Two new reports out today demonstrate that we’ll be dealing with the fallout from the housing market collapse for some time to come.
First, home prices are continuing to fall:
NEW YORK (AP) — U.S. home prices plunged by a record 8.4 percent in November, marking two years of slowing returns, according to a key index released Tuesday.
The decline in the Standard & Poor’s/Case-Shiller 10-city composite home price index was the biggest year-to-year drop since a 6.7 percent decrease in October. The November performance was the 11th straight monthly decline. The index tracks prices of existing single-family homes in 10 metropolitan areas.
”Nothing in these numbers suggest a bottoming out. The numbers universally are disappointing,” said David Blitzer, S&P’s managing director and chairman of the index committee. ”Maybe when we get into the spring/summer home-buying season and with lower interest rates, maybe it will all come together.”
The broader 20-city composite index also was down year-over-year, falling 7.7 percent in November.
And, second, the rate of home ownership fell in 2007 at the fastest rate since they started measuring it in 1965:
NEW YORK (CNNMoney.com) — The housing and mortgage meltdown caused the biggest one-year drop in the rate of homeownership on record, according to government figures released Tuesday.
The decline, while expected, is yet another indication of the housing market’s sudden and dramatic turn.
The Census Bureau report showed that home owners accounted for 67.8% of occupied homes in the fourth quarter, down 1.1 points from a year earlier. It’s the largest year-over-year drop recorded in the report.
“It’s an incredible story,” said Dean Baker, co-director of the Center for Economic and Policy Research. “We’re back to where we were in 2002, which is before the subprime nuttiness and run-up in prices. And it’s not clear how much farther we’re going to fall.”
The ownership rate was well below the 68.2% ownership rate in the third quarter of 2007. Homeownership rates, which have been tracked since 1965, hit a record high of 69.2% in the second and fourth quarters of 2004.
And it’s going to be awhile before things straighten themselves out:
A record 2.18 million homes sat vacant and available for sale in the fourth quarter, according to the report, up from 2.07 million in the third quarter and the 2.1 million a year earlier. The fourth-quarter reading on vacant homes for sale matched the previous record set in the first three months of 2007.
The report shows that 2.8% of homes not in the rental market now sit vacant, matching the record high, also from last year’s first quarter. That’s nearly twice the rate of vacant homes that were on the market during the first quarter or 2001, just as the economy was heading into its last recession.
“For some perspective sake, this measure never topped 1.9% until the housing bubble started deflating,” said Mike Larson, a real estate analyst with Weiss Research.
The bubble has burst folks, it’s time to let things ride themselves out.
February 23rd, 2008 at 10:15 am
This is a topic of great interest to me. I wrote Portfolio Pollution and the truth be told, the finger (in my opinion) needs to be pointed back at our Federal Government on FIRREA which is garbage! Any help you could provide in bringing this topic of discussion forward would be greatly appreciated!
Appraisals VS AVM’s_either way Portfolio Pollution was self-induced
*A Bank or Lender controls the entire appraisal process from beginning to end using their preferred vendors (wink wink). FIRREA gave way to AVM’s and they are a flat joke! Do you know how many local appraisers went out of business due to AVM’s. Answer: a lot! Why: because ‘AVM’s’ cleared out anyone in the business that challenged over-valued loan amounts given to them in advance (aka target price) by the client who ordered an ‘appraisal’. Banks and lenders are totally driving the bus on property valuation and that should be changed immediately!!!
I’d compare it to picking your own umpires in a game where you have home field advantage. To fix the problem we need to focus on relieving the bank or lender from their duties re: ordering, scheduling and paying for over-valued appraisals, paying for it with the purchasers money, and selecting appraisal ‘vendors’ that simply roll over and comply. After all, someone has to look at property valuations objectively.
A passionately involved membership post resulted in a dozen or more responses. The posting asked appraisers for concrete examples of pressure they had received to inflate appraisals or hit specific numbers. While we did receive a few anecdotes about such pressure, most of the correspondence was an interesting mix of finger-pointing, suggestions, and a bit of fortune telling. We have included a representative sample of these responses below. While each writer granted permission to quote him by name, they are identified only by location. See the link below to the Mortgage Daily News article entitled - Appraisers on Pressure and Reform. Also look for the online article written by Larry Levy entitled “The fraud of appraisal regulation”.
http://www.mortgagenewsdaily.com/5112005_Aprraisers_On_Pressure_And_Reform.asp#comments