Falling home prices

[TBPu]

honobob, I do like evidence but it would be hard to find any evidence in Michigan other than listings. No sales equate to no sales evidence. But I assure you, there are lots of empty houses compared to 3-4 years ago.

So I've never been one to claim expertise but my eye for For Sale signs tells me we got housing problems in River City. Yep, right here in River City folks.

[Texas Proud]

Quote:

Originally Posted by honobob All this talk about years of research and "evidence" , yet in three pages of posts not one confirmed resale at a lower value. I'm sure values are down somewhere but all my confirmed resales in my area have been at 10%+ increase over "bubble years" prior sales. Just curious why no one posts an actual resale at a lower value when they make their claims.

Are we talking now or anytime?

I bought my house at 55% of the previous sale back in the 80s... confirmed with broker and the extra cash they had to put up at closing...

As for today... who knows.. it would have to be someone who recently purchased and is selling now... but I can tell you that there are a number of foreclosures in some good neighborhoods... one I looked at has a tax appraisal at $348K but is listed at $227K... most of the rest are close to the tax appraisal....

[FinallyRetired]

Quote:

Originally Posted by honobob I thought we were trying to find lower resales to support the end of the world. So looks like slightly over 7% annual appreciation. Is this where we Northerners had the Battle of Bull Run? Is there limited land or something like that?

Yeah this is one of the battlefields of the War of Northern Aggression. Land is pretty plentiful, but it's only an hour or so from DC, a pretty stable and growing federal featherbedding job market.

Bit of trivia: Back in the mid 90s the Disney Company tried to secretly buy up all the farm land and turn it into an amusement park with a historic theme. When the locals found out about it they rezoned and voted down the idea.

[honobob]

Damn! Not a trace of evidence left.

[eridanus]

Robert K? Is that you?


Shiller data from Oct 2007 sales:

Denver has returned a 36% return since 1990.
Atlanta has returned 34%.
Chicago has ruturned 63%.
Boston - 69%
etc.

Not to say that they've all been that low. LA has returned the best since 1990 - 150% - and a number of others have over 100% gain.

[jazz4cash]

Quote:

Originally Posted by SoonToRetire Yeah this is one of the battlefields of the War of Northern Aggression. Land is pretty plentiful, but it's only an hour or so from DC, a pretty stable and growing federal featherbedding job market. Bit of trivia: Back in the mid 90s the Disney Company tried to secretly buy up all the farm land and turn it into an amusement park with a historic theme. When the locals found out about it they rezoned and voted down the idea.

Dont underestimate Disney........this price decline could be "Plan B".

[Retire Soon]

San Diego would be a good market to look at when considering price declines. It was one of the first regional markets to go up and likewise it was one of the first markets to decline. The link below will take you to DataQuick, which keeps track of sales in this region. The chart compares November 2007 sales in cities in San Diego County with the same month a year ago.
Keep in mind when viewing the chart that statistics can be misleading. As others have pointed out, many people have taken their homes off the markets. Also, buyers are generally seeking less expensive homes in any given neighborhood since money is becoming tight. The chart only shows actual sales in each city, so if there were only a few, the percentage decline in sales price could be skewed. As everyone knows, November is not the best month to sell a home, but I think you can get a general idea of where home prices are headed by studying the chart.

DQNews - San Diego Union Tribune Zip Code Chart

[cho oyu]

Quote:

Originally Posted by eridanus Robert K? Is that you? Shiller data from Oct 2007 sales: Denver has returned a 36% return since 1990. Atlanta has returned 34%. Chicago has ruturned 63%. Boston - 69% etc. Not to say that they've all been that low. LA has returned the best since 1990 - 150% - and a number of others have over 100% gain.

Hmmm. Imagine that. Even in one of the hottest markets in the US, the average return has been just over 5% per year over the last 18 years.

Interestingly, this follows quite well even if you extend dates back another 50+ years. Most of the US appreciates at around 3%/year (very close to reported inflation), while some coastal areas tend to appreciate at around 5%/year (slightly above reported national inflation rates).

Of course there are some very localized statistical deviations (coastal community becomes a spot for the rich and famous, small mountain town turns into hot ski resort), but for the most part, housing is merely a roof-over-the-head-keep-out-of-the-rain inflation hedge as compared to rent.

[TargaDave]

If you figure that tax breaks are offset by maintenance and depreciation you wonder why so many people are owners instead of renters given the modest long term appreciation. The obvious answer is that for many people (or course not all) a home is much more than a "roof-over-the-head-keep-out-of-the-rain inflation hedge", or some big money making scheme. You might say it's an activity or lifestyle (an outgrowth of the nesting gene?). That fact that it keeps up with inflation at all is a plus

[cube_rat]

I'm stepping back into real estate after cashing out late 2006. I live in the bay area and although San Francisco appears to be still strong to some degree, the peninsula area has a large amount of short sales and bank owned properties on inventory in great areas. This info is stored in the private comments section in the multiple listing. Sometimes the REO or short sale info is advertised, sometimes not. I can't tell you how many empty houses I've walked through here on the peninsula. Where did these people go? I just saw a house yesterday that's an utter disaster where flipper wannbes came in, bastardized the house and ran out of money. Now it sits as bank owned in a very nice part of San Bruno.

EDIT: Overall, I believe that certain parts of the bay area will recover from the current bad pockets due to a strong work force in the Silicon Valley and biotech firms (i.e. Genetech). Additionally, there are still high income earners sitting in rentals salivating right now wondering when to jump into the market, thus I see a wave coming in should rates drop and prices flatten or go downward.

[Martha]

Hey Cube, haven't seen much of you lately!

Honobob, here is a cherry pick from my neighborhood:

1609 east superior st
1986 sold for 169000
2002 sold for 289000
2005 listed for sale at high 300,000s then dropped to mid 300,000s
2006 mortgage foreclosed, balance at time of foreclosure sale was 305,000
2006 and 2007 property listed for sale for 299,000, then 279,000, then 239,000
2007 property sold for 200,000

[honobob]

Quote:

Originally Posted by cho oyu Hmmm. Imagine that. Even in one of the hottest markets in the US, the average return has been just over 5% per year over the last 18 years.

Well, let's take a look at what that really means. 1990 $200,000 purchase of home with 20% down ($40,000). We won't even look at those smart guys like Alex with their no down VA loans. That home will be worh $458,404 in 2007 if it is an AVERAGE home. Now if I put $40,000 in stocks in 1990 and make 10% every year (everybody I know who has bought stock has lost money in the stock market) I'll have $202,179.

Real Estate $458,404
Stock Market $202,179

And the real estate figures are an average!! People I know are doing a hell of alot better than average, but then they know how to do the math.

[honobob]

Quote:

Originally Posted by eridanus Robert K? Is that you? Shiller data from Oct 2007 sales:

You might want to post the parameters of Schiller data. For most metropolitan areas the information is useless.

[TBPu]

I'm not actually saying we have this situation onboard but just sharing the possibility that it may exist.

Cognitive Dissonance
An ego flaw wherein the filtering of information that conflicts with what one already believes, in an effort to ignore that information and reinforce one's beliefs, exists.

Or something of that type might allow certain types to believe that the widely reported housing price drop does not exist and contrarily, a housing price rise is in fact the norm.

And of course it is possible, I guess, for the vast majority of people to be equally obsessed with reporting false information about housing drops.

All is possible.

[cute fuzzy bunny]

Its also possible that a lot of people are focused on the drop and not the big picture and long term growth.

Which psychological dysfunction would that be?

I remember a lot of folks running around in 2002-2003 showing the big drop in the equities markets as the reason why not to invest in equities.

Seems to me that their lip flapping has subsided somewhat over the last four years.

[Bestwifeever]

Quote:

Originally Posted by honobob Well, let's take a look at what that really means. 1990 $200,000 purchase of home with 20% down ($40,000). We won't even look at those smart guys like Alex with their no down VA loans. That home will be worh $458,404 in 1997 if it is an AVERAGE home. Now if I put $40,000 in stocks in 1990 and make 10% every year (everybody I know who has bought stock has lost money in the stock market) I'll have $202,179. Real Estate $458,404 Stock Market $202,179 .

But won't you have to pay back the $160,000 balance on the house out of these profits (assuming you made no further payments)? And subtract property taxes and maintenance from the profit?

[honobob]

Quote:

Originally Posted by TBPu the OPs 2 years of study and the evidence presented do tend to trump a lot of anecdotal chest thumping with little study at all, or maybe not.

TBPu You were the one that came on supporting the OP and chiding other posters for not bowing to the higher authority. But when you were presented with actual sales you tried to diminish them with name calling. Then you admit you and the OP have no evidence but determine the market by the number of empty houses compared to 3-4 years ago. That's about the time you made your unfortunate purchase. What made you buy? Did the neighborhood seem like it was getting fuller?

I get some grief here because I'm very pro real estate. Why wouldn't I be? Just by making reasonably educated purchases I've seen an investment of less than $100,000 turn into over $2,000,000. Anybody could do it. No seminars, no late nite infomercials.

Is there a housing drop? Not where I invest. Not to anybody I know throughout the country. Are some people losing money on real estate? I'm sure there are but there always have been people too stupid/too greedy to make money even in the best of times.

Does home appreciation track inflation? Maybe if you take all properties and buyers and sellers actions and try to represent that as one transaction. But why would you? Where I invest I have a track record of 9-11% going back 30 years. If the average is 3-4% then obviously someone is in the negative numbers. Should I let their failures impact my investing?

Ego? I'm just one of millions that have done as good and others have done better. My only claim to fame has been the ability to pick a good tenant. And even that could just be luck but its been a hellava long streak. So why am I always talking up RE if not to feed my ego? Well, I'm on a retire early forum where people are trying to make financial decisions that will accomplish their goals. Real estate has worked for me and I have no problem sharing my experiences and that of others that I'm familiar with.
If you're here just to discourage people then I hope your audience is limited but even I know there's always some people who want to hear bad news, real or not.

[honobob]

Quote:

Originally Posted by Bestwifeever But won't you have to pay back the $160,000 balance on the house out of these profits (assuming you made no further payments)? And subtract property taxes and maintenance from the profit?

Answer 1. As opposed to standing out in the street, wet and cold, holding on to your stock certificate?

Answer 2. Hell no!! You make the tenants do that!!

[cho oyu]

Quote:

Originally Posted by TargaDave If you figure that tax breaks are offset by maintenance and depreciation you wonder why so many people are owners instead of renters given the modest long term appreciation. The obvious answer is that for many people (or course not all) a home is much more than a "roof-over-the-head-keep-out-of-the-rain inflation hedge", or some big money making scheme. You might say it's an activity or lifestyle (an outgrowth of the nesting gene?). That fact that it keeps up with inflation at all is a plus

I should have been a bit more clear - that phrase applies from the perspective of looking at one's residence as a long-term investment.

As you say, there are other very strong reasons that one might spend more for purchasing a home than for renting. Stability, freedom, and a sense of ownership/pride are very important lifestyle intangibles.

[TBPu]

Ummm, I did not mention anyone by poster name and stated clearly that is was perhaps a reason why some might not see what the poster above me had clearly seen and what I can see driving around my (and the only example that I feel confident to speak on). I do not recall seeing more than a couple of For Sale signs in my city until 2006 and now a large number of For Sale signs litter the city. And nothing is selling.

As far as supporting the OP, he presented a list and was met with a lot of skepticism until, yes, he was proven right. The list was valid and illustrated a situation that indicates that yes there is a housing problem in many areas.

So yes I supported his position and respect that he took a lot of time (2 years) researching the subject.

As far as your own situation or attack on me, I have no comment.