That heady buzz from the home buyer tax credit is now turning into a grinding headache, as home sellers realize their very temporary, government-induced catbird seat has now fallen back to earth.
As of July 1st, 24 percent of sellers on the market had cut their asking prices at least once, according to Trulia.com.
That's up 9 percent from the previous month and represents about $27 billion worth of vanished national home equity (or home equity hopes).
"The market is going to maintain a relatively flat trajectory, if not more like a saw tooth trajectory, for the near future, and meaningful recovery may not happen until some time in 2011, 2012," says Trulia's Heather Fernandez.
Friday, July 16, 2010
More sellers slashing home prices
From CNBC's Diana Olick:
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Based on expected mortgage rate resets, foreclosures won't significantly slow down until April of 2012.
ReplyDeleteSave your money and rent cheaply, in the meantime, without lowering your standard of living. When interest rates are much much higher and mortgage payments are lower than rent costs, that is the time to buy.
Then use the money you saved while renting to pay for the property outright, or to ensure you have a very small mortgage.
Learn how to preserve your wealth during this process by investing in gold and silver bullion, closed-end funds with high yields (ACG, CFP, etc) and foreign real estate in areas where truckloads of expats are heading to retire.
Note that that is not the case locally. At least not in the District. I stopped by an open house today and the agent there couldn't stop talking about how demand is higher than ever and prices rises quickly once again. He described the last few years as a 'pause' which was now over. Given that Washington never suffered from job losses or the like as did the rest of the country, and given that NYC's losses have largely been DC's gains (Wall Street moving to K Street), I can easily see why even the low appreciation rates we had the last few years didn't make sense. The pause wasn't based on the fundamentals for this region, but instead on the fear that what could be happening elsewhere could happen here. And now that it's obvious that it's not going to happen here, demand is going back through the roof. The agent said that given 10 years or less, only NYC will have higher prices per square foot. As an example he talked about a condo in the same building I was visiting having sold last week for over $800 per square foot. That is just incredible for DC. I think all the worry was for nothing. Real Estate is doing fine in the area, and will continue to hold its value (and then some).
ReplyDeleteThe homebuyer tax credits simply managed to temporarily inflate prices (and hopes) by bolstering short-term demand at the expense of future (now current) demand
ReplyDeleteNote that that is not the case locally. At least not in the District. I stopped by an open house today and the agent there couldn't stop talking about how demand is higher than ever and prices rises quickly once again. He described the last few years as a 'pause' which was now over.
ReplyDeleteUm, yeah, sorry to disagree, but in the "up and coming" (bubblicious) neighborhoods - in NW - that I'm watching closely, things are stalled and dropping.
I've watched three houses in my block which are down 15% from original asking - two of which were asking below their '06 purchase prices - and they still have not closed. One is under contract, but it's contingent - I'm guessing on financing - and that's an open question mark.
There is 'rot' inside the district boundaries, even if some condos are going for silly prices. The credit bubble existed here too Lance, not just "elsewhere in the country". DC has been insulated by the lack of job losses.
"I stopped by an open house today and the agent there couldn't stop talking about how demand is higher than ever and prices rises quickly once again."
ReplyDeleteYeah and I know 6 real estate brokers looking to get into another career as things have been drying up for them.
Lance, why were you at an open house?
"the agent there couldn't stop talking about how demand is higher than ever and prices rises quickly once again."
ReplyDeleteHA. who care what a real estate agent said? I stopped by the hen house today and the fox told me this was a great time to let him in.
The second hand market in ireland just getting worse, create a even bigger gap between new house and 2nd hand houses.
ReplyDelete