2009-05-13thetruthaboutmortgage.com

Home prices in some hard-hit still have a long way to fall, according to a report released today by Fitch Ratings. The ratings agency believes California home prices will fall another 36 percent from current levels over the next 12 to 18 months before stabilizing in late 2010.



Comments:

catherine at 03:11 2009-05-14 said:
two years ago I thought they would fall 50%, wow seems I was too cautious doesn't it?

60% are the projections now and maybe more

tons of oversupply still

and people tightening down......living together, extended families, tent cities, old age homes - you know 50 people that owned homes gone forever from the market, the baby boomers entering that arena, NOT MANY MCMANSION BUYERS THERE

housing in the 30s didn't recover until the 50s

property taxes HAVE TO TRIPLE WITH THESE LOSSES and taxes are only GOING TO TRIPLE ON THOSE MAKING OVER 250,000 ( :P SORRY OBAMA KOOL AID DRINKERS, COULDN'T RESIST)

so even though the property will be worth 60% less, the other costs will triple causing even more to tank

and of course THEY ARE GOING TO TAKE AWAY THE MORTGAGE INTEREST DEDUCTION - they have laughed about doing it

(I mean you are rich to own a home right, evil rich, right? so you won't need that special treatment IN UNFAIR DEDUCTIONS THAT THE POOR DON'T GET...........

see how that poor against rich crap works,

FINAL BOOT TO OUR INDUSTRY COMING UP ON DECK)

unemployment in the millions has such a devastating reaction (as we in our industry have lived and found out the snowball effects)

to the economy that it shows the cult like love of the man,

NO ONE IN THE ADMINISTRATION THINKS 1 MILLION UNEMPLOYED A MONTH FOR AS FAR AS YOU CAN SEE WILL HARM ANYTHING) not one daily press conference on that at all

only the new shiny, irrelevant stuff

this is lava and it flows everywhere sooner or later............

so sad

(and ONE old note: we never thought people in the beginning should walk away if their house was worth 20% less, DID WE? (read the old posts)

HOW DO YOU FEEL IF YOUR HOME IS WORTH 60% OF WHAT YOU OWE, OUCH, HUH?) Permalink

PC LOAD LETTER at 10:05 2009-05-14 said:
Home prices will likely bottom out around 20% of their late 2005 peak price in real terms (remember, have to account for inflation...). This may seem impossible, even after all that has happened, but it is quite possible.

The price declines for all of 2008 and late 2007 were mostly due to a change in lending, basically suicide loans started to get more difficult or go away entirely in some cases. To some extent this has been reversed a bit by the actions of the Fed and other CB's by keeping rates artificially low and loosening standards on Fan/Fred loans, but they can't keep that up forever and they can't do that for free, the cost will likely be ugly but that is a whole other can of worms....

In the mean time the real economy is now being trashed and that is what is causing current foreclosures and price drops left and right. The job losses are absolutely staggering, the worst on record since the GD in fact. That alone would cause a moderate bust in home prices by itself. On top of that wages have not increased much, if at all in ~30 years. Dual income families at first and then debt was used to offset the differences to maintain our standard of living, but now the credit is gone and the jobs are going too so people have to make due with what they've got in their pocket. And finally there is the negative wealth effect. People were counting on their homes to finance their goods and future, now that is gone and they aren't willing to go so deeply into debt anymore.

If you add all these things up together I think you can expect home prices to decline nation wide for another 5-10 years, followed by a long stagnation phase as wealth/credit are rebuilt and inventory is eaten up. It might just be another 20 years or so before homes get back to their 2005 peak value after adjusted for inflation. Permalink

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