Housing Prices Still Plummeting

By Big Tent Democrat, Section Economy
Posted on Tue Mar 31, 2009 at 09:58:44 AM EST
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Via Atrios, the Geithner Plan to pretend "legacy assets" are not actually, um, toxic, will have to be a long term one:

Home prices in 20 U.S. cities fell 19 percent in January from a year earlier, the fastest drop on record, as demand plummeted and foreclosures rose. . . . A glut of unsold properties may keep prices low, shrinking household wealth and damping spending. Still, sales of new and previously owned homes rose in February, indicating the housing slump, now in its fourth year, may ease as policy efforts to unclog credit and aid borrowers begin to take hold.

“There is still a lot of downward momentum,” said Michelle Meyer, an economist at Barclays Capital Inc. in New York. “We don’t think we’ll see a bottom in home prices until the second half of next year. The decline in home prices will continue to depress household balance sheets.”

It will also depress the value of those "legacy assets" Geithner is so sure are underpriced.

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Housing Prices Still Plummeting | 68 comments (68 topical)

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And those mortgage backed securities (5.00 / 5) (#8)
by Militarytracy on Tue Mar 31, 2009 at 10:49:12 AM EST

that Citi and BofA just bought on the secondary market were a great deal because they were undervalued :) Houses aren't worth spit without stable middle class jobs, and mortgage streams are worth about as much as a urine stream without stable middle class jobs. But my whining and b*tch*ng grows tiresome and for that I'm not sorry Obama and friends.

Not tiresome to me, MT (5.00 / 4) (#10)
by Cream City on Tue Mar 31, 2009 at 10:54:15 AM EST

as you have a way of cutting through the clutter to the concise points not always made elsewhere, with a useful perspective plus passion and panache!


: Thanks for dealing with my (5.00 / 2) (#12)
by Militarytracy on Tue Mar 31, 2009 at 10:56:21 AM EST

daily and sometimes hourly yammering and ranting.

You are absolutely right (5.00 / 5) (#59)
by esmense on Tue Mar 31, 2009 at 02:21:55 PM EST

Unfortunately, the financial interest that most influence economic policy see good middle class wages as "inflationary." It is in their vested interest to believe that the cure for the economy -- the most necessary thing to get houses and cars selling again -- is mostly a matter of "getting credit flowing again," that is, more easy credit, more (for them, profitable) consumer debt, rather than more jobs at higher wages (and greater savings rates -- that is, money they will be asked to pay interest on rather than debt they will collect interest from).

What is best for the financial markets is no longer aligned with what is best for average Americans and the economy overall.


: Good to see you back (none / 0) (#61)
by cal1942 on Tue Mar 31, 2009 at 02:52:27 PM EST

esmense.

not tiresome to me either. (5.00 / 1) (#68)
by cpinva on Wed Apr 01, 2009 at 01:35:42 AM EST

low housing prices and ample, low rate credit mean nothing, if no one is employed. zero income still means zero ability to buy and support a house.

apparently, the blatantly obvious seems to still escape our titans of financial intellect.


Since our housing "bubble"... (5.00 / 1) (#9)
by MileHi Hawkeye on Tue Mar 31, 2009 at 10:52:15 AM EST

...did not inflate as much as other places, the downside isn't as bad as some are experiencing.

From the Governor's Office...

Our home foreclosure rate is stabilizing and is lower than many other states. Our home values have declined a little, but they haven't plummeted as in many other states.

The report shows, re Denver (5.00 / 2) (#14)
by Cream City on Tue Mar 31, 2009 at 10:58:06 AM EST

that "faring the best" -- of 20 metros in the study -- "were Dallas, Denver and Cleveland with annual price declines around 5 percent in January."

But every region showed decline from last year, and when those "faring the best" are down 5 percent, it shows how different our worldview is this year.


here too (5.00 / 1) (#25)
by CST on Tue Mar 31, 2009 at 11:46:44 AM EST

to be honest, I think you see the difference where there was a big building boom. For example, the suburbs have been hit harder than the city, since there was more building in the burbs. Here in the city, prices went up, but we don't really have a lot of space to build tons of new houses. So the total supply didn't change as drasticly as it did in places like San Diego and Florida where people were building tons of houses - that no one wants now.


hm (none / 0) (#31)
by connecticut yankee on Tue Mar 31, 2009 at 11:58:32 AM EST

I read an article today forecasting that the new exurbs would become tommorrow's low-income housing. That many would revert to rental properties, similar to what happened when the cities died.

The article suggested that HOAs were already starting to welcome the idea of renters as its better than vacants.


: wouldn't be surprised (none / 0) (#39)
by CST on Tue Mar 31, 2009 at 12:27:53 PM EST

especially since this generation coming up seems more inclined to live in the city, and rising gas costs make it harder to live outside viable transit options.

The housing market here didn't inflate much (none / 0) (#15)
by Militarytracy on Tue Mar 31, 2009 at 11:03:40 AM EST

either because of all the three piece camo suits running around here. The military moves so much we buy houses reluctantly, and the only home prices I saw inflated were some fresh McMansion builds around here coming already attached to mortgage companies offering A.R.M.s. Likewise because the camouflaged are paid the same unexciting amount every 1st and 15th with boring predictability, the only houses that obviously slid into freefall were those same fresh builds I mentioned earlier.


The prices will fall... (5.00 / 3) (#17)
by Dadler on Tue Mar 31, 2009 at 11:10:29 AM EST

...until, in those places they are crashing, prices more closely (MUCH more closely) come in line with wages. You think average joe or joanne, in the next quarter century or so, even with half a brain cell and only one shoe on, is going to let themselves be sucked into another magic sounding mortgage deal for a giant dreamhouse? Home houses will simply be homes again, not mercenary objects of quick financial lust. As my friend in coastal North San Diego county told me recently, lamenting the diminishing spirits in his neighborhood, there is a big difference, BIG, between someone asking you 'how long have you lived in the neighborhood?' and 'when did you buy?'

Yes, our homes will become homes again (5.00 / 1) (#19)
by Militarytracy on Tue Mar 31, 2009 at 11:13:57 AM EST

Getting there is going to suck though


Yes (none / 0) (#45)
by squeaky on Tue Mar 31, 2009 at 12:57:33 PM EST

You think average joe or joanne, in the next quarter century or so, even with half a brain cell and only one shoe on, is going to let themselves be sucked into another magic sounding mortgage deal for a giant dreamhouse?

No question about it in my mind.


Agree (none / 0) (#48)
by Inspector Gadget on Tue Mar 31, 2009 at 01:01:43 PM EST

if they learned anything from this it is to watch the market signals and bail earlier.


they might, sure (none / 0) (#49)
by Dadler on Tue Mar 31, 2009 at 01:04:21 PM EST

but for the same kind of numbers to do it again, assuming the same kind of schemes and junk mortgages and delusions come around again even marginally soon, we still need another generation of births and aging and loss of memory to get there. but, i could be wrong, and the collective stupidity could be much greater than i am presuming. i look for another bubble. we had tech. houses. what's next? bananas? somthing, somewhere, will become the next great financial disaster, that we can agree on.


: I've been watching an area in (none / 0) (#50)
by Inspector Gadget on Tue Mar 31, 2009 at 01:07:13 PM EST

AZ for the past year. It gives all appearances of trying to get the same scheme going and appealing to the investors to buy up the foreclosed properties.

: In a generation or so (none / 0) (#63)
by cal1942 on Tue Mar 31, 2009 at 03:07:28 PM EST

expect the same stupid mistakes unless there is real reform. Real reform came in the 30s but the stupid seeped in again starting in the 80s and continued unabated for three decades.
Now, with evidence of stupidity in hand, the administration has decided to extend the stupidity.
Galbraith was right about the generational rhythm of stupidity but didn't live long enough to see another generation immediately discard the lessons finally learned and decide to continue the madness.

: I tend to agree (none / 0) (#66)
by esmense on Tue Mar 31, 2009 at 03:21:02 PM EST

waiting for the next bubble to save your deep in debt ass is so much easier, and safer, than standing up and sticking your neck out for better wages a genuine economic safety net, etc. Why rock the boat when you have a one in a zillion chance of winning the lottery or making a killing in the next ponzi scheme floated by your betters?

Homes "Rose" In February (5.00 / 2) (#22)
by BDB on Tue Mar 31, 2009 at 11:41:49 AM EST

is at best spin and at worst intentional misinformation designed to mislead people into believing Feb. home sales showed improvement.

While the sales were higher than sales were in January, that's always the case because home sales are cyclical (Jan. is always the worst month of the year). The spin fails to acknowledge this yearly occurence, merely comparing Feb. sales to January sales as if a rise from Jan. to Feb. is meaningful when it is not (happens every year and does not mean anything in terms of the overall health of the housing market). The correct comparison, which takes into account the cyclical nature of home sales, is year to year.

When the correct comparison is used, the alleged "rise" is sales becomes a fall in sales. For example, new home sales fell 41% in February when compared to a year ago (horrific is the adjective Ritholtz uses to describe the fall).

Yet, as Ritholtz points out, that's not how the media reported it or refers to it.

Saw a similar article last week (5.00 / 3) (#27)
by Inspector Gadget on Tue Mar 31, 2009 at 11:49:46 AM EST

but the message was new home construction was up. Same scenario....against January numbers, but way down from Feb 2008.

One really needs to learn how to follow their own instincts and question every single word published in the media these days.


funny (5.00 / 3) (#28)
by connecticut yankee on Tue Mar 31, 2009 at 11:51:54 AM EST

Good point, reminds me of the global warming skeptics who tout the ice returning to the poles...every december. It's a miracle!


Do you ever wonder who decides to do (none / 0) (#24)
by Militarytracy on Tue Mar 31, 2009 at 11:45:30 AM EST

these spins and where and why? I never bought wag the dog much but this is too pathetic to entertain the notion that someone thought that was a story line.


: The storyline (none / 0) (#64)
by cal1942 on Tue Mar 31, 2009 at 03:11:58 PM EST

is that Obama is wonderful and gee, look an improvement already.

Were in a death spiral (2.00 / 1) (#32)
by SOS on Tue Mar 31, 2009 at 11:59:43 AM EST

Taxpayers are bailing out Ford and GM and now Ford and GM are going to make car payments for the newly unemployed?

: Good thing so many people have been (none / 0) (#38)
by Inspector Gadget on Tue Mar 31, 2009 at 12:25:37 PM EST

relieved of their mortgage payments so they can give all the rest of their money to the bailouts of the really, really big companies who behaved irresponsibly.

: Citation, please (