Wednesday, November 19, 2008

"Great news: Home prices have fallen!"

From Fortune:

With declines of 30% or more California markets like Sacramento and San Bernadino, home prices and rents in those areas are approaching equilibrium, according to Deutsche Bank analyst Lou Taylor, who compiles a valuable quarterly survey housing costs in 55 urban markets.

As home prices continue to fall, Taylor predicts that dozens of grim markets could reach equilibrium by year end. "We're getting back the affordability levels of 1999, before the bubble began," says Taylor.
From the Modesto Bee:
Great news: Home prices have fallen! At least that's great news for people buying homes. New statistics show home affordability has soared in the Northern San Joaquin Valley as plummeting prices enable more families to attain the American dream...The National Association of Home Builders/Wells Fargo Housing Opportunity Index calculates that nearly 60 percent of homes sold in the region during July, August and September were affordable to local median-income families.
...
The affordability index, however, is only as good as the data it's based on, and some question whether the income statistics used are current. The index, for instance, calculates that the median- income Stanislaus family earns $56,500 per year. But many workers in the region have lost jobs this year, and unemployment is rising. "Income numbers often lag," cautioned Dr. Stephen Endsley, a Modesto real estate investor. "It may look like we have housing affordability, but do we really consider unemployment? First-time buyers have to have confidence before they go out and buy, but many of them have questions about (the stability of) their employment."
From the Stockton Record:
The City Council on Tuesday approved The Grupe Co.'s $3 billion plan to build 7,000 homes in a massive subdivision on a Delta island on the city's northwest side.
...
Two people spoke against the proposal Tuesday, saying the city is unwise to expand into the Delta and to approve vast housing plans while Stockton is in a foreclosure crisis. "It cannot help but further depress the housing market," said one of the speakers, Ann Chargin.
From the SF Chronicle:
Jing Hua Wu, the engineer who police say fatally shot three executives at a Santa Clara startup company last week just hours after being fired, spent the last few years amassing a large portfolio of investment properties. According to public records from eight counties in three states, Wu and his wife own at least 19 homes and vacant lots worth more than $2.4 million...Records show that Wu and his wife, Jie Zheng Wu, went on a property-buying spree starting in 2004...In California, they bought a modest home in Elk Grove (Sacramento County)....

[A]uthorities said they are looking into whether Wu's financial situation had been affected by his foray into real estate before the nation's foreclosure crisis.
Blog commenters eat real estate "experts"

6 comments:

Jacob said...

Does the affordability stat take into account how much the "median borrow" can actually borrow?

I mean if you make $50k and have your 20% saved up, and qualify for $150k loan then that $200k home is just right.

But, on the other hand, if you stil make $50k but your credit bad and you have no down payment and only qualify for $100k, then it doesn't matter how "affordable" that $200k home is, you still can't buy it.

anon1137 said...

This is a great time to have a safe pot of cash and NO exposure to the real estate market.

The weather is quite delightful this time of year, the air is sweet and dry. Life is good.

Husmanen said...

Speaking of "Experts"...

Thought everyone would enjoy this ‘look back’ at how Peter Schiff was grilled over an over again in the last two years as he was calling the crisis. Wonder what these experts would say now?

http://www.socalbubble.com/

One of the first economist Peter discusses the housing market with is Art Laffer where he claims the economy could not be stronger…

Laffer, you may remember him from the Reagan years.

Enjoy!

Diggin Deeper said...

Schiffer is one to follow...his commentary has been direct and hasn't wavered throughout this "Laffer". Both he and Larry Kudlow are really looking like fools right now..

Speaking of "Great News: Home prices have fallen!"

So what!

When your neighborhood's on fire, you don't run inside your home for protection...

Looks like Citi's about to crater...probably gets a buyout bid in a few days from the likes of JP Morgan or some other sucker that want's to take on all their losses...

Legacy automakers are bankrupt, they just haven't admitted it yet.

Stock market looks like it wants to visit 5K.

4 million people taking their unemployment checks, 2 million looking for rentals because they've walked from their homes.

Let's hope the guys in the white hats arrive soon...with something other than more debt to hand off to our children...

Expect a boomerang affect. All this liquidity will eventually take the dollar to new lows, once asset liquidation subsides...

But the good news is "Home prices have fallen!"

Diggin Deeper said...

That should have been Schiff not Schiffer....

norcaljeff said...

Hus, no need to pick on Reagan or Laffer. I agree, him and Cudlow were pie in the sky guys but no one save a few people knew it was this bad. He also started the Laffer curve, e.g. lower, flat taxes bring in more revenue, which is true. But at this point inthe economy, no one is buying or spending and as job losses mount, there isn't much in the way of tax revenue period. Maybe all these rich, elitist dirt bags will finally start chipping in.