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Home Prices May Drop Another 25%

Catz Part Deux

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Home Prices May Drop Another 25% - Business - The Atlantic



This is a pretty fascinating picture. First, it shows just how incredibly absurd the housing boom was. Beginning in the 1940s, inflation-adjusted homes prices have settled around the 110 value according to the Case-Shiller index. Yet, the index value exceeded 200 in 2006. Prices began a descent when housing collapsed, but as of May the index remained well above the natural value of 110.

Eyeing the chart, the value looks to have hit around 147 in May. For it to drop back down to 110, home prices would have to decline another 25%. That's still a pretty long way to fall.
I knew home prices had gone way, way up in our area right after we bought our house in 1999, but I had no idea how much they'd really zoomed up because all of our equity was on paper. Amazing, really. And, in comparison to other booms, it explains why they fell so far, so fast.
 

VanceMack

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I knew home prices had gone way, way up in our area right after we bought our house in 1999, but I had no idea how much they'd really zoomed up because all of our equity was on paper. Amazing, really. And, in comparison to other booms, it explains why they fell so far, so fast.
This is a decent start. As much as it will hurt (me as much as anyone) the housing prices have to come down. They probably have to come down lower than they were before the market boom. And as long as people dont bail on properties the values will come back. maybe not as high...but to a fair profit level.
 

Catz Part Deux

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If I were smart, I'd sell my house tomorrow for as much as I could get for it and just rent something.
 

danarhea

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Another bubble out of the way, but we still have the derivatives bubble to go, and that one's going to be a REAL bitch.
 

VanceMack

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If I were smart, I'd sell my house tomorrow for as much as I could get for it and just rent something.
IF you could find a buyer!

I expect in another 5-10 years the housing prices will be close to what they are now but thats with normal and acceptable market appreciation. My daughter and her husband bought a starter home...renovated it...and had it appraised and in less than a year it went from 70k to 240k. Now...they did do a LOT of work...but thats just not even logical. No way new buyers could touch their house at what it is appraised at.
 

VanceMack

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Another bubble out of the way, but we still have the derivatives bubble to go, and that one's going to be a REAL bitch.
Stock and home speculators are going to take a beating...especially the middle tier 'rich' folks...but they will probably still come out ahead of where they were...just nowhere near where they are.
 

LaMidRighter

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IF you could find a buyer!

I expect in another 5-10 years the housing prices will be close to what they are now but thats with normal and acceptable market appreciation. My daughter and her husband bought a starter home...renovated it...and had it appraised and in less than a year it went from 70k to 240k. Now...they did do a LOT of work...but thats just not even logical. No way new buyers could touch their house at what it is appraised at.
Depends on the area I guess. In my city that's slightly more than a mid-level house by maybe 10k, Cali that would be a steal, NY too I would assume.

EDIT- my numbers were a bit off. A mid-level around here, probably around 2.5k sq. ft. will usually average about 170k depending on neighborhood but there is no shortage of 210-240k$ homes and they are being snapped up like candy.
 
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VanceMack

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Depends on the area I guess. In my city that's slightly more than a mid-level house by maybe 10k, Cali that would be a steal, NY too I would assume.

EDIT- my numbers were a bit off. A mid-level around here, probably around 2.5k sq. ft. will usually average about 170k depending on neighborhood but there is no shortage of 210-240k$ homes and they are being snapped up like candy.
I get that...the point is...fair maket price WAS 70k. Renovated price...maybe 135-140k. The market ceiling is (or was) about 120k for that neighborhood.

And the problem we had is a lot of those 300k houses suddenly were selling for 700k...until they ran out of buyers. We have subdivisions thaty were projected to go for 7-800k that sit incomplete and abandoned. If they could finish them and sell them for 3-400k they would go tomorrow.
 

LaMidRighter

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I get that...the point is...fair maket price WAS 70k. Renovated price...maybe 135-140k. The market ceiling is (or was) about 120k for that neighborhood.

And the problem we had is a lot of those 300k houses suddenly were selling for 700k...until they ran out of buyers. We have subdivisions thaty were projected to go for 7-800k that sit incomplete and abandoned. If they could finish them and sell them for 3-400k they would go tomorrow.
Gotcha. That makes sense than independent of area, yeah the inflation is going to hurt alot of people and I agree that alot of "buyers" are being priced right out of the market.
 
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EnigmaO01

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If I were smart, I'd sell my house tomorrow for as much as I could get for it and just rent something.
Are you sure? No matter what value a home is it always seemed better to me to be putting my money into paying off my mortage and building equity vs. paying someone else.
 
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