U.S. home-value decline far worse than in 2009

[Newsjock]

Source: Bloomberg News

U.S. home values are poised to drop by more than $1.7 trillion this year amid rising foreclosures and the expiration of home-buyer tax credits, said Zillow Inc., a closely held provider of home price data.

This year's estimated decline, more than the $1.05 trillion drop in 2009, brings the loss since the June 2006 home-price peak to $9 trillion, the company said Thursday.

The drop pushed more buyers underwater, meaning they owe more on their mortgages than their homes are worth, Zillow said. The percentage of homeowners with so-called negative equity reached 23.2 percent in the third quarter, up from 21.8 percent at the end of 2009.

... Zillow's report is similar to other forecasts for prolonged weakness in the U.S. housing market. U.S. home prices will decline as much as 11 percent by 2012 as weak demand and rising inventory extend the housing slump, Morgan Stanley said in a report Wednesday.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/12/09/BUDI1GO66J.DTL

[nebenaube]

1. wtf?

What does "a closely held provider of home price data" mean?

[bemildred]

9. Usually "closely held" mean stock of the company is in few hands,

And not generally on sale to the public.

[David__77]

2. It's bound to happen. The income/price and rent/price ratios were insane.

Anyone who thought that some magical thing happened in the early 2000s that fundamentally transformed the housing market forever was incorrect. Cheap money led to prices steeply climbing, of course, but the underlying demand didn't change (it's not as if there's a huge population boom), and incomes are stagnant at best. Who in their right mind would pay a $2,500 payment of principal/interest/taxes/insurance, when you could pay MUCH less for an equivalent home in rent? The new generations need access to reasonably priced housing, and trying to maintain high prices does them a disservice.

[Arctic Dave]

13. My rule of thumb is as soon as the phrase "new paradigm" comes out of their mouth, run away.

It is code for, making shit up to charge you more.

[HopeHoops]

3. Yeah, I was a little pissed to find out my home was worth $1.7 trillion less than it was last year.

So much for my plans to relocate.

[Turbineguy]

5. Yes,

but if you relocated you'd only have to pay 1.7 trillion more anyway.

Especially if you live in Zimbabwe.

[Roy Rolling]

6. not to worry

I'll still sell you mine for $1.5 trillion and you can just walk away from your current mortgage.

[HopeHoops]

7. What's the horsepower rating on your garbage disposal? That's always the deal killer.

[No Elephants]

20. Yes, but only if your prospective buyer is the host of Home Improvement,

[Tunkamerica]

4. i looked on zillow's yesterday at my neighborhood and found several errors

one house was listed as being worth $761,000 because it had 6 bathrooms and 2 bedrooms. This is in a neighborhood of $90,000-125,000 homes. It had my house as being valued at almost $13000 more than i bought for and $8000 more than it was appraised at a year ago which is public record.

[bemildred]

10. Yes, they are pretty useless. Pseudo-information. nt

[NickB79]

15. Wow, I just looked up my houes on Zillow, and it is off in description

It's listed for $10,000 less than we paid for it only 14 months ago.

BUT, it also only lists it as a 3-br, 1.75 bathroom. The previous owners added an addition above the garage that had another 1/2 bath and 2 bedrooms. What's weird is that the total square footage was updated, though.

[sendero]

22. I'm not sure why....

.... you think you house could not have depreciated 10K in a year.

I realize that Zillow is often incorrect but house prices ARE dropping and they will be for years.

[NickB79]

24. Oh, I understand that my house could easily depreciate that much

But the listing as only a 3-BR makes me wonder if that's accurate or not.

[sendero]

25. I think..

... that info like that comes from the tax records. If you house is better than that, so much the better, you'd probably be paying more property taxes if it were correct. :)

[NickB79]

27. Haha, good point. nt

[davsand]

16. You get exactly what you paid for with Zillow...

Oh wait--it's FREE you say????

:eyes:


You'll notice that when people want loans they actually pay for an appraisal done by a licensed appraiser--somebody licensed and (more important) trained to do the job. In fact, lenders insist upon appraisals. I am biased (and I admit it freely) but with stuff like Zillow you are getting your money's worth and no more.



Laura
(An Illinois Licensed Appraiser)

[ngant17]

17. unfortunately licensed appraisers can very widely

for example, my first appraisal low-balled my house (for a refi) that I simply couldn't accept it. $90k. Never work with this company again. The second appraiser had me in at $120k., a $30k difference. Appraisers have to work in the best interests of the homeowner, after all, they are getting paid by the homeowner to do it right the first time.

[Gormy Cuss]

23. It also helps to read Zillow's explanation of the "Zestimate" and disclaimers

notably the one that says appraisers and qualified real estate agents would use much finer level of detail to estimate the value.

IMHO the "zestimate" isn't as interesting as the value range and the trending data for the area.

[BigEd7]

8. Take the

Average wage for any region. Multiply that by 14.2 (it's one of those weird economics derived factors). Then you have the maximum home value/price that a region can can afford. So if your average wage is 50K then the region can support a maximum home price of 600K. And that does not mean for everyone that means that someone can afford that 600K house, everything else in the region slides according to income scales and population according to a wage distribution matrix which will have the larger population value earning the least in wages and conversely the smallest population value earning the highest wages.

Such is capitalism.

[bluedigger]

11. I use Zillow, Trulia, and Realtor.com.

I've been casually "in the market" for a couple years now. I get daily updates, and every day I see prices reduced on homes I have saved. Eventually they usually are taken off the market, but sometimes they come back, often reduced again. Zillow's "values" can be wildly off, but I think it is more a function of the size of the local database. I do agree that the market has at least two more years until it bottoms out. I'll rent for a while longer...

[Historic NY]

12. I get monthy Zillow reports my house dropped like a rock.............

so much I'm considering asking for an assessment adjustment. My neighbors sold for 315 in 05 mine is simliar except for a pool and extra room that is a bedroom.. I'm down into the 170's from a high in 06 of 280's. Its like we lost over 10yrs value.

[tridim]

14. My foreclosure is complete as of last week..

And I have to say, selfishly, I'm starting to feel good about it. It's like a huge weight has been lifted off of my chest. With the adjusted home prices I was underwater by at least 66% of the home's value. That's not sustainable, by anyone, jobless or not. I don't care that my credit score took a hit, because I don't plan on ever taking on a mortgage again in my life. I'm done with TBTF bank scams.

I do feel horrible for my neighbors and their homes, but I didn't lose my job and home on purpose.

[soryang]

18. Title uncertainty caused by MERS, PSAs, foreclosure fraud

It isn't just general economic conditions that are dragging down the home resale market. Due to widescale fraud in the investment banking industry there are several levels of fraud clouding marketable title on homes. This is lowering liquidity in the real estate market in general.

When you buy a home whether previously foreclosed upon or not, you need to have confidence in the marketability of title. The multistate electronic recording system or MERS does not conform to state real estate laws for recording of title. In addition to Wall Street's use of this bogus system to avoid properly recording assignments of mortgages, not recognized in many states, the Pooling and Servicing Agreements may not meet New York State law requirements for these instruments. Accordingly, so called Mortgage Backed Securities may neither backed by mortgages nor secure.

In addition to fraud in the inducement of mortgages, (so called "liars loans") their is fraud in the assignments, and fraud in the massive CDS market insuring and gambling on these MBS instruments. There is an additional layer of fraud in the foreclosure actions themselves.

Who holds the legitimate security interest in your mortgage? If all mortgage assignments to successors in interest weren't recorded at the county courthouse as they should be under state law for marketable title, how do you know the title is marketable? If a foreclosure was induced by an alleged successor who used forged and otherwise fraudulent documents to get a default judgement, that title will not be good (until cured by statutes of limitation of quiet title laws which can take as long as twenty years to cure such defects.) In real estate, it is generally extremely difficult to not possible to remedy defective title actions after the fact. This is harsh reality of real estate law which the press and the investment industry is hiding from the public.

[Kaleko]

26. I'm archiving your post and hope more people will see it today.

Thanks for spelling this out.

[soryang]

28. My pleasure

I started on this subject a couple of years ago by calling in to Sirius left radio programs to discuss it. First people didn't understand it. The subject matter is kind of dry. It doesn't lend itself to one liners. Matt Taibbi got into it a little and now others.

My recommended sites in this area are nakedcapitalism.com and 4closurefraud.com. The first has a couple of well documented articles on PSA fraud. 4closurefraud.com has actual court documents and parts of excerpts of depositions that lay out the problems of foreclosure fraud and the potential defenses(foreclosure fraud is spun in the media as robo signing)

I've tried to write a couple of articles on my otherwise unused blog to consolidate my posts on DU into a big picture for my own purposes. None of my writing is intended as legal advice, it's just intended to be informative opinion. Anyone with a real estate problem needs to consult a licensed professional in the relevant jurisdiction, that is, a competent real estate attorney.

http://civilizationdiscontents.blogspot.com/

[Kaleko]

29. Your blog posts contain some truly eye-opening summaries of what's going down, Soryang.

I'm sending the link to some friends. I want to encourage you to continue to speak out in other venues where you can get more exposure such as here on DU.

Thanks again.

[county worker]

19. I'm paying $353K for a house that sold for $510K in 2005.

Zillow says it is worth $398K today on their web sight. Not every thing is going south.

[Le Taz Hot]

21. Mine came down anoth $1500

LAST MONTH.