MSNBC: "Housing bust" hasn't reached bottom yet...markets rife with "sellers' denial about prices"

[Amerigo Vespucci]

Too soon to look for housing market bottom
Falling prices, gloomy consumers point to more trouble ahead

http://www.msnbc.msn.com/id/23796366/

Last month’s pick-up in home sales — even as prices kept falling — has some homeowners wondering if the steep housing slump may be coming to an end. But most housing market watchers say the optimism is premature — and that this spring will likely be another washout for the residential real estate market.

“There is no clear bottom yet,” said David Blitzer, chief economist for Standard and Poor’s, which tracks home prices. “We hope it comes soon. But right now it's a hope.”

Home prices, meanwhile, fell 10.7 percent in January compared to a year ago, according to the latest reading of S&P’s Case-Shiller index. Prices were hardest hit in Miami and Las Vegas, where the index fell nearly 20 percent. Of the 20 cities tracked by the index, 13 posted their biggest drops in two decades.

A separate government index showed prices falling 3 percent in January compared to a year ago. That data is derived from a smaller sample of homes with mortgages that conform to the $417,000 limits on loans sold through government housing finance agencies.

[shaniqua6392]

1. My daughter just bought a house

for $68,000.00 that sold two years ago for $138,000.00. It was a bank owned property. Our real estate agent said that about 95% of the homes he shows now are foreclosures. There are a lot of empty and lonely houses here in suburban Detroit. We are no where near the bottom here. There are usually around 8-10 empty houses on each block around here. It is very sad and scary.

[Amerigo Vespucci]

2. In Silicon Valley, houses are still going on the market for $750K and up...

...and these are old, "ranch-style" single-family homes that might have gone for $250K before the "house flippers" sank their hooks into the flesh of the average working man and woman.

It is sad and scary, yes...but I feel no pity for anyone sitting in a $250K home that can;t sell it for $750K. The "sellers' denial" has got to sink in at some point.

[shaniqua6392]

3. Yeah..That is really different than around here.

All the houses around here are actually for sale at half off. Those of us lucky enough to be able to hang onto our houses have seen their values decrease substantially. My hubby and I are going to have to wait 3 or 4 years before our value will come up enough for us to move. We planned on doing it this year, but are being forced to stay because of the decrease in equity. We are both just thankful to still have our jobs.

[SoCalDem]

18. Wanna be MY neighbor?

Auction on the vandalized house next door.. should go for under $100K.. 2 more foreclosed across the street..and 3 for sale down the block..

[EvolveOrConvolve]

4. I'm no economist

But could the slight increase in home sales be due to the huge drop in prices instead of some positive economic indicator?

[spooky3]

12. I'm not either, but I think so, and that another possible explanation is

since the slight increase was January to Feb., not Feb. 07 to Feb. 08 (I think), it could just be normal seasonal fluctuation, e.g., more houses may close in Feb. than in Jan., because more deals are struck after all the holidays are over, then closing happens a few weeks later.

[SoCalDem]

19. Vultures with money are going to do what they always to

they snap up "bargains" and then rent them out until the market picks up..and makes a TON of money :)

[Rosemary2205]

5. Southside Atlanta

My house was valued at $115 2 years ago -- I'm seeing similar homes in the MLS priced at $80 now. That is a 30% drop in 2 years and we never had anything even remotely like a "bubble" to begin with. Most of our problems are directly related to the problems in our county government.

[Amerigo Vespucci]

6. I have a friend in Alpharetta...

...one of my best friends, actually, a former boss...who relocated to Silicon Valley (his original home) for his new job. He's renting a townhouse in San Jose while his house in Alpharetta sits on the market, unsold.

There's probably a 0% chance that he's ever move back to Georgia...unless another job opportunity in close proximity to his home opened up...so the reality is that at some point he will see the writing on the wall, and will sell his home, and will take a BATH.

I sincerely hope there is a "V.I.P. Area" in Hell for the "house flippers." No matter how many get burned by the current downturn, as long as it's not 100%, it's not enough.

[Rosemary2205]

7. That actually surprises me.

Alpharetta is fairly well sought after and from what I can tell has had what I would call a "minor" bubble. Granted people are looking for bargains but any reasonably priced home in good condition should sell within a few months at worst. In fact, I know someone looking in that area, has put bids in on 6 different houses and ended up losing in bidding wars - most were forclosures -- so obviously price matters.

[Amerigo Vespucci]

9. He moved here and kept half his furniture there so the house could be "shown"...

...and in another few days he is going to India (Hyderabad) for 3 months, at the expense of his company, where he will live and work.

Meanwhile, he's paying rent in San Jose, living in India, and has a house in Alpharetta he cannot sell.

"Bad things happen to good people," and my friend is among the BEST.

[spooky3]

14. that's horrible -- I really hope something gets resolved for him soon.

[spooky3]

13. I've read that there was a lot of "overbuilding" in the Atlanta area and some

people think that is the main reason why some parts of Atlanta area have experienced a downturn.

[wordpix]

16. same thing in Florida---overbuilding, along with wrecking natural environment

[Warpy]

8. They are certainly getting burned here in central NM

We never saw much of a price bubble here, either, but that didn't stop people from California buying up 1/4 of all new construction over a period of about 4 years. Now we're seeing their housing of choice, the McMansion, being offered as "Three years young! Never lived in!" More than a few of those properties aren't just out of date and dusty, they're damaged since the speculators didn't know that winter temperatures here can go to the single digits at night and didn't bother to have the heat turned on.

The post WWII houses in my area are still selling well since they're convenient to everything, midway between uptown and downtown and close to the university. The speculator properties on the edge of town are just not moving at all.

The abandoned properties are now growing weeds aplenty, dragging down the value of adjacent property that's been lived in. Vermin, vagrants and vandals are next if the city doesn't act, take them over, and get at least Section 8 people in there to maintain them.

[AP]

10. I don't understand why so many posters angry at 'flippers' when it's obvious to me that this whole

thing was planned out at a much higher level by people with teams of MBAs working out the numbers.

[Hannah Bell]

15. can you explain? n/t

[wordpix]

17. basically, mortgage loans were bundled and sold to investment banks

and this makes it hard for a borrower to work out a new mortgage deal to stay in his home as it is hard to know who the responsible lender is. Really seems to be some dirty dealing with these loans and lenders. Meanwhile, the US gov. is bailing out the likes of Bear Stearns to the tune of billions

[riverdeep]

21. Why aren't the pure free marketers livid and lashing out at the bailout?

Why are all the people who say the government should stay out of people's lives, especially 'interfering' with business, not completely ballistic about the government bailing out a private company?

When a steel mill used to get shut down and the town became decimated with the loss of jobs, these people said 'sure, some people are going to get hurt, but that's business. Don't stand in the way of the market.'

[Fleshdancer]

32. those hypocrites are ignoring the bailout but railing against regulation

and it's the same old song "but if you regulate us, then the economy will COLLAPSE!" :eyes:

I read an article where some a$$hole was quoted as saying that only the instincts of a free market can fix the current problems. I sat there thinking the same question you are which is why aren't they complaining about the bailout then? How does $20B from Uncle Sam factor into his "natural instinct" bs theory.

It's like they all went to the Paris Hilton school of Economics. Break it? No worries, that's what rich daddies are for. :grr:

[AP]

24. There are thousands of stories out there about people who were told they were

signing up for fixed interest loans who now read the fine print and discover they had variable rate loans. is that the flippers' fault?

Now were realizing that banks needed as many loans as possible to bundle and sell on Wall St. Is it surprising that they'd give people they knew couldn't afford them a loan for a price they knew didn't make sense (I mean, how has the teams of MBAs on their side -- your average home buyer, or the banks?). How is that the flippers' fault?

Who makes money when every home on America is leveraged at 120% of equity? The flippers or the banks who make money off of interest on loans? Follow the money if you want to find the guilty party, right?

[Lance_Boyle]

30. that's the fault of people not reading the fine print *before* signing

nobody else's. Not the lender, not anybody but the idiot who signed on the dotted line without reading his/her contract through and through. Sucks to be that person. Maybe s/he will read before signing next time.

Follow the greed, not necessarily the money. If these "duped" borrowers had read their contracts before signing them, they would not have been "duped."

[AP]

11. County government? What about lax lending standards by banks and the corrupt

real estate businesses which lied to people about their mortgages and lied to banks about property values?

[Rosemary2205]

23. We have not had much of that here.

Long time residents are flocking out of my county because the county government and school board have screwed things up so bad for so long - voting them all out and a new crop in doesn't help. Our public schools recently lost acreditation they are so bad.

[Stinky The Clown]

20. I love the knee jerk blame heaped on 'flippers'

The issue is FAR bigger than that, far more complex than that, and far more structural than those who blame the 'flippers' want to think it is.

No one is blameless, but the biggest blame, in my mind, is the predatory lenders who gave out mortgages for 120% of a house's (grossly ... criminally) inflated 'value' to people who, for pure greed, lied about their income to qualify for that shitty loan.

Or mortgage writers who just plain lied on applications (unbeknownst to the borrower) about such critical information as a house's appraisal just to make another loan, no matter what.

Or the honest but dumbassed people who signed up for those ARMs so they could get their chunk of the American Dream. I see these people much more as victims than anything else. To be sure, some were just greedy, but many really were hopeful and played the game as honest as they were capable of doing (and understanding).

Or the Wall Street guys (they needed to be wearing masks) who invented crap-assed 'investment vehicles' to resell to stupid fuckers with too many millions and too few brains and scruples.

Or a federal banking and securities system that allowed - ***encouraged*** - this crap to give the illusion of a sound and vibrant economy.

Or Alan Fucking Greenspan who set the stage for all this shit and then retired just before the dam burst.

Or an administration that lifted as many controls as they could get away with so as to smooth the way for all the above stated shenanigans, and sooooo much more.

But go ahead ...... blame the 'flippers' if that makes you feel superior. It may make you feel superior, but it shows you to be ill informed, petty and simple minded.

[Indenturedebtor]

22. Yeah usually flippers

Usually flippers buy a screwed up run down house on the cheap and then fix them and sell them at market value. They help curb urban decay and deal with that awful thing that happens where you spend years and sweat and money keeping your house up to date and looking good, but your worthless neighbor lets their house go to hell thus cheapening your investment.

Flippers are a good thing in my opinion.

[gasperc]

28. flippers were not the problem, speculators on new homes somewhat

but really the underwriters, appraisers and lenders that approved so many toxic loans. Teased rates that buyers could never afford when rates go up, cash out loan above the home value, inflated if not fraudulent appraisals, alot of multi-factiodal bad, bad things kept happening. Brokers looking the other way and focusing on their commission, doctoring applications so that applicants could "afford" the home.
Speculators that bought new homes which they quickly tried to flip at a much higher price because "demand" was so hot. But was it hot because speculators were flooding the market or was there true demand, and when the speculator couldn't sell to the next speculator is that when the bubble popped? That's why tax law that forces people to stay in a home at least 2 years or pay a big penalty or other techniques are very useful to try and ward off this kind of shit.

But I agree, flippers that fixed up properties and sold them at market value aren't at fault here.

[Mountainman]

31. I see were I can blame those who used real estate as a short term investment.

They helped boost up market values when the market was hot. They buy a house and in a couple of months sold it for a profit. Enough of those in a hot market force prices up. No one buying a house to live in for years can afford to out bid the investors hence the new financial "products".

If the investors didn't use homes as a way to make money the bubble never would have happened and we wouldn't be in the mess we are in. Increases in home prices would have been more gradual.

The problems we are having all can be laid at the door steps of short term investor's greed.

[AP]

25. Thank you for this post. Furthermore, if the banks are setting up a system that

depends on rapid inflation of prices, it's crazy to blame "flippers" for not ignoring inflating prices.

Tell me one inflating asset, the sale of which is legal, where people stand back and say, no, I don't need to make money on that.

Gold is shooting up. Do people say, "I blame the people who are buying Krugerands"? No. Because that's stupid.

[Stinky The Clown]

26. Excellent points ......

..... we on the left are plagued with our own flavor of moron, it would seem.

[Johonny]

27. Yes

the flipper is a blameless creature of god, filled with the fruits of the giving trees mana. All rejoice at the housing boom flipper.

[Stinky The Clown]

And all the reast are without blame?

It isn't simple ..... unless you want it to be, Chairman Mao.

[edhopper]

29. There was no increase

this is just more BS reporting from the media.
If you look at this chart

you see that there is usually an increase from Jan to Feb. But we see we have over a 20% DECREASE from Feb of 2007.
And this years Jan/Feb rise was less than usual.
The market is falling and has a long way to go.