"Values dropped 3.9 percent in the 12 months through July, steeper than the 3.4 percent decrease in June, according to the S&P/Case-Shiller home-price index. The index declined in January for the first time since the group started the measure in 2001, and has receded every month since then.
Stricter lending standards and reduced demand are prolonging the housing slump, now entering its third year. Prices may continue to fall as homes stay on the market longer, economists said. Diminished housing wealth may spur households to pare spending, hurting economic growth.
The housing slump ``doesn't seem like it will go away any time soon,'' said Michael Gregory, a senior economist at BMO Capital Markets in Toronto, who forecast the index to drop 4.1 percent. ``As far as consumers go, this is another sort of pall over'' their ability to borrow against the value of their homes, he said. (Bloomberg 9/25/07)
The Washington, DC area continued to experience price declines. According to the Case Shiller Index the year over year July 2007 price change was -7.2%. With the the monthly price declines accelerating from earlier this year. The housing market is not 'bottoming out!'
See Also: Home Prices Post Biggest Drop in 16 Years (Calculated Risk)
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To think, these are July numbers back when the mortgage industry was healthier. It was mid-August the credit crisis hit. Values for August will be interesting. September even more so.
ReplyDeleteBut the NAR will continue to lie and only note the median numbers and not tell people that the median home being sold is getting larger. They won't point out that existing homes are losing value.
Got popcorn?
Neil
The Facts: Real house values and asking prices in suburban Northern Virginia and Maryland are steadily reverting to the norm circa mid-2002, 2003, and early 2004. Which is exactly where they should be to enable individuals to eventually afford house, as well as to be able to take their time to make a prudent decision whether or not to actully purchase a property.
ReplyDelete-dcandout
dcandout said...
ReplyDelete"The Facts: Real house values and asking prices in suburban Northern Virginia and Maryland are steadily reverting to the norm circa mid-2002, 2003, and early 2004. Which is exactly where they should be to enable individuals to eventually afford house, ..."
That's right people could not afford homes at mid and late 2004 and 2005, 2006 prices. That is why nothing sold during those years and there were no bidding wars for the unlimited supply of houses being offered for sale.
"That's right people could not afford homes at mid and late 2004 and 2005, 2006 prices. That is why nothing sold during those years and there were no bidding wars for the unlimited supply of houses being offered for sale."
ReplyDelete--------------------------------
Exactly right, Lance. That is why many are now facing forclosure and the Congress is looking to pass legislation to help them out. Would that be happening if these people you speak of could truly "afford" the prices that they paid back then and were only able to afford because of funny money credit?
Lance, your cynical and highfalutin tone is a disservice to yourself and others sharing real events of the post bubble correction. But thank you for pointing out some of the problems with what defined the fabricated race for easy funds by which real property became a conduit. The bidding wars and escalating sale prices of all kinds of residential properties of varying quality from shack to McMansion in the DC area were the result of an unhealthy fever of pure speculation for which medication is now being dispersed. Open up and say aghhh!
ReplyDelete-dcandout
Lance's quote:
ReplyDeleteThat's right people could not afford homes at mid and late 2004 and 2005, 2006 prices.
Stop to consider all of the foreclosures going on in this country and then ask "But they were able to get the mortgage, do you mean they can't, or could'nt, or never could afford to pay the mortgage in the first place?"
Once you figure that out, you will realize that there is a world of difference between getting a mortgage to get into a house and being able to afford a mortgage to keep the house.
Uhm, Lance, why do you think there are so many foreclosures? Could it have something to do with people buying house they can't afford? Just saying.
ReplyDeleteMy first post here, btw, love the blog.
That's right people could not afford homes at mid and late 2004 and 2005, 2006 prices. That is why nothing sold during those years and there were no bidding wars for the unlimited supply of houses being offered for sale.
ReplyDeleteBidding and affording are two different things. Remember when 29% LTV's were the limit? They went no-doc during the years you mentioned. Option-ARMs too. Half of the buyers weren't qualified. Hence the credit crisis.
The BofA graph shows the next nine months will be the worst for mortgage resets.
When is the last time you can remember people losing their homes because of an inability to get a refinance mortgage? Me neither. This is new.
Again, these Case-Shiller numbers were from before the credit crisis. As I noted before, it has become much worse since July. I can find 4-bedroom homes going for less than a 3-bedroom six months ago.
And...
We're about to enter the slow sales time of the year.
For every person I know who wants to buy, I know three who want to sell. Hmmm....
Got popcorn?
Neil
"That is why nothing sold during those years and there were no bidding wars for the unlimited supply of houses being offered for sale."
ReplyDeleteWe always knew it would come to this...once all the evidence piled up and the bubbleheads turned out to be right...Lance would just revert to talking about those good ol' days.
Hey Lance:
ReplyDeleteHe said afford, not buy.
"Stop to consider all of the foreclosures going on in this country and then ask "But they were able to get the mortgage, do you mean they can't, or could'nt, or never could afford to pay the mortgage in the first place?"
ReplyDeleteI guess you don't realize that foreclosures make up less than 5% of all mortgages issued in last 5 years. That means that 95% could afford it. Read Kenneth Harney's Post article from 2 weeks back.
"Stop to consider all of the foreclosures going on in this country and then ask "But they were able to get the mortgage, do you mean they can't, or could'nt, or never could afford to pay the mortgage in the first place?"
ReplyDeleteI guess you don't realize that foreclosures make up a small fraction of all mortgages out there including those issued recently. That means that the vast majority of these people could afford it. Read Kenneth Harney's Post article from 2 weeks back.
Remember that mortgage delinquency problems affect only people with outstanding loans and that more than one in three homeowners own their properties debt-free. Of the remaining two-thirds -- the latest survey examined 44 million of them -- prime loans that are at least 30 days past due constitute just 2.6 percent nationwide. In other words, among mortgages made to borrowers with good credit at application, 97.4 percent are continuing to be paid on time.
In some states, delinquencies among prime borrowers are far lower -- just 1.35 percent in Oregon, 1.39 percent in Washington state, 1.89 percent in Virginia and 1.9 percent in California. Prime-credit borrowers who took out fixed-rate loans in most states are performing even better than prime borrowers as a whole -- just over 2 percent on average nationally and barely more than 1 percent in California, Oregon, Hawaii and Washington, are paying late.
The numbers get more sobering when you look at borrowers with subprime mortgages: 14.5 percent nationwide are behind on their payments by at least 30 days. That's more than five times the rate of delinquency among prime borrowers. On the other hand, it means 85.5 percent of subprime borrowers are still paying on time every month.
so no, it wasn't that people who bid up the prices couldn't afford to do so ... as the stats given in Harney's article prove, they could.
KH is right when he says BHs can't imagine that not everyone is in their shoes.
www.washingtonpost.com/wp-dyn/content/article/2007/09/14/AR2007091401154.html
Yo Lance bubbleheads getting you down?
ReplyDeleteAsk em, "What does Washington Metropolitan in the table mean?"
Don't point out that even at -7.2%, they are still priced out of the market, that would be cruel.
Send them to Frank the Realtor (LINK) who has shocking numbers showing the bubble bustin', outside the beltway.
Which matches the price reductions outside the beltway.
Frank the Realtor closes with, "Half of the readers will see this as an opportunity, the other half will see it as the beginning of the end. Will the outskirts stay out, or will that creep closer to DC including Arlington and Falls Church and Alexandria. I don't know."
I run with a well-off crowd. They are talking about buying rentals, investing. They're not trying to time the bottom so much as buy at a discount to future prices. They're in the half that see today as an opportunity
"Yo Lance bubbleheads getting you down?"
ReplyDeleteSince the bubbleheads turned out to be right and Lance (and you) turned out to be wrong, then yep, the bubbleheads have Lance down in a pan-global way.
"Don't point out that even at -7.2%, they are still priced out of the market, that would be cruel."
Evidence? Nope, you have none.
"I run with a well-off crowd."
You have to be a special kind of lame to actually type and post a sentence like that.
"They're in the half that see today as an opportunity."
Well, according to housing futures prices, 2010 will be an even better opportunity.
Anon 3:20 said:
ReplyDelete"They are talking about buying rentals, investing. They're not trying to time the bottom so much as buy at a discount to future prices. They're in the half that see today as an opportunity."
Yep, I've been thinking of taking some of my equity to put a 20% downpayment on a weekend house now that there are bargains out there in vacation areas. You'd think BHs would be thinking of buying too ... But then again, I think if you can get something for 7.5% to 10% off of today's values, you scored a homerun in that before too long naturally occuring appreciation will compound those savings similarly like they have on my primary Washington residence. Bottom line of course is that you gotta be able to get into the game. Years back I didn't mind buying the small place I didn't really want (I wanted it all too back then) and didn't mind sacrificing the dinners out and vacations to be able to afford that first place. I guess I was lucky that I didn't have a sense of entitlement.
The lance show it's the lance show, the lancity lancity lance show, let's all lance and feed the trolls, it's the lance show.
ReplyDeleteLAME.
"Yep, I've been thinking of taking some of my equity to put a 20% downpayment on a weekend house now that there are bargains out there in vacation areas."
ReplyDeleteThat is a great idea lance!
As if buying an overpriced rowhouse at the top of the bubble wasn't bad enough you are now looking for ways to put more money into the housing market...
There are a lot of really great properties available up and down the Atlantic coast that are already selling for 7% or more off peak. You had better jump quickly before you miss your chance to buy high!
BTW, considering your interest only loan on your current house.... don't you think you might be overestimating your "equity" a bit?
I highly recommend that Lance buy that vacation home. He should pay double the asking so then that will guarantee that all future homes sell at that price. Lance will singlehandedly pull the market back up by paying double the asking. Go for it Lance!
ReplyDeleteThe Case Shiller is a very broad analysis. Citing it to claim that realestate is down in "D.C." without qualification is misleading. The Index includes the following cities/counties for the "DC Metro Area":
ReplyDeleteDistrict of Columbia DC, Calvert MD,
Charles MD, Frederick MD, Montgomery
MD, Prince Georges MD, Alexandria City
VA, Arlington VA, Clarke VA, Fairfax VA,
Fairfax City VA, Falls Church City VA,
Fauquier VA, Fredericksburg City VA,
Loudoun VA, Manassas City VA, Manassas
Park City VA, Prince William VA,
Spotsylvania VA, Stafford VA, Warren VA,
Jefferson WV
How many people reading this blog consider Jefferson West Virginia to be "D.C."?
Without question, there has been a bubble in the outlying counties as there is not any scarcity of developable land in Spotsylvania, for example.
For locations closer to the center, I wouldn't hold my breath (or put my life on hold) waiting for the prices to revert to the trend, because as the metro area grows, prime locations increase in value because of increasing demand for a limited supply. The MRIS statistics for the District and the inner suburbs already reflect this with stable and rising prices YoY 2007, 2006.
"so no, it wasn't that people who bid up the prices couldn't afford to do so ... as the stats given in Harney's article prove, they could."
ReplyDeleteAnd what percentage of these non-delinquent homeowners bought before the bubble? Actually, although that percentage is surely high, I guess it doesn't much matter anyway. Given the kind of financial havoc already being done to the economy by the bubble aftermath that has just begun, the affordability level was obviously unacceptably low.
Calvert MD, Charles MD, Frederick MD,
ReplyDeleteI've been to Frederick, MD a few times. Anyone know where Calvert MD or Charles MD are?
Why are those places part of DC? This is junk science.
"The Case Shiller is a very broad analysis. Citing it to claim that realestate is down in "D.C." without qualification is misleading. The Index includes the following cities/counties for the "DC Metro Area":
ReplyDeleteDistrict of Columbia DC, Calvert MD,
Charles MD, Frederick MD, Montgomery
MD, Prince Georges MD, Alexandria City
VA, Arlington VA, Clarke VA, Fairfax VA,
Fairfax City VA, Falls Church City VA,
Fauquier VA, Fredericksburg City VA,
Loudoun VA, Manassas City VA, Manassas
Park City VA, Prince William VA,
Spotsylvania VA, Stafford VA, Warren VA,
Jefferson WV
How many people reading this blog consider Jefferson West Virginia to be "D.C."?
Without question, there has been a bubble in the outlying counties as there is not any scarcity of developable land in Spotsylvania, for example."
Of course it makes sense. It makes sense for the DC metro area. Since there most people live in the center, and not in the those unknown places, it is very reflective of what is happening. The index is weighted by the number of houses. Clearly, Spotsylvania makes up only a fraction of the index.
The argument makes no sense.
"Of course it makes sense. It makes sense for the DC metro area. Since there most people live in the center, and not in the those unknown places, it is very reflective of what is happening. The index is weighted by the number of houses. Clearly, Spotsylvania makes up only a fraction of the index.
ReplyDeleteThe argument makes no sense."
Well - glad to see I am not the only one trolling in dead threads (Neil, is that you)???
The true story is that most sales are in the suburbs, with few in the core areas, and few in the exurbs. Note now that the exurbs are selling very rapidly, its heavily weighted towards the suburbs & exurbs.
In any event, even case shiller has shown their data skews such that the inner areas arent declining as much as the index, and the outer areas are declining much more than the index.
http://www2.standardandpoors.com/spf/pdf/index/052708_Housing_bubbles_collapse.pdf