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Wednesday, November 24, 2010
As I have been predicting for quite some time (see: The Truth About Home Prices), housing prices are declining again in the aftermath of the second ill advised "first time home buyer tax credit" (should be renamed "Fool's Gold Part 2").
According to this article, FHFA Monthly Home Prices: September 2010, home prices have now fallen below their levels in September 2009. (The article states: "The FHFA monthly HPI are formulated from home purchase information collected from mortgages that have been sold to or guaranteed by Fannie Mae and Freddie Mac.").
As you can see by the graph above, the home price trend clearly shows that home prices are declining again. As a result of this further (and expected) housing price decline, there are going to be an elevated level of foreclosures, short sales and other distress sales over the next several years. Due to these issues, the overall poor economy, and the fact that home prices are still historically high, housing will not begin recovering for at least 4-5 years and even then price gains will be very modest.
Nashville and Middle Tennessee Short Sale and Foreclosure Help and Assistance for Homeowners and Property Owners in Financial Distress. If you are a Nashville Tennessee, Franklin Tennessee, Brentwood Tennessee, Nolensville Tennessee, Spring Hill Tennessee, Murfreesboro Tennessee, Smyrna Tennessee, La Vergne Tennessee, or Middle Tennessee homeowner, property owner, condo owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Nashville Tennessee and Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR, Expert and Real Estate Investor. I primarily help sellers (homeowners, property owners, condo owners, owners of high end homes and properties (estate homes, luxury homes and executive homes), real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Robertson County TN, Maury County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN, Belle Meade TN, Nolensville TN, Spring Hill TN, Gallatin TN, Springfield TN and Mt. Juliet TN). If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Nashville Tennessee and Middle Tennessee Short Sale and Foreclosure REALTOR, Real Estate Expert and Real Estate Investor.
Friday, April 2, 2010
According to this Real Estate Economy Watch article, Fear Seen Driving Prices Lower than Last 20 Years, the housing markets in most US cities "will see prices fall below the lowest levels of the last 20 years" according to the House Price Forecast from University Financial Associates (UFA) in Ann Arbor Michigan.
The article quotes Dennis Capozza, the Dykema Professor of Business Administration in the Ross School of Business at the University of Michigan, and a founding principal of UFA, as saying the "Detroit metro was the canary in the coal mine this cycle, with falling house prices arriving earlier than in other metros. Other metros that have already or will soon converge to pre-bubble real prices include Las Vegas, Phoenix, the inland California metros and many south Florida metros."
Overall, the UFA's forecast "would take the national median price of a home in most markets below $101,000, the national median in 1990, according to the Census Bureau." This prediction comes after other recent data which shows that housing prices are headed downward again. This will result in more short sales and foreclosures as underwater homeowners and real estate investors walk away from their upside down (i.e. negative equity) homes and properties.
Short Sale and Foreclosure Help and Assistance for Real Estate Investors, Home Builders and Developers in Nashville TN and Middle TN. If you are a Nashville Tennessee, Franklin Tennessee, Brentwood Tennessee, Nolensville Tennessee, Spring Hill Tennessee, Murfreesboro Tennessee, Smyrna Tennessee, La Vergne Tennessee, or Middle Tennessee real estate investor, home builder, condo developer or real estate developer who cannot pay the property/project mortgage payments (due to the poor economy, adverse financing conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), have already defaulted on the mortgage, or are already in foreclosure, or owe more than the property/project is worth, please contact me to discuss your options including a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/project). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN, Belle Meade TN, Nolensville TN, Springfield TN, Gallatin TN and Mt. Juliet TN). If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Nashville Tennessee and Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.
Thursday, April 23, 2009
Monday, April 6, 2009
Monday, March 30, 2009
- Government - The problems were caused by the relationship between Fannie Mae/Freddie and the Community Reinvestment Act (pushed by social agenda politicians (think Bill Clinton, Barney Frank, Chris Dodd, etc.). The result was that more and more high risk loans were made to financially unstable and under-capitalized borrowers under the guise of social justice.
- Greedy Bankers - Pushed by the government, bankers soon realized that they could make more money lending to unstable and under-capitalized borrowers as a result of being able to make more loans and charging higher rates and fees.
- Foolish Consumers - Consumers started viewing buying a home as an "investment". While that may sound good, the problem is that what most people classify as an "investment" is really noting more than speculation (i.e. gambling). As a result people took on more and more debt to buy bigger and bigger homes since they were "investments". In reality, the only investment part of owning a home is that in the old days you would buy a home and eventually own it free and clear instead of perpetually paying rent. Now, "homeowners" just perpetually have a mortgage which is not much different from perpetually renting other than you benefit if the price goes up and get hurt if the price goes down. This is made much worse by leverage (think 0-5% down mortgages). In reality, owning a home was never meant to be an investment other than you would eventually own the home free and clear and maybe get some appreciation, which would protect you from inflation (not 20-50% annual appreciation, but more like 3-7% per year). Owning a home was primarily meant to provide a lifestyle. People just had the common sense not to buy a lifestyle that they could not afford.
- Some recent real estate news shows existing homes sales up 5.1% and new home sales up 4.7%, but home prices only improved 1.7%. This is likely the result of more builders dumping their homes for cheap, but their median prices are still higher than resale homes so the overall prices went up a bit.
- Despite sales increasing a bit the number of homes in inventory increased for the first time since July 2008. This means supply will likely increase. Not good for prices.
- As soon as the general public thinks the market has improved there will be additional inventory added to the market as all those sellers that gave up on selling flood the market with their homes. Again, this will not be good for prices.
- The problem now is the absurd Obama stimulus plan, which will surely drive up inflation (and as a result interest rates) and drive up unemployment as investors and companies pull back investments (i.e. in start-ups, equipment, facilities, etc.) due to higher future taxes (necessitated by the huge government spending in the Obama plan) reducing their future returns. This is what will likely break the back of the real estate market in the mid to long term. So while prices may increase a tiny bit in the short term, in the long term they will suffer. As a result I do not see the real estate market rebounding back to the pre-2006 price levels any time soon.
Saturday, March 7, 2009
Wednesday, February 25, 2009
In Bloomberg Interview, Harris of Barclays Capital Says President Obama is doing the "Right Thing" for U.S. Housing
- Too much total consumer debt including real estate and non-real estate debt.
- A natural waning of housing prices after a "too good to be true" run up in real estate prices.
- A decline in the secondary market for debt instruments largely due to concerns about issues above.
- Swapping out all the residential mortgage debt held by US Banks (totals approximately $11.3 Trillion) in exchange for US Treasuries with a guaranteed yield of say 2.5% with provisions for the banks to sell of the Treasuries in controlled allotments in order to raise cash. Currently the total value of all US Federal debt is $10.76 Trillion. Therefore, this plan would essentially double the national debt. However, since it is really a debt swap the total of all US public and private debt would remain the same at about $53 Trillion.
- The Fed would then alter the terms of all the mortgages "purchased" so that all people current on their mortgages and have equity would receive a reduced interest rate of 3%. People who are current, but have no equity would receive 3.5%, people who have equity, but are delinquent (assuming they can pay the mortgage after the reduction) would get 4% and people who have no equity and are delinquent (assuming they can pay the mortgage after the reduction) would get 4.5%. Any people with negative equity would have been dealt at the time of the Fed's "purchase" of their mortgages since the Fed would be paying a discounted amount for their mortgages (i.e. the banks would take a haircut by reducing the face values of these assets). The delinquent homeowners with negative equity would also share the pain by agreeing to pay the Fed 10% of future home appreciation in order to make up for the higher rate of default.