Why U.S. Resale Housing Prices Keep Falling

[No DUplicitous DUpe]

Why U.S. Resale Housing Prices Keep Falling
http://economiccrisiswritings.blogspot.com/2011/07/why-us-resale-housing-prices-keep.html


In June, according to the National Association of Realtors, U.S. home resales fell to their lowest level in 7 months. Worse yet, sales are running behind last year, the worst year in 13 years. This despite near record low mortgage rates. Why is this happening?

Because many prospective buyers fear the economy and fear for their jobs, while others are staying on the sidelines for now in anticipation of lower prices to come. Still others are deeply in debt and/or no longer have equity in their current homes and can't qualify for mortgages even at cheap rates.

The situation is spiraling downward. For the resale housing market and the economy to rebound will require a much stronger jobs market, a much higher level of consumer confidence and for the U.S. government not to set another debt cap but to get control of its soaring deficits.

To learn more please see "Home Resales Decline Again as Buyers Hesitate," The Wall Street Journal http://online.wsj.com/article/SB10001424053111903554904576457830106557422.html?mod=googlenews_wsj

[Trajan]

1. While I agree generally with this ...

... I think I would give more prominence to "others are deeply in debt and/or no longer have equity in their current homes and can't qualify for mortgages even at cheap rates."

Good paying jobs are going away, replaced by fewer jobs with lower pay ....

Those who might have been in the market 5-10 years ago are now unable to reenter that market.

The market will have to float downward to restore the balance between prices and income ...

It's not hit bottom yet ....

[PSPS]

3. You're right

Now that we've gotten rid of the liar's loan, one must actually qualify for a mortgage. But the damage done by these liar's loans (and their bastard stepchild: the HELOC) lives on.

Many sellers can't sell for what they owe, keeping prices too high. And most buyers don't make enough to afford houses at these still-to-high prices.

The only real solution, of course, is an increase in wages. But that isn't going to happen in the foreseeable future, so housing prices will continue to fall.

[FreakinDJ]

7. Most Buyers don't qualify by the "New Standards"

90% of the sales around here are "Cash Buyers"

[PSPS]

10. That's because they don't make enough.

Like I said, only when wages go up (or prices drop sufficiently) will sales improve. There is plenty of money out there for mortgages if you qualify, but few do because of both depressed wages and still-too-high selling prices.

Of course, cash buyers don't have to qualify since they aren't seeking a mortgage.

[customerserviceguy]

2. With the current backlog of foreclosures

Housing will be soft for years to come. If more people go underwater, the supply of foreclosure housing will keep on replenishing.

We're locked in a downward spiral, the only thing I see to get us out of it is inflation. If general price levels (and hopefully wages) keep rising, while housing falls slowly, eventually, a floor will be placed under real estate prices.

[dipsydoodle]

4. Why is this happening ?

They are falling back to the realistic values which they shouldn't have risen above from about 10 years ago.

[Bonhomme Richard]

5. For those of us who work for themselves.....

I wouldn't consider looking into buying a new (to me) home now because I probably wouldn't qualify for a loan in todays environment. Even those who have good jobs with a well known company are getting their balls busted. A close friend who is a captain with AA and whose wife is an emergency room nurse are getting a hard time buying an investment home.

[napi21]

6. The housing market is caught in a revolving door.

The banks issued many loans they never should have issued, the market burst and housing prices fell, the number of homesnow on the market increased dramatically and brought down the value of other omes in the market thus putting many people under water on their mortgages so they could sell them if they wanted to. They got into a little troublle and lose their home to foreclosure which again brigs down the value of other homes. It's a vicious circle whith no improvement on the horizon.

My son has had his hme for 10 years. He's employed at a fairly good job and has been paying additionl on each mtg. pmt. for the last few years. It's a nice 2 story natural cedar home on 2+ acres on a lake. It has 4 br/2 bath, LR/DR/Kit, heat pump, built in fireplace and bamboo floors. There's a large 3+ car garage/workshop at the end of a wide cement drive way. He bought it 1- years ago for $165,000 which was just below the appraised value. The local tax appraiser's office just reassessd all the properties in the county and his reassessment is $65,000!!!! That's NOT a typo, they dropped the assessment $100,000! NOW, even though he's been paying more than the required pmt. every moth, HE'S underwater on his loan! Personally I don't understand how they could possibly come up with a figure that low, but he said he wasn't going to complain because his taxes went down over $500/yr too. He's just going to stay put and keep paying it off.

I have no idea what the answer could be to get the housing market out of this slump.

[HCE SuiGeneris]

8. Tax assessments rarely reflect an accurate market value.

If he's happy where he is, this is actually a good thing in that his taxes are lower. Best of luck to him.

[SheilaT]

11. Assessments are often simply a percentage,

and sometimes a surprisingly low one at that, of the probable market value of a home. I'm trying to remember what my place is assessed at for tax purposes, and I'm thinking it's about a third of what I paid for it two years ago.

It's possible that if I were to try to sell my place, I'd get what I paid for it, maybe a little less, but I have no plans or need to sell, so I'm fine.

Also, if your son has been making additional payments for ten years, he ought to be close to being paid off, yes? In any case, if he can still afford his mortgage, he's far better off staying put.

[napi21]

12. I wasn't talking about the % off for tax purposes. On our assessment statement it lists

market value and then taxable value which is 40% of market value. he $90 thousand number I stated was Market Value.

[NNN0LHI]

9. My homes value is falling because no one can afford the huge property taxes on it

I can't even get a comparable to use to try to get my taxes lowered because no other houses are selling.

Don