General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsWhen Will U.S. Home Prices Finally Stop Falling And Begin To Rise?
When Will U.S. Home Prices Finally Stop Falling And Begin To Rise?
(posted with permission from: http://economiccrisiswritings.blogspot.com/2012/03/when-will-us-home-prices-finally-stop.html)
Even with the U.S. Fed holding interest rates down to some of the lowest levels since the Great Depression, prices continue to fall as the job market is weak, middle class incomes are stagnant, consumer debts are high and foreclosures mount. In this environment, what will it take to reverse the downward trend in pricing and when?
Of course a much stronger job market, higher wages and a continued pay down of consumer debt would be a huge boost. But the foreclosure backlog at Fannie, Freddie and the banks is huge and it too must be dealt with. One way is for lenders to sincerely work with homeowners who are struggling to make their mortgage, taxes and insurance payments, which means either writing down a portion of their mortgages or extending and restructuring those mortgages to make them more affordable, so fewer people lose their homes. But for those people still making their payments, when they learn others got a break, they too will demand one.
The second way is for Fannie, Freddie and the banks to finally have a blowout sale of their mountain of foreclosures, so that investors will buy them and put them back on the tax rolls. To make this more palatable, there can be a rule requiring investors for a period of time to lease these homes out, so they don't get flipped into the market driving down prices further.
Until then dear reader, I don't see U.S. home prices rising in the immediate future. If you need to sell your home, please consult with a local real estate professional, but price it to sell now, rather than to ride the declining prices down further.
To learn more, please see "Home Prices Hit New Depths," The Wall Street Journal, 2-29-12 http://online.wsj.com/article/SB10001424052970204520204577251090065551210.html
hifiguy
(33,688 posts)Maybe in another ten years or so?
BootinUp
(47,201 posts)I would say within 24 months. Could be within 12. That is like national average, some regions sooner others later.
DJ13
(23,671 posts)Houses are still expensive compared to wages on a historical basis.
Wages are the more critical factor, IMO.
And most banks are no longer in the business of lending to the 99%.
dmallind
(10,437 posts)Additional as in buying a separate house before my last one sold (which it did), not as in a second mortgage. The banks fell over themselves to give me money at a fixed and ridiculously low interest rate. How did I achieve this? By being in a Masonic lodge with the president of a small local bank? By having Romneyan wealth and collateral? No. By paying my bills so I maintain a high credit rating, and by not buying houses well out of my price range on silly adjustable/interest only/balloon rip-off mortgages.
EDIT: To address the OP. Couple years or so is a good guess, and slowly at first; but wouldn't be surprised to see another bubble in the late teens as increasing population meets years of slow construction.
sdfernando
(4,947 posts)Most people pay their mortgage with what???? Wages, money they earn working. Until median home prices are about 3x median income in any giving area housing will remain unaffordable.....so either home prices go down (which we are seeing) or wages go up (which we aren't seeing), or some combination of both.
frylock
(34,825 posts)riderinthestorm
(23,272 posts)when we re-financed then.
60%. I'm west of Chicago.
I really hate to think they'll drop even lower....
Its all paper gains and losses for us, we're not moving ever but I really fear for those who do need to move for work, school, family.... they are getting crushed.
msongs
(67,462 posts)n2doc
(47,953 posts)Places where there are a lot of good paying jobs, prices are rising (Silicon Valley, DC, Manhattan). If that spreads outwards, prices will start to rise again as interest rates making buying a house a lot cheaper than renting in many places. But if we go back into another recession (gas prices, Iran War, Euro crisis, etc) then all bets are off. I have seen more houses sell in Savannah this spring than in previous years.
Yavin4
(35,450 posts)Except for coastal metro areas and other high profile real estate markets where high roller speculators reign, housing is a reflection of falling wages.
demosincebirth
(12,544 posts)2%. the last four month.
SoCalDem
(103,856 posts)Down from pre-crash $385K to $149K..
Our retirement plan bit the dust, (sell the house & downsize)..so we remodeled and will die here now..
Nye Bevan
(25,406 posts)and I hope and expect that they will fall further. House prices are still too high, and I want my kids to be able to afford to buy one when they are older. I bought my house as somewhere to live, not as an investment, and have never "unlocked my equity" to buy an SUV or a big-screen TV.
Funny how gasoline and housing are both essential, but most people seem to want cheaper gasoline but more expensive houses.