Housing: 2006 thread, use the 2007 thread instead.

[Slew Foot]

Prices are down about 10% in the Sacramento/Elk Grove are in the last couple months. A new development went up with 1700 sqft homes selling for 360K. Last year a 1700 sqft house in a new development was around 400K base.

 

[TylerP]

I just got back from a meeting with a developer that wants my uncles land (7 acres that border a developement, lake, and city park and is 3 minutes away from a new highway). The developer wants the land for townhomes in the 1300-1700sq ft range and has says he will have no problem selling them at 515k. Sickening. Two miles down the road a farmer sold 3 acres to a developer and he put up condos that are sold out already at 400k. *puke*

*edit*
And this is a rural area.

 

[EatSpam]

I'm in the process of buying a new 2 story, 2200 sq ft home in a quiet, safe neighborhood for $150,000. No bubble here.

 

[LegendKiller]

Originally posted by: dullard

Throwing in tax just confuses things. (1) You forgot state taxes, (2) Not everyone is in the same tax bracket, (3) The tax deduction will vary quite a bit over the life of the loan. So lets just use the real dollar value: $382633 and $353617 respectively for your numbers.

However, your numbers are a bit suspect. Housing dropping 33% is quite rare. The biggest drops I could find were ~26% (Austin late 1980s and Oklahoma City mid 1980s). A 2% gain in interest rates is quite common especially considering we were right near 5% to begin with. Heck, far more than 2% rise is common.

Not including taxes and saying it is now a fair comparison is like not including wheels on a car and saying it's a fair comparison to one that is. If you are to do a thorough analysis of whether to rent or buy, then you must include all relevent information. To not do that is missing many important data points and can lead to erronious decisions.

I assumed a tax rate of 25%, pretty normal for most people. I don't believe you can write I off of state taxes. However, there is one issue I forgot and that is property taxes, if you pay 1.5k less for 30 years, you are saving 45k over that period, another very valid inclusion.

I'd like to see your data behind your reductions in housing prices. First, to understand the information. Second, to see whether they are just regional bubbles. One of the common mistakes people make in statistics is assuming that past deviations will have some type of predictive factor in future deviations. Unless the deviations are correlated, assuming this is a major mistake.

If you look at the past deviations in the stock market, none have been exactly the same and none are good predictors of the following events. No two bubbles are the same. However, the one factor that *is* the same is the regression to the mean.

If you look at the picture below you will find something very interesting.

For your benefit I scanned in this image. From "Irrational Exuberance" written by Robert Shiller (2nd ed) copyright 2005.

Irrational Exuberance

This is a housing index compiled by extensive research for the past 114 years. The index is stated in real terms (adjusting for inflation). It finds that throughout history there have been several bubbles with eventual decline. Some of that decline has been through inflationary erosion (housing appreciation increasing less than inflation).

The one notable thing is that housing prices have increased at a rate of .06% for 104 years, in real terms. From 1890 to 1994 prices increased a total of 20%. However, from 1994 to 2004 prices increased 50%. So, in 1/10th the time it increased 2.5x as much.

How is that sustainable?

You see the same tendancies here...

http://finance.yahoo.com/q/bc?s=%5EDJI&t=my


However, people refuse to see the obvious outcome, regression to the mean.



Now read this article


http://www.axisoflogic.com/artman/pu...le_21256.shtml


While that one is doomsday-ish, it highlights many of the issues in the housing market today. It is also a decent article with a lot of good backup, something which most articles today lack.

Housing prices haven't gone down by 33% before, but they have never, on a national scale, gone up in price like we have experienced in the last 10 years. To ignore that is to ignore any bubble in history, such as 99/00, 1929, and the tulips.


As far as your assumption that IR increases of 2% is "normal". That assumes that inflation is going to increase by 2% or that the Fed will curb lending (by increasing fed funds rate or increasing reserve requirements for banks). This isn't exactly the case...

http://mortgage-x.com/trends.htm

If one were to adjust those increases/decreases for inflation, one would see that the actual real-interest rate is very low and the increases aren't large. Furthermore, if we assume that the deviations were more of a result of poor monetary management and lack of understanding of economics, most of the uber-high inflation and large rate increases are removed.

Sure, we could see 8.5% rates, we could even see 10% rates, but I *highly* doubt it. I don't highly doubt that we will see a huge reduction in housing prices, or at least a leveling off for a *VERY* long time (like 3-4 decades).

 

[dullard]

LegendKiller, thanks for the thoughtful post, far too many people on P&N forget to think when posting.

1) Yes, taxes should be included in the analysis. However, for a public example like this, where tax rates and situations vary drastically, I think you have to give pre-tax data. Then let people put that data into their own tax situation.

2) The only state that I've had my own house is Nebraska. Nebraska lets you deduct all your federal deductions (including housing) except for the federal deduction for state taxes. I can't comment on other states, but I just want to point out one state where housing can be deducted.

3) A quick search for online data gave me this. Of course it was regional, prices have never gone down historically.

4) I agree 100% that the recent price gains are not sustainable. But to think that prices will drop by 33% is a big stretch. They might drop that much. However, to count on it would be foolhardy. Had you said something more like 10-20%, I wouldn't argue. I personally predict 10-20% drops in many local regions. A bit more in some areas, and just drastic price increase slowdowns in most of the US (plateauing for 10+ years).

5) Your morgage-x.com link backs up my thoughts. Mortgage rates have dropped nearly 10% in the last 20 years. To think they can't go back up 2% or more in that plateauing generation, is also foolhardy (it took just 3 years to go from 9% to 15% in the late 70s/early 80s). Maybe they'll stay low forever, but I doubt that. Inflation alone has gone up 1.5% in just 2 years (commonly used Dec-Dec data). Inflation has gone up from 1.9% to 4.0% if you use the lesser used Jan-Jan data in the last two years.

 

[LegendKiller]

I think the big data point you are missing is inflation. The real loss was much greater, which I also expect for this bubble. To quote your article

"$222,200 in 1990 would have been worth $266,700 in 1996 dollars, which means the actual loss for homeowners buying in 1990 and selling in 1996 was closer to 34 percent."

Furthermore, that doesn't tell us what the price run-up was. If it was 34% previously, within a very short amount of time (relatively), then a 34% reduction or even a 20% reducion isn't surprising.

If one were to apply a larger bubble and gross-up the loss in the same manner, one would expect a larger decrease.


For example, if the run-up was 30% and the resulting decrease was 20% for say, a 1985 - 1990, and then 1990 to 1996 period. Now, take the 1996 to 2006 period, a runup of say 90%, we could experience 3x the losses as before, say 60%. Of course, that seems a bit simplified and inaccurate, but it is logically sound that a bigger bubble would increase the likelihood of a bigger bust.

I have always stated that we will see something like the end of a mountain range. You have your large peak, followed by a large (not huge) decrease in verticle feet, an eventual tailing off, and then a flat plain. Think of Denver.

10-20% is a bit optimistic to me. I am thinking more in lines of 15-25% with extremes approaching 40-50%, followed by (in agreement with you) a decade of flat prices.


To include the last 20 years in the interest rate calculation is not exactly a great comparison. Considering that we were just coming off of the energy crisis, *VERY* poor monetary and economic manipulation, and the resulting uber-high inflation of 10%+. Heck, when my parents bought their house in 1979 the IR was 15.5%. Not a fair comparison to today's relatively low inflation rates.

An accurate time frame would be the last 15 years or so.

As far as your house in Nebraska. I mean, come on! Corn Huskers? Who wants to live there!??!?! Of course there is no bubble and you have favorable tax conditions to attract people to a place where the tallest "tree" is 6' tall (corn).

Sorry, I just had to do it.

 

[dullard]

Originally posted by: LegendKiller
I think the big data point you are missing is inflation. The real loss was much greater, which I also expect for this bubble. To quote your article

"$222,200 in 1990 would have been worth $266,700 in 1996 dollars, which means the actual loss for homeowners buying in 1990 and selling in 1996 was closer to 34 percent."

...

As far as your house in Nebraska. I mean, come on! Corn Huskers? Who wants to live there!??!?! Of course there is no bubble and you have favorable tax conditions to attract people to a place where the tallest "tree" is 6' tall (corn).

To include inflation when "considering" to buy your first house is a big stretch. Suppose you wanted a 300k house, and suppose in a few years it drops to $250. You can't honestly say that due to inflation that was a 33% drop and you saved 33% of your money. And that is the exact situation that we have been talking about in this thread.

As for Nebraska, it is one of the worst tax states. Property taxes on an average house is $4k+ per year. Car taxes are $300+ per year (not including the high sales tax to begin with). Gas taxes are near US highs. Heck, Nebraska made the worst states for business taxes list. Nebraska just has too many roads, and too much land, without the population base to pay for it all.

 

[jlmadyson]

Housing Market Readjusting to Normal Balance, Says NAR

To: National and Business Desks, Real Estate Reporter

WASHINGTON, March 13 /U.S. Newswire/ -- A lower level of home sales expected this year will create a more level playing field for buyers and sellers on the heels of a five-year sellers' market, according to the National Association of Realtors(r) (NAR).

David Lereah, NAR's chief economist, said the number of homes on the market has been improving nicely. "The cooling from overheated sales conditions in recent months is helping to bring inventory levels up to the point where buyers have more choices than they've seen in the last five years," Lereah said. "Annual price appreciation is still running at double-digit rates, but the cause of those sharp increases is going away. As the market readjusts, price appreciation should return to more normal rates of growth this year."

The national median existing-home price for all housing types is projected to rise 5.8 percent in 2006 to $220,300. The median new-home price should increase 5.4 percent this year to $250,200.

Existing-home sales are expected to fall 5.7 percent to 6.67 million in 2006 from the record 7.08 million last year. At the same time, new-home sales are forecast to decline 7.7 percent to 1.18 million from a record 1.28 million in 2005 -- each sector would be at the third highest year following the tallies for 2005 and 2004. Housing starts are likely to total 1.98 million this year, down 4.3 percent from 2.06 million in 2005.

NAR President Thomas M. Stevens from Vienna, Va., said some home buyers and sellers have unrealistic expectations. "Some sellers in markets that have had rapid appreciation are listing the price of their home too high, but those homes are just languishing on the market," said Stevens, senior vice president of NRT Inc. "At the same time, some buyers who have believed hype about a housing bubble are hoping prices will drop, but that?s not happening either.

"Consumers need professional assistance to understand and negotiate the current market realities. Sellers should listen to their agent's advice to competitively price and show the home, and buyers may want to choose a buyer's agent to represent their interests and help them negotiate favorable terms. Today's market has changed a lot from the conditions we've seen during the last five years."

The 30-year fixed-rate mortgage should increase gradually to 6.9 percent in the fourth quarter.

Inflation as measured by the Consumer Price Index is projected at 3.3 percent this year. Inflation-adjusted disposable personal income is expected to grow 3.7 percent in 2006.

Growth in the U.S. gross domestic product is forecast at 3.5 percent in 2006, while the unemployment rate is seen to average 4.8 percent this year.

The National Association of Realtors(r), "The Voice for Real Estate," is America's largest trade association, representing more than 1.2 million members involved in all aspects of the residential and commercial real estate industries.

EDITOR'S NOTE: NAR will soon revise national and regional median existing-home prices back to 1999. The fixed reporting sample of representative multiple listing services has been updated to reflect geographic changes over time so that the monthly samples for regional price measurements are as accurate as possible. The changes in price patterns will be consistent with previously reported data.

Existing-home sales data for February will be released March 23; the next forecast is scheduled for April 11, and the Pending Home Sales Index will be April 3.

Some interesting projections, 6.9% APR on 30 year fixed by Q4 , existing homes down 5.7%, and 7.7% for new homes. Should be an interesting year, normal balance I suppose. I'm just wondering overall what kind of year that would be in respect to the last decade, and what kind of impact it will have on GDP.

 

[dmcowen674]

Bottom line is the Republicans financed their whole destruction of the U.S. by ordering banks to give away money to developers.

This is going to cost the Country dearly.

 

[dullard]

Originally posted by: jlmadyson
Some interesting projections, 6.9% APR on 30 year fixed by Q4 , existing homes down 5.7%, and 7.7% for new homes. Should be an interesting year, normal balance I suppose. I'm just wondering overall what kind of year that would be in respect to the last decade, and what kind of impact it will have on GDP.

Your interesting article was added to the list above. That article projections appear to be following the trends at the end of 2005: strong but declining sales, strong but declining price increases, increasing interest rates.

I don't know enough to make GDP projections from housing changes. On the surface, the exchange of an existing house from one person to another would not affect GDP (since nothing new was actually made or sold). But, declining new home sales will have an effect. However, wouldn't the ~4.3% drop in housing starts mostly offset the ~5% gain in new house prices, so it is all a wash? There will be a drop in furnature/appliance sales as many people buy them for their house, but that is such a minor part of GDP, I don't see much impact.

The bigger GDP hit, I think, is the lack of refinancing money that will come as (1) interest rates rise and (2) people have already refinanced all the equity they could. When this ends, it could be a -2% to -3% hit to GDP (putting us right on the zero growth region in mid to late 2007 if nothing else changes).

 

[jlmadyson]

U.S. Housing Starts Fall 7.9% to 2.12 Million Rate in February

March 16 (Bloomberg) -- The pace of U.S. housing starts fell less than expected last month, suggesting housing demand is holding up in the face of higher mortgage rates.

Builders broke ground on new homes at an annual rate of 2.12 million in February, down 7.9 percent from January's revised 2.303 million, the Commerce Department said today in Washington. Building permits, a sign of future construction, fell 3.2 percent to an annual rate of 2.145 million.

Builders kept up the momentum in February after unusually mild January temperatures let them get an early start on the construction season. Housing starts probably will slow later this year as mortgage rates and selling prices put new homes out of the reach of more would-be buyers.

``Housing starts are still on a rising trend despite all this talk about housing cooling off,'' Kevin Logan, chief U.S. economist at Dresdner Kleinwort Wasserstein in New York, said before the report. ``With a lag we should see housing starts fade. The second quarter will really tell the tale.''

Economists expected starts to fall to a 2.03 million rate in February from the prior month's originally reported 2.276 million, according to the median of 59 forecasts in a Bloomberg News survey. Estimates ranged from 1.95 million to 2.175 million.

Permits were forecast to fall to a 2.11 million pace, from 2.217 million, according to the median of 23 estimates in a Bloomberg survey. Projections ranged from 2.05 million to 2.22 million.

Single-Family Starts

Starts of single-family homes fell 2.3 percent last month to a 1.8 million-unit rate. Builders started work on multifamily homes such as townhouses at an annual rate of 320,000, down 30 percent.

Starts fell in three of four regions. They fell 24 percent in the Northeast to 182,000, 11 percent in the South to 1.04 million and 10 percent in the Midwest to 326,000. Starts rose 7.9 percent in the West to 571,000.

The number of homes under construction rose 0.6 percent last month to 1.428 million, the most since February 1974. Housing completions fell 1.7 percent to 2.022 million units at an annual rate.

The number of housing units authorized, but not yet started, fell 1.1 percent to 212,800.

New Home Sales

New home sales probably will decline 7.7 percent this year as rising mortgage rates and prices make housing affordable for fewer people, the National Association of Realtors forecast on March 13.

Changes in housing starts can lag fluctuations in sales by six months to a year, economists said. New home sales peaked in July. The government will release February's sales report on March 24.

As home sales decline, price increases will slow, said Ara Hovnanian, chief executive officer of Hovnanian Enterprises Inc., the ninth biggest U.S. homebuilder by stock market value.

``I think it's very likely we're going to see a leveling off or at least a slowing in the appreciation rate,'' Hovnanian said in an interview on March 8. ``Our view is it's going to be a very soft landing,'' for housing.

The median new-home price will increase 5.4 percent and the 30-year mortgage rate will reach 6.9 percent by the end of the year, according to the National Association of Realtors. In December, the median new-home price was 6.7 percent higher than a year earlier, according to a government report.

Mortgage Rate

The average rate on a 30-year fixed mortgage was 6.25 percent in February, up from 6.15 percent the month before, according to Freddie Mac. Based on last month's average, interest and principal costs for every $100,000 of a loan would be $615.72.

The housing market accounted for 55 percent of economic growth last year, according to a Merrill Lynch & Co. report released last month. Growth will probably reach a 4.7 percent rate this quarter, the strongest in more than two years, before slowing to 3 percent by the end of 2006, according to a Bloomberg survey taken from Feb. 27 to March 7.

Bernanke's view may be right on the money.

 

[GTKeeper]

I think some areas will suffer more than others. In the early 1990s I believe there was a housing correction.

Look at some areas where a couple graduating college earning 50-60 a pop can't afford a 2 bedroom home because they are at 400k-500k!.

I think the bottom line is this.

On average the debt per person in the U.S is at an all time high. If you buy a 450k home today, and put down a payment of 50k on it and the market adjusts by onle 10% down, you just lost all of your equity (save 5k). Also as interest rates rise all the people with interst only rates will feel the squeeze, couple that with people who have taken out new morgtages on their new inflated equity will really feel the pinch. People who believe there will be no correction are delusional.

 

[dullard]

Originally posted by: GTKeeper
People who believe there will be no correction are delusional.

I agree with you there. But people who think the correction will be large or widespread are also delusional. We just can't say at the moment exactly what the extent of the correction will be.

It is clear from the trends I posted above, that something major is going on (record rises and then record falls). Housing is looking for a direction. Overall, I think things are slowing down significantly. But slowing down does not necessarilly mean going in reverse. I suspect prices will go in reverse in many select areas (it is already happening in a few areas). But I don't think prices will reverse nationwide. The nationwide average will pretty much be at a near standstill for several years (some areas growing and some shrinking).

 

[conjur]

And median housing prices are rising at almost twice the increase of wages.


WHHHHEEEEEEEEEE!!!!!!!!

 

[dullard]

Originally posted by: conjur
And median housing prices are rising at almost twice the increase of wages.

If you currently have a house, great for you. The rising prices helps you, and yet your mortgage amount will be the same for 30 years. Remember rising house prices don't necessarilly mean you pay any more! Your mortgage terms are fixed for the life of the mortgage.

If you don't have a house, all it means is that you are stuck in an apartment for that much longer.

 

[conjur]

I'm the latter. I had to sell my house during a period of extended unemployment.

 

[WhipperSnapper]

Originally posted by: dullard

If you currently have a house, great for you. The rising prices helps you, and yet your mortgage amount will be the same for 30 years. Remember rising house prices don't necessarilly mean you pay any more! Your mortgage terms are fixed for the life of the mortgage.

Actually, it could come back to bite people in the form of higher property taxes and perhaps higher insurance rates (higher value for house = higher cost to insure it, I suppose).

 

[Engineer]

Originally posted by: dullard

Originally posted by: conjur
And median housing prices are rising at almost twice the increase of wages.

If you currently have a house, great for you. The rising prices helps you, and yet your mortgage amount will be the same for 30 years. Remember rising house prices don't necessarilly mean you pay any more! Your mortgage terms are fixed for the life of the mortgage.

If you don't have a house, all it means is that you are stuck in an apartment for that much longer.

It helps you if you are planning on selling your house. It hurts you as the tax assessed value continues to rise and you pay more and more taxes on your property. Something cities around the US have caught on to during this rise in values and have evualated homes more frequently to help raise revenues.

 

[charrison]

Originally posted by: Engineer

Originally posted by: dullard

Originally posted by: conjur
And median housing prices are rising at almost twice the increase of wages.

If you currently have a house, great for you. The rising prices helps you, and yet your mortgage amount will be the same for 30 years. Remember rising house prices don't necessarilly mean you pay any more! Your mortgage terms are fixed for the life of the mortgage.

If you don't have a house, all it means is that you are stuck in an apartment for that much longer.

It helps you if you are planning on selling your house. It hurts you as the tax assessed value continues to rise and you pay more and more taxes on your property. Something cities around the US have caught on to during this rise in values and have evualated homes more frequently to help raise revenues.

As far as I know California is the only place with sane property tax rules. Your property tax remains at the purchase price. Other places where property taxes are redone a yearly basis have a nasty habit of taxing people out of their homes.

 

[jlmadyson]

US growth solid even if housing slows: Bernanke

NEW YORK (Reuters) - A slowdown in the U.S. housing market would still be entirely consistent with economic growth at or near potential, Federal Reserve Chairman Ben

Bernanke said on Monday.

"There has not been but there may be in the future some stress in some areas, but broadly speaking I think that consumer finances are consistent with continued reasonable growth in consumption and enough to keep the economy at or close to its potential output growth rates," Bernanke said in answer to a question following a speech in New York.

"This increase in mortgage debt may not be a particularly serious problem. First, there has been on the other side of the balance sheet, significant increases in assets, so that balance sheets in general are looking stronger," he said.

Bernanke said that, even if short-term interest rates rise, the impact on the growing number of people who hold adjustable-rate mortgages would occur with a lag since many of them have fixed-rate "lock-in periods" of three, five or seven years before the adjustable feature kicks in.

"Our best estimates at the Federal Reserve are that the repricing of these instruments is actually going to take place relatively slowly," Bernanke said.

CURRENT ACCOUNT GAP A RISK

Bernanke also said the large U.S. current account deficit poses a risk but he said it was not strictly a U.S. phenomenon.

"I have expressed concern about that because while I think it is possible over a number of years to bring the current account down, it does pose certain financial risks, particularly risks in changes in interest rates and the dollar," he said.

"It is a global phenomenon and requires action not only by the United States but by our trading partners in order to rebalance in some sense the distribution of final demand around the world," Bernanke said.

The Fed chief said that the conventional G7 prescription to reducing the U.S. current account deficit was higher U.S. savings, more flexibility in Asian currency regimes and greater growth in Europe and Japan.

He said U.S. saving rates were likely to rise over the next year or two, especially if housing prices moderate.

The Fed chief said that there has been some movement on the part of China toward increased currency flexibility, which U.S. lawmakers are seeking as a means to bring down U.S. trade deficits, but Bernanke said "so far, of course, those steps are relatively modest."

"I would add that ... it's also particularly important for there to be greater domestic demand absorption, in the economic lingo, in the economies of east Asia. We have a lot of economies that are essentially running an export-led development strategy -- which I guess is fine except that everyone can't run an export-led development strategy," he said.

"It is necessary over time for there to be an increased reliance on domestic demand in Asia to help move toward this balance," Bernanke said.

He said while there has not yet been a great deal of progress on this front, he was moderately encouraged that there was beginning to be a cyclical recovery in Europe and Asia, which would provide more strength to the global economy.

"Another slightly positive direction I think is that China and perhaps to some extent other Asian countries, have begun to speak about increasing their own domestic demand as part of their own development process and implicitly as part of the global rebalancing process," he said.

Bernanke dodged a direct answer when asked to specify whether he felt the best way to ratchet down spiraling budget deficits was through cutting spending or by raising taxes.

Bernanke said that, in his appearances before Congress, he would tell lawmakers "not necessarily to choose high or low spending or high or low taxes, but only to make sure that the choices they make are internally consistent and consistent with long-term responsibility in our fiscal finances."

Guess, we shall see in due time.

 

[Bitek]

Helluva post OP!

I definely notice far more For Sale signs up, and staying up. Prices have not greatly appreciated in the last year in my area (but they are not dropping, which would be my greatest concern.)

 

[EatSpam]

Originally posted by: Train
The housing market will drop, thats for sure, but I don't think it will crash. Like Greenspan said "it will likely have a soft landing"

There are too many smart consumers out there who realize prices are inflated, and are waiting til they come down to buy. When prices fall, there will be plenty of people waiting to catch them.

Sucks to be the people who bought when prices were high...

 

[DeeKnow]

Originally posted by: dullard

Originally posted by: TylerP
I am hoping for a housing bubble-pop. Cause that is when I swoop in and clean up nicely.

Welcome to Anandtech.

You and millions of other investors who are waiting for prices to drop. Because of them, housing prices are unlikely to fall nationwide. They are already falling in some isolated regions, but don't expect the fall to be big or necesarilly in your location. Todd33 got it right - the higher interest rates will wipe out most of any savings you get by waiting for prices to fall.

....unless you're sitting on a lot of cash, that is

 

[dmcowen674]

3-22-2006 Homeowners stretched perilously

BOSTON - If the nation's real estate boom collapses, its first victims may well be low-income minorities and immigrants in a big US city like Boston.

That is the picture emerging here as foreclosures rise and the housing prices falter.

More than one-quarter of Boston's mortgage-holders appear to be stretched thin financially, spending at least half their income on housing

Such pressures are forcing a rising number of homeowners to erase their debts by forfeiting their homes. Foreclosure filings in the county that includes Boston nearly doubled in January from a year ago, ForeclosuresMass. says.

Homeowners "call us and are heartbroken," says Robert Pulster, executive director of the Ecumenical Social Action Committee, which works with Boston residents on the brink of losing their homes. "They thought it was their dream."

More trouble lies ahead, some experts warn.

"This is the first decade that we have had this culture of pricing risk in home lending," says Susan Wachter, professor of real estate at the University of Pennsylvania. "What happens if someone loses a job?... If you are already spending 50 percent of your income toward a mortgage, there is no cushion."
================================
and Republicans are thrilled.

 

[dullard]

Mortgage demand at a year low.

Home ownership is down for working class. Although, a drop of 3% over 25 years is basically nothing.

Originally posted by: WhipperSnapper
Actually, it could come back to bite people in the form of higher property taxes and perhaps higher insurance rates (higher value for house = higher cost to insure it, I suppose).

Originally posted by: Engineer
It helps you if you are planning on selling your house. It hurts you as the tax assessed value continues to rise and you pay more and more taxes on your property. Something cities around the US have caught on to during this rise in values and have evualated homes more frequently to help raise revenues.

Luckilly, I live in a state that in the last decade or so has lowered property tax rates as property tax values increase. I think all states should do that.

Originally posted by: Hafen
Helluva post OP!

Thanks.

Originally posted by: dmcowen674
More than one-quarter of Boston's mortgage-holders appear to be stretched thin financially, spending at least half their income on housing.

That scares me. I couldn't even begin to consider spending 50% on housing. For me, it is closer to 20%! Areas like Manhattan, Boston, and California seem to be the first to be stretched beyond their means - who knows how many more areas will reach that point. But, you could keep politics out of your post.