(coffeego)
Home prices continued to drop in November, according to the latest report that covers 20 cities across the country in its index. Out of those 20, 19 saw a decline, resulting in a 1.3% dip from the previous month in the index score.
CNNMoney cites the latest numbers from the S&P/Case-Shiller 20-city report, which shows that not only did prices on homes fall in a month, but they’re down 3.7% from a year ago. The peak prices were 32.8% higher in the summer of 2006, and we’re only hovering 0.6% above March 2011′s lowest prices.
“Despite continued low interest rates and better real GDP growth in the fourth quarter, home prices continue to fall,” said David Blitzer, spokesman for S&P.
The only city to post a gain in the index was Phoenix, where prices rose 0.6% in the month, but were still down 3.6% from the same time a year ago.
Many factors could contribute to the drop, which is surprising to some experts who had been seeing an encouraging amount of activity in the housing market.
Some sellers who were holding out are finally accepting the fact that prices likely aren’t going to go up anytime soon, contributing to the lower prices. It’s gotta go sometime, is the thinking here, and after three years of a recession, people are lowering prices just to get that house sold.
The increase in sales of properties in foreclosure could also be dragging the numbers down, as those homes are going for a song from banks who repossessed them from mortgage borrowers who couldn’t pay up.
Home prices post steep decline in November [CNNMoney]
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I don’t need to read this for proof. I’m living in the proof.
And I’m told that I should consider myself lucky to be “only” a couple thousand upside down on a home I had $30,000+ equity in just 3 years ago.
Not trying to be a dick here, but I think you are lucky compared to a lot of people who are more like 50k upside down. Doesn’t make it any less terrible.
Well, losing equity is a lot worse than just being plain old up-side-down.
If you’re way up-side-down and you don’t have a lot of $$ tied up in the house (low equity %), then it’s MUCH easier (mentally, anyway) to walk away.
My neighbor, with a larger lot, just sold their house (that they’ve been trying to sell for 3 years) for $40,000 less than what we paid for our house. I was only a few thousand upside down, now I’m probably closer to 10-15, if I’m lucky. At least I have no plans to move in the next decade, so hopefully eventually I’ll get some equity again.
I live in an area that was suppose to be immune to the housing slump, but one of the newest houses in the plan just sold for over $30k less than the original sales price. That is almost a 10% loss.
Condos in my neighborhood are selling for (drum roll) $80,000 less than what we paid for ours. This is due mainly to a few foreclosures which are in terrible condition but they’re bringing the comps down. But the other problem is contractor auctions – large condo buildings were not 100% sold so the contractor holds auctions on the leftover units. Why buy a lived-in unit when you could spend $80,000 less on a brand new one?
One of my friends put 60k down, basically cashing out 10 years worth of his 401k to do so. A few years later his job transfers him to another state and he tried to sell his house. He still owes like 1k more than what the house is worth in the market. Major bummer.
I’m upside down by around $125k. I bought in late 2005. I’ve been rejected for two jobs because they couldn’t afford to relocate me and I couldn’t afford to pay the lost equity.
It’s gotta go sometime, is the thinking here, and after three years of a recession, people are lowering prices just to get that house sold.
————–
Rent that shit out until the economy gets better. That’s what I’m doing.
Same here. I was fortunate that I could have sold and broke even after 11 years, but we opted to become landlords. So far the experience has been headache free and as long as it stays that way and we are covering our costs or making a profit we will probably remain landlords.
Those home prices need to keep falling so people can afford houses again.
Right. The numbers may disappointing to Realtors and incumbent property owners, but real estate needs to be affordable in order for the whole system to work.
Yup. I just purchased a house July last year – which was originally listed at $150k. I offered them $135 and they balked, but the appraisal came back at $138 and that’s what we got it for.
Win win
I am fully aware of this, but it stills hurts and depresses me whenever I see how big of a hole I’m in with my house…
The other day, my friend asked if we could find out how much her aunt’s townhouse is valued at, and we looked it up on Zillow. Her place was valued at about $470k, and my friend exclaimed, “Oh, that’s it? That’s not that much. She bought it at $400k.” I was quite furious with that, I told her that’s more than 15% increase in value — I lost more than 15% in value on my house and millions of homeowners are underwater. I am not sure how she is that capable of being so ignorant of what had been going on with the economy for the past 3 or 4 years, especially when she was engaged to a man who would have been better off declaring bankruptcy and walking away from his home. Yeah, I guess I’m just mad at her for being so ignorant and I shouldn’t. But at times, it feels like a slap in the face when someone is completely unaware of what people around her are struggling through.
I hear you – a friend from high school was telling me she’d make money on the house she bought in 2007. I was like “Are you sure? Foreclosures are bringing the value down everywhere” and she insisted there were no foreclosures in her area because she lived in a nice neighborhood. I had to show her how to look it up on Trulia and she discovered that in her zip code there were, in fact, 47 foreclosures. But she had just no idea and was convinced that she’d be immune from this because she bought in a “good neighborhood” and they didn’t own a McMansion – nope, sorry. Everyone is affected.
Maybe she bought it 10 years ago? Then it all makes sense for the price to be higher than what she paid for. Also, she doesn’t have to feel bad for people who are under-water. People just made bad investment compared to the ones that did. Those who bought early and got out by 2006 made lots of money. Those who got in at 2006 lost a lot of money. That’s how the market works. Should we take the money away from people who made money and give it to those who lost money? That makes no sense.
“Should we take the money away from people who made money and give it to those who lost money?”
No, but people don’t need to be callous assholes about it. Run along now and enjoy the fat profit you made off that 2006 property sale.
+1 million
She could have bought it 10 years ago and so that’s how she paid less than the current market value (even after the drop in market value the past few years). But for my friend to moan over how her aunt might only be able to make a relatively small profit, when she was fully aware of how people around her are struggling is ignorant and insensitive.
Sure, there are many families that made bad decisions, but not everyone who bought a house did it recklessly and expected the market came crashing down like that. They — we are still in a very difficult situation. We are paying our mortgage diligently every month, but to realise that the value comes down faster than what you’re building into your equity is still extremely stressful and depressing.
Zillow is typically 4-6 months behind on values. My neighbor’s house sold a month ago, still not updated on zillow, which has the last listing price, $10,000 more than the sale price.
It’s not the most accurate pricing since it’s a bit behind, but we just wanted to get an idea of how much the place is worth on the fly.
If you bought a house as an investment, your investment lost some money. Not much, really, compared to the daily baths people take on wall street.
If you bought your house as an escape from the landlord, and to enjoy lower payments than rent, then you shouldn’t be worried.
If you did neither, you made a poor decision.
So on your planet people only buy houses to grow their money or to get out of the rental racket?
Yeah it’s a real “poor decision” to buy a house simply to have a damn roof over your head. Just because you only see black and white doesn’t mean other people aren’t in the grey.
‘Yeah it’s a real “poor decision” to buy a house simply to have a damn roof over your head’
Which is exactly what getting out of the rental racket does for you. Of course, being a renter does it for you to. You should decide based on the benefits of home ownership and the cost of it vs. the cost of renting which is the better decision for you.
If you treat it as anything but a choice between purchasing as an investment or purchasing it for the purpose it’s built for, you are an absolute idiot and you DESERVE to have the money vacuumed from your wallet as a lesson in economics 101.
Not everyone rents before they buy a house jackass. What is so hard about that concept for you?
I’m not sure how that is a valid argument.
You’re either renting or owning when it comes to housing, or you’re leeching (or you’re under 18 and therefore entitled, to a degree). Let me spell it out for the first two:
Renting — A good deal if you rent at a price lower than repairs + mortgage on a house, or if you need sudden mobility (only if have a lease that can be broken).
Owning — A good deal if your mortgage + repairs are lower than renting.
In both situations, the price of the house only matters on the day you decide. In the case of renting, it also matters after the fact, since you have the option to buy. In the case of owning, the value of the house makes absolutely no difference, rather, the cost of renting is what matters. Unless rents in the city are going down (I have never witnessed that, but it probably happens once in a blue moon) you have a good deal.
The final sale price of the house ONLY matters in three cases:
– You’re dead
– You have found that rent is lower than your mortgage (In that case, I’d suggest you foreclose if your house price has dropped significantly and you’re underwater)
– You are moving to another place where house prices have gone up (In this case, you’d pretty much have to be leaving the USA)
#1 only happens once and you won’t care, #2 is very rare ESPECIALLY considering your mortgage payments tend to be fixed whereas rent goes up yearly, #3 could happen, but I don’t know that many people who emigrate all that often, so I’d like to think it’s rare.
Of course, I’m assuming you’ll need a mortagage. For those fortunate enough not to require one, they’ll need to work out opportunity cost on the money a house costs vs. rising rents.
I bought my house so I could stop worrying about rent and have a roof over my head
And build a cool lan center in the basement!
Our county thoughtfully completed a reassessment of property values in late 2007/early 2008. So we are paying taxes on home and land values from that time frame, and not since the market tanked. Our county government sees nothing wrong with this.
Same here, except 2006. I hate it like cancer.
Psst crispy…I have a question for you…you there?
*Yeah I’m here, but don’t tell my boss!*
*typed in whisper for some reason…
Could you do me a favor? Shoot me an e-mail to the address under my name in my profile…feel free to use a fake address or whatever…I have a question for you (no, it’s not personal in nature) that might be relevant to your interests.
Are you going to send me Viagra coupons or something?
Um…no? I mean, I can find some if you want them.
Oh hell no, I’ve got enough in my spam folder to have a boner for the rest of my life and I don’t even have the necessary apparatus. I’ll do it after work, the firewall here blocks private email sites.
Awesome…I appreciate it.
Yeah…in my mother’s case, they reassessed her property value last year and determined that it had increased by about $30,000, even though there is really no good reason for this development. Turns out that where she lives, property tends to increase in value when the local government needs more money.
My county does a reassessment every single year. Since roughly the same number of properties are roughly supporting the same budgets each year, it doesn’t matter — you still pay the same taxes unless your property was reassessed less than everybody else.
I tried to sell my house (paid $150K 18 months ago) to the city for the $235K they said it was worth, but surprisingly they weren’t very interested.
In all seriousness, I did go to city hall to inquire how they arrived at that amount. Talk about not picking your battles… They were unreceptive to say the least.
I live in Seattle- they need to keep dropping. Seriously.
Haha, Seattle is bad… but NYC is worse… those house prices are very high.
Yawn…, Until the local economy can produce jobs where the yearly income is approximately one third the value of a house/mortgage prices will continue to drop. The economy or job market simply won’t support the bubble prices of the last decade.
As a non homeowner, I say, GOOD. Makes it easier for me to afford one. Here’s hoping they stay down until I can scrounge up enough for a down payment.
same here. At 31 I’m in a place where I would FINALLY consider buying a house and the market is pretty good for buyers where I live.
Me, too! Fingers crossed it’ll happen this year.
I feel the same way. I’m a younger guy and for a while, there was no such thing as an ‘entry level home’ (in a neighborhood that wouldn’t get me shot).
While I’m sorry to those currently losing value on their homes, home prices were out of control especially for starter homes.
Just refinanced my house last month. Bought it two and half years ago and it has only dropped $1,000. But of course that is not counting the 8,000 tax credit i got
That’s the sunk cost fallacy. If you would consider buying a property at the price you could sell it for and then rent that out until the price goes up what you’re suggesting is the right move. Becoming a landlord could be the right move for you, but it’s probably not the right for most people.
Comment above in (failed) attempt to respond to the idea that those looking to sell at a loss should become landlords. Sorry.