I have warned against any optimism with respect to housing prices. The Case-Shiller index keeps coming to my rescue. It’s down again.
Note: it’s an average of three months.
There is the usual chatter about buyers entering.
“Relentless” pressure from foreclosures could soon send the S&P Case-Shiller index of home prices to a new low for the past decade, says Stuart Hoffman, chief economist at PNC Financial Services. But he thinks this drop in price and low mortgage rates are getting buyers back into the market.
They never say how many buyers. They never say how many houses are being held off the market by lenders.
The declines came in every city except Phoenix, which is prostrate. Year-to-year, only Washington D.C. (where our tax money goes) and Detroit (the ultimate catastrophe) rose. So, at the top of the money flow and the bottom, things got a little better.
Atlanta fell the most. I am waiting to buy a few investment houses in the Atlanta suburbs, where I live. It’s amazing what you can buy for $100,000.
What other cities fell? Las Vegas, Seattle and Tampa.
The peak was July 2006. Prices nationally are down by a third.
What about consumer confidence? It was down.
When consumers are not confident, they do not buy houses.
Yet the mainstream media still try to fake optimism. Here is the headline from USA Today: Homeownership rates fall to 66% as downturn nears a bottom. There was nothing in the article to indicate a bottom. It says the opposite.
“The trend is down, and there are few, if any, signs in the numbers that a turning point is close at hand,” says David Blitzer, chairman of S&P’s index committee.
(Note: MarketWatch has pulled the article.)
These prices will offer tremendous rates of return on invested capital. The timing in each community will be different.
Zombie banks have zombie properties all over the area I live in….they are sitting empty 'short sales' for months if not years…I looked at a home yesterday that shows as a 'short sale' that has been on the market as a short since October of '10. The neighbors on both sides report the lady moved out in September of '10. The home was financed for $205,000 in '05. It is listed for $116,000. It will be lucky to fetch 90K and it will drop from there as it is showing more and more evidence of abandonment. This home is a repo by the latest …April of '11 in normal times…. but we aren't in normal times. The bank is carrying this home (times X thousands of similar properties) on it's books at full financed value not at market value (it's TRUE value.) More book cooking from Wall Street. Think The Devil and Dan Webster …..knock…knock….knock…'I'm here for your soul' (banks)……
I have been in Real Estate since 1996. There are about 15 times more distressed sales (Bank-Sales and Short-Sales) then there should be. In my market 40% to 50%, instead of 3% to 5%, are distressed sales, and unit sales volume of residential properties is down about 43% from the 2005-2004 peak years. This has caused home values to crash.
Sugar coat it anyway you want but "debt" is the fundamental cause of all insolvency. When you are swimming in debt there is little opportunity to build a rainy day fund or be generous to your neighbor. America needs to become a “creditor” not “debtor” nation and same goes for the people. We need a fundamental shift in thinking with solutions on budgeting, financial freedom, and entrepreneurial skills that will help America back on its feet and become great again. We are not going to mortgage our way out of this problem. We should be teaching people to live within their means, not their borrowing power.
Excellent post…as a business person learns quickly….you can't borrow yourself to a profit….conversely a private citizen cannot (re-fi or second and even third mortgage) borrow themselves to solvency.