HOME PRICES CONTINUE TO DROP WITH ANOTHER 15%-20% TO GO

12 Nov

see also 1/3 of all homes underwater — at a minimum

EDITORIAL NOTE: With a few places as an exception, home prices, once predicted as bottoming out LAST YEAR, continue to drop and are expected to take another plunge of 15%-20%. Experts who once predicted the bottom in 2010 are now saying it will be sometime in 2012. Here is what I say: home prices will continue to drop and could even go to near zero because of the rise of title problems caused by exotic Wall Street scenarios in which the title to most properties were affected. As for when they hit “bottom” it will be when the foreclosure nightmare is over. Even the optimistic experts concede that is, on average, another 8 years, with New York topping the list at 57 years.

The reason is simple arithmetic. Start with joblessness, lack of capital for new businesses, and add a healthy amount of fraudulent foreclosures pushing the market downward while the Banks report higher and higher profits through accounting tricks that would baffle the most avid puzzle fanatic. Basic fact pattern: as the prices go lower people “default” on mortgages that have probably long since been paid off. The further prices go down the more people are underwater — either worse than before or for the first time. I spoke with one homeowner who bought his home for $550,000 and only took out a mortgage for $175,000. “Now I see and feel the problem,” he said. “I never thought that I could ever be underwater because the mortgage was so low compared with the purchase price. Yet here I am, the house listed for $175,000, the broker telling me I’ll be lucky to get $140,000 and after all selling expenses I might see $125,000 or less.”

He’ll need to come to the table with money in order to sell and he knows that whoever he pays is probably not entitled to the money. he just wants out of a neighborhood that is a virtual ghost town. What was once a thriving community is  bereft of the family, secure atmosphere on the brochures.

Home Prices Drop in Nearly 3/4 of U.S. Cities

home valuesWASHINGTON — Home prices dropped in nearly three quarters of U.S. cities over the summer, dragged down by a decline in buyer interest and a high number of foreclosures.

The National Association of Realtors said Wednesday that the median price for previously occupied homes fell in the July-September quarter in 111 out of 150 metropolitan areas tracked by the group. Prices are compared with the same quarter from the previous year.

Fourteen cities had double-digit declines. The median price in Mobile, Ala. dropped 17.7 percent, the largest of all declines. Phoenix and Allentown, Pa., Atlanta, Las Vegas and Miami also experienced steep declines.

Eight cities saw double-digit price increases. The largest was in Grand Rapids, Mich., where the median price rose 23.7 percent. South Bend, Ind., Palm Bay, Fla., and Youngstown, Ohio, also saw large price increases.

The national median home price was $169,500 in the third quarter, down 4.7 percent from the same period last year.

Most analysts say that prices will sink further because unemployment remains high and millions of foreclosures are expected to come onto the market over the next few years.

Sales of previously occupied homes dropped to a seasonally adjusted annual rate of 4.88 million in the third quarter, slightly ahead of last year’s pace for the same period. Sales were lower than usual for the summer season last year because a federal tax credit inspired more buying in the spring.

This year, sales are on pace to finish behind last year’s total, which was the lowest in 13 years.

Sales are low even though the average rate on the 30-year fixed mortgages is hovering near 4 percent.

Regionally, the median home price in the Midwest fell 2.2 percent to $142,300 in the quarter from the year before, even as sales activity jumped 25 percent. In the South, the median price also slid 2.2 percent to $153,200 and home sales increased 15.5 percent.

The Northeast’s median home price dipped 6.5 percent during the period to $236,700, as sales rose from the previous year by 11.6 percent. The median home price in the West dropped by 9 percent to $205,700 in the third quarter from a year ago. Sales there increased 16.7 percent.

Also see:
Where Are the Real Home Bargains? Not Where You Think!
Mortgage Rates Stay Low, But Homebuyers Aren’t Budging

Top 10 Cities For Military Retirement
Gallery: 10 Cheapest Places To Retire

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