•Home-Price Declines Accelerated in Second Quarter as Foreclosures Climbed

Discussion in 'Economics' started by ByLoSellHi, Aug 12, 2009.

  1. http://www.bloomberg.com/apps/news?pid=20601087&sid=axsovog3CuAE

    Home Prices Declines Accelerate in Second Quarter (Update1)
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    By Kathleen M. Howley and Brian Louis

    Aug. 12 (Bloomberg) --
    Home price declines in the U.S. accelerated in the second quarter, dropping by a record 15.6 percent from a year earlier, as foreclosure sales weighed on values.

    The median price of an existing single-family home dropped to $174,100, the National Association of Realtors said today. Total sales rose 3.8 percent to a seasonally adjusted annual rate of 4.76 million from the first quarter and dropped 2.9 percent from the second quarter of 2008.

    Prices fell in 129 out of 155 metropolitan areas from a year ago and 39 states experienced sales increases from the first quarter, the Chicago-based realtors group said. Sales in the U.S. housing market at the heart of the global recession are beginning to stabilize, said Patrick Newport, an economist for Lexington, Massachusetts-based IHS Global Insight.

    “Sales of new and existing homes are beginning to grow again,” Newport said in an interview. “The market may be past its bottom.”

    Home prices are tumbling even as mortgage rates remain near all-time lows. The average U.S. rate for a 30-year fixed home loan was to 5.22 percent last week, down from 5.25 percent the prior week, according to mortgage buyer Freddie Mac of McLean, Virginia. The rate dipped to 4.78 percent in April, the lowest ever recorded.

    U.S. foreclosure filings -- notices of default, auction or bank seizure -- rose to a record in 2009’s first half, according to RealtyTrac Inc., an Irvine, California-based seller of real estate data. More than 1.5 million properties, one in every 84 U.S. households, received a foreclosure filing, RealtyTrac said in a July 16 report.

    Default Discounts

    Homes in or near default typically sell for about 20 percent less than non-distressed property, according to the Realtors group. Those sales reduce the value of each surrounding home by an average $8,667 because the lower price is used by appraisers to set values for other properties in the area, according to the Center for Responsible Lending in Durham, North Carolina.

    The world’s largest economy will contract 1.3 percent this year, according to a July 10 forecast by Fannie Mae. The U.S. unemployment rate may climb to 9.9 percent in 2010, from 9.3 percent this year, according to the mortgage buyer controlled by the U.S. government.

    To contact the reporters on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net; To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net.
    Last Updated: August 12, 2009 10:04 EDT
  2. This is just a foretaste of what's to come.

    A banker confided me that banks are intentionally slowing foreclosures, so that they don't overflood the market with homes, thus driving prices down even faster.
  3. maybe not. some markets are recovering.


    The lower end of every market is hot these days - here are three examples in Carmel Valley 92130. The first two just went pending, and the third house featured closed today
  4. I'm refinancing this Friday from 6% to 4.5% with a bank I have dealt with previously. How different things are today...short of providing a dna sample I pretty much supplied everything else you could imagine. In addition valuations are down 10% in my town from what we purchased. Furthermore, the bank will now only lend to a maximum of 70% of valuation....maybe they expect prices to fall further.

    Finally, isn't it intriguing that when you want to borrow from a bank they will determine the valuation of your home by evaluating comparable sales in your area over the last 4 months i.e. they use to mark-to-market valuation.

    Yet, when the banks need to value their MBO, CDOs etc they no longer need to use mark-to-market.....just guesstimate the value and use that for reporting purposes.
  5. We just bought two months ago (June) and locked in a 30 year fixed at 4.35% (60 day lock dating back to April).

    I figured that was about as low as it's ever going to get.
  6. Damn 4.35% that is fantastic! Is that with points? Lowest 30yr in this area was about 5.5%.

    Only plan to be house another 5 years then look for smaller house...empty nesters.
  7. That doesn't surprise me at all.
    I need to call my Bank Pres. buddy and get the dirt, but I"m half scared to.
  8. clacy


    Congrats! You likely bought at (or very damn near) the bottom of both the housing and mortgage markets.

    I refi'ed and I'm saving quite a little on my payment. I'll have made up the refi costs in 7 months.
  9. houses in us are cheaper than anywhere I have been recently. Like Vietnam, Thai, east eu... . Presume china too.

    You guys are becoming now really, really competitive compared to anyone in the world.

    Congrats ! thats the way ahead !
  10. toc


    there is a word out there that commercial real estate correction is coming soon and it will be more severe than the residential. so housing market is not out of the woods yet.

    #10     Aug 12, 2009