Metro Jacksonville

This article argues that the end of the rout is upon us or very close.  Are things up from here?  Read more here:

QuoteBottom's Up: This Real-Estate Rout May Be Short-Lived

By JONATHAN R. LAING

This real-estate rout has been more painful than prior ones, but it may be shorter-lived. Indeed, there are early signs of recovery.

A FEW YEARS AGO, AN ACQUAINTANCE SENT Wellesley College economist Karl "Chip" Case a T-shirt depicting a cartoon of a smiley-face house surrounded by soap bubbles, called "Mr. Housing Bubble." But it was the words captured in a comic-book cloud on the shirt that gave this otherwise goofy image its bite: "If I pop, you're screwed!"

The dark humor hardly was lost on Case, co-creator along with Yale economist Robert Shiller of the now-canonical S&P/Case-Shiller Home Price Indices. In pairing recent sale prices of U.S. homes with the prices those same homes fetched previously, the index is substantiating what every sentient American knows: The U.S. housing market is in a deep funk, probably the worst in 50 years, according to Harvard's respected Joint Center for Housing Studies.

(http://s.wsj.net/public/resources/images/BA-AM954A_Housi_20080711192539.jpg)

Home prices are down nearly 18% from the market's peak, according to Case-Shiller, and inventories of unsold homes are at near-record levels. Foreclosures are mushrooming on "subprime" properties, or homes whose purchase was financed with subprime debt. Blowback from the crisis has left mortgage-finance giants Fannie Mae (ticker: FNM) and Freddie Mac (FRE) financially strapped, while many other lenders lack the stomach -- or money -- to offer new mortgages. Noted market experts such as Pimco bond-fund manager Bill Gross and economist Mark Zandi of Moody's Economy.com predict the meltdown in housing will continue for many months, with home prices declining by 10% or more from today's depressed levels.

Yet, such pessimism appears overdone, based on much recent data. Sales of existing homes are showing tentative signs of increasing, while the plunge in prices likely is nearing an end. Total inventories fell in May to 4.49 million existing homes for sale, or a 10.8-month supply at the current sales pace, down from an 11.2-month supply in April, according to the National Association of Realtors, in just one statistic emblematic of the nascent trend.

YES, THE SUPPLY OVERHANG still is humongous, but at least the numbers are moving in the right direction, as even Treasury Secretary Henry Paulson noted last week. Speaking at a Federal Deposit Insurance Corp. conference, Paulson declared that "we are well into the adjustment process." Inventories of new single-family homes are down 21% from a 2006 peak, he observed, while "existing-home sales appear to have flattened over the past several months, indicating that demand may be stabilizing."

Still other numbers suggest prices are close to bottoming. The S&P/Case-Shiller Index for April, released just last month, showed the biggest year-over-year price decline yet, of 15.3%. Buried in the numbers, however, and widely ignored in the media, was the news that home prices actually rose, albeit slightly, between March and April, in eight of the 20 markets covered by the index (Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Portland, Ore., and Seattle). This was in sharp contrast to the readings for March, which showed prices falling in 18 of the 20 surveyed markets. Also, the pace of monthly price declines is starting to slow in most of the markets with negative readings.

"Other than Larry Kudlow of CNBC, none of the journalists who interviewed me after the latest release seemed at all interested in any of the positive developments," says David Blitzer, chairman of the S&P Index Committee. "They seemed focused on the bad year-over-year number."

In general, transaction-based home-price indexes, including S&P/Case-Shiller, may be painting a bleaker picture of price trends than warranted. That's because subprime housing, though less than 10% of the total U.S. housing stock, accounts for a far larger share of current sales volume, owing to spiraling defaults and distress sales. In the San Francisco area, expensive homes ($721,548 and up) have suffered a peak-to-trough drop in price of only 10.7%, compared with low-priced homes ($473,711 and under), down 40.9%, and mid-range homes, down 28.3%, according to the latest Case-Shiller numbers. The surge in low- and mid-range sales has been sufficient to push average peak-to-trough prices down by 24.6%, despite the index's valuation-weighting.

Help for the housing market also may be on the way in the form of proposed congressional legislation that would allow the recasting of some $300 billion in troubled subprime mortgages through the Federal Housing Administration. The bill, which some have derided as a bailout, would demand sacrifices by both lenders and borrowers, and could help to ease conditions in the subprime market.

Of greater importance, a government takeover of loss-ridden Fannie and Freddie -- the subject of widespread speculation late last week -- would ease concerns about the continued availability of credit in the housing market. Fannie and Freddie, which buy mortgages from banks and repackage them into mortgage-backed securities, are the biggest source of financing for the U.S. mortgage market.

SURPRISINGLY, CHIP CASE, whose knowledge of the housing market goes back decades and is based on the voluminous collection of data, is among those who think home prices may be nearing a bottom. Case notes, among other things, that new housing starts fell to 975,000 in April from a peak rate of 2.27 million in January 2006, and that three declines of similar magnitude -- from more than two million to less than one million -- have occurred in the past 35 years. "Every time this has happened before, housing-market activity has rebounded within a quarter and caught experts by surprise," he says. "In many areas, particularly outside the overbuilt markets of Arizona, Florida and Nevada and the huge bubble market of California, home prices may well stabilize" and begin to recover before the end of this year.

Case acknowledges history might not repeat, as the U.S. could be on the cusp of a painful recession. Unlike the three prior dips of a million-plus starts -- in the first quarter of 1975, the second quarter of 1982 and first quarter of 1991 -- the latest slide was triggered by insensate speculation and suicidal lending practices rather than the traditional factors of rising unemployment and interest rates and slowing economic growth. Thus, he says, a protracted dip in the economy would temper his optimism, though the official measures of economic growth don't indicate a recession yet.

Jim Paulsen, chief investment strategist of Wells Fargo's primary investment unit, expects home prices to steady by year end, with the pace of foreclosures slackening shortly. Most of the subprime debt at the center of the current crisis already has been written down by financial institutions, he notes, while many subprime borrowers who lost their homes are returning to rental units. "Folks who compare this home-price cycle to the one that occurred in the early '80s obviously have short memories," Paulsen says. "In the 1980s the economy was in a deep recession, mortgage rates were at 17% or more, and unemployment [was] hitting a post-Great Depression high of nearly 12%."

THE STEEP DECLINE IN HOME prices -- Case prefers to study the ratio of sale prices to per-capita income in various locales -- already has improved affordability. The change in such ratios varies by market, with Florida, Arizona and Nevada typically tracing short boom-and-bust cycles because any surge in speculative demand quickly is followed by overbuilding, due in part to the abundance of cheap land. The ratio in Phoenix, for example, has been reverting to a more typical six times home prices to income, after soaring to nine times in 2005 and '06.

Most volatile are popular metro areas, such as Los Angeles and Boston, where housing demand is high, along with restrictions on development. Los Angeles' affordability ratio doubled from 2001 to 16 times at the height of the housing boom, before dropping back to around 11. The Boston market never grew so frenzied, perhaps because it was far from the center of the subprime-lending business in Southern California, where an array of bad business practices flourished. Boston's housing-affordability ratio peaked at 12, and since has returned to a more normal nine times prices to income.

(http://s.wsj.net/public/resources/images/BA-AM971I_housi_20080711221215.gif)

Building a New Foundation: The U.S. housing market typically begins to improve after housing starts have fallen by a million units or more, says economist Karl "Chip" Case, co-creator of the S&P/Case-Shiller Home Price Indices. Case measures the affordability of homes in various markets via the ratio of home prices to per-capita income. Such ratios rose to excessive heights in recent years in many metro markets, but lately have reverted to more normal levels in cities like Boston and Phoenix.

For much of the country, particularly in the industrial Midwest, affordability never became a problem. In Detroit, for instance, a race to the bottom between home prices and per capita income left the ratio at under four times. Chicago's ratio likewise has been well-behaved, bobbing between five to seven times.

Now sales activity seems to be picking up. According to the latest report from the National Association of Realtors, sales of single-family homes, condominiums, town houses and co-ops edged up 2% in May from April's levels. That might not sound like much of a jump, but May marks only the second month in the past 10 to have seen an increase.

Much of the gain came from markets such as Sacramento, Las Vegas and California's San Fernando Valley and Monterey County, all regions where lenders were unloading large numbers of foreclosed properties. In Detroit, too, sales are soaring, albeit at median prices of under $30,000.

Cape Coral, Fla., a Gulf Coast city of some 170,000, has been depicted in the New York Times and Good Morning America as Foreclosure Central. Yet, in the past two months year-over-year sales have jumped more than 40% as a result of avid bargain-hunting. So-called 3-2-2-1s (three bedrooms, two baths, two-car garages and one swimming pool) that sold for more than $300,000 at the height of the boom now are being snatched up in bulk by investors for as much as 60% less, says local Realtor Tommy Lee. "I'm telling people to come on down and take a look, but only if you have pre-approved credit, because with gas prices where they are, I don't want to be running a taxi service," he says.

NAR economist Lawrence Yun is optimistic home prices will stabilize in the next five months and begin to recover next year, despite today's gloom and overly stringent lending standards. NAR officials typically are cheerleaders, but Yun advances some reasonable arguments to buttress his view. Home sales, he notes, currently are running at a pace of about five million a year, around the same level as a decade ago. Yet, the population has grown by 25 million in the past 10 years, and the U.S. has created 10 million new jobs. Though the rate of new-household formation requires the net addition of 1.6 million housing units a year, housing starts likely will remain below one million into next year, creating pent-up demand in the years ahead.

TODAY'S HOUSING BUST IS unique in U.S. economic history. It began in good, not bad, economic times, and has proven to be national rather than regional in scale, with markets around the country detonating like Chinese firecrackers between early 2006 and mid-2007.

With the benefit of hindsight, one can discern a concatenation of developments that made the latest cycle almost inevitable. In the aftermath of the 2000 stock-market bust and the 2001 terrorist attacks, and amid heightened fears of deflation, the Federal Reserve drove short-term interest rates to near-historic lows and flooded the nation's financial system with money. Cheap funding spurred a surge in home-buying, and drove the home-ownership rate to a peak of 69% of all U.S. households by 2004, up from 64% a decade earlier.

Prices in many areas began to go parabolic in '04, at the time the Fed began to raise rates. Affordability became a problem in some markets, and cash-out refinancings began to slow. On Wall Street, however, where the securitization of mortgages had become a huge profit center, the demand for new mortgage product was unrelenting. Mortgage brokers and other loan originators were also getting rich off the business, and thus were eager to oblige. By 2005 the mortgage industry had began churning out new "affordability" products that featured low "teaser" rates in the early years of a mortgage to keep monthly payments low. Long-sacrosanct down-payment and family debt-to-income requirements were jettisoned. Other products enabled borrowers to repay interest only in the early years of a loan, while so-called option ARMs added the unpaid portion of monthly interest to the principal balance.

Come 2006, many lenders were scraping the bottom of the barrel to find new borrowers, some of whom, by fibbing about their annual income and net worth, often with the connivance of mortgage brokers, secured "liar loans." As greed gave way to fraud, both borrowers and lenders came to believe that ever-rising home prices would cure any defects in the underwriting process.

All this helps explain the seemingly aberrant behavior of many homeowners once prices started down in 2006. Borrowers with 100% loan-to-value mortgages, particularly after including first and second mortgages and home-equity lines of credit, began defaulting, sometimes mailing their keys, or "jingle mail," to their loan servicers. Why keep paying, after all, once the value of a property has slumped below that of the debt against it? Better to live rent-free until the foreclosure notice arrives. Such behavior also was rampant in Texas in the mid-1980s, when the oil boom went bust.

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Delinquencies, defaults and foreclosures hit the housing market with a rapidity and virulence unmatched in previous cycles, pushing total loans past-due and foreclosure rates to unprecedented highs. As a consequence, the current residential real-estate cycle has been front-end-loaded relative to past bear markets, which suggests the pain, though excruciating for many, may be shorter-lived than in the past. Early mortgage defaults have blunted the negative impact of subprime-mortgage-rate resets, which peaked in the spring, and are likely to curb the effect of interest-rate resets on option ARMs and other affordability products, expected to peak between 2009 and 2011. Many of these mortgages already are in the foreclosure pipeline, which will lessen the overhang of foreclosed properties in the future.

THERE ARE SIGNS THAT THE PRESSURE on home prices from foreclosures may wane in the months ahead, says Tom Brown of Bankstocks.com, who studied the performance of the dozens of subprime-mortgage securities that make up the ABX indexes. Precipitous declines in these now-infamous indexes, which track the value of the underlying securities, forced financial institutions around the globe to mark their own subprime assets to market, forcing many to write down billions of dollars, and seek new capital.

The performance of the ABX indexes covering the four crummiest subprime vintages -- those securitized from the second half of 2005 to the first half of 2007 -- shows that the rate of early-stage, or 31- to 60-day, delinquencies has been falling for the past six to eight months, says Brown, depending on the newness of the vintage. This is key, he adds, as today's early delinquencies are the raw material for tomorrow's foreclosures. Fewer delinquencies will eventually mean less of an inventory overhang in the housing market.

Likewise, Brown notes a decline in the percentage of early delinquencies that advance to later states. Both developments tell him the cumulative-loss assumptions on these mortgages made by both the credit-rating agencies and Wall Street could prove far too pessimistic.

One can draw a similar conclusion from the delinquency-inflow trends of other types of mortgages, be they loans backed by home-equity lines of credit or second-lien mortgages from the bubble years. Many have performed horribly, but the rate of inflow of new delinquencies suddenly has dropped in recent months.

An ebbing tide of new delinquencies strongly hints that the worst may soon be over for the housing market, at least in terms of burdensome supply. The pig, in other words, is well along the python's alimentary canal.

In hindsight, the housing bust hasn't been nearly as calamitous as depicted in the media, or as Wall Street's woes might suggest. Yes, people have lost their homes, but more than a few were mendacious mortgage applicants and mere speculators, who eagerly sought out 100% margin loans, only to fold just as quickly when prices turned against them.

It is important to remember, as well, that even after a steep drop in the S&P/Case-Shiller Indices, long-term buyers in the top 20 U.S. metro markets have seen their properties appreciate by 70% since 2000. Home prices often take five to 10 years to recover fully from severe declines such as this. But at least the available data suggest the scary dive in home prices soon will be over.

http://online.barrons.com/article/SB121581623724947273.html?mod=ba_mp_view&page=sp

I really hope those predictions are right.

some commercial RE funds are positive for the year (after being 20% losers last year).  still think we have at least another 6 months of pain in the residential RE market.

Warren Buffet's comments on the bust last year... "when people get scared I get greedy, when people get greedy, I get scared."

People are scared right now, prices are down. If you can, buy it up. It's just like stocks, don't quit investing, right now everything is just on sale.

Some have poo pooed the idea of rail transit in Jacksonville, but oddly the 10 cities with the lowest % change in values are all rail transit cities.

Las Vegas - Bus + BRT + short monorail
Phoenix - Bus
San Diego - Corridor Rail + Streetcar + Bus + New Commuter Rail
Miami - HEAVY RAIL (short) + limited Commuter Rail + BRT + Bus + DPM
Detroit - Bus + Corridor Rail + DPM
Los Angeles - Corridor Rail + Light Rail + BRT + Bus + Commuter Rail + HEAVY RAIL (limited)
Tampa - Bus + Streetcar (very short)
San Francisco -  Streetcar + HEAVY RAIL + Commuter Rail + BRT + Bus + Cable Car + Boats
Washington - JEAVY RAIL + BRT + Bus
Minneapolis - BRT + New Light Rail + New Commuter Rail + bus

Cleveland  - HEAVY RAIL + Light Rail + streetcar + BRT + bus
Boston - Commuter Rail + SUBWAY + Light Rail + streetcar + BRT + bus
Chicago  - COMMUTER RAIL + HEAVY RAIL (EL) + Corridor Rail + AMTRAK (massive hub) + INTERURBAN + bus
Denver - LIGHT RAIL + BRT + bus
New York -  HEAVY RAIL  (EL+SUBWAY) + Commuter rail + High Speed Rail + Boats + Bus + Light Rail (metro) + Skycable
Atlanta  - HEAVY RAIL + bus
Seattle  - Commuter Rail + Corridor rail + Light Rail + streetcar + BRT + Bus + Boats
Portland  -  Extensive LIGHT RAIL + Streetcar + bus
Dallas -  Extensive LIGHT RAIL + Subway (limited) + Commuter Rail + Streetcar + BRT + bus
Charlotte  - new LIGHT RAIL + Corridor Rail  + Streetcar + Bus

JACKSONVILLE - Bus - Skyway (very short) + boats

While Los Angeles and San Francisco seem to be misplaced, keep in mind the California market has been far above normal housing prices for 50 years. Other then these two, there seems a DIRECT connection between modes + transit + system size + system age = % change in housing value.

OCKLAWAHA

so...what's your explanantion for the huge decrease in values in Miami?

Mass Panic!  The sky is falling!  Florida will soon be submerged!!   ::) :D

Hmmm... I wonder why the last three houses I put an offer on were sold for OVER the asking price, and this after being up for sale less than 24hrs! Stephen can you talk to some of these buyers who are offering more than the asking price and let them know the market is in a free fall?

well - and i have a closing on July 28th...sold FSBO 5 days after I put the sign up.  we shall see.  looks like its gonna close.  signing a listing agreement tomorrow for another one in the 32246 zip code.  we'll see how that one goes too.

QuoteThis was in Forbies magazine 14 July 2008

 

Houston, we don't have a housing problem.

The city's $152,500 median home sale price is up 6.6% from 2005. It boasts a low vacancy rate and an oil-rich economy. Throw in a bubbling entrepreneurial tech scene, and you've got four factors that put Houston on the top of our list of best places to buy a home.

San Francisco, Charlotte, N.C., Jacksonville, Fla., and St. Louis, Mo., are other areas buyers can feel safe investing in.

In Depth: Ten Best Cities To Buy A Home
We examined the country's 40 largest metropolitan areas and looked at cities where home prices have appreciated over the last two years. We also measured tightening vacancy rates. These metrics indicate places where buyers are investing in homes in order to live, not just make a quick buck, and where the housing market is relatively solid. We culled our vacancy and home price information from the U.S. Census Bureau and the National Association of Realtors.

The average vacancy rate across the major metro areas was 2.88%, and the average percent appreciation was just .07% over the last two years.



With lending tight, we also factored in the spread between a monthly rent check and a mortgage payment at the median level (assuming that the down payment was 10% and the fixed interest rate is 6.25%). Encino, Calif.-based real estate brokerage firm Marcus & Millichap provided stats on median monthly rents.
Cities where a mortgage payment was close to, or less than, the average rent were given a higher score. For instance, in Cleveland the average rent is $702, and the average mortgage is $565.78. With a lower monthly payment, tax incentives and the opportunity to build equity, it makes sense to buy here.

In stark contrast, San Jose, Calif., has an average monthly mortgage payment of $4,322.33, versus an average rent of $1,612.

Lots To Like In The Lone-Star State
Texas dominated our lineup of mortgage-worthy areas. Thanks to a business-friendly tax environment, many large corporations call the Lone Star State home, which creates jobs and tax revenue.
The University of Texas campus provides young blood and research-related jobs to No. 2 city Austin. This state capitol is a hip area on the rise. The vacancy rate has fallen by 37.5% in the last 24 months to just 1.5%, despite a lot of building in recent years. And buying isn't much more expensive than renting. An average mortgage payment is $1,022.40, and average rent hits $767.

San Antonio, No. 5, and Dallas, No. 6, made the list thanks to affordable housing, which continues to appreciate. In both cities, the median home price hovers around $150,000, and a monthly mortgage payment of around $800 is pretty close to what one pays in rent. If you can pony up the down payment, these are great areas to live.

Coast-to-Coast Sweet Spots
Philadelphia landed at No. 4, with homes appreciating by 9.1% in the last two years and vacancy rates staying low at 1.9%. This university town, which plays host to the University of Pennsylvania, certainly has its charm. A city on the rise with a tempting cost of living, Philly is a great place to buy a new home.
What's housing like in your area? Weigh in. Post your thoughts in the Reader Comment section below.

The South made a nice showing with Charlotte, N.C., Jacksonville, Flo., and Atlanta, Ga., making our list. Charlotte and Jacksonville have surged in price by 12.9% and 8%, respectively. Atlanta has seen huge amounts of growth and remains reasonable with a median home price of $172,000.

San Francisco, this year's best city for young professionals, came in at a respectable No. 8. While housing certainly isn't cheap in the City by the Bay, it is definitely in demand and continues to appreciate. For a buyer, San Francisco offers a culturally rich and beautiful city that is chock full of opportunity.

In Depth: Ten Best Cities To Buy A Home

QuoteThe South made a nice showing with Charlotte, N.C., Jacksonville, Flo., and Atlanta, Ga., making our list. Charlotte and Jacksonville have surged in price by 12.9% and 8%, respectively. Atlanta has seen huge amounts of growth and remains reasonable with a median home price of $172,000.

I wonder how much truth this holds?

Can you provide a link to this, samiam?

Here you go:

http://www.forbes.com/realestate/2008/07/14/housing-buyers-list-forbeslife-cx_md_0714bestbuy.html

Thanks Jason.  It is good press for J-ville.  I dont think the 8% increase was achieved in the last year though.  That must have been the 2006-2007 gains minus the 2007-2008 losses.  Still, 8% return in 2 years on a leveraged bet is a fine return. 

The smart money is getting back into real estate with all the great deals out there.  The trick is getting financing as the banks today are extremely conservative about real estate loans for obvious reasons.

Although this may be an isolated event, housing starts have begun to rebound.  If sustained, this would signal a housing revival:

QuoteU.S. Housing Starts Spurred by New York Code Change (Update2)

By Timothy R. Homan

July 17 (Bloomberg) -- U.S. housing starts unexpectedly surged the most in more than two years in June because of a change in New York City's building code that overshadowed a slide in single-family home construction.

Housing starts rose 9.1 percent to a 1.066 million pace from a revised 977,000 rate in May, the Commerce Department said today in Washington. Excluding a jump in construction of multifamily units in the Northeast, starts would have dropped 4 percent. Work began on single-family homes at the slowest pace in 17 years.

Rising foreclosures, higher mortgage rates and declining property values threaten to keep home sales depressed in coming months, discouraging builders from starting new projects during the worst housing slump in 25 years. Spending on residential projects may continue to be a drag on growth the rest of this year as builders try to work off excess inventories.

``It's still a very, very weak housing market around the country,'' said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh. ``Builders are coping with sharp oversupply, a big overhang of single-family homes that for the most part are still falling in prices.''

A separate government report showed initial claims for unemployment benefits rose less than forecast last week. Claims increased to 366,000 from 348,000 the prior week, the Labor Department said.

Economists' Forecasts

Economists forecast the pace of starts would decline to 960,000, from a previously reported 975,000 for May, according to the median on 76 projections in a Bloomberg News survey. Estimates ranged from 925,000 to 1.03 million.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aboQs91gAR8A&refer=home

More on a bottom being reached in housing.  From the bottom, it is all up.   ;)

QuoteThe Media Are Missing the Housing Bottom

Media reports painted a pessimistic picture of today’s release on existing home sales, which fell 15 percent from a year ago and recorded higher inventories. But inside the report was an awful lot of very good new news, which appear to be pointing to a bottom in the housing problem; in fact, maybe the tiniest beginnings of a recovery.

For example, the median existing home price has increased four consecutive months and is up 10 percent since February. Yes, it’s down 6 percent over the past year. But the monthly numbers show a gradual rebound. Actually, this median home price is $215,000 in June, compared to $196,000 last winter.

And there’s more. One of the hardest hit regions is the West, including California, Arizona, and Nevada. The other two bad states are Florida and Michigan. However, existing home sales in the western region are up four straight months, and are 17 percent above the low in October. At the same time, prices in the West have increased three straight months.

Meanwhile, overall national existing home sales are basically stabilizing at just under five million. And in the first and second quarters of 2008, these sales dropped slightly by 3 percent in each case, which is a whole lot better than the roughly 30 percent sales drops of the prior three quarters.

It’s a pity the mainstream media keeps searching for more and more pessimism. The reality is a possible upturn in the housing trend, and at the very least we are getting a bottom. Stocks sold off 165 points largely on media reports of terrible home sales and prices. But I am hoping the market comes to its senses and realizes the data are a whole lot better.

And on top of all that, just as housing may be on the mend, Congress is about to ratify a huge FHA-based bailout that could total $42 billion. Congressional solons are putting up $300 billion to refinance and insure distressed loans through the Federal Housing Administration. But this dubious government agency, with a whole history of bad portfolio management, may wind up taking in the very worst loans on the books.

Of course, taxpayers are on the hook. More government semi-socialism.

http://www.kudlowsmoneypolitics.blogspot.com/

Some good news for the local market:

QuoteHome prices, sales continue upward trek

Existing homes in the Jacksonville area continued to show slight monthly gains in sales and price while yearly comparisons again declined, according to data released Thursday by the Florida Association of Realtors.

Single-family home sales from May to June were up 2.1 percent to 1,013. Compared with the same month last year, sales decreased by 20 percent.

The median sales price came in at $197,000 compared with $193,200 in May. A year ago in June the median price was $212,200.

Condominium sales in June went up 20.5 percent from May to 135 units. The median sales price jumped from $154,700 to $182,000. Last June, sales were 9 percent higher at 149 with median prices 5 percent lower at $173,200.

Housing sales tracked by FAR have shown modest gains from one month to the next since February for the Jacksonville area.

Liz Flaisig/ The Times-Union

http://www.jacksonville.com/tu-online/stories/072508/bus_309538560.shtml

QuoteForeclosure filings up 120%
220,000 homes were lost to bank repossessions in the second quarter, and the annual forecast for 2008 will have to be revised upward.

NEW YORK (CNNMoney.com) -- As foreclosures continue to soar, 220,000 homes were lost to bank repossessions in the second quarter, according to a housing market report Friday issued by RealtyTrac.

That's nearly triple the number from the same period in 2007.

A total of 739,714 foreclosure filings were recorded during that three-month period, up 14% from the first quarter, and 121% from the same period in 2007. That means that one of every 171 U.S. households received a filing, which include notices of default, auction sale notices and bank repossessions.

http://money.cnn.com/2008/07/25/real_estate/foreclosure_figures_up_again/index.htm?postversion=2008072508

Foreclosures up 120% from last year (2007).  They are up just 14% from last quarter.  It seems as if they too are close to a plateau.  Also, these are nationwide numbers.  Jacksonville appears to be doing a bit better.

Some more good news, courtesy of the US Census:

QuoteHomeownership Rate in Second Quarter 2008 Rebounds By Largest Increase in Four Years

(http://bp3.blogger.com/_otfwl2zc6Qc/SIsqJRpp6KI/AAAAAAAAFNE/7GI0aghHktY/s400/homeownership.bmp)

The chart above is based on the Census Bureau's latest release on home ownership rates, and shows the following:

1. The howeownership rate fell below 68% in the last quarter of 2007 (67.8%) and first quarter of 2008 (67.8%) for the first time since early 2002, as part of a four-year downward trend since the 69.2% peak level of homeownership in 2004.

2. The .30% increase in homeownship for the second quarter of 2008 to 68.1% was the first quarterly increase in almost two years (since third quarter 2006), and was the largest quarterly increase in four years (since second quarter 2004).

Bottom Line: If this rebound in homeownership rates continues to reverse the four-year downward trend, it could provide further evidence that we are finally experiencing a bottom to the housing market problems, as suggested by Larry Kudlow (The Media Are Missing the Housing Bottom) and Brian Wesbury ("Pace of existing home sales is very close to a bottom," and "Pace of new home sales has either already hit bottom or is getting very close to the bottom.")

http://mjperry.blogspot.com/

Forbes Magazine lists Jacksonville as #9 best city to buy in
http://www.forbes.com/2008/07/14/housin ... stbuy.html

Quote from: uptowngirl on July 29, 2008, 12:14:18 PM
Forbes Magazine lists Jacksonville as #9 best city to buy in
http://www.forbes.com/2008/07/14/housin ... stbuy.html

Your link is bad...

Quote from: stephendare on July 29, 2008, 11:03:09 AM
http://www.huffingtonpost.com/2008/07/29/home-prices-plunge-record_n_115562.html

Quote


NEW YORK â€" Home prices tumbled by the steepest rate ever in May, according to a closely watched housing index released Tuesday, as the housing slump deepened nationwide.

The Standard & Poor's/Case-Shiller 20-city index dropped by 15.8 percent in May compared with a year ago, a record decline since its inception in 2000. The 10-city index plunged 16.9 percent, its biggest decline in its 21-year history.

No city in the Case-Shiller 20-city index saw price gains in May, the second straight month that's happened. The monthly indices have not recorded an overall home price increase in any month since August 2006.

Home values have fallen 18.4 percent since the 20-city index's peak in July 2006.

Nine metropolitan cities _ Las Vegas, Miami, Phoenix, Los Angeles, San Diego, San Francisco, Seattle, Wash., Portland, Ore., and Washington, D.C. _ posted record lows in May. And the value of housing in Detroit is now lower than it was in 2000.

But a possible bright spot in an otherwise dismal report, seven metros _ Tampa, Fla., Boston, Detroit, Minneapolis, New York, Dallas and Atlanta _ showed smaller annual declines.

Las Vegas recorded the worst drop, with prices plunging 28.4 percent in the month. Miami came in a close second, with prices down 28.3 percent.

Charlotte, N.C., posted the smallest drop at 0.2 percent. Until April, the North Carolina city had been the last metro still showing price gains.

You obviously dont understand that (1) the Case-Shiller index attempts to measure the nominal values of property not the real value so property can still go up in price but the index could show a "loss", (2) the Case-Shiller is not the only index out there and it is consistently more pessimistic than the others which is why the media loves it, (3) looking at the year over year loss is deceptive as the trends in sales and prices since February have all been positive and (4) the index only includes 20 real estate markets out of the entire nation and Jacksonville is not even included.  Other than these problems, it is a great index.  Thanks for posting it.   ;)

Would this part of your post not constitute a "comment":

QuoteRe: Sunshine and Unicorn Laughter Coming from Propaganda Asses Unsubstantiated

If not, sorry I misinterpreted your post.   :D

Try this one, the other was a copy of a copy of the link  ;)

http://www.forbes.com/2008/07/14/housing-buyers-list-forbeslife-cx_md_0714bestbuy.html


"San Francisco, Charlotte, N.C., Jacksonville, Fla., and St. Louis, Mo., are other areas buyers can feel safe investing in. "

Although I am not sure how reliable that is when you look at this in the "indepth" section:

9. Jacksonville, Fla.
Since 2000, Jacksonville's population has grown an impressive 8%. Meanwhile, median home prices have climbed 14% in the last 24 months to $189,200. Along with its other virtues, sunshine-rich Jacksonville came in at No. 3 on our 2008 Cleanest Cities list thanks to fresh air and clean water.


You can say a lot about JAX, but clean???!!!! hmmmm

^ Again, you guys really don't know how good you've got it. Sure, there are industrial areas of the city that need cleaning up, but they pale in comparison to other cities in GA, SC, and NC that are dirtier--despite the lack of industry!

I am referencing litter, not industrial, but normal everyday citizen litter, and it is pretty bad. ;)

Believe me, it is worse up here. Cigarette butts, beer cans, Colt 45 bottles...all because usually these people just throw their trash in the back of their pick-up trucks and drive off. I'm not saying Jax is ultra-clean, because I have seen parts of the city with litter. However, everytime I visit Jax, I see a pretty clean city in comparison to my current residence of Columbia.

Quote from: Charleston native on July 29, 2008, 04:18:05 PM
Believe me, it is worse up here. Cigarette butts, beer cans, Colt 45 bottles...all because usually these people just throw their trash in the back of their pick-up trucks and drive off. I'm not saying Jax is ultra-clean, because I have seen parts of the city with litter. However, everytime I visit Jax, I see a pretty clean city in comparison to my current residence of Columbia.

Everywhere I go there is litter in Jax-- especially in the 'Field. Just yesterday I saw some guy walking down Laura, finish his beer, and just throw it in someone's front bushes. I have litter in my yard ALL the time.

Me too EasyE. I have yelled at people throwing their Steele Reserve cans in my yard and they "promise they will come back later and pick it up" What a joke! The litters in JAX have no shame, none at all...

Ok, for those of you who have had your homes on the market for less than a week and say you have sold them, where exactly are they located????  I have had my 1200 sq ft bungalow on the market for over a year listed almost 90k LESS than houses for sale 2-3 houses down, it's in perfect condition, in Avondale (zip 32205) and I didn't have a SINGLE showing and only one offer of 80k from an investor right when the market went tits up.  I see more houses coming up for sale than I see signs coming down from sales, and while you say that there are houses that have sold above the asking price, what was the asking price, similar to mine...90k below market?  Were they also short-sales or REO/distressed properties??  Can't really use those as a measure to what is selling and what isn't.

I truly hope that the speculations/predictions being made in the article are right, but just based on the statistical data, while it's moving in the right direction, we're still looking at 2010-2011 before the average citizen will see the difference. 

Until credit restrictions are loosened, the only buyers will continue to be cash-buyers and investors.  There is a huge number of people looking to buy a house but can't because the deal falls through at the closing table due to insufficient credit requirements.  Unless you are someone (see investor above) who has 80k-100k lying around and can pay down your LTV, the odds of you getting a 30 yr fixed with the standard 20% down are low.

We can look at the data that's posted here all day about the percentage of homes selling vs. the number on the MLS, or how many homeowner's we have here, or what the median home values are, but that doesn't mean jack unless you look at the price paid for the home at last sale compared to the value at that time (real estate BPO, not tax/market value which is usually $10,000 more than the actual), factor in the amount the purchaser invested (downpayment), what they own on the property now and what the CURRENT value is.  There are so many factors that the average person and reporter doesn't look at.  MANY of our homes are what is considered 'distressed' and while some may be selling, the seller is walking away with nothing and in many cases are cutting checks to the bank to pay the difference.

I can only speak to personal experience, but I recently bought a home (which was fun in this market, because I got a great deal). We searched from about January through May, and I kept track of tons of houses through my realtor's online portal.

During that timeframe there were hundred of houses that went off the market within weeks of being listed. There were also hundreds of houses that stayed on the market the entire time - and are probably still on the market.

Honestly, none of it was ever a surprise, because the houses that sold quickly were priced very well. You could actually tell from the listing the day it popped up on the computer - "Oh, this one isn't going to last long." Sure enough, it would go sale pending within a month.

However, the trend was that people who had owned their house for less than 3 years were getting totally screwed. They would have it on the market for $10k or $20k more than they paid for it - in a feeble attempt to barely break even on fees and improvements - but the houses were still just totally overpriced. Conversely, people who had owned the house for 10 years were able to give a lower price, because they didn't have to worry as much about the unwarranted appreciation from '02-'05.

Quote from: Joe on July 30, 2008, 10:30:16 AM
I can only speak to personal experience, but I recently bought a home (which was fun in this market, because I got a great deal). We searched from about January through May, and I kept track of tons of houses through my realtor's online portal.

During that timeframe there were hundred of houses that went off the market within weeks of being listed. There were also hundreds of houses that stayed on the market the entire time - and are probably still on the market.

Honestly, none of it was ever a surprise, because the houses that sold quickly were priced very well. You could actually tell from the listing the day it popped up on the computer - "Oh, this one isn't going to last long." Sure enough, it would go sale pending within a month.

However, the trend was that people who had owned their house for less than 3 years were getting totally screwed. They would have it on the market for $10k or $20k more than they paid for it - in a feeble attempt to barely break even on fees and improvements - but the houses were still just totally overpriced. Conversely, people who had owned the house for 10 years were able to give a lower price, because they didn't have to worry as much about the unwarranted appreciation from '02-'05.

Just wanted to point out that when a house "went off" the market doesn't mean it sold.  Another new trend that is happening is a house that has been on the market for a significant period of time, will be taken off the mls for 30-60 days and then will be placed back on the market.  After the 30-60 day time period, the home will appear on the MLS as only having been on the market for a day and none of the previous market history is retained.  Tricky.  It's a way to prevent potential buyers from looking at a property and offering a lower price due to the appearance that the home is distressed, and helps realtors keep the listing prices stable. 

Btw, I've owned my house for over 4 years and like I said, it was priced 90k under market.  It's now a rental.

Clearly there is still a big backlog of unsold homes in Jax.  It will take a while for the market to work through this.  The good news is Jacksonville is growing in jobs and population and income so time is on our side.  Now, if you are like Second Pancake with a home listed now that wont sell, this is little consolation.  The best thing to do in that case is to rent it out until market conditions improve.  Glad to hear that you were able to find a renter, SP.  Good luck with selling it down the road.   :)

Signs of a bottom even in California:

QuoteCalifornia's Discount Foreclosure Sales Point to Housing Bottom

By Dan Levy and Daniel Taub

July 31 (Bloomberg) -- California led the U.S. into the worst housing recession since the 1930s. Now the most populous state may be the first to find the bottom.

In Stockton, the U.S. metro area with the highest foreclosure rate, home sales more than doubled in the second quarter after prices fell by an average 37 percent, said PMZ Real Estate Corp., the area's largest broker. Across the state, sales rose for three consecutive months starting in April after 30 straight months of declines, the California Association of Realtors said. About 40 percent of those transactions were foreclosure sales, DataQuick Information Systems reported.

``California is having a wrenching decline in wealth, but this is a cathartic event that will lay the foundation for a recovery,'' said Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pennsylvania, in an interview. ``This signals the beginning of the end.''

Almost $1.3 trillion of homeowner equity was lost in California since home prices peaked in December 2005, Zandi said. Discounts of as much as 50 percent will extend into 2010, helping clear a glut of foreclosures and leading to a more balanced housing market, said Ryan Ratcliff, an economist at the Anderson Forecast at the University of California in Los Angeles, and Christopher Thornberg, principal of Beacon Economics LLC in Los Angeles.

``Half off in a decent neighborhood is close to the bottom,'' said Bill Gross, co-chief investment officer of Newport Beach, California-based Pacific Investment Management Co., manager of the world's biggest bond fund. Property markdowns of 30 percent to 40 percent give the market ``price illumination if not sunshine,'' he said.

`Beginning to Happen'

California led the U.S. in default notices and bank seizures for the 18th straight month in June and had seven of the 10 metro areas with the highest foreclosure rates, according to Irvine, California-based RealtyTrac Inc., which sells default data. That drove down prices and led to ``discounted distressed sales,'' with two-thirds of transactions under $500,000, compared with 40 percent a year earlier, the California Association of Realtors said.

The amount of time it would take to deplete the supply of homes decreased to 7.7 months from 10.2 months a year earlier, and the median price fell 38 percent to $368,250 last month, according to the Realtors.

``Things are beginning to happen,'' said Karl Case, professor of economics at Wellesley College in Wellesley, Massachusetts, and co-creator of the S&P/Case-Shiller home-price index. ``We're not going to get reestablished in a stable market unless that inventory gets cleared out.''

Birth of Subprime

California led the boom in the U.S. housing market, as prices in the state more than doubled from 2000 to 2005, fueled by historically low interest rates, according to the Chicago-based National Association of Realtors.

As values soared, California gave birth to the subprime mortgage industry that specialized in lending to borrowers with poor or limited credit, who often used them to buy homes they couldn't afford, said Stephen Levy, director of the Center for the Continuing Study of the California Economy in Palo Alto.

Subprime products included ``zero-percent'' loans that needed no down payment, adjustable-rate mortgages, known as ``exploding ARMs'' because low interest rates rose after two or three years, and ``Alt-A'' or ``no-doc'' loans requiring no proof of income.

Almost half of the 25 biggest U.S. subprime lenders were based in the state, including New Century Financial Corp. in Irvine and ACC Capital Holdings in Orange, and a quarter of the country's subprime loans were issued there, more than in any other state, according to Inside Mortgage Finance and data from San Francisco-based research firm LoanPerformance.

County Breakdowns

Defaults on those loans began to accelerate in 2006, helping to push California into the lead in foreclosures.

Foreclosure sales accounted for 75 percent of June's total in Merced County, home to the Merced metro area with the country's second-highest foreclosure rate; 72 percent in Stanislaus County, home to the Modesto metro area with the third-highest foreclosure rate; and 66 percent in San Joaquin County, home to Stockton, data from DataQuick in La Jolla, California, and RealtyTrac show.

Sales of foreclosed properties equaled 63 percent of the total in Sacramento County, 62 percent in Riverside County, 58 percent in Solano County, 57 percent in San Bernardino County and 49 percent in Contra Costa County. Prices dropped as much 37 percent in those counties, DataQuick reported.

`Seen the Light'

About 1 million U.S. homes will be in some stage of foreclosure by the end of the year, and properties seized by banks will eventually sell at an average discount of 30 percent to 33 percent, said Rick Sharga, executive vice president for marketing at RealtyTrac.

Discounts will be higher in areas such as Stockton, about 80 miles east of San Francisco in California's agricultural Central Valley, and Riverside, 50 miles east of Los Angeles, that experienced above-average levels of new construction at the peak of the housing boom and where lenders made a disproportionate number of subprime loans, Sharga said.

PMZ, the Stockton-based brokerage, closed 1,707 home transactions in the second quarter, about 80 percent of them foreclosure sales, said Michael Zagaris, the company's president. Foreclosed homes are now getting multiple bids and the supply of homes for sale in San Joaquin and Stanislaus counties shrank to 4.9 months in June from 18.2 months a year earlier, he said.

``We've found the bottom,'' Zagaris said. ``The financial institutions have seen the light and are allowing the market to find its own level.''

Loan Values

Bank-owned properties attract investors who can rent out the homes for 10 percent of the purchase price annually, said Sean O'Toole, founder of real estate auction Web site ForeclosureRadar in Discovery Bay, California. ``Those deals are starting to pop up and putting a floor on the market,'' he said.

Bruce Norris, president of the Norris Group investment firm in Riverside, said he purchased foreclosed properties for one- third of the outstanding loan value during the past two months.

Norris bought a three-bedroom home in the Moreno Valley section of Riverside for $106,000, a 65 percent discount on the $300,000 loan held by Bear Stearns Cos., now part of JPMorgan Chase & Co. He got a 61 percent discount on a home with $258,750 in loans held by Deutsche Bank AG, and a 63 percent discount for a home with $324,000 in loans held by Morgan Stanley, he said.

``The banks are stuck wholesaling to people like me,'' Norris said. ``They are starting to move product faster than the market would normally allow.''

Housing Bill

Banks will foreclose on about 700,000 properties with subprime mortgages this year, more than double the number a year ago, Sharga estimated. The increase is prompting overwhelmed banks to hire more workers to process purchase offers.

Executives from Charlotte, North Carolina-based Bank of America Corp. and Wells Fargo & Co. in San Francisco told Congress last week that they've accelerated the pace of loan modifications and added personnel to help homeowners avoid foreclosure. Wells Fargo, which services one in eight U.S. mortgages, expanded its staff to more than 1,000 from 200 in 2005.

The housing bill signed by President George W. Bush yesterday is intended to stem foreclosures and includes a program backed by the Federal Housing Administration to insure as much as $300 billion in refinanced mortgages, including many subprime loans.

Housing in Stockton and Riverside sprang up during the boom as builders purchased cheap land and potential buyers sought affordable homes away from expensive coastal cities, said Levy at the Center for the Continuing Study of the California Economy.

Stockton Couple

Inland home values mirrored coastal gains until a wave of ``insane'' subprime and Alt-A mortgages started in 2005 and resulted in record defaults, Levy said.

``All of those markets suffering from higher foreclosures are where prices went too high and leverage was applied too excessively,'' Pimco's Gross said. The housing bill will ``put a floor on certain mortgages'' and help stop price declines, he said.

Homeowners like computer consultant David Imig and his wife, Deborah, who live in the Stockton area and owe more than their house is worth, aren't helped by the bill. They paid $462,000 for a three-bedroom at the market peak in 2005. Now, their neighbor's foreclosed home is on sale for half its original price.

``We're a good $100,000 down,'' Imig said. ``If we could move without taking a huge bath, we would.''

Past Busts

Previous California housing busts had roots in local economic woes and U.S. monetary policy. The state lost 350,000 jobs in the early 1990s, about two-thirds in the aerospace industry, according to the Cato Institute and Los Angeles County Economic Development Corp. Home prices tumbled 12 percent. In the early 1980s, existing-home sales dropped 61 percent amid interest rates of more than 14 percent and a national recession, the state Realtors said.

California may rebound more quickly from this decline than regions with fewer delinquencies and vacant homes, according to Zandi of Moody's Economy.com. The foreclosure process is ``more efficient'' than in states such as Florida where courts are involved, and Californians are typically ``more optimistic'' about housing after experiencing busts that were followed by property booms, Zandi said.

``They know it's going to be a good investment five or 10 years down the road,'' Zandi said. ``The fundamentals are good: supply constrained markets with lots of population growth, a solid and diversified economy and important global links'' in Los Angeles and San Francisco, he said.

`Bidding War'

It may take until 2010 for foreclosure sales to work their way out of the system in areas where defaults have soared, said Thornberg of Beacon Economics.

``Those sales are going to have a very large impact on prices for the next year or so until those homes get absorbed by the market,'' he said. ``Housing markets don't bounce, they splat. They hit bottom and they stay there.''

That's good news for buyers like Peggy Thorpe. She outbid seven offers for a foreclosed house in Vallejo, east of San Francisco, and still got a 34 percent discount. It was the sixth time since May she made an offer for a home in foreclosure.

``This time I jumped higher,'' said Thorpe, 43, who works at a vineyard in Napa and paid $190,500 for the three-bedroom home with a loan balance of $289,000. ``There's an extreme bidding war right now.''

http://www.bloomberg.com/apps/news?pid=20601109&sid=aAL047pyn7t4&refer=home

Quote``Half off in a decent neighborhood is close to the bottom,'' said Bill Gross, co-chief investment officer of Newport Beach, California-based Pacific Investment Management Co., manager of the world's biggest bond fund. Property markdowns of 30 percent to 40 percent give the market ``price illumination if not sunshine,'' he said.

Gross is actually a man I respect.

QuoteEconomists: Florida Officially In Recession

THE ASSOCIATED PRESS

Published: Friday, August 1, 2008 at 7:26 a.m.
Last Modified: Friday, August 1, 2008 at 2:26 p.m.
Economists from the Wachovia Economics Group say that Florida is officially in a recession.


In a report released Thursday, Wachovia analysts said Florida’s economy declined at its sharpest rate in 16 years during 2008’s second quarter.

Analysts predict that the state will lose momentum through 2008, then bottom out late this year or in early 2009.

There is one bright spot. Tourism has held up well, the report says, with the number of visitors to the state up 3.4 percent.

http://www.theledger.com/article/20080801/NEWS/775555273/1410&title=Economists___Florida_Officially_In_Recession

Wachovia said it.  Now it's official.   :D

This article states that the declines have not been as bad as advertised nationally (outside the bubble regions) based on a new reading of the stats:

QuoteHousing Collapse Ahead?
Not According to the Data
   
By Charles W. Calomiris, Stanley D. Longhofer and William Miles
Monday, August 4, 2008; Page A11

Turmoil in the housing market has led to fears that home prices will drop precipitously, particularly if foreclosures force large numbers of homes onto the market in the coming year. Recently, these fears have driven financial stocks down and led to the government rescue of Fannie Mae and Freddie Mac. But the projected losses have been wildly exaggerated. Most Americans have not experienced any significant decline in the value of their homes -- nor are they likely to.

Only four states -- Arizona, California, Florida and Nevada -- have had declines of more than 4 percent in home prices over the past year, according to the house price index of the Office of Federal Housing Enterprise Oversight. Some worry that OFHEO's index may be missing the full extent of the crisis because it doesn't include very high-priced homes with "jumbo" mortgages or homes bought with subprime loans -- the ones being hit hardest. While one could argue that the index would be more representative if it included these transactions, the properties it does include represent more than three-quarters of U.S. homes.

The OFHEO index provides broad coverage of large and small markets across the country, and each home is weighted equally. Furthermore, excluding subprime mortgages has an advantage -- doing so makes the index a more representative measure of the homes owned by middle-class families. Fire-sale prices from distressed sales of subprime mortgages exaggerate the declines that patient sellers are likely to experience.
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This spring, it was much reported that the Standard & Poor's/Case-Shiller housing price index recorded a 14.1 percent decline from March 2007 to March 2008, and there is every indication that the index's June results will also be down significantly. But this is a poor measure of what is happening to the value of most homes. The Case-Shiller index includes no data from 13 states (representing 11 percent of the U.S. housing stock) and offers only partial coverage of 29 others (with 79 percent of U.S. housing). Homes in the areas omitted or incompletely covered appreciated at a slower pace during the housing boom, and their values have been more resilient over the past two years, so the data behind the index are biased toward the markets most susceptible to dramatic swings.

Also, the Case-Shiller index weights transactions by value. For example, it gives eight times as much weight to the sale of an $800,000 home as it does to a $100,000 home, meaning it is particularly sensitive to what is happening with high-priced homes in the largest, most expensive markets.

But even if price declines have been small so far, how can one gauge whether the increase in foreclosures will lead to accelerating decline? In our own research, we use quarterly historical (1981-2007) state-level data on the OFHEO price index, foreclosures, home sales, permits and employment to explore how foreclosure shocks affect future home prices.

We conclude that declines in house prices are highly likely to remain small. Our analysis reveals, unsurprisingly, that foreclosures and home prices have negative effects on each other over time, but this does not imply a vicious cycle of collapsing prices. Our models predict that as foreclosures continue to climb in many states, house prices will remain flat or decline in those states -- but will not collapse.

One reason for this is that the effect of foreclosure shocks on house prices is small. Furthermore, other fundamental factors (such as employment growth and a slowing of the growth of the housing supply over the past year and a half) will cushion the impact of foreclosures.

We constructed several forecasting models. Even under an extreme worst-case scenario for foreclosures, our conclusion was that U.S. house prices just aren't going to fall by very much in the next two years. In our worst-case scenario, the average cumulative decline is about 5 percent, and only 12 states experience declines greater than 6 percent by the end of 2009.

The fact that home prices will remain stable does not imply that the housing downturn has been trivial. Indeed, the price stickiness has been reflected in the lower sales volumes and declining housing starts that we have witnessed for over a year. These factors have already slowed GDP growth. Many developers and financial institutions have been badly hurt. And some homeowners who had the misfortune to buy in the hottest markets have experienced significant declines in value and will experience further declines.

But fears of a huge loss in home values for most homeowners -- and especially for middle-income homeowners -- across the United States, and fears of the devastating losses by financial institutions that would accompany them, are greatly overblown.

Charles W. Calomiris is Henry Kaufman professor of financial institutions at Columbia University and a visiting research fellow at the American Enterprise Institute. Stanley D. Longhofer directs the Center for Real Estate at Wichita State University's business school. William Miles is an associate professor of economics and Barton fellow at Wichita State.

http://www.washingtonpost.com/wp-dyn/content/article/2008/08/03/AR2008080301572.html

Pending sales up in June:

QuotePending home sales rise 5.3 percent

By ALAN ZIBEL

WASHINGTON -A measurement of pending home sales rose in June in a rare piece of positive news for the beleaguered market.

The National Association of Realtors' seasonally adjusted index of pending sales for existing homes rose 5.3 percent to 89 from May's reading, which was revised downward to 84.5 from an earlier reading of 84.7.

The June index was 12 percent below year-ago levels.

Home sales are considered pending when the seller has accepted an offer, but the deal has not yet closed. Typically there is a one- to two-month lag before a sale is completed.

Wall Street economists surveyed by Thomson/IFR had predicted the index would fall to 84.3. The index, which sunk to a record low of 83 in March, stood at 101.4 in June 2007. A reading of 100 is equal to the average level of sales activity in 2001, when the index started.

Last month, the Realtor group said completed sales of existing homes fell more sharply than expected in June, pushing activity down to the lowest level in more than a decade. Many analysts predict home prices will keep falling until at least next spring as tighter credit, a weaker job market and rising foreclosures scare potential buyers away.

Still, the NAR predicts a package of housing legislation signed by President Bush last week _ particularly a $7,500 tax credit for first-time homebuyers  will aid a recovery.

"With a tax credit now available to first-time home buyers, increases in home sales could be sustained with the momentum carrying into 2009," Lawrence Yun, the group's chief economist, said in a statement.

Others are less optimistic about a market embroiled in its worst downturn in decades. Richard Syron, chief executive of mortgage finance company Freddie Mac said Wednesday he expects home prices nationwide to fall 18 percent from peak to trough, according to their measure, and that the market is only halfway through the descent.

http://money.aol.com/news/articles/_a/bbdp/pending-home-sales-rise-53-percent/35336

First Coast real estate is leading the way to recovery according to new data in this article:

QuoteFirst Coast homes make a slow climb

A Realtors report shows prices are rebounding

By David Bauerlein, The Times-Union

The median price of existing Jacksonville-area homes rose for sales between April and June, according to figures released Thursday by the Florida Association of Realtors. 

The median sales price of single-family homes sold by Realtors was $191,700, which was 3.5 percent higher than the $185,300 posted for the first three months of the year. The report is one of many used by analysts to track the state of the housing market and forecast whether falling home prices have bottomed out.

"Across the state, we're seeing positive signs," Florida Association of Realtors President Chuck Bonfiglio said. He said prices "appear to be reaching equilibrium in many areas."

Wayne Archer, director of the University of Florida's Bergstrom Center for Real Estate Studies, said spring 2009 could see an upward trend in the state's real estate market.

"I would expect that Jacksonville might quietly lead the recovery," he said. "Jacksonville did not have the same price run-up that South and Central Florida did and as a result did not get caught up in the hysteria."

The median is the price at which half the home sold for more, and half for less. Compared to the second quarter of 2007, the median price was down by 8 percent, and Realtors handled 24 percent fewer sales.

Ray Rodriguez, owner of Real Estate Strategy Center of Northeast Florida, said his own tracking of single-family home sale prices also showed improvement for the second quarter. He said the impact of more foreclosed homes being sold could weigh down prices in the future, but prices appear to have stabilized.

"Going forward, maybe a moderate recovery, but not a drastic downturn," he said.

Statewide, the median sales price for existing single-family homes was $203,000 compared with $202,300 in the first quarter of the year. Compared to the second quarter of 2007, the sale price was 16 percent less.

david.bauerlein@jacksonville.com, (904) 359-4581

http://www.jacksonville.com/tu-online/stories/081508/bus_318833920.shtml

Existing Home Sales jump 5.5%:

QuoteU.S. Economy: Home Resales Rose More Than Forecast in September

By Bob Willis

Oct. 24 (Bloomberg) -- Home resales in the U.S. rose more than forecast in September, aided by foreclosure-driven declines in prices that indicated the market was stabilizing before the latest slump in financial markets.

Purchases of existing homes jumped 5.5 percent last month to a 5.18 million annual pace, the highest level in a year, the National Association of Realtors said today in Washington. The median price dropped 9 percent.

Economists said sales figures for this month and next will be critical in determining whether sales have reached a bottom as predicted by the Realtors' group. Federal Reserve Chairman Ben S. Bernanke earlier this month said even households with ``good credit'' were finding it tough to get mortgages.

``This may be a temporary bump as we clear out these foreclosed properties,'' said Adam York, an economist at Wachovia Corp. in Charlotte, North Carolina. ``As the meltdown really hits these figures in late October and November, that's when we could see some retracement.''

Resales were forecast to rise to a 4.95 million annual rate from a 4.91 million pace in August, according to the median estimate of 66 economists in a Bloomberg News survey. Projections ranged from 4.7 million to 5.11 million.

Sales rose 1.4 percent compared with a year earlier, the first year-over-year increase since November 2005. Resales totaled 5.65 million in 2007.

Today's figures compare with the 4.86 million level reached in June, the lowest in a decade and 33 percent down from the record reached in September 2005.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aiJJHzH_CPLY&refer=home

(http://3.bp.blogspot.com/_otfwl2zc6Qc/SQIh7q1w15I/AAAAAAAAHjM/MdCAQTcxs1M/s400/homes.bmp)

QuoteFrom First Trust, based on the National Association of Realtors release today:

1. Existing home sales increased 5.5% in September to an annual rate of 5.18 million, much higher than the consensus expected selling rate of 4.95 million. Existing home sales are up 1.4% versus a year ago.

2. The median price of an existing home declined to $191,600 in September (not seasonally adjusted) and is down 9.0% versus a year ago. Single-family home prices are down 8.6% versus last year.

3. The months’ supply of existing homes (at the current sales rate) fell to 9.9 in September from 10.6 in August.

Implications: The housing market is healing. The key implication of today’s report on existing homes is that credit-worthy home buyers are able get loans. After hovering for twelve months in a range between 4.85 million and 5.11 million, existing home sales spiked up 5.5% in September to a 5.18 million annual rate. The monthly gain in September was the most in five years and the level of sales is now above where it was a year ago (see chart above), the first time that has happened since 2005.

Sales are rising as home sellers (including lenders who have foreclosed on previous owners) are cutting prices aggressively. The median sales price on an existing home is down 9% versus last year and the lowest since 2004. We expect further price declines in the year ahead as the industry continues to work off excess inventory. After hitting 11.0 in June â€" the highest level since 1985 â€" the months’ supply of single-family existing homes has fallen to 9.4.

http://mjperry.blogspot.com/2008/10/some-healing-in-housing-market.html

Good news indeed!

(http://1.bp.blogspot.com/_otfwl2zc6Qc/SQ2sTbl8raI/AAAAAAAAHm8/Fe0eYCplbGE/s400/hai.bmp)

QuoteAccording to the NAR's most recent report, the housing affordability index (HAI) reached 135.2 in September, which is close to a four-year high (see chart above) and just slightly below the 135.4 level in February (when 30-year mortgage rates dipped below 6%).

An HAI of 135.2 means that a family earning the median family income in September ($60,730) had 135.2%% of the income necessary to qualify for a conventional loan (at 6.22%) covering 80% of a median-priced existing single-family home in September ($190,600).

Since July 2007 when the HAI was at only 103.6 (due to higher home prices and interest rates, $228,500 and 6.8% respectively), the 31.6 point increase in housing affordability to 135.2 over the last 14 months should continue to play an important role in the recovery process for the slumping real estate market. It's a buyer's market.

Note: The NAR's report on housing affordability index released last Wednesday received no media attention; I couldn't find a single news report. But you'll find hundreds of stories on foreclosures and falling home prices. Go figure. Positive, upbeat news doesn't sell as well as gloom and doom?

http://mjperry.blogspot.com/2008/11/housing-affordability-close-to-4-year.html

RSG -  you gonna have to give me something other than stuff from the NAR.  i'm still thinking 2010.

Its at least a few years off, because while existing home sales are continuing to rise and the affordability index is rising, forclosures haven't peaked yet and businesses are still restructuring, so its not over. Builders have stopped building, so the housing supply should start to decrease, but the forclosures are continuing to flood the market with cheap homes, pushing the builders into a pinch and house prices through the floor. Unemployment will continue to rise, home starts will continue to stagnate, and the big builders will continue to lose money until people start giving away houses, which is what they've been doing lately. The construction industry, especially residential, is continuing to wither, and with commercial and civic construction being put on hold, don't look for any recovery in the near future.

On a side note, with the passage of Amendment 2 and possible implications for the sexual minority populations in Florida, look to Miami, Tampa, Orlando and Jacksonville to have a significant migration event if health benefits are eliminated as they were in Michigan. I've already talked with about a dozen people who are leaving for greener pastures after the holidays, 1) because there are jobs for democrats up North now, and 2) because the benefits that we had were the only things keeping people living in such an "unaccepting" environment.

I've heard rumors out of Disney Corporate either fighting No. 2 or setting up their own pension fund/tax shelter for their employees with their own rules in order to bypass the new regulations, if it comes to that.

It may be a bit melodramatic, but having been exposed to the real estate, construction, banking and entertainment industries in some fashion over the last ten years or so, I don't think my predicitions are far off.

Look for unemployment to cap at 10%, real wages to fall at least 6%, and inflation to continue to put pressure on food and non-durable goods prices. I don't see the dollar going lower than it did a few weeks ago, but I do think oil will rebound to a little over $100 over the winter, especially while the refineries switch over to heating oil; also expect gas prices to rise at the normal pace at the same time. Also, expect the local market to fare better than regional markets because the economy is vastly more diversified than the rest of the state. With the "good business climate" Florida has, and the low cost of living that we have locally, I don't think the impact form the recent mergers will affect Jax too much in the sense that layoffs will be rampant. However, looking at the numbers from state tax rolls, and you can expect local governments across the state to raise all sorts of taxes to help close the gap caused by the lack of state revenue coming in. We're probably looking at a 16-18% cut in tax revenue, which does not translate well for areas that depend on those monies to operate, especially when there are infrastrucutre projects already on the books that will have to be finished regardless of the economy.

*No, I'm not an economist, but I did predictd in February the $150 oil and $1000 gold that we had in June, so I think I'm pretty good at this.

I think that real estate led us into this recession and real estate will have to lead us out.  Real estate has been in depression/recession for 1 1/2 years now which has caused in large part the credit crunch which then caused the ripples throughout the economy we are seeing now.  Past real estate downturns have not last as long as you are predicting and have often turned on a dime unexpectedly.  So, this time should not be different hopefully.

As for the homosexuals relocating and harming the Florida economy, this seems to be a stretch.  First, you are assuming that large numbers of gays will do this.  And, if even 1/2 moved away, we would only lose 1/2 of 1% of our population which would soon be replaced by new in-migration anyway.  So, this seems real far fetched to me.

Once those 12,000,000 or so foreclosed houses are all sold off it'll be great guns again for real estate! LIAR loans and NINJA mortgages will once again fuel the FIRE economy!

Quote from: stephendare on November 07, 2008, 11:01:20 PM
And dont forget the estimated 30 million homes expected to go into foreclosure over the next 18 months.

Not to worry.  Uncle Barack will pay their mortgages.

http://www.youtube.com/v/L6ikOxi9yYk

Quote from: Midway on November 07, 2008, 10:12:56 PM
Once those 12,000,000 or so foreclosed houses are all sold off it'll be great guns again for real estate! LIAR loans and NINJA mortgages will once again fuel the FIRE economy!

Do you have anything productive or fact based to post?  Ever?

Quote from: Midway on November 07, 2008, 10:12:56 PM
Once those 12,000,000 or so foreclosed houses are all sold off it'll be great guns again for real estate! LIAR loans and NINJA mortgages will once again fuel the FIRE economy!

Well since there is a majority of Dems still in the senate and congress you may be right....afterall they started all this.

Housing affordability continues to increase.  Now is the time to buy property cheap:

QuoteHousing Affordability Reaches All-Time Record High

(http://3.bp.blogspot.com/_otfwl2zc6Qc/STfnmqIjSbI/AAAAAAAAH9c/mVYk-5jFGys/s400/haimonthly.bmp)

Thanks to the National Association of Realtors, I was able to get monthly data on the Housing Affordability Index (HAI) back to 1988. As the chart above shows (click to enlarge), the October HAI of 141.8 (a family earning the median family income had 141.8%% of the income necessary to qualify for a conventional loan covering 80% of a median-priced single-family home) is the highest level on record, going back at least to January 1988.

As I mentioned in this recent CD post: a) the recent increase in housing affordability is good news for the real estate market, since it will help in the recovery process (i.e. a "Larry Kudlow mustard seed"), and b) this increase in housing affordability, now reaching an all-time historical high, has gone unreported by the media, I still can't find a single news report on this topic.

http://mjperry.blogspot.com/2008/12/housing-affordability-reaches-all-time.html

It goes unreported because the NAR has zero credibilty. It consistently denounced the possibilty of a bubble when the existence of same  was manifest to anyone with open eyes and half a brain. It then spent two years repeating its most holy mantra "real estate never goes down", even as the market was crashing.

A poll cited this week in the WSJ revealed that 60% of Americans still  believe their house will appreciate in value during the next twelve months.   In the last downturn, prices in the Northeast fell from 1989-1992...in California 1990-1995. This was a much bigger runup. The bottom is a long way off.

I think we have a little way to go.

From http://theaffordablemortgagedepression.com/2008/11/24/dont-buy-a-house-yet.aspx (http://theaffordablemortgagedepression.com/2008/11/24/dont-buy-a-house-yet.aspx)

QuoteForeclosures â€" House Supply
As long as there is a material number of foreclosures in the market prices will not rise.  House prices are unlikely to stabilize unless values become so cheap relative to fundamentals that people are willing to buy regardless of price.  We are not near this dynamic.  Median home prices have reverted to 2004 levels whereas the Housing Bubble and excessive appreciation rates began around 1996. 

At present we are experiencing an all-time record number of foreclosures.  There is a large source of highly visible foreclosures looming for the next several years in the form of adjustable rate mortgages.  These mortgages will continue to reset through 2012 and result in a large numbers of defaults.

QuoteThe Temptation to Purchase Discounted Foreclosed Properties
Many people have resisted the temptation of buying houses that have declined in prices but have fallen victim to the allure of foreclosures.  These distressed purchases are available at below current market prices.  The important concept to understand is that the price of foreclosures is collapsing just like the price of new homes and non-distressed existing homes.

People who bought foreclosures in 2007 aren’t particularly thrilled by their “deals” especially if the properties were purchased in Florida, Nevada or California.  Price declines have more than offset the discounts possible in foreclosure transactions.  These people are underwater just like recent buyers of non-distressed houses.

Foreclosures will persist for many years as a contracting economy, rising unemployment and adjustable rate mortgages trigger defaults.  Home prices will continue to fall.  And years from now foreclosures will still be occurring.  If you find yourself interested in buying a foreclosed property, consider how much better of a deal will be available on distressed properties in 2012.

Quote from: jaxtrader on December 04, 2008, 06:23:02 PM
It goes unreported because the NAR has zero credibilty. It consistently denounced the possibilty of a bubble when the existence of same  was manifest to anyone with open eyes and half a brain. It then spent two years repeating its most holy mantra "real estate never goes down", even as the market was crashing.

A poll cited this week in the WSJ revealed that 60% of Americans still  believe their house will appreciate in value during the next twelve months.   In the last downturn, prices in the Northeast fell from 1989-1992...in California 1990-1995. This was a much bigger runup. The bottom is a long way off.

The question is not whether people hate NAR for being an advocacy group for realtors, the question is is the data presented accurate.  It is clear that (1) prices have come down, (2) rates have come down and (3) income has risen over the past several years.  Therefore, housing is more affordable based on quantifiable and verifiable data.

As for public opinion about the economy, consumer sentiment can turn on a dime.  The recovery always surprises people when it begins so most people miss the initial phases as they are afraid to buy and see prices drop even further.

As for prices in various markets, real estate markets are regional as you suggested.  I think values in Jacksonville will rebound faster than those in say Miami or San Diego because we were not as much into the bubble.  I am more concerned with the local market although I would like to see a national increase also.

Quote from: jtwestside on December 04, 2008, 10:20:09 PM
I think we have a little way to go.

From http://theaffordablemortgagedepression.com/2008/11/24/dont-buy-a-house-yet.aspx (http://theaffordablemortgagedepression.com/2008/11/24/dont-buy-a-house-yet.aspx)

No offense jt, but if you are looking for advice from a site called "the affordable mortgage depression", you are probably going to get the most negative forecast possible.  Real estate downturns have not traditionally lasted 6 years from peak to trough, as your clip suggests with its advice to wait till 2012 to buy foreclosures.  That is frankly absurd.  Just as people were unrealistically positive on values on the way up so too they are unrealistically negative on values on the way down.  The reality is an equilibrium of housing affordability will be reached, this will generate more sales, the numbers of unsold homes will decline and prices will begin to rise again.  It is just a matter of time.

Things were basically sound a year and a half ago.  Then we had a banking panic.  We are working out way through this now.  I dont recall anyone saying that free market economies always went up.  They generally do but it is sometimes in fits and starts.  The long run is positive though beyond doubt.

"Basically sound" = "about to implode"

Quote from: RiversideGator on December 05, 2008, 12:07:38 AM

Quote from: jtwestside on December 04, 2008, 10:20:09 PM
I think we have a little way to go.

From http://theaffordablemortgagedepression.com/2008/11/24/dont-buy-a-house-yet.aspx (http://theaffordablemortgagedepression.com/2008/11/24/dont-buy-a-house-yet.aspx)

No offense jt, but if you are looking for advice from a site called "the affordable mortgage depression", you are probably going to get the most negative forecast possible. ...

No offence taken, I didn’t expect anyone to think it was a non-bias source.

The point is that the mortgages will be resetting until 2012. Disregard the advice, but the mortgages resetting will cause foreclosures and the foreclosures will cause lower home prices. You're correct that it's not just going to keep going down and down until then and we will equal out, but the site has a point the market certainly isn't going to be "turning around" until the foreclosures work their way out of the system.

What I'm finding in the market I'm looking (Springfield) is that there is a price point (199K)  that people seem to be attached to when it should probably be 150-170. For some it's an emotional attachment they bought the house for less maybe put money into (some) restoring and now the market has turned and it's hard to realize that something you expected to gain value has actually lost it. For others they owe right at that much so they can't go any lower. For those who do (and the home is in OK shape) the homes sell pretty quickly. But most houses that are in GOOD shape are still at the 250-300 when they should be around the 199 price point. Of course this is just subjectively based on what I'm willing to pay. I'm hedging my best on there being more on the market after the new year (distressed or not).

Speaking of sources. These people have gotten it right so far http://www.itulip.com/housingbubblecorrection.htm (http://www.itulip.com/housingbubblecorrection.htm)

According to the date stamp on the site this was posted on January 20, 2005 (they wrote back then it will take 15 years)

QuoteStep B: As housing prices begin to decline, sales will continue, though more slowly and less frequently. Old habits die slowly. One year into the decline, housing speculators will have left the market, but home owners will generally still believe that prices will either resume their rise or at least flatten out, not continue to decline. Remember the first year of the stock market bubble decline, when most people hung in there until they'd lost all of their money? The first lesson of behavioral finance is that the most common mistake made by market participants is to hang on too long and fail to cut losses.

While home owners at this stage will borrow less against their houses, and loans will be more difficult to come by, the average home owner will still make frequent trips to Home Depot or hire contractors to make home repairs and improvements, believing they'll "get their money back" in an increase in the value of their home at least equal to the cost of fixing it. Some home owners will put their home up for saleâ€"if they purchased early enough in the boom so that they can still realize a profit, even selling at five to twenty percent below the peak price.



Step C: After prices have declined for two years, large numbers of buyers who purchased near the top of the market will begin to feel the psychological effects of being underwater on their mortgage. They will be less inclined to borrow money, or to spend money fixing up their home, as home improvement value increases will be swallowed up by general market price declines. There will still be profits to be made by those who bought very early in the previous boom cycle, but fewer people will have this option.

As transaction volumes continue to fall, demand for housing-related employment will decline too. The first signs of labor market distress will start to show up, as more and more of that 43% of the private sector who found jobs in the housing industry are no longer needed. Coincidentally, major employersâ€"such as the U.S. auto industryâ€"will be going through major restructuring, adding to pressures on housing prices in some areas. Some home owners will need to sell at a loss in order to move to regions of the country where the labor picture is better, and will do this if they have enough equity and are not paying cash out of pocket to cover their remaining mortgage obligations. These sales will further depress home prices.

Step D: Three years into the decline, marginal home buyers will learn what owning a home really costs, versus renting when housing prices are declining and jobs are more scarce. Rent is a fixed cost, whereas home ownership presents many variable costs, including increased interest payments on ARMs, and rising tax, insurance, and energy costs. Also, upkeep for the average home typically costs five to ten percent of the price of the home, annually. As prices fall, homeowners will have less access to home equity loans. Many will not be able to afford repair and maintenance expenses. Homes in some neighborhoodsâ€"and in some cases, entire neighborhoodsâ€"will begin to look neglected, further depressing prices.

Step E: Five years into the downturn, rising unemployment will begin to more seriously affect the market, as indicated in Chart 1. As unemployment rises, homeowners will leave housing bust regions to move to areas where there are more jobs. Many houses will be sold at a loss, or even abandoned, as the market price falls below the loan value. Given the choice between paying cash out of pocket to sell their home or leaving the keys with the bank, many home owners will make the latter choice.

Step F: Ten years into the downturn, real estate will be widely regarded as a terrible, "can't win" investment. McMansions will be subdivided for rental as multi-family homes.

Step G: Ten to fifteen years after the start of the decline in housing values, prices will bottom out, setting the stage for the next boom. Time to buy.

Quote from: Lunican on December 05, 2008, 07:30:03 AM
"Basically sound" = "about to implode"

I guess you could always say this about the economy as there is always a recession ahead at some point during times of even the greatest expansion. 

Quote from: jtwestside on December 05, 2008, 09:15:07 AM
The point is that the mortgages will be resetting until 2012. Disregard the advice, but the mortgages resetting will cause foreclosures and the foreclosures will cause lower home prices. You're correct that it's not just going to keep going down and down until then and we will equal out, but the site has a point the market certainly isn't going to be "turning around" until the foreclosures work their way out of the system.

Mortgages are always resetting.  Are there greater numbers of resets upcoming in 2012?  Also, predicting 4 years down the road on the economy is very doubtful.  Very few people would have predicted the current situation in 2004, for example, and those who did are probably always pessimists.  In the next 4 years, many of those people will refinance and pay off their current mortgages or will sell their homes or will be able to make the new payments.  The bottom line is there is no way to know what economic conditions 4 years from now will be.

Quote
What I'm finding in the market I'm looking (Springfield) is that there is a price point (199K)  that people seem to be attached to when it should probably be 150-170. For some it's an emotional attachment they bought the house for less maybe put money into (some) restoring and now the market has turned and it's hard to realize that something you expected to gain value has actually lost it. For others they owe right at that much so they can't go any lower. For those who do (and the home is in OK shape) the homes sell pretty quickly. But most houses that are in GOOD shape are still at the 250-300 when they should be around the 199 price point. Of course this is just subjectively based on what I'm willing to pay. I'm hedging my best on there being more on the market after the new year (distressed or not).

Just because you think prices are too high doesnt mean they are.  Prices were much cheaper in 1980 too but those prices arent coming back.  If you think things are expensive now, wait till 2012.   ;)

Quote
Speaking of sources. These people have gotten it right so far http://www.itulip.com/housingbubblecorrection.htm (http://www.itulip.com/housingbubblecorrection.htm)

According to the date stamp on the site this was posted on January 20, 2005 (they wrote back then it will take 15 years)

Real estate cycles have NEVER taken 15 years to resolve themselves.  Even the Depression didnt last that long.  This is frankly nonsense.

*Edited graphs to reflect Springfield and not all of 32206.

Quote from: RiversideGator on December 05, 2008, 12:27:56 PM

QuoteAre there greater numbers of resets upcoming in 2012?

Not just in but UP UNTIL. Isn't that one of the key ingredients to this whole mess? I think that's the flaw in your thinking, you seem to want to ignore the fact that one of the reason for the bubble was inflated home prices by the banks so that they could sell more loans. Unfortunately now that the home prices are deflating and the ARMs are adjusting people are realizing that they really can't afford that 4k square 5 bed 4 bath Mc Mansion they bought then promptly refinanced a couple of times (because home values were still inflating) to buy a hummer and a motorcycle.

QuotePrices were much cheaper in 1980 too but those prices aren’t coming back.  If you think things are expensive now, wait till 2012.

And we'll never have sub $2 a gallon gas either.  Bet if I asked you a year or even 6 months ago if home prices would be headed towards 2006 levels you would have said the same thing, right? I would love to get what home in my hood were selling for even 9months ago, but I can’t now, maybe in 3 years …

I'm not saying 1980 (but heck who knows at this point) and I know the site says 2012. I have no doubt that foreclosures will still be a historic highs until then. I have faith in the market and that's why I'm looking. I never said I was waiting til then. I also never said I was going to listen to the association of realtors and jump in for the heck of it either. I'll take all the info I can get and make my choice.

I'm also glad the home I'm selling was bought in 2002 with a conventional mortgage and not refi with equity taken out.

QuoteReal estate cycles have NEVER taken 15 years to resolve themselves.  Even the Depression didn’t last that long.  This is frankly nonsense

.
I keep seeing you make comments like this, but what is it based on? When have we ever had a bubble like this one?

QuoteJust because you think prices are too high doesn’t mean they are.

Don't take my word for it, take the markets. *I should add that I'm not saying all aren't, but some have unreal expectations based on the market from a year or more ago. People are slow to adjust. And once again I think that's just the beginning.  http://www.firstcoastnews.com/news/local/news-article.aspx?storyid=125149&catid=3 (http://www.firstcoastnews.com/news/local/news-article.aspx?storyid=125149&catid=3)('Foreclosure Holiday' Helps Struggling Homeowners) There will be another drop in home values after the first of the year. Slow Christmas sales, who knows with the auto makers, and of course Obama not being the 2nd coming is all going to hit people at once.


(http://graphs.trulia.com/real_estate/Springfield-Jacksonville/2152/graph.png?version=123&width=600&height=250&type=qma_median_sales_price&city=Jacksonville&state=FL&neighborhood_id=2152&exclude=none&period=1)

(http://graphs.trulia.com/real_estate/Springfield-Jacksonville/2152/graph.png?version=123&width=600&height=250&type=qma_price_per_sqft&city=Jacksonville&state=FL&neighborhood_id=2152&exclude=none&period=1)

And now even the NY Times seems to indicate that a bottom has been reached in real estate.  This is good evidence that the bottom was actually about 6 months ago.  Anyway, here is the article:

QuoteMaybe It’s Time to Buy That First House

By RON LIEBER
Published: December 5, 2008

Five or 10 years from now, when the financial crisis has ended and housing prices are up smartly once more, we will look in the rearview mirror and realize that we missed a golden age for first-time home buyers.

Then, everyone who sat on their down payment savings accounts for a few years too long will kick themselves for not taking advantage of what may turn out to be the buying opportunity of a lifetime for those who can qualify for a mortgage.

Unfortunately, we do not know when this golden age will begin, because we will be able to identify a bottom to the housing market only with the benefit of hindsight. But as it does with the stock market, the moment will probably arrive when everyone is feeling the most pessimistic.

That moment is certainly getting closer. Housing prices have fallen drastically from their peak levels in many areas of the country. Rates on 30-year fixed-rate mortgages are already close to 5.5 percent, and this week there were suggestions that the federal government might try to drive them down to 4.5 percent, a truly incredible figure to be able to lock in for three decades.

Meanwhile, first-time home buyers have the same advantage they have always had, which is that they do not have to sell their old place before buying a new one. That is an added advantage in areas where many available houses simply are not moving, because the people trying to sell them will not be bidding against you.

If you’re hoping for a recovery in the housing market, you ought to be cheering on the first-time home buyers. When they purchase homes, their sellers are free to move on or move up, stimulating further sales.

But if you are a potential first-time buyer yourself, or lending or giving the down payment to one, you are probably as frightened as you are tempted by all the “For Sale” signs that have become “On Sale” signs. So let’s quickly review some of the still-grim pricing data in certain areas â€" and consider the reasoning offered up by first-time buyers who have forged ahead anyhow.

As is always the case with real estate, much depends on location. One study, “The Changing Prospects for Building Home Equity,” tries to predict where today’s first-time buyers in the 100 biggest metropolitan areas may actually have less home equity by 2012 as a result of continued price declines. The verdict was that buyers in 33 of the markets could see a decline by 2012, including potential six-figure drops on an average home in the New York City, Los Angeles, San Francisco and Seattle metropolitan areas.

This is obviously scary. (I’ve linked to the study, a joint effort of the Center for Economic and Policy Research and the National Low Income Housing Coalition, from the version of this article at nytimes.com/yourmoney.) It’s worth noting, however, that these predictions came before the government made its most recent move to reduce borrowing costs.

Also, the price projections in the study are based, in part, on the fact that the ratio of purchase prices to annual rents is still higher in many areas than the historical average, which is roughly 15 times rents. While past figures may well have some predictive value, I have never been convinced that first-time buyers compare a home that they could own and one that they would rent in purely or even primarily economic terms.

When Jaime and Michael Proman moved this fall to Minneapolis, his hometown, from New York City, they craved a different sort of life after two years together in a 450-square-foot studio apartment. “We didn’t want a sterile apartment feel,” said Mr. Proman, who is 28 (his wife is 26). “We wanted something that was permanent and very much a reflection of us.”

The fact is, in many parts of the country there are few if any attractive rentals for people looking to put down roots and enjoy the sort of amenities they may spot on cable television home improvement shows. Comparing a rental with a place that you may own seems almost pointless in these situations, especially for those who are now grown up enough to want to make their own decisions about décor without consulting the landlord.

Still, for anyone feeling the urge to buy, a number of practical considerations have changed in the last year or two. The basics are back, like spending no more than 28 percent of your pretax income on mortgage payments, taxes and insurance. Even if a lender does not hold you to this when you go in for preapproval, you should hold yourself to it.

You will also want to start now on any project to improve your credit score because it may take several months to get it above the 720 level that qualifies you for many of the best mortgage rates.

John Ulzheimer, president of consumer education for credit.com, a consumer credit information and application site, suggests starting to pay down and put away credit cards months before you apply for a loan. That is because the credit scoring system could penalize you if you use a lot of credit each month, even if you always pay in full. Also, check your three credit reports (it’s free) at annualcreditreport.com and dispute errors.

While no one can easily predict the likelihood of losing a job, Friday’s startling unemployment figures suggest the need for caution if you think you might be vulnerable. A. C. Panella, who teaches communications at Pasadena City College in California, waited until she had a tenure-track job before buying a home in the Highland Park section of Los Angeles with her partner, Amy Goldman, a lawyer for a nonprofit organization. “We could afford the mortgage payment on one salary, were something to come up,” Ms. Panella, 31, said. “It’s really about being able to stay within our means.”

For many first-time home buyers, that philosophy stretches to the down payment, too. Ms. Panella and her partner put down 20 percent when they bought their home in September, as did the Promans when they bought their home in the Lowry Hill neighborhood of Minneapolis.

Alison Nowak, 29, put just 3 percent down on a Federal Housing Administration-backed loan last month when she and her partner, Lacey Mamak, bought a $149,900, 800-square-foot home several miles south of where the Promans live. “Anything that is an opportunity also has a bit of risk,” she said. Her house was in foreclosure before a plumber bought it and fixed it up. “One way we mitigated it was that we bought a really tiny house in a very good neighborhood.”

One other strategy might be to buy new instead of used. Ian Shepherdson, chief United States economist for the research firm High Frequency Economics, says he believes that a steep drop-off in inventory of new homes is coming soon, thanks to a rapid decrease in home builder activity.

Since prices generally soften in the winter, it may make sense to start looking seriously once the mercury bottoms out. “If you look at new developments next spring, you may not have the choice you thought you would have or be in the bargaining position you thought you would be,” Mr. Shepherdson said. Also, if you wait after June 30, you will miss out on a $7,500 federal tax credit for income-eligible first-time home buyers that works like an interest-free loan.

Finally, allow yourself to consider how it would feel if you bought and then prices dropped another 10 or 15 percent. It might not bother you if you plan to stick around. Plenty of people seem to be making a longer commitment to their homes. According to a survey that the National Association of Realtors released last month, typical first-time buyers plan to stay in their home 10 years, up from 7 last year.

Perhaps people are more aware that they will not be able to build equity as rapidly as others did in the real estate boom. Or they simply have more confidence in hard, hometown assets now than in other markets.

“We wouldn’t let another decline bother us,” said Michael Proman. “You can never time a bottom. This is a long-term investment for us, and it truly is the best investment we have in our portfolio right now.”

http://www.nytimes.com/2008/12/06/business/yourmoney/06money.html?_r=1&ref=business

And NPR seems to agree that now might be a good time to buy:

QuoteIs Now The Time To Buy A House Or Refinance?

by Erin Killian

NPR.org, December 5, 2008 · Mortgage rates are falling, opening the door for potential homebuyers who have been afraid of the unstable real estate market â€" and home owners looking to save on monthly payments.

For a 30-year fixed-rate mortgage, interest rates are now in the 5 percent range â€" close to the lowest they've been in nearly two decades, according to weekly figures put out by the Mortgage Bankers Association. In June 2003, the rate hit 4.99 percent.

Due to the low rates, MBA reported Wednesday its largest increase in applications to refinance mortgages in its 18-year history of putting out the weekly report. Applications do not directly translate into loans, but consumers are clearly reaching out to their banks and brokers to lock in good deals.

What's more, the Treasury Department is weighing a plan for new homebuyers to push rates for 30-year fixed mortgages to 4.5 percent, down from the current 5.6 percent average, according to BankRate.com â€" a move aimed at spurring investment in the foundering real estate market.

So is now the time to buy or refinance? Experts say that if you have enough equity in your house, it may be time to refinance. But if you're looking to buy â€" especially in markets like San Diego or Washington, D.C., which saw some of the biggest price jumps during the housing boom â€" it might be worth it to wait a few months. That's because even though interest rates are low, they're likely to stay low and housing prices continue to fall.

Why are mortgage rates falling?

Last week, Federal Reserve Chairman Ben Bernanke announced the agency would buy $500 billion worth of long-term securities to drive down yields on long-term Treasury bonds. The interest rate for a 30-year fixed-rate mortgage is typically in line with the yield on a 10-year Treasury note, so in response to the Fed's move, rates on mortgages began to fall â€" to 5.5 percent and lower.

Are interest rates likely to drop further? Or should those looking to buy or refinance grab these low rates now?

For those interested in refinancing, consider this: Historically, 30-year mortgage rates have been about 150 basis points above the yield on the 10-year Treasury note. On Thursday, that yield was 2.57 percent. Add 150 basis points to that figure, and you would get a mortgage rate of 4.07 percent. But right now, the spread is closer to 300 basis points, with rates at 5.6 percent. That suggests that interest rates have further to fall to close the spread, says David Kittle, chairman of the Mortgage Bankers Association.

But even if rates do fall more, they are not likely to fall that much more, so it doesn't make sense to wait and see before refinancing, he argues. "If you get greedy over an eighth or a quarter [of a percentage point for interest rates], it always turns around and bites you," says Kittle, who is also executive vice president of Louisville, Ky.-based Vision Mortgage Capital.

"I don't see a downside to refinancing," adds Dean Baker, co-director for the Center for Economic and Policy Research in Washington, D.C., who warned about a housing crash years before it happened. He notes, however, that people whose houses have experienced steep drops in price may not have enough equity in their homes to refinance.

But when it comes to taking out a mortgage, Baker advises waiting to see how the Treasury's plan to lower interest rates as low as 4.5 percent shakes out. And he notes that the plan, if it happens, could also help push refinancing rates a bit lower, too.

So does that mean that now is the time to buy?

There are wide-ranging opinions on this.

The risk in buying a new house is that the market has not hit bottom. The U.S. is in a recession, and foreclosure rates continue to weigh down prices. If people can't pay their mortgages because they are losing their jobs, the supply of homes for sale will keep growing, putting a "downward pressure on prices," says Susan Wachter, professor of real estate and finance at the University of Pennsylvania's Wharton School of Business.

But even though no one knows when â€" or where â€" the market will hit bottom, Jack Guttentag, professor of finance emeritus at Wharton, thinks the bottom can't be too far away.

If you can get a house under market value, at historically low mortgage rates, it may be the time to buy, argues Kittle of the Mortgage Bankers Association.

The trick, of course, is figuring out what market value is in places such as Los Angeles and Florida, where housing prices have been falling by 3 percent a month, says Baker. He expects prices to plummet another 10 percent to 15 percent over the next year.

And it may be worth it to wait a bit more to see what happens with the Treasury's latest mortgage plan, he says.

Is it harder to qualify for a mortgage now?

Standards have tightened. In most cases, you have to prove that you can afford the monthly payment. That means you have to have a job, a decent credit score and the assets you say you have.

But you don't have to put down 20 percent of the purchase price if you don't have it â€" some traditional banks will let you put down as little as 5 percent, says Guttentag; you just have to prove you have enough income to make your monthly payments. And if you're applying for a Federal Housing Authority loan, you can buy a house with a down payment of just 3 percent, though that will rise to 3.5 percent on Jan. 1.

The real question is whether it's worth it â€" especially if you think house prices have much further to drop.

What if I am refinancing? What closing costs should I expect?

A general rule is closing costs for a refinanced mortgage will fall between $2,000 and $2,500.

If you closed your loan within the last one to five years, you should get the re-issue rate on your lender's title insurance, which can be up to a 70 percent discount, according to Kittle. That would be a $350 discount on a $500 lender title policy. But borrowers need to ask their title company or closing attorney specifically for this discount, because it's not illegal to charge the full price â€" even if it is unethical, he says.

Are mortgage rates likely to stay low for a while?

Yes â€" because there are many factors spoiling the economy.

"In some sense, for homebuyers, it's the best of times and the worst of times," says Guttentag, who writes the Mortgage Professor's Web Site. "It's the best of times because prices have come down. … The other side of it is this option is available only to people who can qualify in the current market. Everything is more difficult right now."

http://www.npr.org/templates/story/story.php?storyId=97828145

And so does a Fortune magazine editor:

QuoteMaybe It's Time to Buy

The sickening collapses in house and stock prices from their peaks have trimmed about $13 trillion -- almost a year's output for the entire U.S. economy -- from Americans' net worth. Not since the Great Depression almost 80 years ago have we seen anything like these simultaneous housing and stock implosions, and back then houses and stocks were owned by only a relative handful of Americans, whereas in today's world, two-thirds of us own houses and half of us own stocks.

It's really scary out there. The S&P/Case-Shiller index, which measures housing prices in 20 big markets, continues to fall. Foreclosures mount; dire predictions fill the air. The stock market lurches up and down like a roller coaster on steroids, and seems to fall -- or occasionally rise -- by 5 percent or more every other trading day. Each weekend, you expect to hear that yet another big financial institution has to be closed down or bailed out by federal regulators. Lots of us who have invested for years (including me) have had a big part of our net worth wiped out almost overnight. It makes you feel like crawling into a cellar, closing the door and not coming out until the all-clear signal sounds.

But even though housing and stocks may be the last things you feel like talking about, they are things that you should talk about. That's because for the first time in years (or maybe decades) prices of homes and U.S. stocks have fallen low enough to be considered reasonable long-term investments again.

No, I'm not suggesting that you run out and binge-buy houses and stocks. Even though they have fallen about 25 percent and 45 percent, respectively, from their peaks, houses and stocks could well fall further, possibly much further. That's what happens when bubbles deflate -- things can fall into a reasonable-value zone, then keep falling until they're unreasonably low. It's the other side of an inflating bubble, during which prices can keep rising even after they're unreasonably high.

But if you're prudent -- I'll define that a bit later -- and if you're willing and able to commit your money for at least six years, I think you'll wake up in 2015 or 2016 and see that you've done okay. You won't make the nearly 20 percent a year that U.S. stocks generated during the 1982-2000 bull market, or the even bigger gains homeowners and flippers made on their investments early in this century, when the housing bubble inflated. But you're more than likely to make some reasonable money, much more than you'll make hiding out in Treasury securities or money market mutual funds. [RG: Or commodities]

But before you rush to write checks, please remember that you shouldn't put money into stocks or houses or other investments unless you can do it while adhering to the three eternal verities of financial survival. They are: Live within your means or below them; shun credit card debt like the plague it is and don't borrow except for an education, a home or a car; and use your house as a place to live, not as a cash machine or a get-rich-quick scheme.

In addition, don't start investing until you've accumulated an adequate reserve fund. To me, that means enough to cover your bills for at least three months if you (and any other employed people in your household) lose your job (or jobs).

The only exception would be to invest modestly in a 401(k) or similar retirement program to take advantage of your employer's matching contributions.

Now to our discussion. Let's start with stocks, which are easier to analyze and invest in than houses are. Stocks are selling at about the same prices they were 10 years ago, which means the U.S. market as a whole has been dead money for a decade. But that may be changing. In fact, some of the smartest long-term investors in the country, who had largely shunned stocks for years, now say that stocks have moved into a reasonable zone.

Bob Rodriguez of FPA Capital told a Fortune magazine roundtable that the number of stocks that pass his value screen has risen to 447 (out of 10,000), up from only 33 in June 2007. Jeremy Grantham of GMO, another roundtable participant, considers stocks to be reasonably priced for the first time in years. Stocks have reached reasonable levels even by the tough standards of Yale professor Robert Shiller, famous for calling both the stock and housing bubbles.

However, that doesn't mean that the U.S. stock market is risk free. Far from it. No matter how cheap stocks may look, they can get significantly cheaper. The classic example: Warren E. Buffett, the best investor of our time, who issued a buy recommendation on the U.S. market in an Oct. 16 New York Times op-ed article. Standard & Poor's 500 closed at 908 the day before Buffett's article appeared and subsequently fell as low as 741. It's 871 as I write this. (Disclosure: Rodriguez's mutual funds and Buffett's Berkshire Hathaway are two of my family's biggest investments.) Buffett is a director of the Washington Post Co.

The unstated assumption behind what Buffett and these other folks are saying is that you must have the stomach and financial resources to survive declines, possibly very steep ones.

Let me elaborate. You need to have staying power. Don't borrow to buy stocks. Don't use your eating money or next year's college tuition money to buy stocks. Don't bet on having a much better year financially than you're having now unless there are special circumstances, such as being a medical resident about to become a practicing physician. Invest only money that you can afford to tie up for years, if not decades, and that you can afford to lose.

And now to houses, which are much trickier than stocks. That's because while you can buy a piece of the whole U.S. stock market through an index fund and thus diversify your risk, you cannot buy a piece of the total U.S. housing market. You can buy only a house -- and you have to take on a lot of debt to do it, which in itself increases your risk.

Nationally, house prices on average have begun to look reasonable for the first time since 1999, when the housing bubble began. The steep drop in home prices has made them relatively cheap in terms of rent and family income. Those relationships matter because when prices are rising much more rapidly than income (the case until last year), more and more people get priced out of the market. So in order to play the game, buyers and their lenders have to take on idiotic risks -- option ARMs, anyone? -- that ultimately make buyers and lenders look like idiots.

The National Association of Realtors affordability index (the median income divided by the median mortgage payment) has risen to 1.42 from 1.08 in 2006, the height of the real estate bubble. That means that the median household income is 142 percent of the median mortgage payment, up from 108 percent. This index assumes a 20 percent down payment and doesn't cover real estate taxes, insurance or other home owning expenses. Thus "affordability" is in the eye of the beholder (or mortgage lender). But the trend is what matters, not the specifics that the index measures.

Then there's an index kept by David Wyss of S&P. It shows that the ratio of average house prices to average income has dropped to about 2.45 from 3.41 in 2006. That means houses are becoming cheaper relative to incomes. Finally, there's the rent-own index by Louis Taylor of Deutsche Bank, which compares the cost of renting a home with the cost of buying it. Those numbers are starting to reach the point where house prices may be supported by people who buy them to rent them out.

But just because those indicators are improving doesn't mean that buying any house in any market is a good deal. A lot of people tried doing that during the great housing bubble and got burned. House markets are intensely local, even though mortgage financing is national.

When I talk about buying a house, I'm talking about making a serious down payment -- call it 10 percent or 20 percent -- and borrowing the rest at a fixed rate for 30 years. You accumulate that down payment by living below your means and saving. You can probably buy with less money down, but the less you put down, the more you have to borrow, and the bigger chance you're taking.

So there you have it. If you've gotten this far, I hope that you're more hopeful thinking about houses and stocks. They may well be cheaper when the 2010 Fortune Investor's Guide rolls around than they are now. But if you buy conservatively and have staying power, I think you'll feel a lot more optimistic when you read the 2016 issue.

http://www.washingtonpost.com/wp-dyn/content/article/2008/12/06/AR2008120600134.html

Quote from: RiversideGator on December 08, 2008, 12:37:51 AM
And now even the NY Times seems to indicate that a bottom has been reached in real estate.  This is good evidence that the bottom was actually about 6 months ago.  Anyway, here is the article:

Is this the same NY Times that just mortgaged it's building to stay afloat? I bet they hope real estate comes back.

;)http://www.iht.com/articles/2008/12/08/business/08times.php (http://www.iht.com/articles/2008/12/08/business/08times.php)

Good point.   :D

http://online.wsj.com/article/SB122883352344691335.html?mod=googlenews_wsj (http://online.wsj.com/article/SB122883352344691335.html?mod=googlenews_wsj)

Pending Home Sales Decline

WASHINGTON -- A forecasting gauge of home sales dipped in October, but the decline was much smaller than expected.

The National Association of Realtors' index for pending sales of previously owned homes decreased 0.7% to 88.9 from 89.5 in September, the industry group said Tuesday.

Private analysts projected pending sales would fall 3.5% during October. The gauge had gone down 4.3% during September; that's a revision up from a previously estimated 4.6% decline.

The NAR pending sales index, based on signed contracts for previously owned homes, was 1.0% below the level of 89.8 in October 2007. Lawrence Yun, NAR chief economist, said home sales have been steady.

"Despite the turmoil in the economy, the overall level of pending home sales has been remarkably stable over the past year, holding in a generally narrow range," he said.

In its monthly forecast on the industry, the NAR projected existing-home sales at 4.96 million this year and 5.19 million in 2009. That compares with 5.65 million in 2007.

The median price for an existing home is seen at $198,500 in 2008 and $199,200 in 2009. It was $218,900 in 2007.

A month ago, the NAR forecast 2008 sales at 5.02 million and 2009 sales at 5.32 million. The 2008 median price was projected at $198,600 and the 2009 price at $200,800.

The NAR's pending home sales index was designed to try measuring which way the housing market is going in the future. It is based on pending sales of existing homes, including single-family homes and condominiums. A home sale is pending when the contract has been signed but the transaction hasn't closed. Pending sales typically close within one or two months of signing.

By region, the Northeast increased 0.6% in October from September; it had gone down 14.1% since October 2007. The Midwest fell 4.3% in October from September; it had decreased 6.8% since October 2007. The South increased 7.8% in October from September; it had fallen 2.9% since October 2007. The West declined 8.7% in October from September; it has gone higher by 17.4% since October 2007.

Actually, these numbers are good.  A 1% year over year decline in existing home sales indicates that a bottom has been reached in terms of sales volume.  Sales should increase next Spring when sales typically begin to increase for weather reasons and the recovery will then begin in earnest.

BTW, Wall Street was heartened by these numbers:

QuoteNEW YORK (MarketWatch) -- U.S. stocks scaled back losses Tuesday as a leading indicator of the housing market proved less dire than anticipated, offsetting disappointment from lowered forecasts at Texas Instruments Inc. and FedEx Corp.

Offering some tentative hope that the embattled housing market could be stabilizing, the National Association of Realtors reported its index of sales contracts on previously owned homes fell 0.7% in October from the prior month and declined 1% from the previous year.

"Though the housing market remains in distress, it doesn't appear to be getting much worse," said analysts at Action Economics.

http://www.marketwatch.com/news/story/us-stocks-trim-losses-after/story.aspx?guid=%7B1F5D47EB%2D2BD8%2D4D83%2D8735%2D5873E02AD373%7D&dist=TNMostRead

Forbes ranked Jacksonville #1 on the list of America's next foreclosure capitals.

Jacksonville Details (http://www.forbes.com/2008/10/20/foreclosure-cities-ten-forbeslife-cx_mw_1020realestate_slide_11.html?thisSpeed=15000)

QuoteHyde looking at foreclosure relief

According to Forbes Magazine, Jacksonville will be the foreclosure capital of the nation next year. City Council member Kevin Hyde would like to see what the City, and the courts, can to to prevent that dubious prediction from coming true.

“In this area, there are 4,800 this year. It’s a staggering number,” said Hyde.

According to Hyde, one in every 10 homeowners is behind on their mortgage payments and one in every 157 is in foreclosure. And, they aren’t all Downtown or on the Northside or on the Westside. Hyde says that “for sale” sign in Ortega or Queen’s Harbour or on San Jose Boulevard may be someone looking to sell and either move or upgrade. Or not.

“It (foreclosure) is not isolated geographically to any particular area of town,” he said. “If you see a for sale sign, they may be in foreclosure. It’s not income specific.”

full article: http://www.jaxdailyrecord.com/showstory.php?Story_id=51401

Quote from: Lunican on December 10, 2008, 03:29:32 PM
Forbes ranked Jacksonville #1 on the list of America's next foreclosure capitals.

Jacksonville Details (http://www.forbes.com/2008/10/20/foreclosure-cities-ten-forbeslife-cx_mw_1020realestate_slide_11.html?thisSpeed=15000)

I question their methodology.  One of the commenters did also:

QuoteHow do you guys come up with this stuff? Jacksonville has the lowest foreclosure rate, and lowest projected foreclosure rate, lowest home prices and highest population growth of any city on your list.....Did the writer of this article ever take a business or math class?

That is probably why it has the highest projected foreclosure rate increase.

This:

Quotethe lowest foreclosure rate, and lowest projected foreclosure rate, lowest home prices and highest population growth of any city on your list

equals

Quotethe highest projected foreclosure rate increase.

to you?   ???

You are quoting a commenter, not the original article. Forbes ranked the cities by percentage change. Jacksonville ranked the highest at 15.4%. Whether that makes Jacksonville the nations foreclosure capital is debatable.

I am disagreeing with the findings of the article as was the commenter.  Are you agreeing or disagreeing with the findings of the article?

Sorry for the delayed response. It looks like all that evidence supporting real estate revival was just wishful thinking.

I'm not sure that's totally true.....

Residential real estate has seen year-over-year sales increases for many months (somewhat fueled by foreclosures and tax incentives)....and I read just the other day that commercial real estate is starting to show signs of improvement.

That said, it is going to take quite some time to get back to the prices we saw in 2006....estimates for Florida range from 2016 - 2035 depending on the community (I think Jax. is 2020)

It's totally true. You read throughout this entire mess that things were increasing and everything was great, as evidenced by this entire thread.

Now the optimistic view is that sales have increased due to foreclosures and home prices will recover in 25 years?

now you're misreading things too....I wrote that some reseidential markets in Flroida aren't supposed to come back to 2006 levels until 2035....but others (including Jax.) within the next 6-8 years

This is the same logic being employed by anti-stimulus folks....they say there are no new jobs, so it must have been a failure...truth is the trend was reversed in March 2009 (when stimulus passed)...now the employment curve is on the upswing....same with housing.

Seems to me that most of the articles posted in this thread were completely off base.

Fresh off the Presses!

http://www.heraldtribune.com/article/20100422/BREAKING/100429906/2416/NEWS?Title=Home-sales-prices-jump-in-March

QuoteThat said, it is going to take quite some time to get back to the prices we saw in 2006

Just as we saw the RTC come in and bail out the savings and loans, we'll be back to this same mess in 10-15 years from now as well. We're Americans, we look for someone's head for a few years, forget, slide back into our ways, then loosen all the safe guards we had, then watch the market take off only to see it crash and we're back to blaming someone for our own faults.

Classic American behavior.

QuoteThe Real State of the Housing Market
By MIKE WHITNEY

Housing has been going sideways for seven months now, mainly due to lax lending standards (at FHA), the Firsttime Homebuyers Credit, and the Fed's mortgage-backed securities (MBS) buyback program. But once the props are removed, the market will fall sharply.

So where's the real demand for housing?

Here's a hint: There isn't any.

The market's in a shambles, decimated by years of fraud and perfidy. What was once a booming industry is now a abscess-ridden corpse that buyers are avoiding like the plague. And who can blame them? A new home is no longer a symbol of status and upward mobility, but a millstone to be shed at the earliest possible opportunity. The industry is facing an insurmountable PR challenge; how to take a "sow's ear" and stitch it into a Gucci purse.   Good luck with that.  Low interest rates and federal subsidies alone won't do the trick.

Despite the media-hype and cheery forecasts, the downhill slide has already begun.  Here's the lowdown from  Realty Check which sums it up pretty well: 

"The average number of days from when a borrower stops paying on his/her mortgage to when the bank sends out the first foreclosure notice is 417....And the final foreclosure can take up to a year more. The government's Home Affordable Modification Program, which today the Inspector General for the TARP wrote, "has made little progress in stemming the onslaught".... is simply delaying the inevitable and in some cases kicking the can and the cost down the road for borrowers who will inevitably redefault and for taxpayers who will foot the bill." (Diana Olick Realty Check, CNBC)

So the banks are taking more than two years to roll-over a house...even when they know the homeowner has no intention of paying? Think about that for a minute. The only reason the banks would hold off that long is if they can't afford to write down the losses. So, it's all a big accounting charade to keep the public from knowing that they're broke. That's the only logical explanation. Back to the article:

"Ivy Zelman did a simple exercise of adding shadow inventory to the seemingly improving inventory numbers. In DC for example, she cites a 5.1 month supply of homes for sale, well below the nation's 8 month supply. But add the shadow inventory of foreclosures, and you get a 13.2 month supply. She claims builders "underwriting ground are unaware of these headwinds." Just after she said that, a guy sitting behind me whispered an expletive under his breath." (Diana Olick Realty Check, CNBC)

It's all about supply and demand, and right now there's way too much supply (shadow inventory) and not-nearly enough demand. So, the banks are dragging their feet--keeping 5 or 6 months supply off-market--to keep prices artificiality high while they pray for a miracle.  It's pathetic, and it's having a ripple-effect on the economy too, because the added pressure on bank capital makes it impossible for them to increase lending. That's why most banks’ loan books have shrunk by 20 per cent or more year-over-year. Back to Realty Check:

"On the low end of the market, that is homes priced below $150,000, investors comprise 2/3 of the purchasers, according to Zelman. Another study out today from Campbell Surveys also found that 50 per cent of sales in March were of distressed properties (foreclosures or short sales.)” (Diana Olick Realty Check, CNBC)

Sure, the low end of the market is Jim-dandy. It's already hit rock bottom, so things are starting to look rosy. But what about the mid-range and high-end where folks are hanging on by their fingernails hoping the market will bounce back? Is anything moving in that market? Not really.

"The trouble of course is the higher end, over $400,000 where investors can't buy with all cash and the mortgage market is closed. Zelman cites a 45 month supply of homes between $400-600,000.

“Unfortunately, the government is ignoring the higher end of the market, and ignoring higher end borrowers who may be in trouble due to unemployment. Jumbo loans are excluded from the federal mortgage bailout." (Diana Olick Realty Check, CNBC)

45 months? 4 years to sell a mid-priced home? That's a lifetime!

And how about this nugget about Bank of America via Housingwire:

"Bank of America is considering a special program for unemployed borrowers that would offer as many as nine months of no mortgage payments while they hunt for a new job."

Great. So, the same bank that borrows money from the Fed at zero-rates and dings you double-digits on your credit card if you're even a day late, wants to extend a helping hand in your hour of need?  Right. There are no good Samaritan banksters, just tight-fisted scalawags who'd squeeze the blood from a turnip if they could figure out how. If B of A is giving folks a break, it's because its back is against the wall and it has no other choice. It means BoA  is underwater itself.   

One final note. The U.S. Treasury Dept recently reported that the number of "permanent" mortgage mods under the Obama whizzbang program, have more than doubled since its kickoff just a few months ago.

According to economist Dean Baker, "This indicates that a very high percentage of the permanent modifications are likely to end in default."

But here's the shocker:

"The money that the government spends on a failed modification goes to banks, not homeowners. Typically, the government will have substituted an FHA insured mortgage for the original mortgage issued by a bank. This means that when a redefault takes place, the bank will have received most of the principle back on the loan, with the government incurring the loss on the redefault." (Dean Baker, CEPR, "Money for Failed Modifications Goes to Banks, Not Homeowners")

What does it mean?  It means that the Obama mortgage flim-flam is another stealth bailout to shoehorn bankers into government-guaranteed loans so John Q. Public gets saddled with the bill again. Sound familiar?

Mike Whitney lives in Washington state and can be reached at fergiewhitney@msn.com

http://www.counterpunch.org/whitney04222010.html

Here's where this guy loses a lot of cred wth me...

"The trouble of course is the higher end, over $400,000 where investors can't buy with all cash and the mortgage market is closed. Zelman cites a 45 month supply of homes between $400-600,000"

then just 2 sentences later...

"45 months? 4 years to sell a mid-priced home? That's a lifetime!"

Talk about redefining your terms in one paragraph.  That's got to be a record!  Is the mortgage market closed at that level there?  Bet not.

On the other hand, 400-600 K$ IS mid-priced in the Seattle, Bay Area California market.  That's still a 40-50% drop from where they were a couple of years ago.

We have a very reasonably priced house market here by comparison.

Quote from: tufsu1 on April 23, 2010, 12:56:49 PM
Here's where this guy loses a lot of cred wth me...

"The trouble of course is the higher end, over $400,000 where investors can't buy with all cash and the mortgage market is closed. Zelman cites a 45 month supply of homes between $400-600,000"

then just 2 sentences later...

"45 months? 4 years to sell a mid-priced home? That's a lifetime!"

The first quote is from Diana Olick; the second from Mike Whitney.