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Woe Is Housing: Part 36
This article originally appeared in The Daily Capitalist.
I am sure you could have guessed where housing is headed without the Case Shiller report from S&P. According to S&P:
Home Price Indices, the leading measure of U.S. home prices, show further deceleration in the annual growth rates in 13 of the 20 MSAs and the 10- and 20-City Composites compared to the December 2010 report. The 10-City Composite was down 2.0% and the 20-City Composite fell 3.1% from their January 2010 levels. San Diego and Washington D.C. were the only two markets to record positive year-over-year changes. However, San Diego was up a scant 0.1%, while Washington DC posted a healthier +3.6% annual growth rate. These are the only two cities whose annual rates remained positive throughout 2010. Every other MSA has either moved back into or has always been in negative territory during the recent housing crisis. On a monthly basis, Washington DC was the only market where home prices rose in January, but up only 0.1%. The remaining 19 MSAs and both Composites fell during the month, with 12 of the markets and the 20-City Composite down by at least 1.0% versus December 2010.
To show this on a longer scale:
Here are the individual 20 city MSA data:
I understand why Washington, DC is a boom town right now, but it is, to me, a repulsive statistic. High paid bureaucrats, lawyers, and lobbyists love the town.
The government is putting a lot of pressure on banks to work with borrowers but as prices decline, that isn't a solution. According to CoreLogic:
11.1 million residential properties, or 23.1% of all U.S. homes, were in negative equity at Dec. 31 [Q4], up from 10.8 million, or 22.5%, the prior quarter. The total negative equity held by the nation's homeowners rose to $751 billion for the fourth quarter from $744 billion at Sept. 30, but down from $800 billion a year earlier. The number of upside down mortgages declined through the first three quarters of 2010, as more properties were foreclosed upon. ...
The data analytics firm said another 2.4 million homeowners had less than 5% equity in their property in the fourth quarter, indicating 27.9% of all mortgages are in negative equity or near-negative equity.
CoreLogic said total negative equity is set to rise another 10 points if home prices fall 5% to 10% as projected in 2011.
That means that 13.5 homeowners (27.9%!) are in serious trouble with their homes.
Banks' REO inventory is now 30x greater than foreclosure sales volume. That won't help either.
It's going to be a long haul for housing and there is nothing on the horizon, such as an improving economy, lower unemployment, and climbing wages to stem the flow. There were simply too many homes built during the boom phases at affordability rates that didn't make sense (malinvestment). Those who can afford to buy a home under the new loan standards will be the ultimate beneficiaries of the bust. But, why rush?
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Re buying vs. renting: Renting makes sense unless ... buying makes sense. People are scooping up terrific deals in some areas that are so cheap they are unlikely to get hurt. If you see something that has a great location, good structure, and is dirt cheap, buying makes sense. Lot's of folks are seeing really good deals in small, productive farms for example. It all depends ...
Buy a house: pay mortgage, including interest; pay insurance; pay taxes; pay for all upkeep.
Rent a house: pay someone else's mortgage, including interest (but forego the deduction); pay insurance (both renter's and your landlord's); pay someone else's taxes; and pay for someone else's decisions about upkeep (through higher rents).
You will never win these arguments, whichever side you take. Each case is unique unto itself. No bright line rule here, kids. Some houses are a great value--IT ALL DEPENDS.
Nicely stated, friend.
Only crazy people buy houses now. They will be a lead weight around your ankle preventing you from ever moving and preventing you from accumulating wealth.
renting is the way to go now.
Fed Speak... Gotta Know The Enemy
http://apeakunderthehood.blogspot.com/2011/03/fed-speak-gotta-know-your-...
Buy a house.
Become a tax hostage.
It's that simple.
Rent an apartment.
Become a rent hostage.
It's that simple.
33.1% NegEq if -10% price comes true. And Case-Shill doesn't count condos, some in SoFla are below 1980's cost. Good luck if you live in a building that's losing occupancy by the week, your association fees will double and triple- The Last Standing "Responsible Borrower" will be forced into foreclosure. That's if a hurricane doesn't get them first.
real estate is way overpriced in the large....buying time will not return for many years....the stock market has not plunged to 5000 as it should have in early 2009.....the fed's market viagra is not helping to clear mal-investment....another indicator to look for is hard times for government employees - that is still years into the future...
http://www.rense.com/WalMartPics.htm
#Winning
#WinTheFuture
#Hope
#Change
#Revolution?
There is no hope, there are no reinforcements, there is just shit. Deal with it. Lose all hope.
And the demographics are bad for the next several years.
And because big brother took over the issuance of student loans from banks, lots of recent college grads are stuck with huge amounts of student loans that they are probably just realizing they cannot get rid of even if they declare bankruptcy.
Also please note, Boston is barely down. We're the nation's snobbery distribution center!
It is strange, is it not, that student loan obligations cannot be discharged in bankruptcy? How do we let the government and its bedfellow banks get away with this?
Four years ago, my wife was pressing to move up to a 'better' home. I told her: "let's wait 18 months, we'll get a much better deal". Here we are, 2 1/2 years after my initial time frame has passed, and I'm still telling her: "let's wait 18 months, we'll get a much better deal". Even then, it won't be long enough; but I'm not telling her that...yet.
Now, I'm waiting for 18 months after mortgage rates begin to increase sharply. The desperation of sellers will be palpable.
stick to your guns....
Oh ... just do what this guy did.
http://patrick.net/forum/?p=25968
Stuck it to the banksters AND has a free house in a different country.
....so D.C. is the only area really up???? (San Diego is just statistical noise).
What a commentary on how things are going in the U.S.
San Diego is just statistical noise
Not really, China import hub.
"Not really, China import hub."
I live in San Diego. It is NOT a China import hub. That would be Long Beach and Los Angeles ports. San Diego's real estate market price distortions come from several factors, but being an import hub certainly isn't one of them. Our port just isn't set up that way.
The statistic that should be published, is the rent vs. own cost differential. From that perspective, San Diego has to be among the most expensive.
How does the Navy's presence in San Diego ( home of the Pacific Fleet ) effect rental rates in the area, if at all ? The military presence -- and attendant off-base housing -- must offer some form of [ rental ] price stability.
In a lot of places near military installations rentees lever their rates to what the military authorizes to pay out to their members for BAH (Basic Allowance for Housing) Here in Jersey that amount is in the neighborhood of $1900 a month. I would imagine that in the San Diego area it is at least this high.
Going to a cash-only housing market...like in China.
Soon the sound of rice bowls breaking...
too true....so why did we have to save the banks???
right. I forgot. We had to save the bank ---- ers.
can we have our money and your bonuses back?
when will the violent outrage begin?
i wish this were the case already , as i would have paid $120,000 cash for my house and owned it, instead of the $120,000 deposit on the $500,000 price tag ........that is the problem, they have my down payment money and they can shake the tree and try and knock me out anytime they want....i guess the last question is, would i still be able to make/save $120,000 in that system