Housing Thread...5/26/09 - Case-shiller down another 2.1 percent, no bottom yet

[alchemize]

Home prices fall at record pace

NEW YORK (CNNMoney.com) -- An index of home prices in 20 major metropolitan areas fell at a record annual pace in November, to levels not seen since 2004, according to a report released Tuesday.

The S&P Case-Shiller Home Price Index, a sampling of 20 cities from across the nation, fell a record 18.2% over the 12 months ended Nov. 30. That brought the index to its lowest point since February 2004. From its peak in mid-2006, the index has plunged a whopping 25.1%.

A necessary decline...many people being pinched that don't deserve it - put 20% down, lost their job, have to move...

eff all those waitress/construction worker husband and wife combos who bought McMansions with interest only loans.

Here is the actual press release with graphs

Hard to say if we're nearing a bottom or just in free-fall. Overall we're back to 04 levels, but are we going to return to 02? 1999? 1987?


2/2/09
Pending home sales rise in December


Senate Adds Homebuyer Tax Credit to Stimulus Bill


3/23/09
Existing home sales grow 5.1%

4/16/09
Housing starts down 10.8%

4/23/09
Existing sales down 3%. I've had one showing in the last 3 weeks on my house. This market is still dead.

4/28/09
Case-shiller still headed down.
S&P/Case-Shiller Composite 10 158.0 154.7 (Previous/Actual)
S&P/Case-Shiller Composite 20 146.4 143.2 (Previous/Actual)

5/19/09
Housing starts down 12.8%

5/26/09
Case-Shiller says no bottom yet
&P/Case-Shiller Composite 10 154.7 151.41 (Previous/Actual)
S&P/Case-Shiller Composite 20 143.2 139.99 (Previous/Actual)

 

[StageLeft]

i got my property tax bill in the mail a month back and my house is assessed exactly where it was two years ago. Rochester NY hasn't been hit hard, but let's get real. I really ought to see what it takes to get a more meaningful assessment.

 

[GTKeeper]

Originally posted by: Skoorb
i got my property tax bill in the mail a month back and my house is assessed exactly where it was two years ago. Rochester NY hasn't been hit hard, but let's get real. I really ought to see what it takes to get a more meaningful assessment.

You can dispute that.

 

[alchemize]

Originally posted by: Skoorb
i got my property tax bill in the mail a month back and my house is assessed exactly where it was two years ago. Rochester NY hasn't been hit hard, but let's get real. I really ought to see what it takes to get a more meaningful assessment.

They tripled my land assessment...crooks. House has been there for 250 years, now all the sudden in one year my land is worth 3x?

 

[Red Dawn]

Originally posted by: alchemize

Originally posted by: Skoorb
i got my property tax bill in the mail a month back and my house is assessed exactly where it was two years ago. Rochester NY hasn't been hit hard, but let's get real. I really ought to see what it takes to get a more meaningful assessment.

They tripled my land assessment...crooks. House has been there for 250 years, now all the sudden in one year my land is worth 3x?

You live in a 250 year old house?:shocked:

 

[alchemize]

Originally posted by: Red Dawn

Originally posted by: alchemize

Originally posted by: Skoorb
i got my property tax bill in the mail a month back and my house is assessed exactly where it was two years ago. Rochester NY hasn't been hit hard, but let's get real. I really ought to see what it takes to get a more meaningful assessment.

They tripled my land assessment...crooks. House has been there for 250 years, now all the sudden in one year my land is worth 3x?

You live in a 250 year old house?:shocked:

Yup

Well, the front 1/2 is 250 give or take. Pre-revolutionary war by the hand-carved beams. The back 1/2 is around the 1860's based on newspapers found used for wall insulation.

"If these walls could talk"...

 

[MustISO]

Where I live I haven't noticed that much of a decline. It's definitely gone down but not more than 10% which is still WAY higher than we paid back in 2000.

 

[Robor]

I have a coworker who purchased near the peak of the bubble. They're now about $85K upside-down on their place. I refinanced an adjustable mortgage to 30 fixed ~ 5 years ago. We took out a home equity loan on our place ~ 3 years ago. Values have dropped so far (about 50% of peak in my neighborhood) between the original mortgage and HE loan we're about $40K upside-down today.

You (the OP) can say it's a necessary adjustment and celebrate it if you want but if this downward trend continues it's only going to get worse. In our case I'm seeing little reason to continue paying into a place that's possibly many years away from having equity again. The mortgage interest gives us very little over the standard deduction on our income taxes and each year homeowners insurance (ass rape here in FL) goes up 10%+. We could probably get a lot better (newer and closer to work) place for less money in rent. Yeah, it would knock our credit down but we've got great credit now and could probably build it back up sooner than our condo has any equity.

 

[BigDH01]

Originally posted by: Robor
I have a coworker who purchased near the peak of the bubble. They're now about $85K upside-down on their place. I refinanced an adjustable mortgage to 30 fixed ~ 5 years ago. We took out a home equity loan on our place ~ 3 years ago. Values have dropped so far (about 50% of peak in my neighborhood) between the original mortgage and HE loan we're about $40K upside-down today.

You (the OP) can say it's a necessary adjustment and celebrate it if you want but if this downward trend continues it's only going to get worse. In our case I'm seeing little reason to continue paying into a place that's possibly many years away from having equity again. The mortgage interest gives us very little over the standard deduction on our income taxes and each year homeowners insurance (ass rape here in FL) goes up 10%+. We could probably get a lot better (newer and closer to work) place for less money in rent. Yeah, it would knock our credit down but we've got great credit now and could probably build it back up sooner than our condo has any equity.

I can see a reason for you to continue paying; the fact that you signed a document saying you agreed to repay the loan.

 

[SP33Demon]

Good, and I hope people who flipped houses are getting nailed with their pants down.

 

[GTKeeper]

Originally posted by: BigDH01

Originally posted by: Robor
I have a coworker who purchased near the peak of the bubble. They're now about $85K upside-down on their place. I refinanced an adjustable mortgage to 30 fixed ~ 5 years ago. We took out a home equity loan on our place ~ 3 years ago. Values have dropped so far (about 50% of peak in my neighborhood) between the original mortgage and HE loan we're about $40K upside-down today.

You (the OP) can say it's a necessary adjustment and celebrate it if you want but if this downward trend continues it's only going to get worse. In our case I'm seeing little reason to continue paying into a place that's possibly many years away from having equity again. The mortgage interest gives us very little over the standard deduction on our income taxes and each year homeowners insurance (ass rape here in FL) goes up 10%+. We could probably get a lot better (newer and closer to work) place for less money in rent. Yeah, it would knock our credit down but we've got great credit now and could probably build it back up sooner than our condo has any equity.

I can see a reason for you to continue paying; the fact that you signed a document saying you agreed to repay the loan.

Yes, but that doesn't mean anything. Robor can take his keys and send them to the bank, he owes the bank NOTHING at that point. Mortages are non-recourse loans meaning the bank can't touch any of his other assets.

I see him walking out of his house as an instant 40k raise, sounds like a good deal to me.

The only way out of this mess is for the government to really step in (because the lenders won't) reduce principal on these houses by some amount so that people actually have an incentive to pay their houses off.

 

[irwincur]

How do you propose the government picks and chooses who should benefit from this. I will be pissed that people in CA stand to get a lot more than someone say in the Midwest. It is not my fault that some moron bought a $1 million dollar house on a 50K salary.

There is some personal responsbility to be had here. It is not the governments job to read the terms of your loan. Hell, even if they did, they would have said go for it. The thinking over the last 30 years has been that home ownership is good, no matter what the cost is.

 

[Moonbeam]

Home sales of distressed and bank owned properties are up as the vultures swoop in to clean up the carcases.

 

[irwincur]

Vultures or smart buyers? The best time to buy are when prices are low - what is wrong with that.

 

[CPA]

Originally posted by: alchemize

Originally posted by: Red Dawn

Originally posted by: alchemize

Originally posted by: Skoorb
i got my property tax bill in the mail a month back and my house is assessed exactly where it was two years ago. Rochester NY hasn't been hit hard, but let's get real. I really ought to see what it takes to get a more meaningful assessment.

They tripled my land assessment...crooks. House has been there for 250 years, now all the sudden in one year my land is worth 3x?

You live in a 250 year old house?:shocked:

Yup

Well, the front 1/2 is 250 give or take. Pre-revolutionary war by the hand-carved beams. The back 1/2 is around the 1860's based on newspapers found used for wall insulation.

"If these walls could talk"...

They just don't make'm like that anymore.

 

[Robor]

Originally posted by: BigDH01

Originally posted by: Robor
I have a coworker who purchased near the peak of the bubble. They're now about $85K upside-down on their place. I refinanced an adjustable mortgage to 30 fixed ~ 5 years ago. We took out a home equity loan on our place ~ 3 years ago. Values have dropped so far (about 50% of peak in my neighborhood) between the original mortgage and HE loan we're about $40K upside-down today.

You (the OP) can say it's a necessary adjustment and celebrate it if you want but if this downward trend continues it's only going to get worse. In our case I'm seeing little reason to continue paying into a place that's possibly many years away from having equity again. The mortgage interest gives us very little over the standard deduction on our income taxes and each year homeowners insurance (ass rape here in FL) goes up 10%+. We could probably get a lot better (newer and closer to work) place for less money in rent. Yeah, it would knock our credit down but we've got great credit now and could probably build it back up sooner than our condo has any equity.

I can see a reason for you to continue paying; the fact that you signed a document saying you agreed to repay the loan.

Works both ways - If I lose my job again (laid off 2x in the last 4 years) and can't find another to afford my mortgage the bank will foreclose and toss my wife and I out. Sorry, I don't have any pity toward the bank.

 

[GTKeeper]

Originally posted by: irwincur
How do you propose the government picks and chooses who should benefit from this. I will be pissed that people in CA stand to get a lot more than someone say in the Midwest. It is not my fault that some moron bought a $1 million dollar house on a 50K salary.

There is some personal responsbility to be had here. It is not the governments job to read the terms of your loan. Hell, even if they did, they would have said go for it. The thinking over the last 30 years has been that home ownership is good, no matter what the cost is.

But what is the alternative?

What is worse? Banks losing 40k / per house as people leave in droves from their homes, or having the principal value be reduced by the government by lets say 80% of the up-side down value?

If the first item happens, banks lose 40k instantly + more for the amount of time the house sits on the market so in reality its the upside down value + some percentage

If we go the 2nd route, people stay in their homes, and banks have a SHOT at recovering their loan value. If the government was smart (which it isn't) it should take the upside down values of these houses, and let people pay that off at some ridiculously low interest rate, let the rest be refininaced through the lender. And the part that is refinanced by the government, is given to the lender so in Robor's case it would be like this:

Robor's house is 40k under water. The gov't says

Reduce his mortgage amount by 20k. (bank agrees to take a 20k hit, but its money they won't see anyway)

Partially Refi the house under a lower rate provided by the government. Immediately have the government pay the lender an X + 20k amount.

Then the part that is refinanced by amount X + 20k, becomes a recoursive loan that Robor HAS to pay back. BUT in the end he has a lower monthly payment, he has an incentive to stay in his house AND he has to pay it back or his future assets are at stake.

This is a win win situation for Robor and the bank. Robor's monthly payment is lower than before, he gets to pay back 20k less than what he paid for originally and at the same time the bank gets a nice chunk of money and is happy that the loan is in less danger to default.

 

[Craig234]

Originally posted by: Red Dawn

Originally posted by: alchemize

Originally posted by: Skoorb
i got my property tax bill in the mail a month back and my house is assessed exactly where it was two years ago. Rochester NY hasn't been hit hard, but let's get real. I really ought to see what it takes to get a more meaningful assessment.

They tripled my land assessment...crooks. House has been there for 250 years, now all the sudden in one year my land is worth 3x?

You live in a 250 year old house?:shocked:

He just moved in, too Welcome to our forum, President Obama.

 

[Martin]

IIRC, median income has grown very little since about 2001, so a return to year 2000 prices seems likely. They don't give the average house price in the article, but I'd look for prices to stabalize when they fall to about 3.something times the median household income (so around 160-170k?)

 

[CADsortaGUY]

Originally posted by: GTKeeper

Originally posted by: irwincur
How do you propose the government picks and chooses who should benefit from this. I will be pissed that people in CA stand to get a lot more than someone say in the Midwest. It is not my fault that some moron bought a $1 million dollar house on a 50K salary.

There is some personal responsbility to be had here. It is not the governments job to read the terms of your loan. Hell, even if they did, they would have said go for it. The thinking over the last 30 years has been that home ownership is good, no matter what the cost is.

But what is the alternative?

What is worse? Banks losing 40k / per house as people leave in droves from their homes, or having the principal value be reduced by the government by lets say 80% of the up-side down value?

If the first item happens, banks lose 40k instantly + more for the amount of time the house sits on the market so in reality its the upside down value + some percentage

If we go the 2nd route, people stay in their homes, and banks have a SHOT at recovering their loan value. If the government was smart (which it isn't) it should take the upside down values of these houses, and let people pay that off at some ridiculously low interest rate, let the rest be refininaced through the lender. And the part that is refinanced by the government, is given to the lender so in Robor's case it would be like this:

Robor's house is 40k under water. The gov't says

Reduce his mortgage amount by 20k. (bank agrees to take a 20k hit, but its money they won't see anyway)

Partially Refi the house under a lower rate provided by the government. Immediately have the government pay the lender an X + 20k amount.

Then the part that is refinanced by amount X + 20k, becomes a recoursive loan that Robor HAS to pay back. BUT in the end he has a lower monthly payment, he has an incentive to stay in his house AND he has to pay it back or his future assets are at stake.

This is a win win situation for Robor and the bank. Robor's monthly payment is lower than before, he gets to pay back 20k less than what he paid for originally and at the same time the bank gets a nice chunk of money and is happy that the loan is in less danger to default.

And reinforces bad behavior...

 

[alchemize]

Originally posted by: Martin
IIRC, median income has grown very little since about 2001, so a return to year 2000 prices seems likely. They don't give the average house price in the article, but I'd look for prices to stabalize when they fall to about 3.something times the median household income (so around 160-170k?)

I think the cost of construction and materials, diminishing availability of land (see major metro areas) drives prices much more than median household income. I don't think a 3% year over year gain is unreasonable. Not sure where that puts prices at...

 

[BigDH01]

Originally posted by: GTKeeper

Originally posted by: BigDH01

Originally posted by: Robor
I have a coworker who purchased near the peak of the bubble. They're now about $85K upside-down on their place. I refinanced an adjustable mortgage to 30 fixed ~ 5 years ago. We took out a home equity loan on our place ~ 3 years ago. Values have dropped so far (about 50% of peak in my neighborhood) between the original mortgage and HE loan we're about $40K upside-down today.

You (the OP) can say it's a necessary adjustment and celebrate it if you want but if this downward trend continues it's only going to get worse. In our case I'm seeing little reason to continue paying into a place that's possibly many years away from having equity again. The mortgage interest gives us very little over the standard deduction on our income taxes and each year homeowners insurance (ass rape here in FL) goes up 10%+. We could probably get a lot better (newer and closer to work) place for less money in rent. Yeah, it would knock our credit down but we've got great credit now and could probably build it back up sooner than our condo has any equity.

I can see a reason for you to continue paying; the fact that you signed a document saying you agreed to repay the loan.

Yes, but that doesn't mean anything. Robor can take his keys and send them to the bank, he owes the bank NOTHING at that point. Mortages are non-recourse loans meaning the bank can't touch any of his other assets.

I see him walking out of his house as an instant 40k raise, sounds like a good deal to me.

The only way out of this mess is for the government to really step in (because the lenders won't) reduce principal on these houses by some amount so that people actually have an incentive to pay their houses off.

It means he put his name on a piece of paper pledging he would pay. To some, this may not mean much but I think it is worth something.

Not all second mortgages are non-recourse by the way. In fact, most that I know of are recourse.

 

[GTKeeper]

Originally posted by: CADsortaGUY

Originally posted by: GTKeeper

Originally posted by: irwincur
How do you propose the government picks and chooses who should benefit from this. I will be pissed that people in CA stand to get a lot more than someone say in the Midwest. It is not my fault that some moron bought a $1 million dollar house on a 50K salary.

There is some personal responsbility to be had here. It is not the governments job to read the terms of your loan. Hell, even if they did, they would have said go for it. The thinking over the last 30 years has been that home ownership is good, no matter what the cost is.

But what is the alternative?

What is worse? Banks losing 40k / per house as people leave in droves from their homes, or having the principal value be reduced by the government by lets say 80% of the up-side down value?

If the first item happens, banks lose 40k instantly + more for the amount of time the house sits on the market so in reality its the upside down value + some percentage

If we go the 2nd route, people stay in their homes, and banks have a SHOT at recovering their loan value. If the government was smart (which it isn't) it should take the upside down values of these houses, and let people pay that off at some ridiculously low interest rate, let the rest be refininaced through the lender. And the part that is refinanced by the government, is given to the lender so in Robor's case it would be like this:

Robor's house is 40k under water. The gov't says

Reduce his mortgage amount by 20k. (bank agrees to take a 20k hit, but its money they won't see anyway)

Partially Refi the house under a lower rate provided by the government. Immediately have the government pay the lender an X + 20k amount.

Then the part that is refinanced by amount X + 20k, becomes a recoursive loan that Robor HAS to pay back. BUT in the end he has a lower monthly payment, he has an incentive to stay in his house AND he has to pay it back or his future assets are at stake.

This is a win win situation for Robor and the bank. Robor's monthly payment is lower than before, he gets to pay back 20k less than what he paid for originally and at the same time the bank gets a nice chunk of money and is happy that the loan is in less danger to default.

And reinforces bad behavior...

I don't think it does in this case. Banks will learn not to lend so freely next time. I think this type of compromise is something we just have to go through. I would rather do this than watch 20% of the houses in my area go under to foreclosure. That just creates squatters, crime, and even more losses on my property. I have a responsible mortgage, my house is not under water and I don't feel screwed if the above is implemented. It mitigates my downside risk even more than I have myself (by getting a fair valued house under terms I can easily pay).

What do you suggest?

 

[Moonbeam]

Originally posted by: irwincur
Vultures or smart buyers? The best time to buy are when prices are low - what is wrong with that.

Who says I see anything wrong with this. Vultures are an important part of the ecosystem and provide invaluable service there. The Tibetans, I hear, place the dead where the vultures can eat them and poop them out over their beloved land to nourish it. It would be wonderful if we were allowed to do the same. Can't think of a better way to go out.

Bottom feeding house buyers are cleaning up empty homes that blight the market and foul neighborhoods.

 

[PingSpike]

Everytime I look around here to see if houses have lost a lot of money (so I can try to reduce my inane property tax assessment) I find that there is now like one house for sale and its the same price range as a couple years ago. If prices have gone down, people have just responded by taking them off the market.

Houses are impossible to build up here. The last time they built a bunch of them was for baby boomers in the 70s. Then they made the development laws really strict and the permitting process complex and expensive. About the only thing that got built recently were condos...my personal opinion being that condos are like apartment except you have to fix your own toilet. If you want a house your choices are one of the few 1970s raised ranches with a half acre lawn left for sale at the same 250K price or you can buy one the flatlander mansions for 500k-2million that are for sale.