Home Prices Still Dropping

[Indy Coug]

http://money.cnn.com/2012/03/27/real...ices/index.htm

So when does the housing market finally stop the bleeding and start moving in the right direction? Locally, it appears the marketing might be ticking up, but that isn't much of a sample size.

[pellegrino]

I thought our market was looking up, but we just got an appraisal back for a refinance and it came back as the same as when we bought it two and a half years ago, before we did major renovations. I don't understand it.

[cowboy]

http://money.cnn.com/2012/03/27/real...ices/index.htm

So when does the housing market finally stop the bleeding and start moving in the right direction? Locally, it appears the marketing might be ticking up, but that isn't much of a sample size.

I haven't looked at the data, but I think it's a function of aggregate income and access to credit. I would guess that demand for housing will be suppressed as long as unemployment stays high and real wages stay flat. Moreover, the prevalence of negative equity positions keeps many homeowners in their homes when they would otherwise trade up for a larger home, and if they have to move for a job, etc., the resulting short sale keeps them from buying new and turns them into renters in their new location.

I think this market presents a real opportunity for hard money lenders who are willing to lend to people who are forced to short-sell but who otherwise have excellent credit. If I had a hedge fund, I would explore this in selected markets.

[Indy Coug]

I haven't looked at the data, but I think it's a function of aggregate income and access to credit. I would guess that demand for housing will be suppressed as long as unemployment stays high and real wages stay flat. Moreover, the prevalence of negative equity positions keeps many homeowners in their homes when they would otherwise trade up for a larger home, and if they have to move for a job, etc., the resulting short sale keeps them from buying new and turns them into renters in their new location.

I think this market presents a real opportunity for hard money lenders who are willing to lend to people who are forced to short-sell but who otherwise have excellent credit. If I had a hedge fund, I would explore this in selected markets.

My concern is that the current "supply" isn't accurate because of

1. The large number of foreclosed homes that are not currently on the market
2. The large number of homes that are being rented instead of sold because they are upside-down

So even if the market ticks up, the dormant supply will gradually be activated, which will help keep the market flat or reduce the growth rates for a very long time. I'm no economist so someone can correct me if I'm off base here.

[Jacob]

I've been shopping for homes in portland and I've noticed that, despite high income, I really can't afford most of the stuff I'm looking at. and so I don't see how many other people could afford it either. based on that simple analysis I think we've still got some drop in the nice homes.
meanwhile in another market I'm selling a home in, prices seem to stabileyes then maybe picked up a bit. but it's not a typical market.

[Color Me Badd Fan]

My concern is that the current "supply" isn't accurate because of

1. The large number of foreclosed homes that are not currently on the market
2. The large number of homes that are being rented instead of sold because they are upside-down

So even if the market ticks up, the dormant supply will gradually be activated, which will help keep the market flat or reduce the growth rates for a very long time. I'm no economist so someone can correct me if I'm off base here.

I think you and Cowboy are right. Cowboy's point about people being shackled with their homes and being unable to move up is especially true. Not only can they not move up, they can't even move to a new location for a better job opportunity without short selling. It's a mess.

[byu71]

I think things must have picked up in St. George. I have made offers on three houses now and haven't go an acceptance on any of them.

Maybe sellers are starting to feel more confident or the banks aren't under any pressure.

[Mormon Red Death]

I think you and Cowboy are right. Cowboy's point about people being shackled with their homes and being unable to move up is especially true. Not only can they not move up, they can't even move to a new location for a better job opportunity without short selling. It's a mess.

I fit this to a T

[San Juan Sun]

I've got my home on the market. We've had one showing in a month, for a nice house in a very nice neighborhood. We have foreclosures on our street dragging local comps down, and will only be able to sell for a big loss. This hurts, because we thought the market was near the bottom when we bought.

We met with a property management group today, as we will probably have to rent it out. Surprisingly, rent is pretty high in my neighborhood. Supposedly a lot of folks who were foreclose upon or short sold and now have so-so credit are flooding the rental market as prospective tenants.

[LiveCoug]

We bought at a horrible time and when we plan on selling here in the next 2 years or so, we will be hosed.

[DrumNFeather]

I thought our market was looking up, but we just got an appraisal back for a refinance and it came back as the same as when we bought it two and a half years ago, before we did major renovations. I don't understand it.

Yours may be a "Maryland sucks" issue more than anything else.

[Color Me Badd Fan]

I've got my home on the market. We've had one showing in a month, for a nice house in a very nice neighborhood. We have foreclosures on our street dragging local comps down, and will only be able to sell for a big loss. This hurts, because we thought the market was near the bottom when we bought.

We met with a property management group today, as we will probably have to rent it out. Surprisingly, rent is pretty high in my neighborhood. Supposedly a lot of folks who were foreclose upon or short sold and now have so-so credit are flooding the rental market as prospective tenants.

Down in Las Vegas, it costs a lot more to rent than it does to buy. Many people would rather stay in a home worth $200k when they owe $500k (this isn't that uncommon down there right now) if they can get a loan modification that puts their interest rate at 2.5%, the rent is more than the modified loan payment.

[Indy Coug]

We met with a property management group today, as we will probably have to rent it out. Surprisingly, rent is pretty high in my neighborhood. Supposedly a lot of folks who were foreclose upon or short sold and now have so-so credit are flooding the rental market as prospective tenants.

We rented out our house last summer and have a property manager. We had about a dozen showings in a week and had someone signed to a lease within 10 days of listing. We were lucky enough to get them on a 3 year lease because it will take well in excess of 3 years for us to sell at an acceptable loss.

At least where we were, nice rental homes in nicer neighborhoods are in relatively short supply, so it's not too hard to find someone. The property management did all of the background checking, listing, showing, etc. which also helped the process along in finding a suitable tenant.

[Mormon Red Death]

I've got my home on the market. We've had one showing in a month, for a nice house in a very nice neighborhood. We have foreclosures on our street dragging local comps down, and will only be able to sell for a big loss. This hurts, because we thought the market was near the bottom when we bought.

We met with a property management group today, as we will probably have to rent it out. Surprisingly, rent is pretty high in my neighborhood. Supposedly a lot of folks who were foreclose upon or short sold and now have so-so credit are flooding the rental market as prospective tenants.

A couple miles up I-94 from you we have friends who it took a grand total of one week to rent their house for a 4 year lease (two medical residents) at about $150 more than their total expense (mortgage + insurance + taxes). at the end of the 4 years they plan to sell (they will no longer be underwater). This is a good time to rent your house.

[Indy Coug]

A couple miles up I-94 from you we have friends who it took a grand total of one week to rent their house for a 4 year lease (two medical residents) at about $150 more than their total expense (mortgage + insurance + taxes). at the end of the 4 years they plan to sell (they will no longer be underwater). This is a good time to rent your house.

We definitely don't get as much in rent as our mortgage payment, but it is roughly what we pay for housing here, so it's cost-neutral from that standpoint.