home prices

Studies say mortgage modifications ineffective, foreclosures will continue, prices will drop

The Wall Street Journal overviews a series of studies on foreclosures, mortgage modifications and home prices.

Of 7.7 million mortgages behind in payments, they are estimating 5 million will end up in foreclosure, in spite of home mortgage modifications.

most efforts to modify loans with easier terms will delay, not prevent, the loss of homes to foreclosure

It's also fairly pocketed in certain areas. The top cities are listed below, along with their months of shadow inventory. Shadow inventory, because it's not on the actual market, can temporarily raise home prices due to less supply available. Yet that unsold inventory is waiting in the wings. It is actually being kept off the market through other means.

  • Stockton CA - 27
  • Orlando, FL - 27
  • Miami, FL - 24
  • Las Vegas, NV - 18

Moody's Forecasts Home Prices to Drop 7.8% in 2010

In case anyone assumes home prices have bottomed, this Business Week article overviews a lot of good reasons why that probably isn't true.

One of which is Moody's estimation that residential home prices will drop 7.8%.

What they are calculating is the foreclosure rate, the high unemployment rate and the withdrawal of the Federal Reserve buying mortgage backed securities, in addition to a first time home buy tax credit being modified and expiring.

Thanks to the feds' bounty of tax credits, purchases of mortgage securities, interest-rate cuts, and home loan programs, new and existing home sales are up. The median home price rose, to $177,900. What happens in 2010 depends on whether the market can stand on its own.

Home Sales & Prices link fest

Home sales jumped 9.6% in July 2009. We have a lot of experts out there looking at the latest housing data, many with different conclusions on what it means than the MSM.

My own feeling is home prices must come down to where the U.S. median income can afford a 30 year fixed mortgage and payments. Obviously that's too crude of an answer, to simply make owning a home affordable again, with investment, equity, wealth, jobs all wrapped up in the real estate market. So, with that, let's read some insightful writings.

Calculated Risk is the gold standard on housing market analysis.

In New Home Sales Increase in July:

Home Sales & Prices - NAR Q2 2009 Survey

The National Association of Realitors has released Q2 2009 home prices & sales survey results.

First the good news. Sales increased 3.8% from Q1 2009, although still down 2.9% from Q2 2008.

According to the report, each home sale creates $63k into the economy (let's verify this claim!)...

but oops, 36% of these sales were from distressed properties (i.e. foreclosed on homes). Stranger still, 30 yr. fixed mortgages dropped slightly in Q2, down 5.03% from 5.06%. Let's call that a flat line change from Q1 to Q2 2009.

Now for the bad news (or good news depending how you look at it). Median Home prices rose 4% from Q1 2009 to Q2 2009, but are still down 15.6% from Q2 2008.

Median Home Price Down 13.8% - Foreclosures cited as reason

You've probably already seen the headlines, Median Home Price down 14%, but what is behind the latest numbers?

So, this latest drop is in just a 3 month period. But the regional differences are staggering.

In Fort Myers Florida, prices are down 59.1%. Akron Ohio, down 48%. San Francisco and San Jose are down 42%. Miami Florida is down 35% and Los Angeles is down 34%.

Much of this corresponds to foreclosure rates.

You might also be interested in this tidbit on geographic immigrant areas (read illegals) have a much higher foreclosure rate:

Housing Sales/Price Decline Matches Great Depression Rate

All you have to do is click on any news aggregrator to see the new median home price for resales is $181,300 and new homes, median price is $220,400. Still not really affordable for your average U.S. median income, but a huge improvement.

That said, Bloomberg has the real story on this latest report. The rate at which prices are falling is a steep, steep decline. In fact, it's freefall.

Sales of single-family houses in the U.S. dropped in November by the most in two decades and resale prices collapsed at a pace reminiscent of the Great Depression, dashing speculation the market was close to a bottom.