Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktAugust Case-Schiller came in at 142.84, down 3.8% from a year ago. Home prices are back to Summer 2003 levels. Certainly the chart gives no indication of gathering strength, if anything it looks like we have had a meager (at best) dead cat bounce off the bottom, and are now in a decling channel with lower highs and lower lows. Detroit and Washington DC were the only MSAs that were up while the worst performers were Portland, Phoenix, and Minneapolis. June and July numbers were revised down as well.
Certainly there is nothing to indicate strength in the housing market. We are going into a seasonally weak period and the consumer is in a foul mood as evidenced by the Conference Board Consumer Confidence reading of 39.8, which takes us back to late 08 / early 09 levels.
Obama’s new housing plan will probably be as successful as his earlier ones at stanching the decline in the housing market. It may help a few marginal homeowners stay in their home, but it isn’t going to do anything for troubled homeowners as they have to be current in their payments to refinance. As I discussed before, we have a demographic issue here, with the older first time buyer prematurely entering the market and the younger first time homebuyer not in a position to buy. That leaves the professionals, and they aren’t going to get interested in housing until prices are dirt cheap and we are not there yet. Against that, we have an army of baby boomers who need to downsize empty nests, or simply bought too much home and need to get out. The government is probably powerless to change this dynamic – all they can do is try and redistribute the losses.
Chart: Case-Schiller:
Filed under: Uncategorized |
All Things in Moderation 
I agree with your earlier assertion that BHO's modest refi plan is not a "re-bubbling" attempt. I only suggest that is what Lawrence Summers wants.
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Excuse my ignorance — the Y axis is price, right? If so, it would be very difficult to find a single family home in DC at the top of that price chart. "That leaves the professionals, and they aren't going to get interested in housing until prices are dirt cheap and we are not there yet."Where you do think they're going? 2002 levels? lower?
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Sorry to go OT, but saw this article on Perry's hiring of a couple of GOP ad designer knife fighters and thought this line from a source is priceless and hilarious:“Perry won’t just go negative. He’ll make your television bleed and beg for mercy.”
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It is an index, with the average home price on 1/31/00 = 100. Where will professionals get involved? Hard to tell. They need to be compensated to take the liquidity risk of owning real estate. My guess is they start nibbling down 10% from here. The shadow inventory of homes is around 4.5MM. The pros want to be there when that trades. So that might be 2002-ish levels. Not sure where we bottom though. Could go lower.
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"Home prices are back to Summer 2003 levels"I'd take that. I couldn't sell my house for what I bought it for in 2003 now, despite some improvements. Prices may be back to Summer 2003 levels (ironically, I bought my house in the summer of 2003) but home sales and the level of available buyers are back to Summer 2003 levels.
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Thanks for the clarification, Brent. I've been enjoying your posts on this issue.
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*are NOT back to Summer 2003 levels, I should say.
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"Thanks for the clarification, Brent.I've been enjoying your posts on this issue. "Ditto this is great.
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thanks everyone
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I don't think Obama's plan helps much of anyone unless they plan on staying in the house another 5 to 10 years. Short term they're re-financing a house that may go even lower so a decrease in interest with new 30 year terms won't really save them much if any money over the next couple of years and they'll still be in an underwater home. It would probably be better to walk away. Long term commitment makes a sense though and the lower house payments may help some get through a rough patch. I still think the bankruptcy courts would have been a better place to deal with all of this.
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lms — i'm not versed enough in this issue to comment too much, but i did see that those homeowners that walk away are facing "deficiency judgements"at least according to this WSJ article (no paywall on this one): http://online.wsj.com/article/SB10001424053111904060604576572532029526792.html
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"I don't think Obama's plan helps much of anyone unless they plan on staying in the house another 5 to 10 years."BannedAgain has some good commentary on this over at Ezra's blog:More complaints, quibbles and advice for Obama’s housing plan )The main thing to note about this plan is that by agreeing to the refinance, the banks eliminate any legal liability they have for problems with the original loans. "— David Dayen raises a different concern. What the FHFA is now saying is that banks who participate in the program won’t be forced to buy back their old loans, even if those loans were improperly originated. When Fannie and Freddie get sold bad loans, they normally can force the bank that originated the loan to take it back. Now, the banks can avoid that risk for a modest fee. Dayen argues that this move could weaken the FHFA’s ongoing lawsuit against 17 banks over this precise issue. “A mass refi plan like this may be worthwhile as stimulus,” he notes, “but as far as the rule of law is concerned it pretty much stinks.”"
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"lms — i'm not versed enough in this issue to comment too much, but i did see that those homeowners that walk away are facing "deficiency judgements""I believe this debt can be discharged in bankruptcy, but of course you would have to file.
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"but as far as the rule of law is concerned it pretty much stinks"oh that, no problem then.
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“Perry won’t just go negative. He’ll make your television bleed and beg for mercy.” OMG, that is hysterical. Texans will be Texans I guess. My daughter almost bought me a shirt on one of her trips with a big gun on the front and underneath it it said "We don't need no stinkin' 911".
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McWing–thanks for that link. You're right–hilarious!And, Brent–my thanks also for your postings and Morning Reports. Between you and John/bannedagain I may figure out this finance stuff sometime this decade! 🙂
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Hi michiJust an FYI, john gave up on plumline again yesterday, but he went over to Ezra's wonk blog instead of coming here. I'm still going to work on him although now that we have Brent, I feel we're already a little more well rounded.How are you? Isn't there a big storm coming in today or tonight? Youngest is on her way back to Denver from Houston late tonight and she's worried about getting in.
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Hi, lms! Yeah, I saw the news about John (I've been reading through the old posts to get back up to speed); I also saw Greg's pique about this site. Given that I read his stuff everyday but skip the commenting I don't think he's losing any page hits from me. If the WaPo doesn't care that the commenting software seems to be driving some folks off, and their Net Nanny is driving others off, well. . . so be it!Yep, had a major change in the weather overnight. Yesterday was 74 and sunny, today is cloudy and 48 and I think the front is moving in rapidly. It looks to me like it's working from NW to SE, so hopefully daughter will be safe and sound in Denver before it gets across the Rockies from here.BTW, didn't get run off so much as my boss had a major meltdown last Wednesday and has been running all of us ragged every since. . . but she's out of town for a few days now so the lab mice are playing. 🙂
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Now to come up with some ultra-leftie liberal post to drive Scott, qb and McWing crazy. . .Hmmmmmm. . . .
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"Now to come up with some ultra-leftie liberal post to drive Scott, qb and McWing crazy. . ."Good idea………….
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I have a new lease on life if you and MsJS are back………..yay.
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Oh, yeah!
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MsJS and Michigoose are back! Blessed be!
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