From the Boston Globe:
Housing slump may rival late ’80s
The Massachusetts housing market will remain in a slump, and by the time it hits bottom about a year from now, prices will have dropped 14 percent from the peak in 2005, according to an economic forecast released yesterday.
Such a decline would mean the current downturn would match the real estate collapse of the late 1980s and early 1990s, when the median single-family home price also fell about 14 percent.
If the forecast by the nonprofit New England Economic Partnership proves accurate, it means more bad news for home sellers, who are already have trouble unloading their properties despite it being the high season for real estate. Statewide, median single-family home prices would drop from $370,000 in the second quarter of 2005, to $318,000 next year, under this forecast.
But such an outlook bodes well for buyers, and the local economy, said Alan Clayton-Matthews, the University of Massachusetts professor who prepared the forecast, because high housing costs have held back economic growth here.
“Although these price declines are not welcome by existing home owners, they are healthy for the economy,” he said. “With housing prices in line with incomes, Massachusetts will once again be affordable for the state’s future labor force.”
In New England, the median single-family home price is projected to fall 11.5 percent from the peak, while nationwide prices are forecast to drop 8.4 percent, according to the Partnership and Moody’s Economy.com.
Members of the real estate industry called the forecast too pessimistic. Lawrence Yun, senior economist at the National Association of Realtors, expected the New England market to hit bottom soon, noting recent data shows the rate of price declines slowing.
Big drop in home prices predicted
http://money.cnn.com/2007/05/23/real_estate/prediction_big_home_price_drop/index.htm?postversion=2007052413
Some economists see steeper drop in store for home prices.
By Les Christie, CNNMoney.com staff writer
May 24 2007: 1:37 PM EDT
NEW YORK (CNNMoney.com) — Most industry watchers agree that home prices will continue to slide before they recover, but now some economists say they’ve got a long way to fall before bouncing back.
David Wyss, chief economist at Standard & Poors, has forecast a price drop of about 8 percent for the 24-month period through the fourth quarter of 2008.
His prediction came during a general economic outlook session at the Mortgage Bankers Association’s (MBA) National Secondary Market Conference & Expo in New York this week.
Housing prices will suffer from a “significant increase in defaults and foreclosures,” he said, with affordability still a major issue. Wyss worried how hard the slump will hit already highly inflated housing markets.
He said its impact on areas like South Florida, where much of the buying is speculative investment in second homes, could be big. “You don’t need a second home,” Wyss said.
Overall, he said he expects the U.S. economy to slow this year to a growth rate of about 2.25 percent, down from 3.3 percent last year.
Celia Chen, Moody’s Economy.com’s director of housing economics followed Wyss’ lead. “We also have an 8 percent decline in median house prices [for the 24-month period ending March 31, 2008], which is consistent with what David Wyss had.”
“That is quite a bold forecast,” Lawrence Yun, economist at the National Association of Realtors, speaking from his Washington, D.C. office, said of Wyss’s prediction. NAR is predicting a much less severe total decline of 1.4 percent through the slump – prices have already declined three straight quarters – and that a recovery will start to take place in early 2008.
“The run up,” Yun said, “was an investor-demand driven boom, and it was followed by an investor-driven collapse.”
more…
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Housing Bubble Hits Home
http://www.paperdinero.com/BNN.aspx?id=198
Segment chronicles some of the aspects of the housing mania and subsequent decline that we now know all too well. Features a series of anecdotal stories of personal gloom and doom while tracking a series of “homeowners” from 2005 to today.
First of all, most of us have been in our home way longer than 2001 when this first took off. Only First Time buyers and Flippers between 2004 and 2005 got crushed. We are not even back to 2003 levels yet. I lost imaginary money like most people, big deal!!!! My neighbor the flipper lost 60k on his last flip and called it quits after making 300k on his first three flips, boo hoo to him. It is the knuckleheads who bought his low rent home depot parking lot crew renovation that is going to suffer!!! Not him.
I bought my home in the RE bust of 1987 paid 320,000 for waterfront in little silver everybody said I was crazy prices were going back to 1980 level.Sure I saw my house lose value right through 1994 but I knew I would live here for a long time .2 years ago a builder offered me 2.2 mil…But I told him I’m planning to stay for a while this is where I live .If people buy homes to live in for 25-35 years you don’t sweat the price movements .
Bernanke Warned by Real Estate Analysts:
Housing Collapse Is Much Worse Than You Say
http://www.larouchepub.com/pr/2007/070522warn_bernanke.html
May 22, 2007 (EIRNS)—A real estate investment and analysis firm, John Burns Real Estate Consulting, said on May 21 that it is “going public with our concerns” that the national sales information for both new and existing homes, is misleading and covering up a deep plunge of the housing sector. “The housing market has softened much more than is being reported” by the Fed, and the National Association of Realtors (NAR), says JBREC.
The firm reports that having purchased and compiled actual home sale closing data for 55% of the country, it finds existing-home sales down, not 9% as NAR reports, but: 22% in May 2006-April 2007, compared to May 2005-April 2006; and much more than that on a simple year-to-year comparison of the past couple of months. It found that existing-home sales have fallen every bit as much as the new-home sales of the biggest homebuilders D.R. Horton and Lennar, which are down 37% and 27%. It found that home brokerage transactions by Realogy Corp., the nation’s biggest realtor company which owns Century 21, Coldwell Banker, and ERA, fell 18% from 2005 to 2006. And that mortgage applications for home purchase have fallen 18%, even though many buyers now have to fill out several applications in order to get a mortgage.
Taking the states with the worst housing sales/foreclosures crises, JBREC found Florida home sales down 34%, not 28% as NAR reported; Arizona sales down 38%, not 28%; and California’s down 37%, not 24% as NAR reports. This strong underreporting of the collapse by NAR, the firm says, only dates from the middle of 2006; it doesn’t claim any intentional misrepresentation by NAR.
As for new-home sales, JBREC reports the Census Bureau is continuing not to subtract cancellations from reported sales, giving sales figures which are much rosier than the grim reality, and are reported publicly by the Federal Reserve.
“In summary, we believe that the Fed should know that the housing market correction has been quite steep, and is also not showing signs of bottoming out,” concludes JBREC.
Separately, a Wall Street firm reported May 18 that the foreclosure “shock cone” is widening: While total foreclosures, at all stages, are up 60-70% over last year so far, foreclosure notices—the front end of the process, when a mortgage is typically 90 days delinquent—are 127% higher so far than in 2006. It said that foreclosed homes being resold by banks or lenders, are hitting the housing market with an average price drop of 30% nationally.
I think it is going to be more like early 80s.
http://bp2.blogger.com/_pMscxxELHEg/RlcHoEEpiGI/AAAAAAAAAis/5CbtU26DGRQ/s1600-h/Existing+Inventory+Mearures+April07.jpg
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