U.S. Housing Still Overvalued (but dropping)

http://www.forbes.com/finance/2005/12/09/hovnanian-tollbrothers-nationalcity-cx_jw_1209housing.html

NEW YORK - Looking to buy a home in Massachusetts or Michigan? Good news--housing valuations there are returning to more normal levels.

The third-quarter update of the Global Insights/National City Housing Valuation Analysis showed that 38% of the top 299 metro housing markets are extremely overvalued and at risk for a price correction. The number of extremely overvalued markets fell to 65 from 67 in the second quarter.

Four new metro areas: Honolulu, Orlando, Fla., Pensacola, Fla., and Phoenix joined the list of extremely overvalued markets. Forty-one of the significantly overvalued metro housing markets were in California and Florida, with most of the rest in the Northeast corridor.

Six cities dropped off the list: Essex, Mass.; Worcester, Mass.; Jackson, Mich.; Bay City, Mich.; Portland, Maine; and Charlottesville, Va. Home buyers may also want to look in Texas. From Dallas to Houston to College Station, prices in the Lone Star State are falling: down 13.3%, 11.7% and 19%, respectively. Fourteen of the top 20 undervalued cities were in Texas.

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Of that, at least 34% are vacant. Gotta be some nervous bankers out there.

Seems we may have come to the limit of the "Greater Fool Theory" for real estate purchase. And it worries me how many people have borrowed on what they thought was equity.

No bust but fizz likely in housing
Economists say prices will stagnate with rise in mortgage rates
By William Sluis
Originally published December 9, 2005
The nation's long housing boom will end not with a bang but in a prolonged period of whimpering as homeowners suffer through stagnant pricing that could last years.

That was the consensus of economists gathered in Chicago this week as they viewed the likelihood that a so-called housing bubble will end in a crash. Their conclusion: It won't.

http://www.baltimoresun.com/business/bal-bz.housing09dec09,1,2290400.story?coll=bal-business-headlines&ctrack=1&cset=true

http://www.nhi.org/online/issues/135/bubble.html

It is widely believed that homeownership is the best way for low-income families to accumulate wealth and enter the middle class. There are reasons for questioning the wisdom of this view in general – many low-income homebuyers find that they are unable to hold onto their home due to job loss or a change in family circumstances, and are forced to sell after a short period of time. However, a bubble in the housing market across much of the country may make this a particularly bad time for low-income families to move into homeownership.

In the last eight years the country has experienced an unprecedented run-up in housing prices, as home prices nationwide have risen by 35 percent (adjusted for inflation). In the past, home prices have risen at approximately the same pace as other prices. While it is likely that the gains in home prices have been sharpest among higher end homes, there is evidence that even the price of homes owned by low-income families have been inflated by the bubble. <snip>

the only part of your home to hold value.

I've been following Thermasave Structural Insulated Panels. Basically it's a panel of cement board, then a core of polystyrene, then another cement board panel. The Federation of American Scientists is really pushing this - it withstands winds up to 200 mph, earthquakes (as long as the ground beneath the structure doesn't sink), doesn't support mold or termites, is highly insulative and quiet, and is super easy to assemble. They make the panels with channels ready to run wiring. I think it will really take over - like drywall replaced plaster walls.

If we have other "disruptive" technologies, like cheap solar or wind systems, or if people start to demand passive solar floor plans, a lot of existing homes will become much less valuable.

Check out this article: http://www.news14charlotte.com/content/entertainment/tech_talk/default.asp?ArID=108812&AC=True

They also have a page on wikipedia.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2014131
http://business.bostonherald.com/realestateNews/view.bg?articleid=119218

The Bay State’s once high-flying real estate market is rapidly losing altitude, sales numbers released yesterday show.
Condo prices are apparently peaking, while house sales plunged last month, the Massachusetts Association of Realtors reported.
The group said house sales fell 9.2 percent in November, dropping to 3,713 units last month from 4,089 in November 2004.
The condo market also showed signs of finally topping out after years of spectacular gains.


The median condo price hit $265,000 last month. That’s down 2.3 percent from a month earlier and 9.6 percent from July’s peak at $275,000.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2014373
http://www.washingtonpost.com/wp-dyn/content/article/2005/12/30/AR2005123001481.html

This has been good news for D.C. teacher Kathleen Bergin and her roommate, Mary Wilson, who works as a nanny. The two long-time friends rented in Glover Park for four years and wanted to buy a place in the neighborhood, but couldn't afford it, Bergin said.

They watched as work started in spring 2004 on the Archbold, an old American University dorm being converted to condos. "But we just assumed it would be way out of our range."

However, after a price cut of $30,000, from about $500,000, plus $10,000 for using a designated lender, Bergin and Wilson became first-time homeowners this month.

The number of homes for sale in the Washington area has more than doubled since last November, according to figures from the area's multiple listings service. The last time the Washington region had this many houses for sale was the late 1990s, before low interest rates and a growing job market fueled the years-long boom in home sales.

Particularly southern california. No more for the simple reason that here in the south land we are out of land. There is nowhere to build and people just keep comming. Of course the market may flat out for a year or two, but this means a rise at only 1-3% per year in that time. A reversal of forutune in souther cali is too unlikely, short of a major earthquake for the main reason that our ecnonomy is too diverse and rich.Along with our proximity to the pacific rim and large harbor will ensure or ecnonmic growth for a life time.