Bloomberg News reported that "U.S. home prices fell 4.5 percent in the third quarter from a year earlier, the sharpest drop since Standard & Poor began its nationwide housing index in 1987, the research group said Tuesday. "
"S&P also reported that prices fell 1.7 percent from the previous quarter, the largest consecutive quarterly decline in the index's history. The S&P/Case-Schiller quarterly index tracks prices of existing single-family homes across the nation compared with a year earlier. "
"A separate index that covers 20 U.S. metropolitan areas dropped 4.9 percent in September from a year earlier. A 10-area index decreased 5.5 percent from the previous year."
MarketWatch adds "Home prices fell in September in all 20 major cities covered by the Case-Shiller price index, even in cities that had been holding up, Standard & Poor's reported.
"S&P also reported that prices fell 1.7 percent from the previous quarter, the largest consecutive quarterly decline in the index's history. The S&P/Case-Schiller quarterly index tracks prices of existing single-family homes across the nation compared with a year earlier. "
"A separate index that covers 20 U.S. metropolitan areas dropped 4.9 percent in September from a year earlier. A 10-area index decreased 5.5 percent from the previous year."
MarketWatch adds "Home prices fell in September in all 20 major cities covered by the Case-Shiller price index, even in cities that had been holding up, Standard & Poor's reported.
In the Washington, DC area the price index fell 6.5% from September 2006 . Prices continue to fall in the Washington, DC metropolitan area. In real dollars prices this is almost 10%. For more numbers go to Case Shiller S&P Index.
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Where's Lance to explain this all away?
ReplyDelete"Where's Lance to explain this all away?"
ReplyDeleteNot on his street!
On his street "average rowhouses" have gone from $1 million to $2 million in the last twelve months.
(btw, Lance's neighbor has cut his asking price again... still no sale)
Probably busy fighting off foreclosure.
ReplyDeleteIf you look at that graph, it looks almost like the top of a bubble. Luckily for me Lance has told me that no such thing exists.
ReplyDeleteAnonymous asked...
ReplyDelete"Where's Lance to explain this all away?"
LOL ... If you don't understand why there is no explaining to do, then you don't understand the bigger picture of homeownership. You are apparently one of the confused bubbleheads who thinks buying a house is like buying a stock. You're no less short-sighted than the flippers with which you share so much in common. Good luck gambling with the roof over your head.
btw, Lance's neighbor has cut his asking price again... still no sale
ReplyDeleteLOL
Homes are now declining at a rate higher than my rent! Yes, I'm paying less in rent each month than the discounts on a typical selling house. That pretty squarely puts the big picture in perspective.
Go to the case-Shiller web site. Download the information. Many areas are now depreciating at the same rate as their maximum appreciation. DC? Getting there. But look at any of the cities in Florida, California, Nevada, or Arizona. That shows where the mortgage market is going.
Now is the time to be liquid. I'll enter the market once the sellers get realistic. Look at the number of months of inventory out there.
This is September data too. Tradionally, prices only drop October through February. Hmmm...
Got popcorn?
Neil
As reported in Calculated Risk, the FHFB is reporting an October-to-October YOY drop of 3.49% in average RE prices. Based on methodology, the FHFB number is extremely conservative, both going up and down.
ReplyDeletelance said"Good luck gambling with the roof over your head."
ReplyDeletepot , kettle, black...
You gambled my friend, how come you cant understand this. You took an IO loan "gambling" that either your salary would go up to cover the payments or you could sell it for more due to appreciation. How is renting a gamble. I am saving money hand over foot.
I love it... You are gambling. Please...
Bob
"You are apparently one of the confused bubbleheads who thinks buying a house is like buying a stock. "
ReplyDeleteYou must be one of the housing pumpers that doesn't like seeing people save money on a huge purchase.
The facts here are simple.
The market is falling. The market will continue to fall for at least the foreseeable future. When the market does bottom out it will likely remain stagnant for years before showing significant gains.
There is no major downside risk to waiting and a prospective purchaser will almost certainly come out ahead for having done so.
It's funny how lance has changed his philosophy about housing. Remember the lance of a year or two ago? Back then housing was a good investment, and prices wouldn't drop. Now he can't claim that anymore so it's now about being a home, blah blah blah.
ReplyDeletelance's point about it being a home, not putting life on hold, enjoy the joys of homeownership....
ReplyDeleteHow much can you really enjoy a home that isn't all yours? You have a tenant in the basement. You can't use your whole house in the way you profess "the enjoyment of home ownership." You can't make as much noise as you want, in fact, you impose restrictions on your ability to use your property anyway you choose. Doesn't sound like the "enjoyment of homeownership" to me. And spare us the talk about just kicking the person out. You need the cash and DC law makes renters very powerful when it comes to evictions or ending the lease.
DC is keeping some rare company at the top of the great American bubble markets (Tampa, Vegas, Phoenix, LA).
ReplyDeleteCase Shiller is the best index, but even it is conservative for 2 reasons.
1. Nominal prices do not account for inflation- add another 3-4% to the 6.6% and we're around 10%
2. Renovation costs are not factored in. By looking at same home sales, the Shiller index is better than "median price" comparisons of different houses. But it does not account for the copious renovation that people put into their houses (eg. the $100k granite clad kitchen the FB's HELOC'ed themselves up for, rationizing it was a "good investment")
So with that 10% decline in price, we renters will also get better quality, at least in the form of a lot more pimped-out granite-clad kitchens and baths.
And it's only getting better next quarter!
"And it's only getting better next quarter!"
ReplyDeleteNo no, didn't you hear? Lance thinks our opportunity is slipping away. The market is at its low point right now and will soon shoot straight to the moon!
sam said...
ReplyDelete“2. Renovation costs are not factored in. By looking at same home sales, the Shiller index is better than "median price" comparisons of different houses. But it does not account for the copious renovation that people put into their houses (eg. the $100k granite clad kitchen the FB's HELOC'ed themselves up for, rationizing it was a "good investment")”
Good call on the renovations. I believe the FB’s have shot themselves in the foot with upgrades. If they haven’t kept up with the additions/granite counter tops/jetted tubs/tile/ etc., they’ll find it even harder to sell.
I’ve seen one or two open houses with a “base model” home priced the same as a comp a few driveways over with all the “bells and whistles”.
so prices are about equal to those from mid 2005, and well over twice as high as those from 2000? This is a crisis again how? If you bought a house in 2000 for $300K, you likely have $300K in equity. Only those poor few who bought at the height have anything to worry about, and that is only if they HAVE to sell. Most don't.
ReplyDeleteRight..because we know housing won't continue to drop...we've hit bottom! No one has to worry. Everyone can go home now. Thanks for playing.
ReplyDeleteWhen did Shiller start screaming "bubble"? It seems that he called the "peak" years before it happened. Same with his call on the stock market. Had you followed his advice you would have been sitting on your hands during some big run-ups. Run-ups that would have insulated you from any downturn that we are now seeing.
ReplyDeleteSay you took his advice in 2002 and now you will wait until 2010 or later to buy, what have you gained?
Those of us with experience from earlier cycles saw this coming. As I've said many times, absent a few terrific bargains, I have put no new money into the market since 2002. I bailed on 4 new condo's in the fall of 2005. I could see the writing on the wall.
While you are rehashing Lance's earlier comments, I find it ironic that none of you are explaining YOUR decision NOT to buy pre-2003.
If you are all so prescient (sp?), why didn't you buy then? You would have enjoyed years of ownership and be well on your way to paying off your mortgage. Hindsight is 20/20. I'd be sitting around eating popcorn and praying for a crash if I had so completely missed the boat.
I know, I know, none of you were in a position to buy back then. LOL.
And you all conveniently forget that Lance did not enter the market in 2005, he very astutely traded up out of a condo. We all know that condo's will suffer the brunt of this downturn. So, who is the dumb one?
As far as ranking on Lance's "deal"; I bought my very best "deal" ever in early 2005. I am waiting for David to post my earliest comments and predictions. Talk about prescience.
Anonymous said...
ReplyDelete"so prices are about equal to those from mid 2005, and well over twice as high as those from 2000? This is a crisis again how? If you bought a house in 2000 for $300K, you likely have $300K in equity. Only those poor few who bought at the height have anything to worry about, and that is only if they HAVE to sell. Most don't."
Add to that the fact that most people who bought during this period were "move-up" buyers reaping the benefits of large equity gains. Like you said, most people are in a great position. There's an interesting dialogue going on on the Nothern Virginia blog at the moment. A guy named Doug makes a very interesting case for why the current "stalemate" is due to first time buyers/renters holding out from buying and causing things not to sell. More interestingly, he makes the case that this won't lead to lower prices but instead to higher rents which will in turn cause these renters to buy and thus free up the current homeowners to "move-up" causing the next boom.
"and well over twice as high as those from 2000?"
ReplyDelete2909 Mosby Street, Alexandria
Actual Sales Prices
04/05/2007, $459,900
11/25/2002, $260,760
09/27/1999 $144,000
One or two places sold for close to $500K in 2005 so there might be a 10% pullback, maybe.
Someone who bought in 1999 and put down a big 20% ($29K) has over Three Hundred Thousand Dollars in equity.
They are not worried about prices falling. They are living in their town house, paying about $900/month in PITI for their place that is close to many, many jobs.
If their job goes bad, they'll find another nearby. If they want to move anywhere, they can rent their place out for $1,500 or more.
Having bought at the right time gives them many options.
If they decide to sell, they can. Easily.
Unless they are one of the millions of Americans who borrowed against their house and now owe more than it's worth...
ReplyDelete