Housing in 'deepest, most rapid' decline since Great Depression

[RedEarth]

Source: MarketWatch)

CHICAGO (MarketWatch) -- Housing is in its "deepest, most rapid downswing since the Great Depression," the chief economist for the National Association of Home Builders said Wednesday, and the downward momentum on housing prices appears to be accelerating.

The NAHB's latest forecast calls for new-home sales to drop 22% this year, bringing sales 55% under the peak reached in late 2005. Housing starts are predicted to tumble 31% in 2008, putting starts 60% off their high of three years ago.

"More and more of the country is now involved in the contraction, where six months ago it was not as widespread," said David Seiders, the NAHB's chief economist, on a conference call with reporters. "Housing is in a major contraction mode and will be another major, heavy weight on the economy in the first quarter."



Read more: http://custom.marketwatch.com/custom/myway-com/news-story.asp?guid={A811AA1E-D0D3-4AA8-917C-95F7F154AA08}

[Dave_Fl_50]

1. Thanks I really need to be reminded of that several times a day

[Pale Blue Dot]

9. You know what? Most people STILL aren't listening.

Most people are still living in a fantasy land where everything is going to be all right because "This is America" and we can't possibly be headed for total disaster. Unfortunately, the fact that most people are refusing to see how bad this will be is exasperating the situation. Articles like this need to continue to be posted until we finally realize that things are NOT OK, they're not going to BE OK, and we need to take action based upon those facts.

[skepticscott]

21. That is exactly right

Too many people are deluding themselves into thinking that things can't possibly get THAT bad, and that something, or someone, will always pop up to save us. Particularly those generations that didn't live through the Depression or WWII have no idea how bad things can get on a wide scale. I'm just waiting to see what it will take to disabuse people of that notion. This little real estate bump is only the beginning. Wait until gas tops $5 a gallon...

[Theres-a]

43. Agreed

After Katrina,you'd think people would realise no one is coming. You would think people would realise that there are no plans to protect us,they are out for themselves,looking for ways to profit from our misery till the bitter end.

We are in fact,on our own. And the media is pretty quiet about the magnitude of what is happening. We are rather like the residents of NOLA the day after the hurricane. We think we dodged the bullet(subrime losses,credit woes),it wasn't that bad.Just a little slowdown-we'll get through it.

What we cannot see,they are not warning us,is that a few short miles down the road,the levee has been breached.And we are soon going to be underwater,as it were-unfathomably high gas,food and heating prices,low dollar.

Everyone,please,get up on your rooftops,before it's too lare.

[Wednesdays]

10. Wow, they even do that on Faux News?

I guess it *must* be getting bad, then.

[fasttense]

2. If you start listing all the bad economic numbers

that are at, or exceed, the awful numbers of Republican Great Depression, you will get seriously depressed.

[Hydra]

3. When the real crash comes

It's gonna be UGLY.

[Hawaii Hiker]

4. Yeah, & some people want John "know nothing about the economy" McCain

to try to fix the economic crisis...

Excuse me, for a second,

:rofl: :rofl: :rofl:

[high density]

5. Prices are still, IMO, out of this world in my area

For whatever reason the 'buyers market' hasn't yet taken shape here. Condos seem especially overpriced.

[customerserviceguy]

49. Yep

Looking at a post card from a local realtor who is bragging that they sold the two-bedroom place next to us for $417,000. It's a decent unit in a nice neighborhood, but christ, that's a shitload of money for a fucking condo!

[dixiegrrrrl]

6. Karma comes around to

Citibank, Bank of America ( who just bought my mortgage provider Countrywide), Washington Mutual, Wells Gargo and especially shysters like Ameriquest for all their "clever" greedy money shenagins.
N'er fear..they will rise from their ashes...they always do.

:nopity:

[tnlefty]

27. Welcome to DU, dixiegrrrrl!

:hi:

[bemildred]

7. Bubbles pop.

Get over it. If you don't like this sort of thing, don't inflate price bubbles. This stuff is as old as capitalism, and it always has the same etiology.

[melody]

14. Yup, I paid cash for a tiny house. Now things will NEVER be so bad I won't get money back.

Just the dirt itself is worth four times what I paid for the whole house.

Riding waves is always a dangerous thing to do.

[kestrel91316]

8. Way to go, Bushie!!! Mission Accomplished (TM)!!!!!!!

[louis-t]

11. Yes, but bushie is borrowing money to give me $600.

So I can go out and spend, spend, spend...:eyes:

[Xenotime]

15. $600 doesn't even begin to pay my mortgage.

[Unicron]

12. Hey, if the bank is about to foreclose on you, here's a suggestion.......

Just tell the bank manager that you read Alan Greenspan's book and I guarantee that he will extend you a 2,000,000 line of credit! I swears!!!

[pokercat999]

36. IMPORTANT !!! If the "bank" is going to forclose on your

mortage make sure they have the right to foreclose and collect! I've read recently that these mortages, especially subprimes, have been chopped up over and over and now there is no real mortage holder. At least they can't PROVE in court that they have the paperwork and the resulting right to take your home. Everyone in a subprime and maybe ANY mortage that has been sold more than once should check this out. Hell, you may be paying your mortage to someone that has no LEGAL right to collect it! Contact a lawyer that understands mortage law and how these subprimes have been chopped up into bonds and find out your legal standing before you walk away!!!!!!!!!

[kineneb]

47. Yes. No papers, no forclosure.

There is legal precedent to require the loan holders requesting foreclosure to produce the Original Signed Paperwork. The company in the case was unable to do so, and the judge threw the foreclosures out.

No tickie, no housie.

[Kolesar]

13. Well, there has to be "one" steepest, deepest drop since the Great Depression

I lived through an industrial collapse in steeltown in 1980, and a late 1980s collapse helped by McCain and a couple of frauds like Charles Keating.

I recall that real estate has only fallen in one year, year-to-year, since the Great Depression.

[Hulk]

16. Can almost see the fearless idiot chortle at the next press interview.

We have an idiot for a preznit.

[benld74]

17. At Least their economist has go it right, if ya go to their web site,,

everything sounds like a RNC talking point. Home sales down - Home tax credits needed, Fed rate cut a start-More assistance required

[Alcibiades]

18. We just got our first home under contract

It was just appraised for taxes at $212,000, was listed at $207,000. We offered $200,000, figuring it would be just a starting point for negotiations. They took it.

It was win-win. They got their house under contract after being on the market for only 2 days. They sold their house for $16,000 more than they paid for it four years ago. We got a 10 year-old house in a nice neighborhood in one of the most desirable public school zones in our county at a 10% discount. One house in the same neighborhood we looked at (but rejected after deciding it was just out of our budget) has been on the market for six months, and another one (an ugly gray thing, though quite nicely appointed inside) has been on the market for a nearly a year

We're planning on staying in this house for the next twenty years and will have $34,000 in equity the day we move in, so can ride out almost any decline in value. If things get bad enough to really sink the value of our new home, it will be Mad Max time anyway.

I suppose the moral for sellers is that the increase in the value of houses cannot and should not skyrocket every year. If you want to sell in a reasonable time frame, drop your price 5% or even 10%. For folks like us, looking to get a starter home for our little family, this is an excellent time. We're going to get to move into a 1900 square foot house that has everything my wife wants, instead of one of the little ranch houses I was perfectly willing to settle for. Here in Durham, we effectively have two housing markets--one for regular 2-4 bedroom houses costing $150-250k, in which prices are beginning to drop a little, and another one for brand-new mcmansions that have actually had prices increase. God only knows who is buying those in a city where the average income is 40k a year. I've heard stories of people spending 2/3 of their income on these 3,000+ square foot houses. Unless you're growing pot or have a big family, I have no idea what they do with all that space, or how they pay for it.

[debbierlus]

20. Your story is nice, but it does not represent the reality for home buying

I own a home that is worth more then when I bought it. I was lucky.

I live in an area that is a bit insulated from the real estate bubble, our homes values aren't skyrocketing nor are they crashing.

The McMansion story is what the media has hyped because it shows the banks as victims to greedy Americans wanting more then they can spend.

Most people I know are lucky to be able to get into ANY house, and some had to take ridiculous loans to try and achieve the American dream. I had bad credit when I bought, and took a loan with an interest of 10%. Horrible. But, I refinanced when my credit improved and now have a very good loan. I was lucky.

Still, I have a fixer upper that will take 15 years rather then five to fix because of inflation. Still, I am lucky.

It is a surreal America we live in today.

[Alcibiades]

38. Just curious

What part of the story does not represent reality? I'm just turning 40 and am able to finally afford to buy my own home. I also regard myself as lucky--lucky to have rented a house in a neighborhood some would have considered "bad" so that we could save enough for a downpayment, lucky to wait until we could afford it, and lucky to see the bubble coming, wait it out, and buy when things looked a little better for buyers.

What I tried to get across was the reality of buying in this market. What I find remarkable is the fact that the house we have under contract was listed for less than the tax value. Realistically, they could have asked for, and eventually probably would have gotten, $20,000 more than we gave them, if they had not had to sell quickly. The fact that this is an exceptional market for buyers, that it's unusual, even unprecedented in my memory, is exactly what I was trying to get across.

I've been looking at houses to buy for about four years now. Whenever I see one I like, I check the assessor records. For the past few years, the story has been sellers making a lot of money off of buyers.

As far as the credit situation goes, it's a lot tighter. People with bad credit simply are not getting loans period. What's more, the rates the banks are charging has been effectively de-linked from the fed funds rate. Our credit's not too bad, but my lender says we'll pay in the low 6% range. Is this a risk premium?

Anyway, the bubble's not been too bad here. It hit more in parts of Wake County and Chapel Hill, mainly in the premium neighborhoods. The McMansion story is very real. Many people assume that we live in a swell mcmansion, and are shocked to find that we rent in a working class neighborhood, behind a pawnshop, the fried chicken place, and the Tienda y Tacqueria. Here, just about the ONLY new homes that go up are mcmansions. Builders have decided there is no money to be made on middle-class homes, and so they sell people the most expensive home people can afford, and sometimes more than they can afford.

[bulloney]

22. 3000 sq ft is small compared to many of the homes I'm seeing people building.

Their incomes are not much different than our family's. But we're seeing these immaculate 4000 to 8000 square foot homes going up. You don't see people building homes that are 2000 sq ft and under. And all of these big homes have the fancy rooflines with gables and other cosmetic effects that's just gonna be a major expense when it's time to replace that roof in about 20 years.

There's an investor who recently built a 16,000 sq ft home about 20 miles from where I live. It made the local papers when it was under construction. I heard a lot of people say they wouldn't want to be one of his customers because that's where their money is going.

Who really needs that much house? When the kids are grown up and out of the house, are you and your spouse gonna exist in that much space? If not, who's gonna buy it from you? And if you do find a buyer, will you come close to getting out of what you put in it? How can you afford to heat and air condition the home, especially with today's skyrocketing energy costs?

I see this pattern of couples/families building oversized homes as another pillar in the housing market that will make it a huge collapse. There will be no market for these homes because people either don't want them or they can't afford them.

[Alcibiades]

39. It's conspicuous consumption

Veblen had that one pegged. What's extraordinary is the democratization of it. There are many couples where both earn $50-100k who have mortgages on houses that are astounding. I know one such couple who bought a $450k home. Yes, they had the proceeds of the sale of two previous homes to put down, but does a couple without kids really need that much space? You'd think you might want to have the money to take a vacation or something when you feel like it. I know a fair number of people who have these swell houses who eat things such as frozen cheese pizza every night because they are house poor.

My wife told me about a study that showed that families grow apart as houses get bigger. Folks just retire to their own wings and never see one another.

[Viva_La_Revolution]

42. Those mcmansions will become rooming houses...

just like the big victorians did in the 20's.

[Theres-a]

45. Seriously

I know some folks that bought a huge home about 4 years ago,and when it first became apparent that the US economic house of cards was coming down I said "don't worry about your mortgage payments-we're all moving in with YOU when TSHTF!"

I was half kidding. Now? Not so much.

[Lint Head]

32. More power to you. You got in under the wire.

The fit will hit the shan any time now and people will still think there is nothing more important than American Idol. :dem:

[Alcibiades]

40. I expect that it may be hard to get a loan soon

Or the opposite--banks will lend, but no one wants to sell, because the paper money is worthless.

[dysfunctional press]

51. how do you figure you got it at a "10% discount"...?

it was listed at $207,000- you paid $200,000- that's 3.5% below asking- the average house sells for 7-8% below listing price. even if you figured it from the appraised value, it's a 6% "discount".

you should have tried starting in the $192-195,000 range...when they jump at your first offer- you probably offered more than they were expecting.

[PinkTiger]

19. All booms, eventually, go bust.

I'm a Realtor, and it is obvious that the problem is mostly in the urban areas where speculators built more and more houses and where people bought houses they couldn't afford with ARM loans (adjustable rate mortages); for awhile there was a frenzy in some markets. Houses were going up in value exponentially, in what seemed to be a crazed rush. Now the chickens have come home to roost.
Meanwhile, in smaller markets that never really saw the boom to begin with, things have settled a little. Prices are about 10-15 percent less than they were in some cases, but in some situations houses have actually increased in value. Those who rode out the last 7 -10 years without buying or selling are OK. Many clients now want to sell their homes so they can buy into a buyers market. It will all be OK, overall. But in some places, especially California, Florida, and some areas of Texas, there is a real glut of homes that people can't afford. We have a few of those in pockets around; and it is too bad, because they will further declline as they stay empty. Not too many people need a 4,000 or 5,000 sq. foot house with a pool and a tennis court and a four-car garage.

[UALRBSofL]

23. This news already depresses me

Reason, we may have to sell our house in florida to move for school. Not sure what we will do.

[PinkTiger]

35. You know, it will all work out.

Right now you think not, but have faith.
In yourself.
How long have you owned your house? If you have equity, you are fine.

[Phx_Dem]

50. Please don't take this personally

But when you say "Houses were going up in value exponentially, in what seemed to be a crazed rush." That was almost entirely caused by Realtors and their "friendly" appraisers. Consumers depended on Realtors to make decisions in their customers best interests, and they utterly failed at that.

[Dukkha]

24. I know this all too well

I've been on the market for over a year without a single offer. I am constantly outpriced by all the foreclosures around me so I have a snowball's chance in Hell of selling and I haven't lived here long enough to build equity. I desperately need out and I can't get anyone to take it not even those cash for homes places. :(

[Blutodog]

25. I wish u luck

Hang in there. Better times are ahead under Pres. Obama.

[Alcibiades]

41. I love Obama

But this is some deep doo doo. I agree it will take a Democratic president to fix Bush's mess just like Hoover and FDR, but the problems are so great that it will take time.

[pretzel4gore]

26. maybe they shoulda stopped bush from stealing the 2k election...

when Jimmy Carter put out his last budget, it had a $58 billion deficit, and you shoulda seen the reaction in the newsmedia! Carter was a tax and spend liberal loser- the country just couldn't afford deficit budgets, the pig said. So regan won the 1980 election. Within 8 years, regan ran up the nat debt from $1 trillion when Carter left, to $2.6 trillion in 1988, and the newsmedia never said a word (regan massively increased military spending)...since the youngster bush has been in office, the newsmedia has effectively shielded his admin from any criticism- and if they now try blame anyone for the mess bush created, they better explain why the outright criminality in every feature of bush's governing was not worthy of reporting, when they sure helped destroy Jimmy Carter (who's still called, even by liberals, an 'incompetent' president) for a measly $58 billion deficit!
The answer is the corporate newsmedia is criminal themselves...i hope the goddam economy collapses totally- then their fricking constant lies won't matter, FINALLY!

[kestrel91316]

28. Does anybody else remember what it finally took to lift us out of

the Great Depression?

I do. It was called World War II.

[bulloney]

31. That's probably why Cheney and Co. had been saber-rattling for a war with Iran.

Even if it were to happen, we won't see any economic "bounce" as experienced in other wars. We've maintained such a high level of military spending during the peace years since Vietnam ended, that the economy won't see the benefit.

[Amonester]

37. FDR had a good plan, but cuckoo banana's fascist grandpoppy

had another one...

[Theres-a]

44. Yep

These clowns have been at this for a long time.

[pretzel4gore]

48. but more then 20 million people died....

while it's true the 'investment' governments made resulted in end of the 'depression' had the government(s) put the (our) money into global transportation, or ending poverty or any other such idea the result would have been better, quicker....imagine though- people DIED just because there was no MONEY in circulation, it was like trying to run a car on watered down gas and air bubbles! In those days, Gov was GOD, sorta, and ordinary people never thought about global geopolitics, much less argue with the 'experts' ....it was a more innocent age. But WW1 and 2 were symptoms of a real rotten aspect of european society ...while we focus on 'nazism' when talking about WW2, we forget that it was our upper class twits who basically destroyed the liberal Weimar republic (junyer's grandfather was involved in funding the nazis) and creating the situation where war was necessary, to undo the damage.
Someone should write a book about how it was our guys who drove Germany into nazism, at the same time as it was our guys who tried to offset the growing threat of COMMUNISM/anti colonialism by stumbling like stoned yahoos into WW1, then messing things up so bad that they couldn't PRINT MONEY after the stock market collapse in 1929...junyer bush is just latest in a long line of nitwit monsters who've abused their powers to cause chaos- everybody forgets how busybody the twits were...for example, they criminalised alcohol, ferchrissake, and they even messed with the US constitution to do so, around about the time the stock market crashed, throwing tens of millions outta work for years (the great depression) then filling the world with books and history bs explaining it all away, exonerating themselves. All money is printed, and its value set by policy, but they try pretend there's some hocus pocus magick involved, which only their priests (thieves in pistripes, more like it) can understand....

[FarCenter]

29. Does America need more new residential house construction?

This is about the decline in new home sales.

Home builders are suppliers of capital goods, and long lived capital goods at that. In a recession, the market for such good declines strongly, since their customers can hang onto what they have, use what they have more intensively, etc.

Furthermore, we are getting to the point were lots of baby boomers will be vacating their houses.

Lastly, a lot of new construction has been in developments 40 or 50 miles from job markets. With the escalating energy prices these are very unattractive.

[Lint Head]

30. People who say that the Bush crime family and the

Republican majority in Congress had nothing to do with this can kiss my ass. My Mother and Father lived through the Great Depression.
It's sooooooooo obvious what has happened. The Saudis control the oil business. We have a damn oil prick in the White House. The mortgage crisis is a direct result of the pass given to the Keating 5 that includes the liar McCain. Neil Bush is a player too.
The people need to do something about this now or this country is doomed. :dem:

[opihimoimoi]

33. The GOPs Grand Leader Bush has led us down the Path of Misery and Death

The GOP needs to fall on the SWORD for all the shit they have heaped on us.

It is they who got Bush to become our God King...able to fall from Fall Proof Segways...to Leap Tall Doors in a Single Pull,
and to play a guitar while New Orleans Drown....

It is the GOP who wish to continue with McCain in Nov...more of the same....Have they not made enough monies yet??

Their riches depends on our poverty it so seems....

Vote BLUE to even the score....send the GOP to the Town Center and the stockad...pelt them with rotten eggs and other filth.

Damn them all for what they did to America

[Turbineguy]

34. Yes, this morning something "plunged"

by 1.7 percent.

[Orsino]

46. Time for more steroid hearings, obviously. n/t