ZILLOW: HOME PRICE DECLINE TO SURPASS GREAT DEPRESSION
More bad news out of the housing market today as Zillow, a leading online real estate marketplace, released their third quarter report and it largely echos what we saw in yesterday’s Clear Capital report – the housing market is double dipping. Home values fell an average -4.3% in the third quarter. Stan Humphries, the Chief Economist at Zillow says the housing market decline is likely to surpass the Great Depression’s decline and that prices are unlikely to recover before next summer:
“While not unexpected, the unceasing declines in home values signal that we’re in for a long, bleak winter of continued troubles for the housing market. The length and depth of the current housing recession is rivaling the Great Depression’s real estate downturn, and, with encouraging signs fading, will easily eclipse it in the coming months.”
Humphries also said the number of foreclosures reached a new all-time high and that the number of homeowners under water on their loan has now reached 23% – a high this year. Humphries is not optimistic”
“The high percentage of homeowners in negative equity continues to be troubling, in that it represents a huge number of people who are not only more vulnerable to foreclosure, but who are essentially trapped in their current homes and are prevented from selling and buying a new home. This has profound implications for future demand and will be a millstone around the neck of the housing market.”
The housing market is playing out almost exactly as I’ve expected in recent years. This still remains a simple supply and demand story. The overhang of inventory is crushing meager demand and the mortgage mess isn’t helping matters as shadow inventory is pushed further into the future. If you thought the housing crisis in the USA was behind us you might want to think again. Housing was the domino that set the credit crisis in motion in 2007 and it could pose a very serious risk in 2011.
Source: Zillow
Gearing up for housing correction version 2.0 – 7 charts showing a 10 to 15 percent decline in home prices for U.S. housing in 2011.
http://www.doctorhousingbubble.com/7-charts-showing-a-10-to-15-percent-decline-in-home-prices-for-u-s-housing-in-2011/
Who will buy the homes of tomorrow? 2010 highest average monthly foreclosure filings on record. 330,000 average monthly foreclosure filings in the United States. Student loans and stagnant job growth will create anemic prospects for housing.
http://www.doctorhousingbubble.com/who-will-buy-the-homes-of-tomorrow-2010-highest-average-monthly-foreclosure-filings-on-record/
I looked into buying a house about 15 years ago and decided that housing was overpriced. Over the years since then, it has only gotten even more overpriced, so I have been renting since then. I am hopeful that when the housing market does actually hit bottom, I will be in a good position to buy. So, in answer, the buyers of tomorrow will be those of us who didn’t get suckered into buying into the bubble of the past couple of decades.
Leland – I have a 15 yr mortgage, and my house is nearly paid off – Was it over priced? Maybe, but in a few months, it will be paid for. In one yr, what will your rent be? I may have to look a replacing an AC, or reshingling the house in the future, but both of those are under 10k. So please explain how the renting was better?
Man, this is the biggest risk in the markets now. How long do equity investors ignore this?
They’ll probably need more than one month of really bad declines for “confirmation”
The scary thing is the consequence of any substantial shock with almost a quarter of houses underwater. If homeowners come under any increasing financial pressure, foreclosures are certain to increase markedly. This is a sword of Damocles hanging over the economy. Even a modest recovery might not be quick enough to save a good many. Risk is still very high.
I’m nearing retirement like so many baby boomers. I am looking for a modest ranch house. I’ve lived in a cramped 3 bedroom vertically built home as well as a spacious 5 bedroom vertically built home. I need fewer dimensions in my life.
I believe the countries demand for housing is decreasing not only in raw numbers due to all the factors listed above but the boomers are making lifestyle changes that will add to the dampening in demand and and the affects on demand will last into the boomers twilight years….much longer than next summer.
I am beginning to look around for a few luxury homes in the nations best zip codes on the east and west coast. Time to shelter my cash in hard assets.
My eyes are on the market for some time trying to find a decent value in california. I can tell you that the value of homes at high end is not coming down by much. These homes tripled or quadrupled in value in the last
My eyes are on the market for some time trying to find a decent value in california. I can tell you that the value of homes at high end is not coming down by much. These homes tripled or quadrupled in value in the last 10 years. They are still very expensive by income standard. The main underlying problem is the bank. It’s really hard to get a loan, and even for a refi. the rate is low, but you are not getting it. don’t take my word for it, try to talk to a bank and see what happens.
This makes my day. I purchased a larger home last year (needed it – bigger family) and am refinancing to a lower 15 year rate. The new appraisal just came back and I have $20,000 more in equity than when purchased last year. I am not going to tap that equity but it’s good to know it’s there. This is in CT though, and I am sure that the dismal numbers are skewed by the horrendous R/E market in CA, NV and FLA.
Trying to find these so called cheap homes. Unless you bid 9-10X above the starting bid, you’re not even hitting their reserve. The ones worth buying “have a contract on them” but are still advertised on Zillow and other places.
It’s a con. I want to buy a place, but unless I want to spend a quarter million I can’t even get someone to answer the phone.
I read somewhere that there were ~4.5 million homes that were in danger of foreclosure. Then the number jumped to ~11 million homes. I think I read this on this site last week.
Is this true?
If so, no wonder B^2 is doing QE2. This is a capitalization action to keep big bank afloat when these 11 million homes becoming non-performing loans and then CRE re-sets hit (they suffer no moral hazard when they default).
TPC: one thing I didn’t understand from the story of the day was that it looked upside down. You had the Fed alter the Tsy/reserve balance by dumping the Tsy’s into reserves. I thought, in QE1, the banks took the huge reserves and bought Tsy’s?? Then, took the interest from this “savings” account and buttressed their capital requirements up to withstand the loan losses/write-offs??
Where did I go wrong?
a bit old but scary graphs: http://www.calculatedriskblog.com/2010/07/negative-equity-breakdown.html
be reminded that “The total negative equity is $771 billion.” in usa ! wealth destruction !!!
This is all pretty simple to my understanding, in that we have to adjust our standard of living to be more inline with the rest of the globe. 1 billion chinese that are willing to work for one tenth that of an average american worker simply means that our standard must go down and theirs up, so that an equillibrum is achieved. All you have to do is look at what it was like living in this country in the decade or so following WWII. We had it good with tons of opportunity, and our homes averaged 900 square feet, cars were utilitarian appliances that did not cost a years salary, single earner households were common and so was the d.i.y. mentality. So back to the future for us, and a big transition to more modest means which we will all be happier with anyway.
Am I wrong?
will
I think you are spot on. The post WWII period set up unrealistic expectations for Americans, who came to expect that our position of exceptionalism and ever increasing wealth would continue ever upward in a linear fashion. We’re getting a big dose of realism from the globalization effect. No matter what we did this was inevitable (though I suppose we could have worked to keep the rest of the world down, but how moral is that? And I’m not sure it could have been accomplished anyway). History will no doubt treat us as having been blind fools.
Yeah you’re wrong.
Why does our standard of living have to go down you friggin slave???
We fought to have a free nation , a good standard of living and now you want to lower it to match the chinese ??
WTF is wrong with you?
Add to this a 14% vacancy rate in all homes in the USA (rental and owner occupied, including multifamily). We have not even begun to tap the sq footage overcapacity (large homes, underutilized).
The only way we get the glut of homes on the market sold quickly is to open the borders.
That will not wash politically, and probably is not such a hot idea economically either.
I’m sure it is among the options that will be discussed in the coming years. Maybe not publicly.
I live in Florida and I heard a lot of bad news on our housing prices on this morning’s news as a matter of fact. One of the scariest things I see as I ride around are the number of vacant homes that populate neighborhoods. Not a good time.
Here’s what needs to happen.
The Federal Reserve needs to be abolished, forgiveness of all debt prior to the abolition of the robber baron system that is the illegally ratified Federal Reserve, usury made illegal, energy sources taken out of the hands of private organizations so that we will always have incentive to create better and cleaner energy sources, monopoly laws enforced, tariffs placed on goods made outside of the nation and a new monetary system put in place backed only by the people of the nation.
The very real scenario of what is taking place in the world at this moment in time is The New Dark Ages.
be smart… learn to make soap , learn to cook , and bake……My Dad once said…. We are wealthy only in proportion to what we can do without.
Please wise up and grow up. You are NOT ENTITLED to be a Prince/Princess.