The housing market has remained at the center of the nation’s economic troubles throughout 2010. The housing market started the year flat on its back, and it’s ending the year in nearly the same condition.
Home sales are still depressed, home-building remains near a 50-year low, and home prices are still about 30 percent below their peak.
Part of the problem this year has clearly been high unemployment. But the ongoing foreclosure crisis also keeps glutting the market with unsold homes. Meanwhile, the government’s efforts to prevent foreclosures over the past year were a pretty big disappointment to many people.
Foreclosures, distressed sellers, short sales, and anything else that reduces the average price of a product is good for the economy, not bad. Bad for sellers maybe… but good for buyers, carpet companies, paint manufacturers, and inspectors.
I agree. Houses are selling. I think that home inspectors who market to real estate salesmen might be experiencing a reduction in business due to more houses being sold by banks and owners unwilling to add another 7% to their losses for each house sold.
It wouldn’t be too bad if it was 7% of equity, but 7% of gross might be 100% of your equity! The recent events have taught Americans that they can sell without an agent.
with unemployment continuing to climb (seasonal employees will be unemployed again) so will foreclosures. Foreclosures ended for a short season while banks corrected the mistakes (whether committed intentionally or not is another discussion altogether) have started again and will continue to climb as unemployment continues to climb and people who are finding work are earning less than they were previously.
Moody's Mark Zandi rolls up a 55-city list of buy-to-rent ratios, and guess what? Renting makes more sense in most places, just like it did six months ago, in spite of what you might have thought about home prices' decline during that period. Factors that kept prices sticky were a home buyer tax credit that steadied non-distressed sales well past mid-year, and the wrench in the work for foreclosure sales in the past couple of months. Likely, the next six months should show improvement to the buy side, as rents are on the up and up, and distressed sales are going to resurface with a vengeance, weighing selling prices down. The* New York Times'* David Leonhardt reports.
NEW YORK (CNNMoney.com) – Home prices took a shockingly steep plunge on a monthly basis, an indication that the housing market could be on the verge of – if it’s not already in – a double-dip slump, according to an industry report released Tuesday.
Prices in 20 key cities fell 1.3% in October from a month earlier, an annualized decline of 15%, according to the S&P/Case-Shiller index. Prices were down 0.8% from 12 months earlier.
Month-over-month prices dropped in all 20 metro areas covered by the index. Six markets – Atlanta; Charlotte, N.C.; Miami; Portland, Ore.; Seattle and Tampa, Fla. – reached their lowest levels since the housing bust first began in 2006 and 2007.
"The double-dip is almost here," said David Blitzer, chairman of the Index Committee at Standard & Poor’s. "There is no good news in October’s report. Home prices across the country continue to fall."
The report was far more dire than anticipated by industry experts, who had forecast an almost flat market in October. It followed weak September numbers.
“It was a bit of a surprise,” said real estate analyst Pat Newport of IHS Global Research. “I wasn’t expecting it to lag so badly in all 20 cities.”
Low house prices…bad for sellers and commissioned used house salesmen. Good for home buyers and those whom they contract to arrange to live in it. I think Nick hit it on the head.
It appears to work better when the homes are in a negotiable state where the seller is flexible, once they become banked owned many are sold without being inspected.
I had a very sad experience recently where a couple had negotiated the price with the bank prior to the inspection (which unfortunately is becoming very common here in Florida) the home had aluminum branch circuit wiring, an 18 year old heat pump which was not working, and a 15 year old roof that needed replacement and was uninsurable. Needless to say they did not have the funds to both purchase the home and do the repairs. They ended up walking away after fooling around with this property for months with the bank after buying a home inspection and an appraisal.
This is the fault of our industry, IMO. Maintenance of a house is abandoned long before the mortgage payments fall behind. The lack of willingness on the bank’s part to negotiate repairs does not negate the fact that they are a necessary consideration on the part of the one who will be spending to make them…yet, the inspection report is still mostly viewed as a negotiating tool.
Similarly, while the utility companies and state/federal governments are providing rebates, deductions and credits for various measures to improve energy efficiency…the most valuable incentive(s) of increased comfort and lower utility bills still come in second to the $75 rebate for the Energy Star water heater.
We don’t do a good enough job of educating our market, IMO.
I also am seeing more people choosing to forgoe the home inspection on foreclosures. They are being told by their agent (if they have one), bank, or their Uncle Bob, the unemployed contractor), that since the property is ‘as is’ an inspection is a waste of time, since there are no costs to be negotiated. The problem is, many see an inspection only as ammunition to further reduce the price of a home rather than a valuable education about the condition of home they are buying and will have to maintain…‘penny wise, pound foolish’.
Independent of whether a home is being bought or sold, a person should have their home inspected by a professional so they can understand its true condition, allowing them to prioritize it’s repair and maintenance, thus protecting their investment.
Agreed, this should be the one point that all home inspectors regardless of affiliation should be able to agree upon and work together for common good.
We probably need a national effort to get the message out that “as is” homes are most likely very deficient.
All of us are correct. I have put alot of this information on my web site. RE’s are hungry, too, and are not suggesting home inspections. “Banks are selling homes as is, so why get a home inspection? You can save $350”.
IMHO, home inspections should be mandated in any home sale transaction.
Home sales here in KC are down 35% in Nov. 2010 compared to Nov. 2009.