Home prices rebound
Last edited Wed Sep 26, 2012, 09:50 PM - Edit history (1)
Source: CNN
NEW YORK (CNNMoney) -- In another sign of a turnaround in the long-battered real estate market, average home prices rebounded in July to the same level as they were nine years ago.
According to the closely watched S&P/Case-Shiller national home price index, which covers more than 80% of the housing market in the United States, the typical home price in July rose 1.6% compared to the previous month.
It marked the third straight month that prices in all 20 major markets followed by the index improved, and it would have been the fourth straight month of improvement across the full spectrum if not for a slight decline in Detroit in April.
The index was up 1.2% compared to a year earlier, an improvement from the year-over-year change reported for June. While home prices have been showing a sequential change in recent months, it wasn't until June that prices were higher than a year earlier.
Read more: http://money.cnn.com/2012/09/25/real_estate/home-prices/index.html
Gee, you'd think people were feeling economically secure enough to start buying again...
pscot
(21,024 posts)That seems a lot more plausible. Nine years would put us above the peak bubble prices.
JackRiddler
(24,979 posts)has corrected it at the link. I request that the OP do the same, this is misleading to everyone reading the forum headlines.
AnnaLee
(1,035 posts)Let's see. In 2012 houses are the same price as in 2003 which is before the 2003-2007 insane increases precipitated by low rates. The only thing that makes inflated houses affordable is low rates. Can we keep rates this low (or even as low as in the 2000s)?
Unless people assume that the Fed will keep rates low despite inflation, unemployment, ruining savings, etc. A house is only worth what the worker can pay at an ordinary interest rate (say 6%).
Why do we want to prop these up and, worse, create another price bubble?
I guess my opinion is that it would have been better to subsidize a unwinding of the price itself. But that's just IMO stuff.
brooklynite
(94,502 posts)JackRiddler
(24,979 posts)that they are once again delving into high risk.
It also means that shadow inventory is being kept off the market, and there's no accounting in these "analyses" for the enormous numbers of underwater mortgage holders.
However, in this case it most of all means this: The headline is blatantly, factually untrue. Beyond belief shamelessness. (See post #9, below.)
genxlib
(5,524 posts)The basis of this story is false since housing is no where near a nine year high. At 2003 levels would be a better way of saying it but the way the headline is written is simply not the case.
However, i will tell you why it is helpful if they do rise. I see two major reasons.
One, the economy is largely stagnated right now due to lack of consumer spending. A lot of consumers are locked into bad deals on their houses. Many would love to sell them and start over but they are so upside down that they can't. Rising prices will begin to put those individuals right side up again and should unlock alot of frozen consumer spending.
Two, one of the underreported aspects of this recession is that public employment has been falling even while private employment has been rising. Even those individuals keeping City and County jobs have had to take lower pay and reduced hours. Furthermore, government spending on local improvements (roads, sidewalks, parks, schools) has been slashed. These budgets at the city and county level are directly linked to property taxes. The budgets have been decimated by lower taxable values and non-paying properties.
There are other reasons it would help but those are the two big ones I see.
magical thyme
(14,881 posts)just when they're getting ready to downsize/rightsize for retirement?
It's better to support wages than to penalize people who were responsible. Or should be be financially ruined because we didn't buy into the 401K myth?
Imho, of course, but if I can't get back at least what I invested into my home, then I get no retirement after decades of saving for it.
AnnaLee
(1,035 posts)I'm not sure I understand what you are trying to say. I guess I wonder how people sell a house for an inflated price without creating the bubble all over again. In other words selling to someone who will find later that they cannot afford it. That assumes that buyer can be found. The subject isn't 401Ks for the majority of retired workers. It is their bank accounts that are suffering from the Fed actions.
You know, one assumes the Fed action choses one generation over another and to a great extent it does. But, yes, someone near retirement that bought a house that is now underwater might be the same as a younger person in a similar predicament.
magical thyme
(14,881 posts)Wages have been stagnant for decades. I mean paying fair wages for work. That way, working people can get off food stamps and start moving forward again.
OnionPatch
(6,169 posts)The housing crash robbed the middle class of what little wealth they had...their home equity. So many have mortgages that are underwater and they would take a HUGE hit if they sell at these deflated prices. Most simply can't afford to sell even if they need to. (Who has thousands of bucks to give to the banks?) Hence, no moving to new jobs, no borrowing to start businesses or anything else, no retirement (can't move to downsize). About half the people I know are in a stagnant economic situation until the value of their homes improve. And no, these aren't people who bought at the peak of the housing bubble madness with risky loans, these are people who owned before the bubble and bought with a down payment and a fixed loan. These deflated prices are seriously hurting a lot of people who did nothing wrong.
I would NOT want to see another bubble like the one that got us into this mess, but prices need to rise to a reasonable level so that there aren't so many people underwater. Our home is still worth less than we paid for it eleven years ago, which was just before the bubble. (and so I think this headline lies) We need to at least get back to pre-bubble home values before we can feel like this recession is ending.
dipsydoodle
(42,239 posts)will have even more difficulty in buying them.
Whoopee.
AlphaCentauri
(6,460 posts)investors are buying houses to rent them, so next big thing, rents go up again. Remember rents didn't change at all during the housing collapse.
davidn3600
(6,342 posts)You got millions of homeowners right now underwater in their mortgages.
Keep in mind also that property values are tied to property taxes. When the values plummet, so does the tax revenue for local and state governments. That means less money for school, police, fire, health services, etc, etc.
So declining values will actually hurt the poor.
AlphaCentauri
(6,460 posts)Inflation is hurting the poor more than low housing prices. People who has been saving money for 30 years, today they can't buy nothing with their savings. The poor doesn't hurt if there is affordable housing that they can buy. As more people own a house more tax revenue, volume vs. high cost.
davidn3600
(6,342 posts)With the debt problems, inflation will likely get worse for the foreseeable future. There is no way to halt inflation while the budget is in the red.
banned from Kos
(4,017 posts)and are therefore "insolvent".
None of which is true, of course.
dmallind
(10,437 posts)Banks own a huge number of foreclosed homes they are not selling. Doesn't make them insolvent, or even wrong. Why would you sell assets at very low prices unless you had to? Coal is very cheap now, and corn quite expensive. If you owned an area that could either be mined or grow corn how much of an idiot would you be to start selling coal? Banks can take write-offs on foreclosed houses rather than sell them at bargain prices and with trivial mortgage rates. As long as they are NOT insolvent there is little incentive to flood depressed housing markets with more inventory, especially as by definition mosre foreclosures are in hard hit markets. What fool if they owned say 100 houses and could live without selling them would choose to sell them until prices recover? Why should banks behave differently.
Wannabe buyers have had several years of bargain basement prices and historically low mortgage rates. It is in most markets massively cheaper to buy rather than rent equivalent homes.
banned from Kos
(4,017 posts)Really, I am just glad the robo-signing bullshit is over with.
The bubble popped - prices fell and people got hurt. End of story.
n2doc
(47,953 posts)JackRiddler
(24,979 posts)Nine year high?! Seriously? And you're presenting this blatant falsehood here? Nine years ago, that was 2003!
Here is the real Case-Shiller index against inflation for the last decade-plus:
EMBARRASSING.
Roland99
(53,342 posts)something's high but it ain't home prices.
jtuck004
(15,882 posts)Whoever wrote that headline for CNN Money is one...
From the link -
"NEW YORK (CNNMoney) -- In another sign of a turnaround in the long-battered real estate market, average home prices rebounded in July to the same level as they were nine years ago."
Prices are not at a 9 year high. They are higher than they were 9 years ago. They are also higher than they were in, say, 1950. Or 1850.
No wonder we are making rich people richer at the expense of everyone else.
tk2kewl
(18,133 posts)JackRiddler
(24,979 posts)CNN's corrected version.
"Home Prices Back to '03 Levels"
They are as high as they were 9 years ago.
They are about 1/3 off a 9-year high - and 20 percent above where they are inevitably heading, as the Case-Shiller returns to its historic level of running below CPI.
The current headline is evil hype.
On the Road
(20,783 posts)is that this particular indicator showed a bigger increase in July than any other month since 2003.
The metric is the S&P/Case-Shiller national home price index, which compares repeat sales of the same homes in an effort to study home pricing trends. That type of metric does not indicate how high prices are -- in fact, it may change most dramatically when prices snap back from a big drop.
http://en.wikipedia.org/wiki/Case%E2%80%93Shiller_index
Having said that, this is very good news and it seems that prices are recovering somewhat from the lows of the last few years.
high density
(13,397 posts)I see multiple for sale signs in my neighborhood that linger for months. I look at the properties online and see $300k+ prices on them. Not a lot of families can afford that.
We are Devo
(193 posts)These $$$ places go pending within days or weeks. Crazy. And no, I don't own!
http://www.redfin.com/CA/South-Pasadena/905-Monterey-Rd-91030/home/7005047
senseandsensibility
(17,000 posts)Those do go for big bucks, even up here in the San Francisco Bay Area. They don't look like much to the untrained eye, however.
We are Devo
(193 posts)CA real estate prices. Shocking to most of the country.
magical thyme
(14,881 posts)He started shaking his head and moaning about a house that just sold for 1/2 my house's *current* market value (which is down considerably from its market value at the peak).
pa28
(6,145 posts)Great news because we may have seen the worst of mean reversion but everybody knows prices are not at a nine year high.
kestrel91316
(51,666 posts)GeorgeGist
(25,319 posts)JackRiddler
(24,979 posts)Why can't brooklynite?
JackRiddler
(24,979 posts)The headline is a mistake - CNN corrected it. You need to do the same.