Bank Of America: "A Slowdown In National Home Prices Is Coming"

Tyler Durden's picture

Via BofAML's Ethan Harris,

The gain in home prices has been widespread, with prices up on an annual basis in all 20 metropolitan areas surveyed. However, the improvement has been particularly notable in certain markets, which have disproportionately pulled up the national composite. The areas with the fastest home price appreciation have generally been those that have attracted the greatest amount of investor buying. As investor demand wanes in these markets, home price appreciation slows.


Surfs up

The trend in home prices in California is particularly important when gauging the risks to national home prices.

About 10% of the national housing stock is in California; it is about 20% if measured by the value of the owner occupied housing stock. Home prices also tend to be more volatile in California than the nation and seem to be an early indicator of the turns in the overall market. As Chart 5 shows, home prices in California have recently peaked at 23% yoy in August and have slowed to the current pace of 15.6% yoy

If history is a guide, this suggests a slowdown in national prices is coming. This is consistent with our forecast. We are looking for the pace of home price appreciation to be nearly half of the current 10.5% pace by the end of the year.

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pound the vix's picture

Don't worry.  Home prices never go down.

localsavage's picture

It's a good time to buy...Click.   It's a good time to buy...Click.   It's a good time to buy...Click.

quasimodo's picture

Will be flipping burgers at this rate, yo

NotApplicable's picture

I was unaware that price has a velocity component.

Why did I go to college again?

Bindar Dundat's picture

I have this feeling  that tonight or tomorrow morning the big one will come in California.  

TVP's picture

And interest rates never go up.  Praise the Yellenturtle.  

yrad's picture

My home value in Dallas, Tx in 2012 was 201k. It is now 242k. Time for a pool!!

Magnix's picture

Thats BS! $40K increase??? Well, its just depends on the area, because I live in Grand Prairie TX (in the Dallas county) and my home value 185K and just slightly up to $190K now.

The Most Interesting Frog in the World's picture

Forgot to mention he added an outhouse.  That 'splains the increase...

Headbanger's picture

That's nothin!

Tent prices have almost doubled in the past five years!

Four chan's picture

the disease the fed spreads, its debt and its derivatives based on its debt instruments, 
has been flooding back into the fed on to its balance sheet like mrsa infecting the host 
as the host flails about spewing its disease further afield in an attempt to buy its way 
out of the cycle created precisely by the same process that created the initial imbalance in health, 
excess liquidity. excess debt units called fed res notes. 

debt is slavery and this is at the heart of the dishonest 
money system that replaced the honest one that made we the people great. 

we are about to discover why the founders gave the republic the money system it once had.

Atomizer's picture

Mrs Atomizer and I took advantage during the last housing crisis. The problem with the Federal Reserve, U6 and lack of demand in new foreign housing purchase demand. 

See how easy that was?

Luckhasit's picture

Why can't i borrow against that equaity? A home is a home.

Just imagine the potential in tent cities.

Lewshine's picture

@ Yrad,

LOL! I live in Ft. Worth (26 miles from Dallas), I'm a real estate Speculator / Investor. Property values only dropped about 20% at the height of the housing collapse - In the Metroplex. Then they bounced back by 2011. Here's the funny - Of course your property in Dallas is at 240k value...According to the property tax man, who gets 3% a year - FOREVER!! By next year you'll be eating cat food but the tax man will have your property value at 300K and $9000 a year to him. BWAHAHAHA Try listing it for that price and see what happens!!! WAKE UP!!

Duke Dog's picture

Exactly, I live in Collin County, about 25 miles N. of Dallas. I've fought those bastards every year for the last 6 and currently involved in another battle with the tax fuckers. Proposed valuation increases during that time have been anywhere from 3-8%, this year it was 5%. They are criminal thieving bastards! There is no way the home would sell for anything more than 80% of the proposed value - a 20% over valuation.

Actually met with an attorney last Thursday and have a Protest hearing scheduled for the first week of July. Considering the cost/benefit of filing suit and it is almost a breakeven proposition at this point. As much as I hate to say it, I would rather pay the fucking attorney than the fucking other theiving criminals.

homiegot's picture

It's Grand Prairie for god sakes. 

AlaricBalth's picture

Call now and we can get you a HELOC at 4.57% with no income/no asset verification. You are approved with FICO scores as low as 305. If you can breathe, you can leave, with a new loan for all your household needs.

Just call 1-800-IMFUCKD

Atomizer's picture

Bank of America is hyperventilating in a brown paper bag. MBS taper.

TVP's picture

@yrad: I'm not sure whether to laugh or cry at this.  

I think I want to cry, because most everyone around me actually thinks like this.  

cougar_w's picture

It is interesting that they called it a "slowdown" and not a "drop".

Not an accident. Tells you something about how they think.

hidingfromhelis's picture they want you to think.

Winston Churchill's picture

Its contained, not to worry.

Spungo's picture

What "artificial lending standards" are you talking about?

AccreditedEYE's picture

How many times does B of A need to prove themselves as a contra indicator on this site? Jeez, think I'll run out and buy 2 or 3 more properties. Between these clowns and the IMF we have the largest green light flashing for RE.

zipit's picture

The ROC chart speaks for itself (assuming the numbers behind it are accurate).

buzzsaw99's picture

+20% yoy, the new normal [/sarc]

Spastica Rex's picture

Should I take out a mortgage on my paid-for '50s brick rambler? I don't want to miss out, and I could use a holiday and some new clothes.

buzzsaw99's picture

yes. you can't put a price on memories.

F.A. Hayek's picture

don't forget the big screen lcd and the neon undercarriage for your hooptie.

The_Dude's picture

You don't think Yellen, the one trick pony, will run the printers fast enough to make everyones head spin the minute we see a little deflation.  

Rainman's picture

yup..leveraged asset deflation is the boogeyman for all central bankers.

Colonel Klink's picture

Bankruptcy of Cuntrywide America.  Hope you finally choke to death on bad housing debt and die!

Rockfish's picture

Stated income (liar loans) are back. 650 FICO on 75% LTV. 

Fog a mirror get a loan. 

orangegeek's picture

OK, who's the BOA rocket scientist?  I want to meet this person.


Such a shit show out there.  Fkg banksters!!!!!

yellowsub's picture

If you bulldoze the homes, they won't count anymore.

Atomizer's picture

Dear Skank of America, 

Who the Fuck cares if I have no mortgage payments x9.

You're the parasite lending debacle limiting the confines of growth..Go cry on someone's shoulder. If you balanced your books correctly, you should still be TARP positive. Let me repeat, POSITIVE. Go fucking whine, it's your regulations that hinder growth..No more banking bailouts.  If your broke, we will close the bank and give you a toaster. 



AdvancingTime's picture

When it comes to real estate low interest rates at some point becomes a double edge sword, that effects both the value by making it easier to purchase thus driving up prices, and at the same time allowing more building to take place and increasing the supply. Often we reach or exceed demand, this eventually has a dampening effect on rents and people stop buying it as an "investment".

Prices must rise and real estate appreciate more then the natural depreciation from the wear and tear from age or the main driver for owning it vanishes. Oversupply is the bane of real estate and crushes the value of this hard and expensive to maintain commodity. Currently we are in uncharted waters, more on this subject in the article below.