US house prices in freefall -- redux

[Dauphin]

Originally posted by Krill
Woot, I might be able to buy a house son

As always, it depends on where:

http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/html/ag.stm

Camden is up 16.1% in the last quarter, Merton 12.3%, Hammersmith & Fulham 9.8%. Surrey, Hertfordshire and Essex are still all up for the quarter (effectively static).

[DanS]

Originally posted by asleepathewheel
Bailouts (of all types) make me physically ill.

Maybe my wife and I should get in over our heads rather than prudently living within our means in an apartment while we build a downpayment.

The government should not be in the business of rewarding personal irresponsibility.

Not only irresponsible choices, but also choices that have gone bad otherwise. There are lots of choices in the housing market that have gone bad even though the choice was responsible.

[Apocalypse]

Originally posted by Kidicious


Take some econ classes and then come back when you know what higher interest rates do.

Come back when you read the Economist.

[Agathon]

Originally posted by Apocalypse

Come back when you read the Economist.

The name of that publication has to be up there with "Fair and Balanced".

[Dinner]

Year to Year home prices in San Diego have fallen 25%.

That's massive.

http://www.signonsandiego.com/news/business/20080715-1250-bn15housing.html

[notyoueither]

That's nothing. Just wait.

[Rufus T. Firefly]

As long as they're still at rock-bottom by the end of 2010, all is well.

[Dinner]

Originally posted by notyoueither
That's nothing. Just wait.

So true. I'm tempted to short sell my house and rent for a few years just so I can swoop in in 2010 or 2011 and pick up a better house for less. My $400,000 house is now worth around $285,000 (it's really a condo in a complex instead of a real detatched single family home though at least it has no shared walls) but the projections right now are for another $80,000 drop at least. $180,000 is a lot of money so a short sell and getting back on at the bottom floor in a few year just might be a good idea.

[DanS]

I doubt anybody would give you a loan in 2010 or 2011 if you do a short sale.

[Dinner]

Maybe then again you could always just say everyone else was doing it. My sister and her husband bought a house 3 years after declaring bankruptcy though that was in 2000.

[DanS]

Yeh, that was in 2000. This one's burning a lot people -- a once in several generations event. They'll be shyer handing out money next time.

[Rufus T. Firefly]

Originally posted by DanS
I doubt anybody would give you a loan in 2010 or 2011 if you do a short sale.

Hey, DanS, you seem to be tracking this -- how far is the DC area going to fall? I'm looking to get into the market there in 2010.

[DanS]

It's tough to say. I was hoping for a bigger fall in my neighborhood, so that I could move into a bigger place. But I'm in the city (Logan Circle) and while the market is off its highs, my sense is that it's only about 10% off its highs -- at least in the resale market. Maybe a little more.

This is surprising to me, considering that much of the market in Logan Circle-ish areas is condos -- you would expect a bust after the boom (I can tell you some stories that are surreal -- and show you new condos and prices). There are factors that appear to be making some big cities more resilient. New York and Boston seem to be weathering the storm better than others. DC appears to be benefitting from that.

In the Washington metro area, the outer suburbs are being savaged -- the WaPo has dubbed it a "ring of fire." The tipping point appears to have been when the illegal immigrants with Alt-A mortgages stopped making their payments. Apparently, some are moving home after an unsuccessful stab at the American Dream.

As you get closer to the center of the city, the prices are holding up better, unfortunately. Here's WaPo's article from several months ago that describes what is happening.

http://www.washingtonpost.com/wp-dyn/content/story/2008/03/23/ST2008032300183.html

Which reminds me. Aren't you going to be in town soon? I remember you mentioning a rental in DuPont. If you haven't been in DC in a while, you may be surprised at the changes.

[Dinner]

Re: Re: I got mine.

Originally posted by PLATO

Very unusual that the holder of a second would just bail like that.

Not at all. In the event of foreclosure the owner of the second doesn't get **** until the primary gets paid. That means he's going to get nothing out of a foreclosure so out of a short sell he might get a few bones thrown his way.

[Dinner]

Originally posted by Oerdin
It's kind of what we expected. The US remains in a credit crunch similar to the Japanese liquidity crisis of the 90's and we're into our third month of economic contraction. Those cities where lots of people own vacation homes (Florida, California, Las Vegas) are hardest hit because people are dumping their second homes/vacation homes in these resort areas.

When the economy is good these vacation areas go up the first and the fastest and when the economy is bad they go down first and the fastest.

I'd like to point out that my post here turned out to be very true. The job loses since January have continued for 5 straight months and now total almost half a million. The vacation cities are being hit hardest as people dump second homes while trying to hold on to their primary homes but I will go further and say the worst is yet to come.

The US is desperately trying to stave off a lending/liquidity crisis just like the Japanese did and we're using the same bailout tactics to try to delay the inevitable. We're going to end up with similar results though hopefully we switch policy faster then the Japanese and so our difficulties will be less protracted.

It's probably better to just take the hit and get it over with, no matter how bad, then to try to drag it out.