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Subscribe to RSSFive years after U.S. home prices peaked, overall expectations for the nation’s housing market are still dim, according to a survey of economists, real estate experts and investment strategists.
Although some local real estate markets are stable or strong, more broadly, fundamentals in the U.S. housing market remain very weak, despite record-low interest rates, according to the results of the September 2011 home price expectations survey, issued by financial technology company MacroMarkets LLC.
The report, compiled from 111 responses of a diverse group of economists and other experts, found that home prices are expected to grow at a mere 1.1 percent nominal average annual rate through 2015. The findings are based upon the projected path of the S&P/Case-Shiller U.S. National Home Price Index over the coming five years.
The gloomy outlook for national home prices has also been impacted by other factors that are shaking economic confidence globally.
“Markets and government institutions are visibly struggling to respond consistently to an unprecedented rash of crises and conflicts,” Robert Shiller, MacroMarkets cofounder and Yale University professor of economics explained. “These struggles diminish confidence, which compounds the underlying economic stresses and lowers expectations.”
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It really is too bad that the U.S. government can't be part of the solution, rather than part of the problem
Government guaranteed mortgage loans fueled the housing bubble. The implosion of the housing bubble is gradually returning housing prices to the 1990 levels despite the $2trillion attempts by the government and the Federal Reserve to prop up falling prices. As the 2nd Recession begins in 2012, the Double Dip, more foreclosures will flood the housing market. The beginning of the race to the bottom has just started.
"It really is too bad that the U.S. government can't be part of the solution..."
The real shame is that Americans have brought this on themselves. Evey Chinese product you buy brings us one step closer to third-world status.
bitch bitch bitch
We are still at bubble prices. We can continue with government policies to postpone it a bit, but eventually prices will fall. My suggestion is to get government out of the way and let the crash happen. Then we can pick up the pieces and happen again. If we keep on our current path we will be like Japan with a lost decade (or 2).
Get the government out of the market .... let the banks foreclose (yes it sucks for those who lose) ... but only then will the market bottom out and begin to return.
All this BS about loan assistance does nothing ... and isn't fair to those who are sucking it up and paying on their underwater homes. At least if the market was at bottom, the only direction would be up! Then those who are underwater could have hope the surface isn't far away.
Or the banks could write down their losses already and get on with it...but that would weaken them even more, and besides why should they pay for making lousy decisions about securitized mortgages when they can hold out and make someone else pay.
The problem is that we are in that situation pretty much now and banks won't foreclose fast enough - they lack the staff, they lack the ability to get the paperwork done properly.
Homeowners try to (usually wrongly) hold out for as long as possible - they deplete everything they can only to drag out the process when they should do what any company (including ironically enough the Mortgage Bankers Association when they had a loan that was upside on a property) and just walk away and take the penalties as outlined by the contract all of the parties agreed to when the loan was made.
But since banks don't really care to get this issue behind them, and homeowners drag this stuff out trying to save a house - the only real solution that would offer any speed is to somehow restructure mortgages to avoid foreclosures - but yes then investors could take a hit.
So the answer is either speed it up or keep it as is and no one will be happy.
Rob, I enjoy my home and where I live. I put 3 children through the school system, and I now work at a local elementary school. My job got cut through no fault of my own. I have 2 part-time jobs, and I am looking for employment on the weekend. I am going to fight with everything I have access to so I may keep my home for as long as I want.
The way the system is working the 'losers' often get to live in the house 2-3 years without paying a dime. Pretty good compensation for their trouble. Many moved in with $0 down.
So much for the poor downtrodden.
If someone thinks housing prices are high please go to a building supply store and check out the prices. If you can't afford a house live in a rental and take your chances with your neighbors. Or use a car payment calulator. $25,000 car put $5,000 down and finance the taxes and fees at 1.8% for 60 months. Monthly payment at $500 and then full coverage insurance at $200 a month. The $700 doesn't include the warranty costs. 3-4 years later your upside down. You owe more than the car is worth.
Yank-957120....So what is your point ? BTW your car analogy makes no sense. Since when does insurance get factored into a car loan ? That is a separate product. If you finance the taxes of course you are upside down, they add no residual value to the car. Who did you expect to pay your sales taxes and DMV fees for you ?
Your master plan seems to be working, Mr. Obama.
There was a time when a house was a home and a consumable, depreciating asset. Not a source of income.
The days of common sense are behind us though, and it is illustrated by the fact that reporting is still slanted towards hoping that the cost of housing INCREASES instead of DECREASES to levels that match wages. Once again the greed of everyone who overspent and those who miss their imaginary 30% annual home "value" gains outweigh reality and the hopes of anyone who may ever want to purchase a house in the future.
What year was that twix? There are 85-90% of homeowners who have absolutely no problems with their home situation at all. And I am not in real estate. I've raised my family here since 1992 and the only thing that ever scared me was the nitwits in the mortgage-Banking industry and the realtors for destroying the industry because of their GREED. The Real Estate sales people have not learned a thing since 2008. Now they fashion themselves to be interior designers and landscape architects. Sell yourself and get a closing attorney. Oh, if you believe what you just said, don't use the mortgage deduction.
In the early 1900s, a house buyer had to save a substantial amount of down oayment to buy a house because banks would risk a large mortgage for more than 10 years.
As holding large number of mortgages were risky, banks sought ways to limit risk while maximize profit. After the banks persuaded the government to guaranteed the mortgages, they began to offer 15, 20, 25, and 30 year mortgages. Later in 2000, the banks invented the NINJA loans (no income no job adjustable).
With the apparent low monthly mortgage payment in a 30 year mortgage, Americans foolishly paid increasingly higher housing prices in the expectation of real estate appreciation as propagandized by the National Association of Realtors.
Gradually over time the banks and government created unaffordable housing market for many Americans; forced unwilling domestic spouse into the work force to qualify for a mortgage; and creation of housing bubble that ultimately imploded into the Great Recession.
Americans are so accustomed to the 30 year mortgage that they do not realize the banks have enslaved them as indentured servants. To qualify for a mortgage for an over-priced house, mothers are pressed into the work force under the guise of "women liberation" propaganda when the truth is that real liberation means having the choice not to be enslaved to a long term mortgage. But Americans are like sheeps, believing their government and banks have benevolent purpose. In reality, they are fatten them up to gorge them for 30 years.
FatCatGets$700Bil....A lot of truth in that. I am not sure they set out to make that happen, but it certainly was the result..
Greed in Real Estate business is the cost we are paying. If the interest rates are as low as is been reported, and there are over 75% of homeowers not in trouble as the previous writer suggested, why are they not taking advantage of the low interest to refinance? Depending on where you live, look closly to refinancing fee. what value is there for you to pay huge refinacing fee for another 30 or 20 or 15 years? If fed wants to spur the houseing market again, they should make banks take off refincaning fee completely so people who really want to refinance can do so with the low interest rate. Banks backed up Real Estate Greed in the begining so both should swallow the bitter pill togather.
its taken them years to get us where we are today. do you think they really want to fix it? a privet enterprise has ended up owning millions of homes and business just by shuffling interest rates. any property loses were paid off by tax payers. when banks give loans to anyone regardless of their ability to pay off THIS IS WHAT HAPPENS.
We haven't bottomed out yet because banks, Real Estate agents and local/ state/ federal governments are trying to prop up housing prices. Governments don't want the value of homes to depreciate because they will lose taxes in property/ home values. Banks and real estate agents would lose even more money on property they own because they were charging too much for it to begin with.
The average house owner would see house values drop further, meaning they lost a lot of money on a house they paid off or they will go underwater owning a house that isn't worth as much as their mortgage.
If homes were to actually go down in value like they should have- there would be amazing bargains for first time buyers. Maybe rent would go down in areas with lots of vacant homes because of the competition of cheaper mortgages.
As far as I am concerned, they will bottom out eventually- because the market shows no signs of recovery. It's just a slower process of flattening out.
Interesting comment. I was just looking at my mortgage statement last night and though my house value has gone down over 50% in the last two years, my property taxes have actually gone up a total of 2.5% over the same time (after a 4% decrease this year).
The one problem with living in a rental is when the landlord defaults on the house you're living in...then you get tossed out on the street often with no recourse. Rental apartments (which I think you are alluding to) are very hit and miss, and, yes, you have to hope your neighbors aren't crackheads or prostitutes.
Maybe if Obama will stop demonizing banks, will get his regulators to drop or at least lower that requirement that they put aside 13% for every loan they make, and will call off his Justice Department who is presently suing them they can begin to make loans again.
Regulation is surely a part of it, but during the boom, banks were highly leveraged at their own doing. When it all unraveled, they met their demise.
The 13% may be an overreaction, but we somehow need to make sure this doesn't happen again.
Housing has shrunk for 12% of the economyto 4% and in some cases less. This is not necessarly because themarket is over biuilt although is some areas it is because of reckless optomism that defied market realities;rather that no one canafford a house when theydon't have a job,or if they have it's uncertain.
The real bad housing market is still the Southwest-Arizona,New Mexico, Southern California, Nevada and Florida. They are not likelyto recover soon because most of thejobs were construction jobs that piad well.
There are areas of growth-North Dakota for exmple has hosingf shortage due to the oil boom withthe new oil rigs coming on line.But areas like this are veryrare in today's economy. Unlying this is a demgoraphic shift-more people are retiring, but not moving to the sunbelbt because of depressed local markets making it harder to sell their current house at a price that would allow a move elsewhere.
Combine that with fewer marraiges and fewer children being born the incentive for housing dissipates. If we add to the proposals like ending mortgage deductiblity that thesuper committee ofnthe Defict is now considering, one can see why the landscape looks bleak for housing inthe years ahead.
All of this has nothing todo with politcs. The closest thing to a politcalsolution would be thecreationof a national housing court toexpdite and resolve thef orclosure process whihc has clearlybooged down and is close to broken. Resouldution of these disputes wouod help clear out some of the uncertainty banks have and force banks to make decisions onwrite downs which they have so far put off. That's unlikelyto happen.
Given that, there is no immedate soluotion in sight.
And this is news to whom? The politicians or Wall Street?
Watermoon,
Demonizing Banks?? Chicken Crap!
The banks and Wall Street got us into this untenable position. But it must be President Obama's fault. Everything is in your eyes.
Your unreasonable loathsome comments on him are just an opinion. Try working with actual facts. Try blaming the entities which are truly responsible. It will be easier on your system.
It's too bad we live in the age of the problem and not in the age of the solution. Our parents had it so much easier!
Well our parent's solution was basically to take out loans that we would *hopefully* be able to repay....
I don't know what these economists are basing their opinions on, but haven't prices and pre-existing sales risen in the last four months. Perhaps it is a benefit to them to keep instilling fear.
The lead into this story is " still no bottom seen...."
I found it the other day. I got my shovel out and started digging. The bottom is in China.
I have no sympathy for:
1) Greedy banks that chucked out every common sense rule for lending they have used for the last 100 years.
2) Greedy consumers that thought a home was an investment to flip.
3) Self-serving government putting their nose in where it doesn't belong.
The loser was the taxpayer that bailed out everyone and got nothing back.
A different perspective.
1 I agree
2 Ten times as many homes have gone into foreclosure than should have. There were many that were very well qualified, that the economy took down.
3 The government should have stuck their nose into the banking industry and didn't. They should have had more oversight, especially when many loans were guaranteed by the taxpayer. This mess would have never happened had they done their job.
The real loser is all of America that lost over half of the value of all real estate. Probably i the neighborhood of 15-20 Trillion.
A way to help us out of this messy economy would be to re-do all outstanding loans! Only loans made in the last couple of years have low interest rates. I realize that the banks wouldn't be behind this because they are making tons of money off high interest rates when they are getting money for almost ZERO interest!
Just imagine the boost to the (who are still left) homeowners (consumers) if the loans were reset to somewhere around 3%. It would mean HUNDREDS of dollars in the pockets of these people every month. Some would save it but the majority would spend it in our economy!
More spending means more demand which means more jobs to fill the demand which means more tax revenue to balance our budget! More jobs means fewer dollars in unemployment, food stamps and welfare.
Well we can start by kicking the banks square in the a$$ then head on over to the three credit bureaus to continue the a$$ kicking.....
As long as we have banks unwilling to work with people actually looking to buy, and credit bureaus that absolutely not accountable for false claims on individuals reports we are going to get nowhere fast.
I litterally have have been working on my credit for about 8 years to get it to a respectable level, last June it was 720 which is pretty good. I had one false claim on my account and dropped 120 points in three months. I have even shown that it was a false claim and still its not being repaired.....no accountability.
I make around 75k a year, my girlfriend makes 90k(with a 805 credit score) yet we were turned down for a loan last April in Florida? We are finally in a situation where we have been preapproved for a loan, and we look into buying a short sale home(One of the many homes that are about to go in foreclosure). Guess what? 6 months later bank denies the offer(which was very close to the asking price), never says a word and we are stuck starting over again. Do the banks really want the housing market to recover? I dont think so at this point.
Florida Bound....Your story is a common one. Banks do not want to approve short sales because they would have to book the loss ( that is already there but not showing on their books ). They have the non performing mortgage on their books for full amount and do not want to show the loss. I have a condo in a nice dvelopment where banks are turning down ( or refusing to respond to ) short sale offers that are at market value. They then refuse to finalize the foreclosure, because they would then be responsible for association fees for a year. I wish I owed more on mine than I do, then I would just walk away. I feel like a fool for putting down a down payment so that I still have a little equity left even after the value has plunged over 70% !
Humansmatter,
OK how about Clinton, Frank and the Community Reinvestment Act.
Tx
You forgot Waters,Dodd,Carper,Meeks and Davis. Just to name a few more
common folk-1064472.......The banks are the ones dragging things out. They won't finalize foreclosure or accept short sale offers because then they would have to book the loss that is in reality already there but not showing. By booking the loss they would show the true weakness of their finances, and worst of all, the bankers might not get their big bonuses that they earned by making bad decisions !
John Morcan- you are exactly right. If you are not buying made in the USA goods, you are not keeping your fellow countrymen working. ATTENTION WAL-MART SHOPPERS, look at the crap you are buying and where it"s made
It will not bottom out until the government gets their hands off of it and lets the market prevail. The losses are big, but the banks deserve to lose because of their poor lending practices. What is sad is the number of homeowners going under through no fault of their own. But there is risk associated with real estate and it was time for everyone to recognize the consequences of getting in too deep.
I for one will never get a jumbo mortgage. The only ones that win with those are the banks that should never have underwritten them to begin with.
Big banks don't lose and that is part of the problem. They need to be broken up like in the 30's with glass stegal act. It needs to be reinacted and we need to kick out congressmen until this happens. They passed so called reform only by moving the deck chairs and giving the banks a boat load of cash from the tax payer. That's why inflation is 4% right now and rising. All we have is corruption starting with obama, bernanke and geitner. They are not going to get it figured out until complete failure and legistlation changes it. If the government had any market savy and intention of saving the market but only friends of bernie.. They would have figured out how much each homeowner lost as percentage and wrote each indivual bank a direct check and let the banking system fail.
The housing market is not going to hit the bottom in the forseeable future-until our economy comes back from China, which is probably never because we are going to be a Third World Country or 1984 is here. Signs are here-reporting on Tahir Square , but VERY little on the protest on Wall Street-scary. Where is the media that is supposed to protect our Democracy ?
The housing market will bottom out when middle class buyers start paying cash.
This crisis started in 1978 when we began to grant loans to people who were not qualified. Expansion of the program over decades kept adding false value to housing, and increasing the pool of unqualified buyers. Eventually, ecomomic conditions and the now greatly expanded pool of unemployed and under employed, along with the folks who would have eventually failed formed the perfect storm. And there you go. Poor policy started it, and the "Deep Obama" we are now in finished it. Real estate will be "nowhere" for probably 7-8 years, no matter what happens next. It could get much, much worse if the Moslem in the White House gets 4 more years to screw with us.