From Reuters:
Economy.com sees home prices down 20 percent
A rapidly deteriorating U.S. economy will cause home prices to drop by 20 percent peak-to-trough, a leading economist said on Wednesday.
Mark Zandi, chief economist and co-founder of Moody’s Economy.com, said he also expects a recession in the first half of this year.
Zandi, speaking at the Reuters Housing Summit in New York, said this is a “significant” change from the Moody’s Economy.com outlook published in December, which called for a 13 percent drop.
He expects home sales to hit bottom this spring, housing starts to reach a nadir this summer, and house prices to trough in the spring of 2009.
“Three months ago, I expected the economy to skirt a recession. Now, I expect it to suffer a recession (in the) first half of 2008,” he said.
…
Zandi said rapidly rising foreclosures is high on his list of significant problems facing the U.S. economy.“The surge in foreclosures and delinquencies on mortgages is accelerating, not abating, and obviously we are at levels we have never seen before,” he said. “This is a significant problem for the economy.”
The surge in foreclosures is putting further downward pressure on the housing market because it adds to the inventory of homes for sale, which is already at a lofty level.
“This puts further pressure on house prices and therefore on the ability and willingness of consumers to spend,” he said.
Zandi said households that are going through foreclosures are also under tremendous pressure, having to rein in their spending very significantly.
“They are also having a measurable impact on spending, particularly areas of the country where foreclosure problems are more serious,” he said.
For each foreclosure on a street block, it reduces the value of all homes on that block by almost 1.5 percent, he said.
“The surge in foreclosures and delinquencies on mortgages is accelerating, not abating, and obviously we are at levels we have never seen before,” he said. “This is a significant problem for the economy.”
Go ahead, fat Mary, keep holding out on that barf bag you call a house.
My take is 25% in 2 years. North NJ may go down 20%.
I’m looking for a townhouse in Nutley. Cambridge Heights. I’m not willing to pay more than 420K for a 3 bedroom/2 garage townhouse. They are selling for 550+ these days. That’s ridiculous.
60% of the people on this forum will never own a home. -Grim
What’s with the “60% of the people…will never own a home”? You think they can’t afford it or what?
I read this forum because I want to buy some RE after the crash (best time to invest). I’m sure lots of other people read it for the same reason. Yes, I own a home, and a condo before that.
I think I like Nasty Gary :-).
Clotpoll Says:
February 20th, 2008 at 11:07 am
stu (75)- I’m gonna cue up some Depeche Mode and re-read that Roubini piece.
Jason Says:
February 20th, 2008 at 11:22 am
#85 – ‘Everything Counts’ should do just fine
Jase: EC is good, but a little too obvious. Other perfectly fine choices include:
A Pain That I’m Used To
Barrel of a Gun
Fly On The Windscreen
Nothing
VMC (4)-
Please list your previous market-timing accomplishments.
#4…then you’d be in the other 40% right genius?
3 essex
That’s a misattribution
#2 dbba: Are they selling for 550+, or are they selling for that price.
lisoosh,
You’ve got to come to the next get together, we can get toasted and create a ruckus.
What was the context for that quote?
If I did make the comment, I’d have said 60% would, and 40% wouldn’t, but at best it would have been a tongue-in-cheek reference to historic homeownership rates, and not really a statement about readers.
#10Are they selling for 550+, or are they selling for that price.
Should have said are they listing for 550+, or are they selling for that price?
Is 60/40 the non homeowner / homeowner ratio.
I think that quote refers to the oft cited argument that no matter how low prices go, some people will still complain that they are too high and never take the big step of home ownership.
This is a constipatory state of events, isn’t it? I saw that new bright idea about deferring foreclosure in return for ephemeral gains on sale.
Can you imagine being a lien holder and having to deal with all these bright ideas for saving the current mortgage?
Postpone the foreclosure and take any future profit on the sale. Bahahahahha. Last one to the table gets no chicken legs, kids! Plus you have to sit on Uncle Herman’s lap cause there aren’t enough chairs.
Bahhaha. I can’t stop laughing.
grim/rich northjersey: If you get a chance, can you check and see if anything in River Edge (Bergen Co) has gone under contract lately. Thanks.
mr p,
http://www.census.gov/hhes/www/housing/hvs/historic/histt14.html
grim (12)-
I have to fess up. I made that statement, and it was about the readers here.
Pat (16)-
“I’ll gladly pay you Tuesday for a hamburger today.”
-Wimpy
I can’t wait for the microloan banks to hook up with some of the 106% LTV/pre-foreclosure set. Lending in coastal Pakistan will seem easy after dealing with Homer Simpson.
12 grim
You didn’t say that, Clotpoll did (and you challenged him on it).
OT, but here’s the annual signal that it’s time to start watching basketball. Also a sign that the Heels will be ready when it counts:
CHAPEL HILL, N.C. — North Carolina coach Roy Williams apparently doesn’t think too highly of Duke coach Mike Krzyzewski’s views on injury reports.
In a small tiff that has added the latest spice to college basketball’s most intense rivalry, Williams took exception to a comment made by Krzyzewski on Sunday that the Blue Devils don’t discuss injuries “unlike other schools.”
While Krzyzewski never mentioned the third-ranked Tar Heels specifically, Williams felt the statement was a subtle jab at his team, which has had a much-publicized run of injuries and ailments in the past two weeks.
It was enough to have Williams, in a comment on his weekly radio show Monday, telling an unspecified person to “coach their own damn team, I’ll coach my team.”
“Famines May Occur Without Record Crops This Year, Potash Says”
http://www.bloomberg.com/apps/news?pid=20601109&sid=aGcGIiIwHQ1g&refer=home
“OT, but here’s the annual signal that it’s time to start watching basketball. ”
March has crept up fast!
Next good sign of spring after March Madness is The Masters…Opening Day….and another 20% drop in the spring real estate market………
BC (23)-
What would Willard say if he were alive to see this?
23 BC
Let’s see – we have War and Famine; what does that leave…? Conquest and Death?
“What would Willard say if he were alive to see this?”
Clot,
I don’t know what you boys are doing but I’m wiring $10M into Jr’s account. Those dang exchange limits.
re: (20)
re: I can’t wait for the microloan banks to hook up with some of the 106% LTV/pre-foreclosure set. Lending in coastal Pakistan will seem easy after dealing with Homer Simpson.
Clotpol……
You made my day with that one, I nearly laughed up a lung.
(27)-
A regular Tolstoy novel.
Tried to get this through moderation on another thread (but everyone moved)
Grim, we have to discuss blog software.
In all seriousness. Here is one of my best resources. The articles are priceless.
One of my long term goals is to set up a food pantry based on this article. http://www.backwoodshome.com/articles/hagan59.html
The people can have a copy of the article and a starter kit of all the items on the list. throw in a few recipes and it can keep food on the table. There is no Kool-Aid on the list, they prefer Tang … :*)
About two years ago I was talking to a friend who lives in a nice town in Bergan County. We were talking about the Thanksgiving food drive at the local church. He said they had a good donation drive with 18 turkeys. They had a problem in that they did not have any local families that needed donations. The drove everything over to a church in Patterson for distribution. This year I asked how it went. They send half to Patterson and half went local.
Off outside to watch the Lunar Eclipse. If have never seen one, the moon will be red around 10:30.
sweet! Thanks for the heads up, pgc – I wasn’t aware, and my inveterate stargazing mom would be horrified.
16 pat
The mind reels
I want to buy a home in NJ but cannot afford these absurd prices.
I am not looking for a mcmansion, nor am I looking for a commuter area. I am looking in central NJ. I will purchase a home but not until prices come down to normal affordable levels. 20% lower…maybe to places like Milburn, Mendham, Westfield, Bernardsville, etc. But for just normal suburban towns were people dont commute to NYC or make a fancy salary, than they will fall 50% minium off 2005 prices. Keep watching people, prices will fall and fall and fall. Houses are not selling becuase people cannot afford them without an exotic mortage. As soon as prices come down to where most of this state that makes a household income of 100k average NJ salary of 65k than houses will start to sell.
My wife and I continue to be patient. But with rising property taxes, prices need to dramsically drop
Q: Through your friend who has MLS access, you are told that a certain house has been on the market for 300 days; it was also re-listed once, so it might show that it’s only been on the market for 150 days.
You approach the realtor armed with this info. If you ask the realtor and he says it’s been on the market 150 days, do you challenge him about the re-list, or just say F it and move on?
Interesting piece over at CNN/Money:
Where Do Social Engineers Get Off Commenting On Subprime Mess?
As the subprime mortgage crisis continues to expand and the FBI begins to investigate unorthodox mortgage qualifying guidelines, the causes of the crisis are yet to be examined outside the paradigm of lending practices and within the context of do-gooderism gone awry.
Economists define predatory lending as creditors deceiving households into borrowing more than they are able to pay back, implying deception and lack of transparency.
Yet this phrase is being attached by coercive utopians with increasing frequency and decreasing accuracy to any financial transactions that includes a low-income borrower. As with any phrase tossed willy-nilly into a mix of financial reality and social engineering, it is impolite to unearth and impolitic to assault.
Two forms of lending currently are in the sites of self-proclaimed lending reformers: mortgages and short-term consumer loans. In an ironic twist of economic fate, it appears that those criticizing the latter may have contributed to the current pain of the former.
The fair housing movement forced adoption by the government and secondary lenders of unrealistic homeownership goals and ineffectual qualifying guidelines, thus creating an artificial lending environment now causing great harm to the very borrowers it purports to assist.
You approach the realtor armed with this info. If you ask the realtor and he says it’s been on the market 150 days, do you challenge him about the re-list, or just say F it and move on?
Call up the NJ Department of Banking and Insurance and let them know how you feel, follow that up with a similar call to the NJ Association of Realtors.
Very scary bailout proposal !!!
http://money.cnn.com/2008/02/20/real_estate/OTC_refinance_plan/index.htm?postversion=2008022016
36 Blood
is that your realtor or the seller’s who is holding out on you?
I certainly wouldn’t let it go. Do as grim says, but I would also at minimum let the agent know that I’m not a big fan of his/her looking me in the eye and lying to me.
looking at an open house in florham park this weekend… it’s listed at 579k. I’ll call it the tiki bar house. If you look it up you’ll know what I mean.
We may drop a bid with a very low 5 handle on it.. could be interesting…
“But with rising property taxes, prices need to dramsically drop”
You may get your wish on housing prices, but if you think real estate taxes are going to fall, forget about it. Ain’t no way it’s happening. This is a key (and perhaps last) funding source for the welfare state of NJ.
Speaking of OT hoops, Knicks were down 72-37 at the half.
Hey #7 & #8 Clot, Essex, my most recent market timing feat: selling 75% of my equity portfolio at the beginning of December 2007. Saved my ~$20,000 last I checked. Na Na Na Na Na! I’m an investment analyst, and I have gotten market timing calls right a number of times, NO it’s not impossible despite the conventional wisdom.