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From Bloomberg

U.S. home-price growth slowed during the second quarter from a year earlier in the sharpest three-month plunge on record, according to a government report issued today that indicates this year's housing slump is deepening.

``The wheels are coming off the housing market,'' said Scott Anderson, an economist at Wells Fargo & Co. in Minneapolis.

The housing market is not a fast moving market.  It's more akin to an oil tanker than a speedboat.  It takes awhile for prices to move.  So when prices drop the most in 31 years, it's a strong signal a problem exists.

The quarterly slowdown came during the ``spring selling season,'' when about half of a year's home sales typically occur, suggesting the housing market may be slowing more rapidly than economists including Anderson initially predicted. In 2005, the last of five record years for home sales and price gains, the second quarter was the strongest, according to Ofheo data.

The signal of future problems increases when prices drop during the strongest selling season of the year.

Prices for single-family homes rose an average of 1.17 percent during the period, compared with 3.65 percent growth in the second quarter of 2005, according to a report issued today by Office of Federal Housing Enterprise in Washington. The drop was the biggest since the agency began keeping records in 1975. The report doesn't give an average price, only the percent of change.

But the price gains may be overstated:

The housing sector may be weaker than the report indicates because the index excludes condominium and luxury home sales, said Robert Mellman, an economist at JP Morgan Chase & Co. in New York. The index measures changes of values for single-family properties that have loans bought or securitized by Fannie Mae or Freddie Mac. It excludes houses that have mortgages higher than $417,000, the maximum allowed in 2006 for loans bought by the government- chartered companies.


``To the extent that pricing at the high end of the market and pricing for condos are especially weak, the Ofheo index may be overstating price gains,'' Mellman said in a note to clients.

Sales of existing houses and condominiums declined to an annual rate of 6.69 million in the second quarter from a 7.19 million pace a year earlier, the National Association of Realtors said on Aug. 15. The median price for a condominium dropped 0.3 percent to $225,800 from a year ago, the first decline on record, while the median for a single-family home rose 3.7 percent to $227,500, the slowest pace in six years.

On top of price declines, inventories are at record levels:

Higher mortgage rates discouraged buyers and pushed the inventory of existing homes on the market to 3.86 million in July, the highest ever recorded, the National Association of Realtors said Aug. 23. The supply of new houses for sale in July rose to a record 568,000, the Commerce Department said Aug. 24.

This explains why homebuilders confidence is at 15-year low:

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And the US consumer is already heavily in debt, meaning there probably won't be many buyers in the market.

Photobucket - Video and Image Hosting

So, we have the biggest year over year price drop in 31years, record high inventories and a heavily indebted consumer who probably can't buy much more housing.  In addition, homebuilders - the people who know the market best - at feeling very uneasy about housing.

Originally posted to bonddad on Wed Sep 06, 2006 at 06:11 AM PDT.

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Comment Preferences

  •  I am glad I was finally able to buy a home before (20+ / 0-)

    this mess really started, most of you aren't old enough to remember 13% home loan rates, this is a picnic compared to those days

    my 6.75% is a bargain

    support change: http://securingamerica.com/ccn

    by testvet6778 on Wed Sep 06, 2006 at 06:04:05 AM PDT

    •  Congratulations, but ummmmmm (7+ / 0-)

      When prices are coming down, it's best to hold off on buying . . .

      When this happened in the 80s, I had a friend who had lost an entire 20% down-payment by the time the purchase closed.

      Men never do evil so completely and cheerfully as when they do it from a religious conviction. - Pascal

      by Clem Yeobright on Wed Sep 06, 2006 at 06:10:42 AM PDT

      [ Parent ]

      •  Bought last September (7+ / 0-)

        And it probably was not the best financial move I've ever made.  In fact, it was probably pretty stupid.  I was spooked by the specter of rising interest rates (we locked in for 30 years at 6%), but that isn't going to be a lot of comfort when the value of my home isn't rising as quickly as inflation.  Or when it actually drops in value.

        There is nothing wrong with America that cannot be cured with what is right with America. -- Bill Clinton

        by ThirstyGator on Wed Sep 06, 2006 at 06:41:33 AM PDT

        [ Parent ]

        •  Usually over time these things work out well (4+ / 0-)
          Recommended by:
          ThirstyGator, 313to212, cwaltz, Lashe

          simply due to inflation.  If you don't have to sell you will probably do just fine.  That person upthread who bought in the 80's is doing fine, even with this decline in prices.  

          •  Assuming they didn't re-fi at a higher interest (1+ / 0-)
            Recommended by:
            Do Tell

            rate, pull out all the equity, or take out a home equity line of credit and p!ss it away on vacations, crap, stuff and junk.  Lots of financially unsavy folks do.

            Violence is the last refuge of the incompetent. ~Issac Asimov

            by maggiemae on Wed Sep 06, 2006 at 08:42:26 AM PDT

            [ Parent ]

            •  We refinanced (3+ / 0-)
              Recommended by:
              Fabian, Do Tell, Lashe

              but at a much LOWER interest rate (they've dropped tons since the 80s), and we took out SOME equity, but hardly all. Almost all of that went right back into the house for repairs and remodeling.

              Unless things tank to depression levels, I don't think we'll have a problem. Not that we're planning to sell anytime soon.

            •  agreed. There are many people who doom their (0+ / 0-)

              own futures with that crap.  If they stay put for awhile, all things being equal, they will probably do ok in the long run.  

        •  Thirsty, (18+ / 0-)

          don't think of it as an investment in your portfolio.  Thank of it as shelter - a loving place where you live and raise a family or like me, live with your animals and have privacy.  Just live and enjoy the house.  Why are you putting the burden on the house of earning a living and making a profit.  The housing market will come and go but the house is your space - your home, your island of peace.   Of course, perhaps you have a job where you may have to move at a vulnerable time - but

          sufficient unto the day is the burden thereof

          I have no patience with people who grow old at 60 just because they are entitled to a bus pass. Mary Wesley, British novelist

          by xanthe on Wed Sep 06, 2006 at 08:04:10 AM PDT

          [ Parent ]

          •  It's always seemed to me that (2+ / 0-)
            Recommended by:
            Nina Katarina, xanthe

            viewing a house as an investment is bass-ackwards.  I know a lot of (most?) people do it, but I always figured the goal of making money was to provide a better life for yourself and your family.  Real estate as investment is the converse: A better life (in the form of a house) being used to make money.

            I suspect that the majority of people who have bought a house are happy to have a place to call their own (or will be when the shit hits the fan), and the resale value is not a pressing concern for them since they don't plan to sell anytime soon.  Thus, the only people people most affected by a housing downturn are those who DO look at their house as an investment, rather than an abode.  In fact, the downturn may have a salutary effect in that it will open up the ownership market to more people.

            I know that, overall, the housing downturn spells bad news for the economy; just looking for the silver lining here.

            ----------------
            As iron sharpens iron, so one person sharpens another. Proverbs 27:17

            by gpm on Wed Sep 06, 2006 at 10:17:50 AM PDT

            [ Parent ]

        •  Look at all the factors (5+ / 0-)

          I bought my house in 1990 at the high end of the  market. The people I bought it from had the house about five years and didn't make any money from the sale. Now my house has more than doubled.  The key to buying in any market is to look at the neighborhood you're buying into, how long you're planning to live there, whether you can afford the payments (percentage of wages) and what a home means to you.  If I were looking for a house today, I'd look at areas of gentrification.  People buying older homes and fixing them up.  My neighborhood in Dallas is an older neighborhood with homes from the 30's and 40's.  It was always a stable neighborhood so the homes were never allowed to deteriorate. Now it's becoming more fashionable to live here and people buy the houses because of the esthetics.  Every time I see a neighborhood being taken back in Dallas, it gives me a lot of satisfaction.  

          •  We did the same thing (1+ / 0-)
            Recommended by:
            Lashe

            in St. Paul. Our neighborhood had a very bad reputation into the 90s, although it started out as a prosperous area at the turn of the 20th century. We bought in just when it was about to take off, in '97. Now we couldn't afford to move here. There are still neighborhoods in the city where there are beautiful old houses to renovate, but they're  going fast. I do worry about the loss of affordable homes around here.

        •  Kinda scary (0+ / 0-)

          we bought last month. However, we snuck in at 6.625%, had a (small) downpayment, and were very strict with ourselves about finding a place we could afford. It's an older home in very good shape in a decent neighborhood (my aunt and uncle have lived nearby for several years and were able to give us the scoop).

          Even the decor was perfectly fine for moving in, though there are several small things we'd like to do. (After living in it, we're noticing the kitchen could use remodeling - but not right away.)

          The monthly isn't too much more than we were paying for rent, but we have more space and a yard (for gardening!) No more loud neighbors, reasonably close to work and well located.

          This place is our home. If it turns out to be an investment, too, you betcha that'd be nice. But the important thing is, it's our home.

          I tremble for my country when I reflect that God is just. - Thomas Jefferson

          Ignorance killed the cat. Curiousity was framed.

          by Lashe on Wed Sep 06, 2006 at 03:18:19 PM PDT

          [ Parent ]

      •  Think of it as shelter (9+ / 0-)

        If a person buys a house, because they plan to live there a very long time, then it's ok.  Just don't get stuck with an ARM and finding out you can't afford your mortgage payments as rates rise.  If a person isn't planning to be in a house very long, it makes sense to rent.

        Winning without Delay.

        by ljm on Wed Sep 06, 2006 at 06:42:52 AM PDT

        [ Parent ]

        •  I agree I bought this home knowing it was my last (16+ / 0-)

          home, I am a disabled vet, so I used the lump sum back pay and paid 20% down, it is in a nice neighborhood here in Columbia SC, there is no fluctuating house market here, now I would agree about buying a home in LA for 500,000 for a 3 bed 2 bath  but I bought in a upper middle class area and it is the type of area where it is old money, there is sledom a home in the area for sale, the nighbors are the type that have been here 20 years,so I am comfortable with what I bought.... it was a fixer upper and the remodeling is done, so actually I could flip it for about 25,000 more than we paid, but like I said it's home, right area, right price and affordable  plus being tax free in SC  helps

          support change: http://securingamerica.com/ccn

          by testvet6778 on Wed Sep 06, 2006 at 06:58:50 AM PDT

          [ Parent ]

      •  We bought (7+ / 0-)

        We bought a year ago May.  Of course, we sold our big-mortgage home and moved into a place with less than half the space but no mortgage whatsoever.  I've been missing the old place fiercely from time to time.

        That's why I like to read stories like this.  Ahhhhh.... life could definitely be worse.

    •  Bought in 2001 (4+ / 0-)
      Recommended by:
      Ed in Montana, Gooserock, exNYinTX, possum

      MUAHAHAHAHAHA

      What is wanted is not the will to believe, but the will to find out, which is the exact opposite. -- Bertrand Russell

      by RequestedUsername on Wed Sep 06, 2006 at 06:45:27 AM PDT

      [ Parent ]

    •  Bought First House at 13.5%, Remember It Well (15+ / 0-)

      We weren't so concerned because

      • We'd bought modestly
      • The monthly was affordable
      • We were in career growth phase
      • Outsourcing hadn't yet begun in earnest
      • Rates had to come down.

      It all worked out as the odds suggested.

      Of course, at that time, it was still possible to figure what the odds were.

      With pretend currency, pretend government, an absentee economy and a looming nucyaler war--not so much.

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy....--ML King, "Beyond Vietnam"

      by Gooserock on Wed Sep 06, 2006 at 06:53:02 AM PDT

      [ Parent ]

      •  Ha! My first mortgage was 15.75%! (1+ / 0-)
        Recommended by:
        Lashe

        Mortgage rates were one part of my picking Iowa City over Irvine.

        "In theory there is no difference between theory and practice. In practice there is."

        by Wee Mama on Wed Sep 06, 2006 at 07:32:34 AM PDT

        [ Parent ]

        •  Though, (0+ / 0-)

          that home in Irvine is probably worth close to a million today.

          -6.00, -7.03
          "I want my people to be the most intolerant people in the world." - Jerry Falwell

          by johnsonwax on Wed Sep 06, 2006 at 08:21:32 AM PDT

          [ Parent ]

          •  Mmm...but could my kids have (0+ / 0-)

            ridden the city bus to take an elementary orchestra over the summer? Taken AP classes for free from sophomore year in high school? Used the law library for free to prepare for the national debate circuity? Biked to school from second grade on?  

            I know that I could not have had the child care I had for them nor the commute I had (biking five minutes to my lab).

            True, I do have to shovel snow!

            "In theory there is no difference between theory and practice. In practice there is."

            by Wee Mama on Wed Sep 06, 2006 at 06:21:11 PM PDT

            [ Parent ]

        •  Got you beat... (3+ / 0-)
          Recommended by:
          ablington, Fabian, 3goldens

          15.875% in 1981. Just south of Irvine in the lovely town of El Toro (RIP).

          Hey, wait a minute! Why am I boasting about this?

          "What is wanted is not the will to believe, but the wish to find out, which is the exact opposite." - Bertrand Russell

          by Mad Dog Rackham on Wed Sep 06, 2006 at 08:45:21 AM PDT

          [ Parent ]

    •  Remember it? I had one of those 13%. And it (5+ / 0-)

      was a killer.    

      •  Interest rate vs. cost (0+ / 0-)

        Isn't it immaterial what the interest rate is, since the bank qualifies you for a loan based on what you can pay each month?  Higher interest rates, lower house sale price.  Bad for the seller, immaterial for the buyer.  Buyer cares about monthly payment only.

        I think buying at a high interest rate would be good, because the house sale price will be lower, property taxes will be lower, and then when interest rates go down, you can refinance your lower principle.  In CA, with prop 13 holding down property taxes, you WANT to buy at high interest rates to minimize your property tax...

        •  Hmmm, it doesn't really work that way. (2+ / 0-)
          Recommended by:
          badger, Swordsmith

          Actually in 1980, the housing prices were holding pretty steady in my area, and therewere very few houses on the market.  The housing market was not a big casino like it is now, people were not as mobile as they are now, either.  We were in a recession after the oil price shock, if I remember correctly.

          We just missed out on a 10% loan for the same house because we waited too long.  We paid the same price for the house.  Our taxes only went up the nine years we lived there, but the price only appreciated in the last 2/3 years.  Housing prices there never fell in my memory, even during recessions.  Adjusted for the high inflation of that time, the house price actually fell for the time we held it.  

          It has been my experience that house taxes almost never go down.  (I can only speak for my area, not California)  Unless you were in a very depressed market like Detroit, and I am not even sure that taxes went down there either.  

  •  I'm glad I sold my Chicago house (4+ / 0-)
    Recommended by:
    Ed in Montana, tikkun, Do Tell, Lashe

    last year.  But I fear I may have bought into a situation of eminent domain where I am.  This would not be a good market for any house stolen in eminent domain.  Plus the mayor here has a loyalty to the thief rather than the citizens here.  What else is new?

    I have no patience with people who grow old at 60 just because they are entitled to a bus pass. Mary Wesley, British novelist

    by xanthe on Wed Sep 06, 2006 at 06:11:35 AM PDT

    •  Are you still in Illinois? (0+ / 0-)

      I believe the legislature here made it harder to use eminent domain after the supreme court decision ...

      I'll get all my papers and smile at the sky. For I know that the hypnotized never lie. - The Who - Won't Get Fooled Again

      by bherner on Wed Sep 06, 2006 at 07:42:11 AM PDT

      [ Parent ]

      •  Yes - I know but (2+ / 0-)
        Recommended by:
        DC Scott, bherner

        the power has certain built in guarantees.  I want oh so bad to be paranoid about this -- but it's not for nothing there is this saying:  "Even paranoids have enemies."

        I have no patience with people who grow old at 60 just because they are entitled to a bus pass. Mary Wesley, British novelist

        by xanthe on Wed Sep 06, 2006 at 07:51:20 AM PDT

        [ Parent ]

  •  Here in south Florida (5+ / 0-)
    Recommended by:
    fly, House, kharma, Fabian, Do Tell

    Folks are stuck in their houses. They can't sell without leaving the area, because even if they make a handsome profit on their home, everything else is so outrageous they can't get back into the market. And even though there's pressure from low unemployment to get wages up, they're not going up fast enough to make it so people can buy. They're barely holding at the level where working people can afford to rent.

    I want to die like my grandfather, peacefully in my sleep, not screaming in terror like his passengers.

    by incertus on Wed Sep 06, 2006 at 06:12:13 AM PDT

  •  November and "Mortgage Moms" (15+ / 0-)
    I was interested to see that MSNBC.com made "Mortgage Moms" their headline news article for a while yesterday morning.  The phrase "Mortgage Moms" referred to American families who are stressed about their mortgage debt vs their income, and who might be inclined to take that stress to the polls in November.

    Time will tell, but it wouldn't surprise me.  

    Bonddad, thanks for these diaries.  I disagreed with a minor point of yours the other day and neglected to say, in wider context, I appreciate your work here very much.

    •  Well It Also References 'Soccer Moms' Who Voted (6+ / 0-)

      Republican in Y2k, with an inference that these families might be a block willing to vote change.

      I would hope so--and this is an issue that can't conceivably be fixed by Republicans.

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy....--ML King, "Beyond Vietnam"

      by Gooserock on Wed Sep 06, 2006 at 06:49:14 AM PDT

      [ Parent ]

  •  I wonder if (2+ / 0-)
    Recommended by:
    Do Tell, Pandoras Box

    the neo-con spending ways might cause Tom, Dick and Harry (Japan, China, and personal investors) to start demanding more return on treasury notes.  I realize it is a huge leap of faith to think that lendors would then raise mortgage rates, but hey, faith is something that neo-cons have in abundance...

    The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.

    by deathsinger on Wed Sep 06, 2006 at 06:13:21 AM PDT

    •  Not a huge leap of faith at all... (0+ / 0-)

      Many mortage rates are tied to the yield of the 10 year treasury, so there is a strong correlation between treasury yields and mortage rates.  

      In Britain they admit to having royalty. In the United States we pretend we don't have any, and then we elect them president.

      by Asak on Wed Sep 06, 2006 at 07:35:22 AM PDT

      [ Parent ]

  •  The Housing market seeps into all corners of our (5+ / 0-)
    Recommended by:
    tikkun, ThirstyGator, DrSpike, sodalis, Do Tell

    economy.

    The industries associated with it, that support it, service it, that are related to it- is huge.

    Off the top of my head:
    Construction trades
    Banking

    Sales Agents

    Home furnishings
    All the industries and people that help those mentioned above go to work and do their jobs

    Housing tanks and it is if we have set off a negative chain reaction that chews up everything in its path.

    A slight correction would be okay but the evidence suggests that this is way more than a slight correction

    •  But really (0+ / 0-)

      you could say that about a lot of other industries.  The auto industry, for example, which is currently in bad shape, but which has not chewed up everything in its path.  I agree in principle, but it's easy to overstate the case.

      •  I see your point, however the leak out of the (1+ / 0-)
        Recommended by:
        bnasley

        auto industry ballon has been slower and more gradual -  a case could be made to say that the American automobile market has been showing decline for decades-

        The housing market is showing a sharp decline; the data given to us in this diary said sharpest ever recorded in a certain aspect.

        It is very troubling.

      •  try telling that (3+ / 0-)

        to somebody who lives in Michigan

      •  We're not importing (1+ / 0-)
        Recommended by:
        bnasley

        Japanese houses though (at least not yet).

        "I count him braver who overcomes his desires than him who conquers his enemies; for the hardest victory is over self." --Aristotle

        by java4every1 on Wed Sep 06, 2006 at 08:46:28 AM PDT

        [ Parent ]

      •  Not true (0+ / 0-)

        Between 30-40% of the job growth during this recovery has taken place in housing-related industries.

        And there's something much, much more important here.

        Look at household income levels. They're down from five years ago. Look at savings rates. They're negative.

        Where have people been getting the money to finance consumer spending over the last five years?

        Their houses. They've been typing money out of their home equity like an ATM.

        That source of liquidity is drying up--and it's going to have a much bigger impact on the economy than anything the auto industry might do.

    •  I have been getting many direct mail coupons (0+ / 0-)

      for restaurants like California Pizza Kitchen (overpriced to begin with and mediocre food) and TGIFridays.  

      I have never gotten coupons for chain restaurants before, so I think this is a sign that their business is way off.  

  •  Like hurricane Katrina, slowly viewed from moon (8+ / 0-)

    All of America watch as the monster Katrina built up strength and made it's slow march through the Gulf.  If one were standing on the moon they could watch it

    I feel the same about the housing bust, on this site and many others, thousands were warning of the coming housing bust crisis.  Praying for a soft landing, mis-managed into a crash

  •  Damn you, bondad... (6+ / 0-)

    Don't you know you're just emboldening the enemy with all of this reality I mean... anti-American  rhetoric?

  •  Good time to stay a Renter. (3+ / 0-)
    Recommended by:
    tikkun, LondonYank, Inland
    I'm in Boston, one of the nation's most overpriced housing markets.  Renting the master bedroom from a maxed-out friend who owns the house but takes the smaller bedroom and the study.  I'm saving plenty of cash and don't have to think much about personal finances.  He's commented more than once, lately, that he'd rather be in my shoes than his.  

    It's likely this housing drop/slump will play out over the next 4-5 years... so I'm thinking to stay put for now and try to sock away $15K a year.

    •  Only problem with that (4+ / 0-)
      Recommended by:
      tikkun, 313to212, wezelboy, DC Scott

      Is that rents are going up-up-up as potential buyers sit out the housing down-down-down.  Oy.

      •  Agreed -- my situation is unique (0+ / 0-)
        I am living with a friend/housemate who basically said "Help! Take the master bedroom and use everything and do whatever you want, just write me a check for $_ every month."  It's a beautiful house, and he's charging me well below market rent.  I'd be a fool to do anything else at the moment.
        •  Not that unique... (2+ / 0-)
          Recommended by:
          Torta, Do Tell

          I'm renting a house for $1600/mo.  The same house would cost $400k to buy, which would be a mortgage payment of more than $2200/mo. easy.  The savings is more than the principal payment would be for several years (if I was able to save the difference, that is).

          •  And that is the reason why something must give... (0+ / 0-)

            Rent and mortgages need to be in "relative" synch.  I'm not an expert on this topic, but this "spread" is too high.

            -6.5, -7.59. If you're not outraged, you're not paying attention.

            by DrWolfy on Wed Sep 06, 2006 at 07:28:14 AM PDT

            [ Parent ]

      •  That's really just realtor spin (0+ / 0-)

        combined with landlord fantasy. Rents cannot rise that much.

        Two reasons:
        1. You can't get a mortgage to pay your rent. You have to pay it out of current income. And current income isn't rising. That means that there's a ceiling on how far rents can go up, and it's pretty low at this point. Landlords argue that they can't afford to rent for such low prices. Perhaps they can't; that, however, is irrelevant to what the market will bear.
        1. "Repartmenting" is everywhere. Many rental units were taken off the market to flip into condos. Sales faltered, so developers are now putting them back onto the market as apartments once again. This is not only increasing rental stock, but it's raising the bar for other landlords, who can't compete with stainless steel appliances and granite countertops.
    •  It's actually a good time... (2+ / 0-)
      Recommended by:
      Jett, Do Tell

      ...for renters to start looking in earnest for opportunities to buy.

      Distress causes distressed sales, at distressed prices.  You're right -- save -- but also remember that every Interest Only, 120% LTV schmuck's loss is potentially your gain.  Educate yourself about the market where you want to buy.  Know what a reasonable per-square-foot price is, and how to calculate it from a listing.  Go to auctions.

      Pakistan is harboring bin Laden. What now, Mr. President?

      by The Termite on Wed Sep 06, 2006 at 07:05:45 AM PDT

      [ Parent ]

    •  inflation (0+ / 0-)

      I would diversity your savings into some commodities with tangible value.  Inflation is threatening, with each oil price surge, to push the Dollar down.  Don't save all your money in dollars.

  •  My parents have already had one foreclosure (2+ / 0-)
    Recommended by:
    tmo, Do Tell

    on their block that I know of.  The bank is putting in an effort to sell -- remodelling, hiring a gardener, etc., but I'm not sure whether that should be seen as confidence or desperation.

  •  Sort of as a sidecar to this information (3+ / 0-)
    Recommended by:
    wezelboy, Do Tell, testvet6778

    I'd like to know how many people are moving, where they're moving, and why they're moving.

    Don't have a clue how you'd find this information but I'd like to see it nontheless.

    utahgirl

    •  June (0+ / 0-)

      We moved from Chicago to suburban Baltimore, er, DC, er, about halfway between the two (closer to Baltimore, really).

      We moved here because my wife is doing a fellowship at Johns Hopkins in Baltimore and the NIH in Betheda (just north of DC).  She splits her time between the two so we split the difference in location.

      Life makes you move sometimes, even if you don't want to.

      RULE OF LAW. That's all the reason you need to oppose Republicans.

      by nightsweat on Wed Sep 06, 2006 at 07:06:48 AM PDT

      [ Parent ]

  •  I can't make heads or tails of this paragraph (0+ / 0-)

    Prices for single-family homes rose an average of 1.17 percent during the period, compared with 3.65 percent growth in the second quarter of 2005, according to a report issued today by Office of Federal Housing Enterprise in Washington. The drop was the biggest since the agency began keeping records in 1975. The report doesn't give an average price, only the percent of change.

    What?

    What is wanted is not the will to believe, but the will to find out, which is the exact opposite. -- Bertrand Russell

    by RequestedUsername on Wed Sep 06, 2006 at 06:39:56 AM PDT

    •  I read it as... (1+ / 0-)
      Recommended by:
      CAL11 voter

      Year over year 2nd Quarter 2004->2005 growth in prices was 3.65%. 2005->2006 was 1.17% growth. It was still growing (at least compared to a year ago), but growth had slowed greatly (drop of 2.48%). They didn't give the average price of the homes, just the % change.

      When prices actually decline (as they have with condos), I guess that's when panic starts to set in. But what do I know...I've never owned a home. Might have a good entry point in the next couple years though. Not sure Seattle prices will drop a lot.

      When Bush says cower, don't ask "how low?"

      by factbased on Wed Sep 06, 2006 at 06:51:26 AM PDT

      [ Parent ]

      •  Puget Sound increases (1+ / 0-)
        Recommended by:
        factbased

        From what I have read the Puget Sound region is expected to weather the storm pretty well. I can't recall where I read it (Forbes maybe), but there was a big article which had projected changes in the housing market over the next year in hundreds of cities - places like Santa Barbara with insane price growth over the past several years were expected begin to stagnate or even lose value (if they aren't already). From what I remember Bremerton, Lakeview, and Olympia were all expected to be in the top 10 for price increases and the Puget Sound region in general was projected to keep on getting more expensive. Compared to other areas it looked like the bubble wasn't going to deflate.

        "The power to dominate rests on the differential possession of knowledge" -Foucault

        by Jett on Wed Sep 06, 2006 at 09:43:21 AM PDT

        [ Parent ]

    •  it's a reduction in increase (1+ / 0-)
      Recommended by:
      ogre

      in general housing prices should increase 1%/quarter or 4%/year.
      Where for the last four years the increase had been running 5%/quarter
      or 20%/year,  now it's reverted to mean,

      This is not in my opinion a reversion to stable growth, but a pass-wave
      as it turns negative.

      Housing markets can shrink, look at the midwest in the 1980's,
      look at Boston in the early 1990's, SoCal between 1991-1998.

      So the coastal markets will shrink for several years.

  •  not a surprise at all (5+ / 0-)
    Recommended by:
    Joe Bob, tikkun, Aquarius40, Do Tell, DC Scott

    Presuming we're not too busy just trying to survive, in the future this whole asset-based economic phase will be looked at as a triumph of a dressed-up snake-oil hucksterism, in which the real estate industry deftly tapped into the fear and greed that comprise our country's 21st century gods.

    I believe it was Kunstler who wrote that the average American long ago lost the ability to discern fact from a sales pitch.  Absent marketing noise and easily exploitable desperation, most people would know instinctively that a mortgage is not an investment.  It's a loan.  And if you think real estate only goes up, there are some parts of Detroit and Gary, Indiana that I'll tour with you.

    As another poster intimated, the social effects of this are starting to displace Brangelina from the radar screen.  Here in Florida, the school where my wife works had "low numbers" this year, leading to the closure of two classrooms.

  •  Confidence is the key. Did I read your diary... (0+ / 0-)

    to say this drop is really a slight price increase?  Did the Bloomberg story say that interest rates have dropped almost half a percent?

    •  adsf (3+ / 0-)
      Recommended by:
      tikkun, kd texan, CAL11 voter

      Yes, the story mentioned the drop in interest rates.

      However, mortage applications are still down on a Year over year basis.

      "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

      by bonddad on Wed Sep 06, 2006 at 06:43:29 AM PDT

      [ Parent ]

      •  My step-son recently inherited (2+ / 0-)
        Recommended by:
        DrSpike, Do Tell

        a very large sum of money from his uncle.  As a perennial student, he has been muttering about buying a house to stash some of that cash.  I have been encouraging him to hold off for at least 6 to 8 months.  

        Am I giving him good advise?

        It seems to me that this is a good time to be holding cash...

        •  I'm not expert... (2+ / 0-)
          Recommended by:
          Do Tell, Granny Doc

          ...and certainly don't play one on TV, but that's what I'd tell him. Rent for a while longer, the housing markets going nowhere but down, it's just a question of how fast and how far. What looks like a decent bargain now, may look like a real steal in another year or so.

          Besides, you can get a long term CD from some banks with returns that are right at 5.5 - 6, or even higher, those numbers rival moderate gains in the stock market--with the added advantage of 0 risk.

          On the flipside, he'll take a tax hit if he doesn't invest in either real estate or stow it away in a 401k. So you may want to get a good cpa to take a look at the numbers.

          Of course it hurts; you're being screwed by an elephant.

          by DelicateMonster on Wed Sep 06, 2006 at 06:56:01 AM PDT

          [ Parent ]

          •  5.15% (0+ / 0-)

            on my savings account with Emmigrant Bank, which has the advantage of being very liquid. Has to be linked to a checking account at a conventional bank, though. I'm in the process of closing all my "investment accounts" (which amount in total to about 2 months of living expenses) and putting them into the savings. The investments haven't done much of anything for over a year. I also closed my conventional savings account, which was costing me a few bucks to keep open each month and on which I'd make about $0.15 in interest each month.

        •  Yes! (2+ / 0-)
          Recommended by:
          Granny Doc, DrWolfy

          That's excellent advice.  He's far better off renting and putting the cash in short-term CDs (6 months to 1 year) than buying a house now.  Prices are headed down because many people are overextended so they have to sell, and a recession on the horizon means there will be less demand.

        •  Gold, not US cash (0+ / 0-)

          Don't forget there's a drumbeat for bombing Iran, and a $9T national debt.

        •  It's the advice I'd give. (2+ / 0-)
          Recommended by:
          Jett, Granny Doc

          And here's my credentials on the matter...

          We're in the third house we've owned.  We treat homes as long term investments.  Long, long term.  Retirement money....  

          We only sold one of them -- back in December.  We'd rented it out for over 11 years, and it is in a growing area of the greater San Diego market.

          We had other reasons for wanting cash, but in all truth, my gut was that it was time to get out while the getting was good.

          If we hadn't been in this home for over a decade, I might be looking at selling and renting for the duration.  I expect a nasty patch, and to watch at least 20% of the nominal value of this house just go away, even as I rebuild the two bathrooms and probably do some serious work on the kitchen.

          In the past, I've urged friends to stop renting and buy.

          Right now, I wouldn't.  No, I'd do the opposite; I'd tell them that I think that buying anything that's not being given away--and on terms that sound like they were written by a masochist--is a serious mistake.

          And this is in a market where we've watched 20% increases become the norm, expected...

          "I desire what is good. Therefore, everyone who does not agree with me is a traitor." King George III

          by ogre on Wed Sep 06, 2006 at 07:32:59 AM PDT

          [ Parent ]

        •  understanding the housing market (1+ / 0-)
          Recommended by:
          Jett

          housing is really many markets. housing includes the property the house sits on. so if you bought a new home in one of those Las Vegas developments you have very little land value, relative to what is available.
          location location, well you know. years ago Bert Doumen, who runs a financial letter in Hawaii, said buy land in Hawaii because they aren't making any more! investing in vacanct land has always been considered more risky than investing in a home, and banks tradionally do not lend on vacant property, although that has changed.
          if your step son has a long term horizon and he doesnt need the cash right away, he might consider buying property, depending on where he lives. typically investors make mistakes when they buy property out of town, florida swamp land, or arizona desert land, with some kind of development plan, which usually never happens. not knowing where you live, i would suggest something nearby, assuming you understand your area.
          to that end you need to go the county and city planning commission and see what the long range plans are, for highways, schools, water, sewer, you dont want to buy something the next interstate highway goes right through the middle of. and its really important to check easments and city and county codes. we own a property which has issues, because the city granted a 20 foot easement years ago, and now they neeed 30 feet to develop and the neighbors along the easement wont give the property.
          concerning the value of property i think bondad is wrong as rain. for one thing a lot of farm land has been covered over, as america relies on imported food. should the global economy suffer a disruption our nation might have trouble feeding its people. my own feeling is that farm land will continue to increase in value. also in the west agricultural land receives water subsidies. when water becomes scarce farmers will still have water.
          other factors creating problems for housing and land include the administations restrictive immigration bill. a large part of housing demand is immigrants. any stop gap measure will only temporarily slow this market, Greenspan said for years and years that we need more immigrants (not fewer) to do the manufacturing work.
          i would say be patient, dont buy pipe dreams in states far away, buy farm land and try to buy close to cities and other centers, gold is just a dirty rock in the ground, buy the ground itself, and remember to keep something aside for taxes, which go up during economically troubled times. during the Great Depression people were foreclosed for taxes. and farmland was nearly worthless, but it won't happen that way next time around, becuase there are so many more people, and less farm land than there used to be, and those farmers get first access to the water supply.
          also the world population will have doubled from 1950 to 2050, and those population demographics support land values. interest rates are probably going to go to zero. note that while residential housing has slowed, commerical property is actually selling at a faster rate. so when you buy property consider all the potential value it might have.
          compared to the stock market, or gold, especially land with income generating revenue.

          "Everything is chrome in the future..." Sponge Bob Square Pants

          by agent double o soul on Wed Sep 06, 2006 at 07:38:09 AM PDT

          [ Parent ]

          •  As long as there are people (0+ / 0-)

            who want to make a quick and easy buck there will be housing developments being built.

            There will always be plenty of land for building.

            I know of at least two old 1950s developments near Fairfax, VA west of Washington, DC that are being replaced by far denser development.

            One is just south of the Vienna Metro station and the other is near Fair Oaks Mall.

            The supply of land in the US dwarfs the supply of good paying jobs.

            •  they used to say that about the forests (0+ / 0-)

              on the west coast there is plenty of land, but its not all the same. the inland areas are brutally hot in the summer, and living there requires a long commute. people tend to think of land in residential terms only. there is also agriculture and commercial. when the housing bubble does collapse a nice rental property will keep that income flowing.

              "Everything is chrome in the future..." Sponge Bob Square Pants

              by agent double o soul on Wed Sep 06, 2006 at 09:41:59 AM PDT

              [ Parent ]

        •  Horrible advice (2+ / 0-)
          Recommended by:
          Aquarius40, rgdurst

          Not in encouraging him to hold off, but the length of time.

          We won't see the bottom for 2-4 years. The biggest drop will come in the first 24 months. Even after that, prices are likely to be relatively stagnant for an additional 2-4 years. If he finds a place to rent he's comfortable in, he should just stay put. When the relationship between the cost of buying and the cost of renting becomes more normalized, then looking to buy is a reasonable idea. That hasn't been the case for 3 years or more in much of the country.

          Caveat: Price changes are subject to huge geographical differences. Larger metropolitan areas in states like Fla, Ca, Nv, Az (there are mixed messages right now about Az) are clearly in the beginning of downward swing. Others areas like Seattle and Austin are still a little behind. But when the dust settles, barring any significant and unique events in particular geographical areas, the entire country will be hit.

          •  People lose it all trying to get in (1+ / 0-)
            Recommended by:
            Kane in CA

            at the first 20% and get out at the last 10%.

            That nice 70% in the middle is where all the money is made.

            First they call you a traitor, then they pass the Patriot Act II, then they tap your phone, then you move to Canada. -- Mohandas Gandhi

            by roboton on Wed Sep 06, 2006 at 08:23:38 AM PDT

            [ Parent ]

        •  If he's a perennial student (1+ / 0-)
          Recommended by:
          Granny Doc

          did he take out a bunch of loans?  If they're subsidized and/or locked in around 4%, he's OK sitting on the loans.  But if not, he should pay off the higher interest ones that are still accruing interest, such as private loans and unsubsidized loans.  There is a tax deduction for student loan interest, but that is only worth $2500 in interest per year.  If he's in a low tax bracket, and will be in the future, it's almost not worth sitting on the loans either.

          It also depends on where he wants to buy.  If it's a coastal area, 6-8 months sounds like too little time to wait.  If he's in an area that has a decent economy where housing is not overblown, and he wants to stay there long-term, housing may be OK, if that's what he really wants to do.  If he doesn't plan to stay there more than a couple years, the cost of selling the house later and keeping it up will eat away any profits he might make.  A good money market account or something similar will give him some flexibility, though, with less risk.

          (-7.25, -5.85) "Talk amongst yourselves. The Christian Right: neither Christian nor right. Discuss." --Linda Richman

          by Slartibartfast on Wed Sep 06, 2006 at 09:19:41 AM PDT

          [ Parent ]

      •  Don't misunderstand me, the market was due... (0+ / 0-)

        for some type of correction in California.  Hey, prices doubled in about five years. I've heard from real estate people that the market is soft and it is a buyer's market.  But, confidence in the strength of the market is what kept driving prices up for five years.  Right now seems like people are on the sidelines.

  •  Request for your input, bonddad. (1+ / 0-)
    Recommended by:
    tikkun

    I'm trying to find a way to buy a house in the next 1-2 years in Boston. I know the market is heading south, and I'm prepared to wait. Unfortunately, I cannot afford more than a condo for my wife & I, and I have a good friend who is in the same boat. We've taken to team up & buy a multifamily together, and will have roughly 20% of the estimated cost for a downpayment.

    I know there is no way to know the future, but what advice would you give for recognizing when the market has stabilized, or which indicators should I be following? I know one bad attempt at housing can ruin a person forever if their investment value drops significantly, and I don't want to fall into that same trap.

    Do I have a sound approach? And should I be hopeful, or re-evaluate my plan?

    "I'm not an actor, but I play one on TV."

    by zeitshabba on Wed Sep 06, 2006 at 06:47:25 AM PDT

    •  Your own plan, not others... (1+ / 0-)
      Recommended by:
      ogre

      Evaluate your rent payment, use a price/sq. foot ratio.  This is your basic cost of having a roof.

      Can you afford to save as well?  Add that to your rent.  Can you also afford to pay property taxes?  Find out the average price per square foot in your town, or a town where you would buy, and add that to your rent.  What if your rent had a 6% interest rate?  Add that to each payment.

      Now evaluate homes that are similar in size to your current space, and calculate a 30y mortgage payment, plus interest, and taxes.  If it is more than the rent plus the other items, don't buy.  If it is less, buy.

      •  Don't forget... (0+ / 0-)

        I've anticipated the taxes, insurance, basic maintenance and will be leaving room for the fixer-upper parts that I eagerly await doing myself. To avoid the classic money pit, I'm figuring that any "upgrades" I plan on doing myself will cost 2x more and take 2x longer what I anticipate on paper.

        I'm preparing for the worst & hoping for the best.

        "I'm not an actor, but I play one on TV."

        by zeitshabba on Wed Sep 06, 2006 at 07:48:56 AM PDT

        [ Parent ]

    •  Here's what I'd do. (0+ / 0-)

      I'd look for a place for sale with option to buy.  Rent, or lease, on that basis.

      Watch, and wait.

      That option to buy will be a psychological tool, an in.  The owner will be eager to sell to you--particularly while the value of the place is declining.

      Watch how long property stays on the market.  You'll see the homes for sale fill the market--and give you lots of choices.  Don't hurry.  Those sellers will get more and more eager.  Don't hurry.

      You can always offer a rent with option to buy on a better find, and a seller who's in a world of hurt will leap for joy at a rent stream with the promise of maybe being bailed out....

      When sales start picking up, and housing has bled for a while, then consider buying.

      Don't look to catch the bottom of the market; the risk of buying into a false bottom is going to be real.  Wait for an uptick.  Spending $5-$10k more because you missed the bottom of the market won't hurt nearly as badly as buying... and watching another $40,000 (or more) evaporate.

      "I desire what is good. Therefore, everyone who does not agree with me is a traitor." King George III

      by ogre on Wed Sep 06, 2006 at 07:42:56 AM PDT

      [ Parent ]

      •  Therein lies the fear. (0+ / 0-)

        Here in Boston, there aren't housing options as you mentioned, given the volume of rent-happy students. The rental market will be quite consistent as the housing market shifts - possibly even go up.

        But it is exactly this which scares me most:

        Don't look to catch the bottom of the market; the risk of buying into a false bottom is going to be real.  Wait for an uptick.  Spending $5-$10k more because you missed the bottom of the market won't hurt nearly as badly as buying... and watching another $40,000 (or more) evaporate.

        How do you distinguish between a false bottom & the real bottom?

        "I'm not an actor, but I play one on TV."

        by zeitshabba on Wed Sep 06, 2006 at 07:52:07 AM PDT

        [ Parent ]

    •  I was in Salem, MA (0+ / 0-)

      a few years ago and spoke to a man who bought a house near Federal Street in 1991 for $110,000.

      My neighbor's daughter and son-in-law bought a old Cape Cod house for $138,000 about eight years ago.

      The Boston market can lose a lot of ground because it is so filled with older houses and dependent on unstable technological industries.

  •  Creativity for sellers (2+ / 0-)
    Recommended by:
    tikkun, Do Tell

    Where I live in suburban Kansas City, sellers are already putting signs in their yards offering no money down, etc... Builders are offering to finish basements for "free."  I talked to a friend trying to sell a house in VA, which is a soft market at the moment.  Apparently there are times of the year in parts of the country when houses sell and other times when they don't.  In VA, he's going to have to wait until spring for the right time again. My guess is the statistic to watch is foreclosure rates.  As for those people who had an ARM, many are just getting a new ARM hoping for better days.  

    Winning without Delay.

    by ljm on Wed Sep 06, 2006 at 06:47:30 AM PDT

  •  I Just Love Your Diaries, Bonddad (6+ / 0-)

    They make me want to slit my wrists.  Desperate for a place to live in a new area - military reassignment - no apartments available, we bought an overpriced house this time last year.  Thank God at least we didn't go anywhere near the price the loan officer said we could afford.  Now there are four houses within two blocks for sale, and I don't even want to know what they're selling for - probably about $20- or $30,000 less than what we paid just a year ago.  We didn't particularly want to retire in this area, but I guess now we have no choice.

    Excuse me now while I go to a corner and cry....

  •  Last week a developer cancelled a planned (8+ / 0-)

    500-unit housing development. An apple orchard had already been removed. Now they are dozing back to previous contour, prior to seeding in forage, so at least the farmer can 'make hay.' This is in Admas county, PA.

    •  around here... (1+ / 0-)
      Recommended by:
      Halcyon

      Where I am, Minneapolis/St. Paul, Minnesota, the plug is being pulled on a variety of condo projects. Projects in the conceptual stage are not getting off the ground because the big investors who tend to fund these things are looking for other places to invest. Buildings in the design stage are just not being built. Some are being redesigned for smaller, less expensive units. Some of those under construction are being reconfigured as office space or marketed as rentals.

      That said, there are still plenty of projects going full speed ahead. The 'luxury' condo market is the only segment that is really doing poorly. In this neck of the woods, $300K is the rough starting point for condos considered expensive. There are plenty of brand new units like these sitting vacant and unsold. The people who are truly suffering are those who bought a condo any time within the past 10 years and now want to sell. They have to compete with a surplus of new condos that cost the same or less than their older units.

    •  Oh, this is sad. (0+ / 0-)

      I have no patience with people who grow old at 60 just because they are entitled to a bus pass. Mary Wesley, British novelist

      by xanthe on Wed Sep 06, 2006 at 09:37:22 AM PDT

      [ Parent ]

      •  We're glad and relieved. (0+ / 0-)

        There isn't enough water to service this many more homes. Then there's the sewage. We have 20 acres and only one small section percs. Most in the area have raised mound septic tanks. The roads can't handle the traffic. The orchards are not able to compete with Chinese or South American imports (at least at the current price of oil). There aren't enough jobs for all those homes, unless they commuted a long way.

        •  I didn't mean sad about the homes... (1+ / 0-)
          Recommended by:
          Halcyon

          I meant sad that the orchard was destroyed.  As to your post - I get it!  This has not stopped the City of Chicago from taking every blade of grass away from its citizens to give it to developers.  The city council has never met a developer it couldn't work.  I understand your post perfectly.

          I have no patience with people who grow old at 60 just because they are entitled to a bus pass. Mary Wesley, British novelist

          by xanthe on Wed Sep 06, 2006 at 10:18:19 AM PDT

          [ Parent ]

  •  Bonddad... (4+ / 0-)

    do you own stock in companies manufacturing anti-depressant or anti-anxiety medication?

    This is getting like "Terror level raised to RED!!!".

    BTW, wanna buy my house?

    This is CLASS WAR, and the other side is winning.

    by Mr X on Wed Sep 06, 2006 at 06:56:46 AM PDT

  •  Why Bush is still popular in Utah (1+ / 0-)
    Recommended by:
    Do Tell

    Ironically, it's the Anglo Democratic Equity Refugees and Latinos from California who are driving up our home prices.

    •  When I fled N. Utah... (0+ / 0-)

      back to So Cal, 18 years ago... we couldn't afford to sell our place there.  We'd have lost money.  We held on...

      At last, maybe...

      "I desire what is good. Therefore, everyone who does not agree with me is a traitor." King George III

      by ogre on Wed Sep 06, 2006 at 07:46:33 AM PDT

      [ Parent ]

      •  Depends on where in northern Utah (1+ / 0-)
        Recommended by:
        Fishgrease

        There are still some places in northern Utah where the real estate has a "free to good home" sign on it.

        But if you're in Park City, most of the Salt Lake Valley, northern Utah County, Davis County or the nicer areas of Weber County; you're set.

        Even Logan is doing well.  My sister-in-law's job moved there.

        Utah is all up to date now.  We have brew pubs, strip joints, Unitarian churches, a Democratic congressman in the 2nd district and LA street gangs.

        I heard that in a few years, we are going to get this new innovation called indoor plumbing.  I can't wait to try it.

  •  I was with friends last night... (4+ / 0-)
    Recommended by:
    tmo, cotterperson, xanthe, Do Tell

    Yes, live friends in physical space (what, Kossacks aren't perpetually holed up in their basements with Cheetos and Mountain Dew? What a shock!!).

    One of them is a real estate agent, the other a mortgage broker.  The real estate agent said inventory in our area has been steadily climbing through the summer.  He's worried.

    The mortgage broker said he was extremely busy with people who wanted to try to convert ARMs and some of those "funny money" mortgage plans into more-stable fixed rate loans.  

    The power of accurate observation is commonly called cynicism by those who have not got it -- GB Shaw

    by kmiddle on Wed Sep 06, 2006 at 07:02:50 AM PDT

  •  I can't remember... (0+ / 0-)

    ...was "the wheels are coming off" a University of Chicago thesis, or Oxford?

    Photobucket - Video and Image Hosting

    Pakistan is harboring bin Laden. What now, Mr. President?

    by The Termite on Wed Sep 06, 2006 at 07:02:50 AM PDT

  •  Home for Sale (8+ / 0-)

    no kidding. This drop in the market is killing me. We bought a new house while we still had the old one, as the old neighborhood's average time on market was 34 days.  We are across the street from the best public high school in Indiana, and one of the best in the country, and the end of the block is the elementary school.  It is also a 2 block walk to a wonderful and huge new public library, and 3 blocks to a rails-to-trails bike path.  It has now been on the market for 8 months, and it is f'ing KILLING ME!

    4 BR, 2.5 Bath, .4 acres with fenced yard and hardwoods.  Entirely refurbished interior, with tile in all bathrooms, kitchen has cherry cabinets and granite countertops, with top of the line appliances.  Carmel, Indiana.  $175,900.

    Now Hypnocrites cartoons are for sale on T-Shirts, buttons, and more.

    by dhonig on Wed Sep 06, 2006 at 07:03:23 AM PDT

    •  Too bad its not Carmel, CA (1+ / 0-)
      Recommended by:
      Do Tell

      You could add 2 zeros to the price and it would have sold already.

    •  My childhood home... (0+ / 0-)

      My family has been wholly unable to sell the house I grew up in outside of Punxsutawney, PA, in a town of roughly 800 folks. 2.5 bedrooms, 1.5 bath house with barn/garage, above-ground swimming pool, fruit trees & 1/3 acre leading all the way back to the creek.

      Asking price? Roughly $45,000. It's only been available for about 8 years now... two "buyers" defaulted 2-3 years into a purchase so far. At this point, I'd almost keep it as a summer get-away if I had any desire to go back...

      So I know your pain. In the past four years, I have paid for that house alone in Boston rent...

      "I'm not an actor, but I play one on TV."

      by zeitshabba on Wed Sep 06, 2006 at 07:32:16 AM PDT

      [ Parent ]

    •  just wondering (0+ / 0-)

      What kind of jobs are there in that area?

      •  Many (0+ / 0-)

        Carmel, and the neighboring town Fishers, are among the fastest growing and "best" in terms of quality of life, education, etc., in the country.  Both are suburbs of Indianapolis.  Delta Faucets, Thompson Electronics, Wellpoint (Blue Cross Blue Shield) and Eli Lilly are headquartered here.  Rolls Royce (airplane), Roche (diagnostics division, not pharma), and others have big locations.  There is still some manufacturing (in fact I have a meeting next week with a guy I'm trying to get to move a manufacturing plant from upstate New York), and a lot of office/service.

        Now Hypnocrites cartoons are for sale on T-Shirts, buttons, and more.

        by dhonig on Wed Sep 06, 2006 at 08:52:41 AM PDT

        [ Parent ]

    •  Where is Carmel? (0+ / 0-)

      close to...        that's awfully cheap.

      I have no patience with people who grow old at 60 just because they are entitled to a bus pass. Mary Wesley, British novelist

      by xanthe on Wed Sep 06, 2006 at 09:35:38 AM PDT

      [ Parent ]

      •  Indianapolis suburb (0+ / 0-)

        probably the nicest suburb in Indianapolis. Information about Carmel here, and a Wiki entry here.  

        on average 89% of Carmel High School Students enroll in four-year colleges. Add 4% of the class entering two-year colleges or trade schools and 2% were foreign exchange students returning to their own countries to pursue further education there, for a total of 95% of Carmel High School graduates continuing their education.

        The Scholastic Aptitude Test (SAT) score results show that Carmel High School students scored an average of 551 on the math portion of the test, 53 points higher than the state average and 39 points higher than the national average. On the verbal portion, Carmel students scored an average of 536, 40 points higher than the state average and 31 points higher than the national average.

        The median income for a household in the city was $81,583, and the median income for a family was $94,210.

        Carmel is home to a thriving economy. Several large companies reside in Carmel, such as the centralized sales headquarters for HSBC Finance Corporation , National Headquarters for Conseco and Pearson Education (formerly MacMillan Publishing). It is also home to many mid-sized and smaller companies such as Orchard Software Corporation, Autobase Inc., Electronic Evolution, and Oxford Financial Services.

        Now Hypnocrites cartoons are for sale on T-Shirts, buttons, and more.

        by dhonig on Wed Sep 06, 2006 at 10:28:03 AM PDT

        [ Parent ]

        •  Are you close to the train? (0+ / 0-)

          grocery store?  good transportation in suburb?  Taxes?  

          I have no patience with people who grow old at 60 just because they are entitled to a bus pass. Mary Wesley, British novelist

          by xanthe on Wed Sep 06, 2006 at 10:35:46 AM PDT

          [ Parent ]

          •  Close? (0+ / 0-)

            no train (really no public trans here).  Blocks from a couple of different grocery stores.  Not much in way of public trans in suburb, but easy driving, and GREAT bike paths.  Taxes are pretty reasonable by Indiana standards, and VERY reasonable by national standards.  

            Now Hypnocrites cartoons are for sale on T-Shirts, buttons, and more.

            by dhonig on Wed Sep 06, 2006 at 10:49:55 AM PDT

            [ Parent ]

            •  thank you for information = I don't drive (0+ / 0-)

              anymore so....but it seems like such a nice house and location.  good luck!

              I have no patience with people who grow old at 60 just because they are entitled to a bus pass. Mary Wesley, British novelist

              by xanthe on Wed Sep 06, 2006 at 01:56:57 PM PDT

              [ Parent ]

    •  wow (0+ / 0-)

      That is insane, $176K for that place would be a steal out west!

      "The power to dominate rests on the differential possession of knowledge" -Foucault

      by Jett on Wed Sep 06, 2006 at 10:21:42 AM PDT

      [ Parent ]

  •  details, details (5+ / 0-)

    Prices for single-family homes rose an average of 1.17 percent during the period, compared with 3.65 percent growth in the second quarter of 2005

    What this says is not that housing prices have dropped, but that the rate of increase in housing orices has declined.  Housing prices are still rising, just not quite as fast.

    -8.0, -7.03 don't always believe what you think...

    by claude on Wed Sep 06, 2006 at 07:10:53 AM PDT

    •  yes (1+ / 0-)
      Recommended by:
      billlaurelMD

      But I think developers are hiding the actual decrease in prices by adding huge incentives and cash back deals to buyers.  Flat screen tv's are also popular in condo communities.  So the developer can continue to say their homes sell at such and such a price but in reality it is much lower if you subtract the incentives.

    •  It looks like it's (0+ / 0-)

      defining an arc.  What's gone up is reaching a peak.

      Here's supporting evidence:

      I'm on a committee that's in charge of building a new UU church building.  Materials costs have just been going crazy for over a year--and have driven the project to the point we're going to cancel.

      But meeting with the contractor and architect the other day, the contractor held out this: while steel and concrete are still holding or rising... a number of other materials costs are levelling out, and some of the subcontractors who weren't even returning calls for bids on jobs are starting to respond... and with very similar bids.

      His comment was that commercial construction's still going like crazy (and international material demand is still high).  But housing... it's lost its demand on things--and this is in the hot-hot-hot San Diego market.

      "I desire what is good. Therefore, everyone who does not agree with me is a traitor." King George III

      by ogre on Wed Sep 06, 2006 at 07:55:02 AM PDT

      [ Parent ]

  •  Not dropped enough yet (3+ / 0-)
    Recommended by:
    tmo, ogre, andy76

    The drop in housing prices is an economic game of chicken.  If potential buyers don't blink, prices could drop well more than 3 or 4% before it picks up again.  Think 25% over the next 2 years.

    As I said, if potential buyers don't blink.  Higher interest rates will keep buyers from giving in, so will higher fuel prices, tuition, and all the other things that keep people from saving.  

    If I were a buyer, I would hold out for another three years.  Right now, you can rent for far cheaper than a mortgage payment for the same space.  

    As for the complaint that rent money is just being poured down the drain, think about this: the actual savings component in a mortgage payment (principal) is remarkably small per month.  You could probably put the same amount into a savings account each month, at a 5% rate, and come out ahead for the next few years.  And without ever having to mow a lawn.

    Wait for 25%.  Bad news for owners; good news for renters.

    •  Even in the Bay Area? (1+ / 0-)
      Recommended by:
      Do Tell

      I'd love to see a 25% drop in house prices, but do you think that would happen in the Bay Area? The conventional wisdom is that home prices will never drop here, only the rate of increase will slow down.

      A word after a word after a word is power. -- Margaret Atwood

      by tmo on Wed Sep 06, 2006 at 07:19:23 AM PDT

      [ Parent ]

      •  Look to the rent/mortgage differential (3+ / 0-)
        Recommended by:
        Jett, tmo, Do Tell

        In other words, the "ROI" of owning a rental property.

        Rents are cheaper by far and since "arbitrage" can't exist over the long term, either rents will increase or home prices will fall.

        Who is renting?  The people flipping the burgers and stuffing the burritos.  They can't afford rent increases.  What's left is dropping home prices.

        I agree with the wait 25%.

        Remember what happened in Southern Cal in the 1990s when the MIC there lost a bunch of money?  CRASH, 50% in some markets.

        It will happen in the bay area.  Renters can't "trade up" and net immigration is dropping.

        -6.5, -7.59. If you're not outraged, you're not paying attention.

        by DrWolfy on Wed Sep 06, 2006 at 07:22:57 AM PDT

        [ Parent ]

        •  good point (0+ / 0-)

          My parents got hit by that crash, lost something like $20K in value over what they bought it for. That place is worth at least 3 times as much now though. The house they live in now is valued at something like $700K - if it were in PA or some other market where prices haven't gone insane it would probably be worth well under $200K. Rents have gone up in their area too but not nearly to the point where they match a realistic mortgage payment. Where I live our rent was only a tiny bit less than our mortgage payment - so it only became an issue of saving enough for a downpayment on a house for us to afford to buy. At this point houses have increased enough that we probably couldn't afford to buy, or if we did it would have to be outside of city limits. It's not nearly as bad as SoCal, but it is heading in that direction. There is no way your "average renter" in SoCal can afford a house unless they are rich.

          "The power to dominate rests on the differential possession of knowledge" -Foucault

          by Jett on Wed Sep 06, 2006 at 10:33:36 AM PDT

          [ Parent ]

        •  Rent differential in Bay Area always huge (0+ / 0-)

          Ah, but the rent differential in the Bay Area has always been huge. Maybe rent and housing prices are connected in the rest of the country but they don't seem to have much connection around here. People don't buy houses thinking about how much they can rent them for; if they did that, nobody would buy houses because you've never been able to recoup your costs that way here. Net immigration may be decreasing, but there are still more people who want houses than there are houses to buy.

          Also, about two thirds of people living in the central Bay Area rent. That's a lot more than just your burger flippers and burrito stuffers. I think there's still a lot of pent up demand, so I'm skeptical that prices will fall here.

          A word after a word after a word is power. -- Margaret Atwood

          by tmo on Wed Sep 06, 2006 at 11:51:42 AM PDT

          [ Parent ]

      •  Varies by area (0+ / 0-)

        Your state just passed an environmental bill that will probably create a lot of creative jobs, attracting people to your area (and away from mine).  These people will probably pay more, because they can.  That will probably mean your area will not drop as much before you risk losing the chicken game.

        If 25% is a national average, that means some other places are going to be economically destroyed.

      •  "the conventional wisdom" (0+ / 0-)

        is a feeble sort of wisdom.

        Ask WHY.  Why won't that property ever go down?

        "Because it's  aperpetual motion machine" is not a good answer.

        Nor is "Because this is the Bay Area" isn't either.

        "I desire what is good. Therefore, everyone who does not agree with me is a traitor." King George III

        by ogre on Wed Sep 06, 2006 at 07:57:25 AM PDT

        [ Parent ]

      •  The Bay Area is one of the few places it could. (0+ / 0-)

        Generally, real estate prices are "sticky".  Sellers often postpone a sale, renting if necessary, rather than take a significant loss.

        For prices to drop significantly (the standard in the industry for declaring a real estate crash is a 10% drop), you almost always see major, well defined "irrational exuberance" first creating a real estate bubble that pops, or at a more local level, a major change in the character of a neighborhood for some reason (e.g. a major layoff that disproportionately impacts that area).

        The Bay Area has been in a bubble for ages.  It could crash.  Cleveland, for example, in contrast, is almost incapable of crashing, because it is not in that kind of bubble and hasn't seen the major job losses of places like Flint and Detroit.

        "Those who can make you believe absurdities can make you commit atrocities" -- Voltaire

        by ohwilleke on Wed Sep 06, 2006 at 08:18:46 AM PDT

        [ Parent ]

      •  I've been tracking Bay Area home prices (1+ / 0-)
        Recommended by:
        tmo

        and in only one period of time in the last 30 years did house prices actually decline (1990-1995) after the '89 quake/early 90's recession double whammy.  And even then, the decline was modest (10% or so.)  I expect a smaller correction this time on average, as we are seeing wage and employment growth in the Bay Area which will limit the damage. I would also add that the condo market will likely be hit much harder than the SFR market...the inventory of condos on the market now after all of the building in the last ten years, coupled with the thousands more condos in the pipeline (8,000 in SF alone right now) will serve to depress condo prices.  See my previous comments here.

        "A liberal is a man or a woman or a child who looks forward to a better day, a more tranquil night, and a bright, infinite future." ~Leonard Bernstein

        by outragedinSF on Wed Sep 06, 2006 at 09:09:02 AM PDT

        [ Parent ]

  •  Local markets (2+ / 0-)
    Recommended by:
    ohwilleke, tmo

    The national statistics are useful, but I'd really like to see more about local effects, since real estate markets are local.  It would be quite possible to have a bubble on the coasts and a healthy market in the midwest, or even a bubble suburban market near an undervalued urban market.  There are also issues of income and wealth distribution.  I'm not sure how much it's possible to conclude from national trends.

  •  Quite honestly (1+ / 0-)
    Recommended by:
    Do Tell

    Bonedads diary titles have the feel of shorts on the Yahoo finacial message boards.

    •  ROFL (1+ / 0-)
      Recommended by:
      roboton

      But so much more content.

      Housing... prepare for you wedgie.  It's been coming for a while.

      "I desire what is good. Therefore, everyone who does not agree with me is a traitor." King George III

      by ogre on Wed Sep 06, 2006 at 07:59:02 AM PDT

      [ Parent ]

      •  I like the attention given to the (1+ / 0-)
        Recommended by:
        Slartibartfast

        missplaced "you"

        Is that intentional, or do people just type so fast they forget the "r" in your?

        I would like to have that discussion with a Human Factos Engineer.

        (I missed the "r" in factors unintentionally, and I am leaving it that way...)

        First they call you a traitor, then they pass the Patriot Act II, then they tap your phone, then you move to Canada. -- Mohandas Gandhi

        by roboton on Wed Sep 06, 2006 at 08:27:15 AM PDT

        [ Parent ]

  •  Housing construction was 6 percent of GDP in 2005 (4+ / 0-)

    That is a lot of economy to head south at once.  I've never liked the housing boom as living in a big house is less productive (in the sense of contributing to a continuing prosperity) than living in a smaller house because it eats up so much in the way of resources over time.  Americans are going to sit in the huge, unsellable homes finding that they can't afford to heat them, cool them or maintain them pretty soon.  That is really going to suck once the recession hits.

    "Americans can always be counted on to do the right thing - after they have exhausted all other possibilities." Winston Churchill

    by LondonYank on Wed Sep 06, 2006 at 07:17:27 AM PDT

  •  So - my prediction a long time ago (1+ / 0-)
    Recommended by:
    hypersphere01

    You'll have to take my word for it....  :)

    1. Housing prices start to fall
    1. Those 100%+ loans start to be short in equity so banks start "margin calls" (don't know the technical word for it).
    1. People can't make those payments to bring the loan up to equity requirements.
    1. People begin to panic sell their homes
    1. Prices crash

    Gotta love those 125% mortgages now, dontcha?

    -6.5, -7.59. If you're not outraged, you're not paying attention.

    by DrWolfy on Wed Sep 06, 2006 at 07:20:00 AM PDT

    •  Okay, I'll bite Doc. What's your prediction... (0+ / 0-)

      on the percentage drop in prices we will see before bottom is hit?

      •  Depends on the area... (2+ / 0-)
        Recommended by:
        kck, CAL11 voter

        California (population centers): 30-40%.
        NorthEast: 25%
        Midwest (gonna be OK, not as big a bubble) - flat to down 5%
        Great Lakes (population centers): 10-20% down
        Florida (don't know much about it) but would say 25% or so.

        The problem, as I forecasted, are the "margin calls" when banks demand that people bring their loans up to equity requirements.

        -6.5, -7.59. If you're not outraged, you're not paying attention.

        by DrWolfy on Wed Sep 06, 2006 at 07:39:14 AM PDT

        [ Parent ]

        •  That's a pretty severe drop in California... (0+ / 0-)

          your are predicting.  A 30-40% drop is the same as saying that about 60-80% of the increase from about 2000.  I saw your comment upthread, but I had thought that California saw a price decrease of about 20% in the 90's.  Do you predict this drop will be more severe than the last one?  Will it last as long?

          •  I'd have to agree. (2+ / 0-)
            Recommended by:
            kck, CAL11 voter

            A home (at or just above the "median" at the time) purchased in the San Diego Co area... 12 years back... for just over $215k... is now running $750-$800k.

            60-80% of the increase since 2000, and it's still going to be $500k or so.

            I lost money in the last CA real estate recession--that charming 90s recession you refer to.  I don't see the local economy being as weak as it was then... but the national situation is going to suck like the Titanic going down....

            I wouldn't be surprised.  Housing has ballooned along for a very long time.  There's a lot of air there to let out....

            "I desire what is good. Therefore, everyone who does not agree with me is a traitor." King George III

            by ogre on Wed Sep 06, 2006 at 08:05:16 AM PDT

            [ Parent ]

            •  Market drivers in San Diego (0+ / 0-)

              Also, it's not so much the housing market itself driving selling decisions in San Diego, from my current experience, but Baby Boomer retirements and looming reversions to adjustable mortgage rates. Keep hearing the same stories.

              > 518,000 American children are in foster care. Got any bandwidth?

              by kck on Wed Sep 06, 2006 at 08:26:19 AM PDT

              [ Parent ]

          •  But within good mathematical estimates (0+ / 0-)

            OK, so let's assume that 5% to 10% is the "normal" long term growth rate.

            Over 6 years, that would translate into roughly 35% to 75% increase from 2000.  Note: I think my estimate is probably high, since actual growth shouldn't exceed (by too much) inflation + productivity gains (or about 4 to 6% over the period.

            So, let's be generous and assume that "natural growth" is somewhere in the middle, let's say 50%.  

            Now, housing has doubled (even more than doubled in some markets) so given those assumptions, about 50% of that growth is "non-normal".  So, yes, to get back into some sort of normality, prices would need to fall about 25%, giving back 50% of the increases.  

            If I am too generous with the "normal" growth rate, then it would give back more.

            -6.5, -7.59. If you're not outraged, you're not paying attention.

            by DrWolfy on Wed Sep 06, 2006 at 08:32:39 AM PDT

            [ Parent ]

        •  Few SCal datapoints (1+ / 0-)
          Recommended by:
          Kane in CA

          I have direct experience shopping for a (final, retired) move from Pasadena, Ca to San Diego, actively searching (very specific reqs.) over 6 months now.

          Pasadena, inventory growing, prices still at peak, comps just starting to sell with longer days on the market, showing a slight  decrease, some still bidding above market due to the neighborhood's high value.

          San Diego, inventory is very high and growing, prices have dropped 15% to 20% in the 100  or so houses I have been tracking and falling steadily daily. I expect that they'll go down 25% to 30%. Very fine properties staying on the market for months.

          We decided this week to sell first and live in the Rv or rent until the we find what we want. We're very close and we are not in a rush obviously. We'll be making an even swap financially but getting much more for our money.

          BTW, we never bought for an investment but to live in our house, only 30-yr fixed mortgages.

          > 518,000 American children are in foster care. Got any bandwidth?

          by kck on Wed Sep 06, 2006 at 08:23:02 AM PDT

          [ Parent ]

  •  Homeowners: start making weapons in your homes! (1+ / 0-)
    Recommended by:
    Do Tell

    This seems like the most stable, predictable and reliably domestic eoncomic endeavor available. That portion of our home which we use for this vocation would be a proportionate tax deduction as a business expense, which will help with that bloated mortgage payment, and the weapons we export will help ease the trade deficit!

    Quis custodiet ipsos custodes? (Who will watch the watchers?)

    by The Crusty Bunker on Wed Sep 06, 2006 at 07:21:06 AM PDT

  •  more anecdotal evidence (3+ / 0-)
    Recommended by:
    Aquarius40, mightymouse, Do Tell

    My daughter goes to a college in Winchester, Virginia.  She told me that a couple of brand new houses in a housing development are being rented by 4 or 5 college kids each.  Must be the sales fell through and the developer couldn't come up with buyers so they are renting them out.  The rest of the homes in the community are not being worked on at the moment.  These are the huge "mcmansions" that were springing up all over northern virginia.  My daughter is very jealous that her friends are living in these homes with two fire places and granite counter tops!

  •  Bonddad, where are those speculators going? (2+ / 0-)
    Recommended by:
    Do Tell, kck

    They drove up the stock market, then they drove up the housing market.  Any idea where speculators are going next?

  •  While Housing is Cooling, Diary is Misleading (6+ / 0-)

    It refers numerous times to "declining prices".

    In fact, what's being reported is that the increase in single family home prices was not as great as last year's increase .   The only home price decline referenced in the article is the median price of condos.  That's it.

    It's certainly true that home prices are cooling, and there are good reasons to be concerned about a hard landing.  But misrepresenting what has already happened shouldn't be part of the discussion.

  •  my home price actually has gone up... (1+ / 0-)
    Recommended by:
    kck

    I live in a home in Santa Monica that is at the bottom range of prices for homes here.  I guess because there isn't really anything available in this location for this price, my home price has actually gone up over the past 6 months.  2 million dollar homes here are more the average, and they have gone down.

    •  If I understand correctly, (0+ / 0-)

      I'm seeing the same SCal scenario. Houses in the $650-$850 range going down and lower priced homes going a little up. Million dollar homes are stable.

      > 518,000 American children are in foster care. Got any bandwidth?

      by kck on Wed Sep 06, 2006 at 08:30:05 AM PDT

      [ Parent ]

  •  So what happens after the crash? (0+ / 0-)

    Look into your crystal ball for a second.  For those of us who haven't bought homes, what are the implications of this?  Does this mean that in, like, 5 years housing will just be really cheap and available if you have a job in the wrecked economy?  I know this isn't an exact science or anything, but what does this mean for the long term?

    Read James Loewen's "Sundown Towns"!

    by ChicagoDem on Wed Sep 06, 2006 at 07:42:16 AM PDT

  •  Pure anecdotal evidence... (0+ / 0-)

    ...every home I've seen for sale in my neighborhood has a "reduced" sign tacked onto it.

    A friend of mine who is a mortgage broker recently told me that he had learned not quite 40% of home sales (I can't recall whether he said 37% or 38%)  are people buying houses to flip them.  Which means a lot of the market has been made up of speculators selling houses to each other.  

    That can't be good...

    "...the big trouble with dumb bastards is that they are too dumb to believe there is such a thing as being smart." -- Kurt Vonnegut, Jr.

    by Roddy McCorley on Wed Sep 06, 2006 at 07:44:05 AM PDT

  •  Bought for 134,000 (4+ / 0-)
    Recommended by:
    Ed in Montana, DC Scott, cwaltz, OWTH

    Paid off mortgage this year. what a relief and our little two acres grows as much food as we can. I have always had self-sufficency in the back of my mind even though I love my creature comforts(dishwasher etc)

  •  Depression, or... (0+ / 0-)

    The housing bubble is just another investment craze, and it will die like all the others.  The need to have a roof will never go away.  Other things that will never go away are the capital gains $500K exemption and the mortgage interest exemption.  These will create incentives to buy houses.

    How the collapse fits into the future is up to us.  Will we create other opportunities by throwing money and incentives at some other industry, say biotech or clean energy?  Will we crack down on monopolistic or oligopolistic competition that not only reduces consumer choice, but oppresses workers and small vendors?  Will we fight to create better working conditions overseas, so our workers do not have to compete with sweatshops?  Will we create sweeping programs, like building a high-speed rail network or a wind-based utility?

    Will we put all our eggs into one basket again (PCs, dot coms, houses) or will we build a diverse, stable economy where all can benefit?

    I resist claims about what the future may bring.  We can control it.

  •  home prices dropping is a good thing (1+ / 0-)
    Recommended by:
    tryptamine

    they have gotten ridiculous in the last few years. I bought in 99 so I am covered but, i would like to move up. but with the rapid acceleration of prices, I am priced out of my own neighborhood. school districts throughtout this area are reporting drops in enrollment because families can no longer afford to live here.The flippers and those foolish enough to expect double digit increases every year might get hurt, but overall it will be good for families to be able to afford a decent house.

    Patriotism consists not in waving the flag, but in striving that our country shall be righteous as well as strong. ~James Bryce

    by california keefer on Wed Sep 06, 2006 at 08:06:16 AM PDT

  •  National statistics don't cut it. (2+ / 0-)
    Recommended by:
    Ed in Montana, badger

    Most parts of the U.S. economy are substantially similar nationwide.  But, not real estate.

    Actually, even the mortgage lending market is a largely national one.  Local mortgage brokers can underwrite mortgages for lenders all over the nation, and Fannie Mae and Freddie Mac (along with the VA and FHA) have such a pervasive influence on the market that the process is very homogenized.  With small minor exceptions (most notably California, where a home owner generally isn't liable to the bank if the house is worth less than a purchase money loan at foreclosure time, unlike almost all other states) the economics of a mortgage are sufficiently close to identical nationwide for lenders to feel comfortable lending anywhere.

    Most of the differences in mortgages from location to location is in the mix of mortgage products consumers choose (itself to a great extent a proxy for the state of the local market, with risky, lower payment mortgages more common in pricey markets), than in the rates that apply to a particular kind of loan.

    So is the market for almost all consumer goods.  If a book or a jacket or a bottle of wine is too expensive locally, people will pay to have it shipped to them.  For major purchases, like a car, people will go to the next state over if the savings is meaningful.

    But, real estate itself is the single most localized factor in a typical consumers budget.  The lion's share of differences in the cost of living between one metropolitian area and another is attributable to real estate prices (either directly, or passed onto consumers through retail prices of goods almost always purchased locally, like groceries).  There are really significant differnces in appreciation rates and the likelihood that prices will collapse from region to region.

    Without a breakdown by region, these numbers are pretty meaningless (even though they made the front page in my local paper in Denver).  The Buffalo, New York real estate market is nothing like the market in Manhattan or San Francisco or Seattle or Austin.

    Is the national trend driven by a collapse of the Pacific Coast real estate bubble, or is it driven by saturation of the market with new construction in the South?  

    My own local market have been putzing along for a year or two at slow or even negative appreciation in any given month, and prices are being suppressed by the fact that my state leads the nation in foreclosures.  But, it isn't helpful to try to extrapolate that trend nationally.

    "Those who can make you believe absurdities can make you commit atrocities" -- Voltaire

    by ohwilleke on Wed Sep 06, 2006 at 08:10:19 AM PDT

  •  Here in Montana's Capital City (2+ / 0-)
    Recommended by:
    badger, Fishgrease

    The housing boom continues, with average home prices reaching $220,000, an astronomical sum for this town just a few years ago. We are getting slop over from the high priced housing markets in Missoula and Bozeman, with an influx of geoaraphically independent small businesses and a lot of retirees that are beginning to really clog up my fishing spots.

    But 17 months and counting for me and mortgage payments will be a thing of the past! Yeeearrgggghhh!!!

  •  Not a price drop (0+ / 0-)

    Correct me if I'm wrong, but an increase of 1.17 percent is NOT a price drop.

    It's the "lowest change in price" in 31 years, but it's not a drop in prices.

    A pessimist sees a glass half empty. I see a paper cup with holes punched in it.

    by Paper Cup on Wed Sep 06, 2006 at 08:17:47 AM PDT

  •  Yep, My mortgage co filed (2+ / 0-)
    Recommended by:
    Disillusioned, QuinnLaBelle

    for relief of automatic stay from my chapter 7 filing, and my house will most likely be auctioned off on Oct. 1. My lease on my apartment won't start until the 15th of October, so I will have an interesting couple of weeks to figure out where me, my wife, and three kids are going to be living.

    It's busted people. Busted. Hemmoraging. Deflating. Sparks are flying, we are riding on those fancy aluminum rims, grinding them away.

    First they call you a traitor, then they pass the Patriot Act II, then they tap your phone, then you move to Canada. -- Mohandas Gandhi

    by roboton on Wed Sep 06, 2006 at 08:20:45 AM PDT

  •  one important side note - (2+ / 0-)
    Recommended by:
    DrSpike, QuinnLaBelle

    reported housing prices may not accurately reflect true market conditions as many large developers offer special rebates or other incentives that mask the true decline in the value of homes for sale.

    developers have incentive to keep prices at artificially high levels but must simultaneously continue to attract new buyers at these reported price levels.  they do so by promising to return part of the purchase price in the form of a rebate.  pretty slick but indicative of darker conditions than are actually reported in aggregate data.

    Henny penny, the sky is falling. - The Feld

    by sedrunsic on Wed Sep 06, 2006 at 08:30:23 AM PDT

  •  Underlying Data is (0+ / 0-)

    here.  California is down 5%.  Nevada, Maryland and Florida are down 6%.  Arizona is down more than 7%.

    In contrast, Rhode Island, Mississippi and Idaho are booming with 3% appreciation.  (In Mississippi, this is likely post-Katrina rebound, in Idaho, this is likely oil boom related, in Rhode Island, maybe people are just flooding into the state to enjoy life without Lincoln Chafee.)

    "Those who can make you believe absurdities can make you commit atrocities" -- Voltaire

    by ohwilleke on Wed Sep 06, 2006 at 08:40:56 AM PDT

  •  I saw signs this weekend (0+ / 0-)

    I saw at least four McMansions for sale this weekend east of Jay Peak in Vermont.  This is a poor area, and the houses stuck out like sore thumbs. I imagined they were built on spec for potential emigrants from the Boston area, as they are so far out of line with the rest of the housing stock. It's late in the year for so many signs to be up.

  •  Here in the Northeast (0+ / 0-)

    they are still building condo crap to beat the band.  Many of these units are still empty yet the pricing of this new housing is phenominally high.  I think that's what the whole point of this exercise is, to simply drive people out of the market.
    Can you say depression in bold capital underlined letters?

  •  Thank God (0+ / 0-)

    I'm looking at maybe maybe looking starting to try to look at getting into the market for the first time early next year. So sorry everybody else. But this is music to my ears.

    To lodge all power in one party and keep it there is to insure bad government and the sure and gradual deterioration of the public morals. - Mark Twain

    by Windowdog on Wed Sep 06, 2006 at 08:45:55 AM PDT

    •  If you can (0+ / 0-)

      wait. Housing prices are going to take a long slow decline. It will be reasonably rapid at first, but this will take years to shake out. Why? Housing prices are notoriously sticky because they are illiquid assets and have another use. Often if people cannot get the price they want, they will just stay in the house. (As long as they can make the mortgage payments).

      However, in highly bubbly markets, CA, DC, VA, FL, AZ, there will be a crash. There has been a ton of speculation and the greater fools are now holding the bag and will get creamed. Another concern is that many of the jobs created in this expansion (30-40%) were based in real estate, construction, mortgage and finance. These jobs are starting to disappear and this will have a significant drag on the economy. The next few months will tell how bad it is going to be.

      Impossible is nothing

      by DrSpike on Wed Sep 06, 2006 at 04:28:14 PM PDT

      [ Parent ]

  •  Reverse Wealth-Effect Recession? (0+ / 0-)

    Bonddad, any indication that the downturn in home prices has affected consumer spending? I read an AER article some time ago that said increase in equity values took at least two years to translate into a positive wealth-effect increase in spending.  

    Any idea of what the relationship is with home value?

    Sponge Bob, Mandrake, Cartoons. That's how your hard-core islamahomocommienazis work.

    by Benito on Wed Sep 06, 2006 at 08:49:23 AM PDT

  •  More anecdotal evidence (0+ / 0-)

    I live in an affluent suburb of Sacramento. I started noticing little signs nailed to posts offering to buy homes in foreclosure a few weeks ago. There is a brand-new brick building on a main corner off the main exit from the freeway that says it is a bank (not a well-known branch, for sure) but is empty and has a commercial rental sign up on it. And construction has flat stopped on a nearby parcel of land that was being paved with streets just last spring. Property sale signs are going up along the interstate.
    My rent on the home I live in here -- 3 beds, 2.5 baths, 2 car garage, HUGE landscaped hillside yard with a deck, 2 patios, an outside storage "barn" shed that has lights/power, and a hot tub gazebo (no tub, darn)-- is $1500/mo. If I were buying, for that monthly price I'd be looking at a marginal neighborhood, with a lot less space inside and outside. True, I don't get the tax perks. But I don't think they would make the difference were I trying to buy a place like this.

  •  $417K is the starting price for a house here. (0+ / 0-)

    Bonddad said:

    The index measures changes of values for single-family properties that have loans bought or securitized by Fannie Mae or Freddie Mac. It excludes houses that have mortgages higher than $417,000, the maximum allowed in 2006 for loans bought by the government- chartered companies.

    Ha!  I live on Oahu where the average price of a house is $620K.  There's nothing "luxury" about a $417K home here.  It's either a 700 sq ft shack if it's in the city, a small prefab in Ewa (resulting in a 45-60m commute to work), or a reasonable-sized home in the run-down and crime-ridden west side (and well over an hour outside the city).  If you're not counting homes over $417K on this island, you're not counting 80% of the homes.

    I'm sure this is the case for other areas of the country, like San Diego, Orange County, the San Fran Bay area, silicon valley, etc.

    War is not the continuation of politics by other means. On the contrary, it represents a catastrophic failure of political skill and imagination. - Kofi Annan

    by Arclite on Wed Sep 06, 2006 at 09:03:17 AM PDT

  •  if the market comes baqck to reality (0+ / 0-)

    if the market comes back to reality, I would expect a 30% correction (in the bubble areas). 300k house should be around 200k etc.

    The problem I see happening is for all these johhny come latelys, flippers, and this interest only and other horrible mortgage holders. Why would they struggle to pay a 300k mortgage on a 200k house?  I see many people simply saying screw it, and walking away.

    There is no such thing as a free lunch, but credit companies and greenspan tried to act like there was.
    It's time to pay the bill, and for many who indulged, they simply won't/can't afford the bill.

    "Those who say religion has nothing to do with politics do not know what religion is."- Gandhi

    by voter for sale on Wed Sep 06, 2006 at 09:04:38 AM PDT

  •  How does one determine a price rise? (0+ / 0-)

    I'm assuming they are comparing the prices of houses that have sold. What are they comparing them too? Isn't it logical to think that what is saleable  (i.e. most desirable, better location) is what is selling now. I don't think that number is as useful at it appears. All we know is that what is selling is selling a bit more than some average a year previously. What does that tell us about what is not selling? It doesn't address any "time on the market issue" which in the real world has an associated dollar value.

    Compare this with selling 100 shares at limit price but without an "all or none" restriction. You might sell 10 at a slight profit, but does this mean that all other shares unsold have also risen just a bit? It just means there was someone willing to pay what you asked, but that there was a limited market. Same thing is happening in the housing market. Let' s not assume that all houses out there have risen in value like the ones that are selling.

  •  First time buyer ~ 1 year (0+ / 0-)

    And this seems like it will be a good time to buy about a year from now.  I rent in Maryland and plan to buy in D.C. close to a Metro.  Part of my down-payment will be my car that I sell, making my wife and I a one-vehicle household.  

    The other thing is that we are looking at condominiums... and there has been a huge condo building boom here the last few years.  From the national macro data condo prices are dropping right now.  It seems like prices may even drop here, what with the increased housing supply and buyers being pinched with flat wages and the economy weakening.

    The only thing is that the D.C. metro area has fared better than most.  The government has been expanding under Bush and there are plenty of high paying contracting/defense jobs in the area.  There is always demand for more housing because population and job growth is strong.  Comparatively, our local economy is stronger, perhaps stronger than anywhere else.  
    So when the housing crash plays out, I'm not so sure D.C. will be that hard hit.  Anyway, I do know that conditions will be good for my wife and I in a year... better than they would've been at the peak, which looks like it may have been last July.  

    Why settle for the truth when you can have Truthiness???

    by wintersnowman on Wed Sep 06, 2006 at 09:07:45 AM PDT

    •  Former NoVA resident here... (0+ / 0-)

      ...I used to keep an eye on the market up there -- hell, you couldn't NOT do so when you are/were a property owner -- and my ears still perk when I hear something about it on the tv/radio/whatever.

      The other night, I heard that NoVA housing prices were down about 4%.  We were just up there lsat weekend, though, and property values came up in conversation with every friend with whom we spent time.  They all talked about the prices having had gone down "a lot"

      Now, whether they said what they said is relative, due to the astronomical prices in the past couple years, or full-on, I dunno, I didn't actually see/look for numbers.  But as far back as last Nov., my old neighbor was noting pricing oddities, like townhouses within the same neighbourhood having pricing discrepancies of 90k.

      Although the masters make the rules / For the wise men and the fools / I got nothing, Ma, to live up to. (Dylan)

      by teedz on Wed Sep 06, 2006 at 09:28:54 AM PDT

      [ Parent ]

    •  If the Chinese (0+ / 0-)

      take away the Chimp's credit card things could get nasty.

      In 1987, the defense related jobs became hard to get and therefore I now live in Florida.

    •  Sorry, but ... (0+ / 0-)

      DC will indeed be hard hit by the coming crash.  All those defense/contractor jobs depend on the US gov't for money.  When an economic crash hits the US, tax revenues go down.  When tax revenues go down, the contractors -- defense as well as others -- are the first to be cut from the budget.

      I arrived in the DC area back in 1958.  Have seen all kinds of changes.  The biggest change of all is that DC is not protected from economic downturns.   The last serious one, back 1989-1992, caused lots of grief here.  Even K St. felt it.  No one was hiring -- not the lawyers, not the federal gov't, not the contractors.

      Oh, and if you are living inside the DC city limits, ditch the cars and use mass transit.  The buses and the subway work together very nicely.  With the addition of Zipcar, etc.  no one in DC really needs a car.  And you'll save yourself a huge load of money by doing so.  Michelle Singleterry (sp?) had a column in the WaPo this past Sunday about it.  

      •  I would ditch the car, but... (0+ / 0-)

        I'm married now and I don't have all the say.  

        But seriously... my wife is a triathlete and she needs a car for training and getting to races.  It's one of the things that keeps her sane.  She's got to transport her bike for rides.  (I ride with her also)  On top of that, we are going to be having kids in the near future and it'll be our choice to have at least one car, for convenience/necessity, depending on your perspective.  I don't know if Zipcar can fit into the young parent lifestyle as well as it meets the needs of urban singles.  

         

        Why settle for the truth when you can have Truthiness???

        by wintersnowman on Fri Sep 08, 2006 at 07:45:10 AM PDT

        [ Parent ]

  •  I Get Appraised Today! (0+ / 0-)

    If this diary is still active tomorrow, or there's another pertinent one to comment in ... I'll let you know precisely what housing is doing in the Detroit area based on my appraisal for a home equity loan.

    I ain't holding my breath for any good news, I can tell you.

  •  Guess we're fabulously lucky... (0+ / 0-)

    Paid fifty grand for a five hundred square foot house in Richmond (North SF Bay) that's currently valued at 308k by Zillow, which is rather a waste of time.

    There are twenty similar valued places here, but people are funny, they get stuck on abstractions. I'm moving my friends in here as fast as possible.

    It's a peculiar postwar mutual housing situation, with parklike lawns, premium construction, and a peculiar isolated nature, only one exit/entrance. Everyone says Richmond, high crime, but that's a mile away. We're closer to Point Richmond, a Berkeley style hill neighborhood, and through a tunnel to a salt beach and lake and mountain park. Close enough to walk. Eat your heart out.

    I resisted looking at this place for three years, because I was stupid and abstract. Now I wish I had all the Bay Area rent we spent.Atchison Village

    Humanity's niche is it's own culture. We change our world as it changes us. Evolution or devolution? -7.63,-3.28

    by ormondotvos on Wed Sep 06, 2006 at 10:53:28 AM PDT

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