03/18/11 Baltimore, Maryland – Whoa…this looks bad too.
In the housing sector, the fed’s ultra-low interest rates are supposed to make it easier to refinance…which is supposed to help firm up prices. But prices haven’t firmed. They’re still giving way.
The latest numbers show prices falling, hitting post-bubble lows in 11 cities. Of the 20 major cities in the survey, only two of them had positive price movements last year. No surprise, only one – Zombietown itself, Washington, DC, home of the feds – showed an increase of more than 2%.
Worst hit were the sunshine states – California, Florida, Nevada, Arizona and Georgia. Along with Michigan, more than a third of homeowners in these states have negative equity in their houses…with 70% of them underwater in Nevada.
Wealth effect? Not in housing. According to the Case/Shiller numbers, homeowners saw their net housing wealth decline by $650 billion in the last quarter of 2010. And since many more households own houses than stocks – 66% are homeowners – falling housing prices has a much bigger effect on the economy than rising stock prices.
And it gets worse. The big wave of resetting (and recasting) ARM loans begins to crash into the housing market next month. There are about $700 billion worth of loans in this group. Many will not be successfully rewritten. Falling housing prices will make it impossible. Homeowners will prefer to walk away, rather than be shackled to a long-term mortgage 30% to 50% higher than the value of the house.
Says housing expert Robert M. Campbell:
“I continue to believe that the second downward leg in house prices that began in 2010 will likely take US housing prices to a point that is 15% to 20% below current levels.”
Bill Bonner
for The Daily Reckoning
Bill Bonner
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This is great news if your rent a house but might like to buy one and you weren’t looking to buy before because you just knew in your heart that you couldn’t really afford the astronomically priced houses, and you didn’t want a “no money down” plan and you weren’t counting on that house that you couldn’t afford to appreciate to a point where you could refinance and have a ton of equity. If that describes you, this is good news.
[Says housing expert Robert M. Campbell...]
Do you believe exerts?
Just experts that work for the government.
Did John McCain ever figure out how many houses he owned?
Here is a refresher course for you doubters: http://dailyreckoning.com/extending-the-housing-bust-predictions/
Last time I looked the sun was still shining in Florida and it’s still snowing here in Upstate New York! Maybe not a buying opportunity for investment, but it is for retirement.
The message is still wrong. “Wealth effect”. “Underwater”. “Firmer prices”.
This is ridiculous. House prices are still in a large bubble. Why not have every American borrow ten million dollars and declare the country to the richest in the world, the richest ever.
The entire presentation of housing needs to be changed. It is NOT an investment. Simply because people have more money tied up in their house than their stock portfolio does not make it so.
Oxygen is more important than houses or stocks. Does anyone suggest that charging for oxygen and making sure it is too expensive for half the country is a way to make us wealthy?
Ridiculous. Even housing bears cannot grasp the fundamental issue. Everyone still sets their clocks by CNBC, as far as I can tell.
It’s hopeless.
@Karl, not as many as Elvis or Ted Kennedy owned.
Say ‘hi’ to them for me.
“Oxygen is more important than houses or stocks.” And salt is more important than gold.
There is a periodicity and self organizing order to the macroeconomy observed in the time evolution of its assets’ valuation curves. This regularity allows predictions of nonlinear events. The fact that so many homeowners world wide are underwater on their housing valuations and that housing supply, jobs and total wages, and ZIRP taken together have resulted only in a slower decline of prices correlates to mounting stresses on a fault line. A historical devolution of asset prices are underway. If the Oct 1987 crash – occurring in a period of relatively low debt and going forward expected macroeconomic growth – was a black swan event, this nonlinear event – occurring at synchronized periodicities starting with the British hegemony in the 1690′s and under conditions of world wide high unrepayable debt load, asset overvaluation, asset supply saturation, and value added job’s contraction- is the singular multigenerational albino black swan event.
For 2 funny.
Hey, at least they know/knew how many houses they had. You can’t say that about your last Republican presidential candidate, whom, by the way, for all you Birthers out there, was born in Panama, not the USA.
All those arms loans adjusting and credit being the way it is right now that expert has good reason to think there is going to be a further correction.
@Karl- Who cares? He’s not the President. Besides, you’re a ghost, remember?
You actually think Teddy knew the amount of the vast wealth he controlled? HA-HA, he couldn’t keep track of the number of drinks he had. Don’t get your proletariat undies so wrapped up.
Besides, the Canal Zone was pig-dog imperialist US territory then. And you don’t need to be a birther (whatever that is) to not believe everything you’re spoon-fed. Just ask Neil Abercrombie.
But you can’t, since you’re a ghost – remember?