Comments on: Home Prices Tumble at Record Rate — Now What?

By: gerryf

gerryf — Wed, 27 Aug 2008 11:24:24 +0000

While it’s true say that the value of your house does not affect your monthly mortgage payments it does affect a family’s ability to stay in your home. A real solution for some over-extended families being tossed from their homes would have been to refinance–however, banks will not refinance you if the value of your home is now lower than the amout you owe.

I, too, feel no sympathy for the investors and speculators who took a knowing risk, but I do feel for the millions of individuals who were misled into believing they could afford more home than they really could, and were doubly cursed with ARM deals, ballon payments and other nifty financial tricks put forward by unscrupulous lenders who were flipping loans as quickly as people were flipping homes.

By: Tully

Tully — Wed, 27 Aug 2008 02:56:34 +0000

As I said, wj, the sales volume indicates that it mostly reflects must-sell transactions. Bottom-fishing.

By: wj

wj — Tue, 26 Aug 2008 21:21:38 +0000

Before jumping to any conclusions about this, I’d want to know: to what extent is the price being reported reflect homes which have been foreclosed and are now being sold? That can move the market price for everything else, of course. But claiming that home prices are falling is going to be closer to reality if those foreclosed houses themselves are left out of the average prices.

By: kranky kritter

kranky kritter — Tue, 26 Aug 2008 21:16:32 +0000

I do feel bad for the regular folks who had the misfortune to buy at the top of the market. Not so much for the folks who used home equity as an ATM. Sadly for many, the price growth had reached bubble proportions, and now the bubble has popped.

Prices must go down until a more reasonable equilibrium is reached, one that has squeezed out speculators and flippers. I tend to agree with Tully. The stories I have read about my region have suggested that while prices are still falling, the number of houses sold is not that concerning. In other words, prices are going down because the perception of values has changed, but other than that the market is still functioning. It can’t finish bottoming out and begin to bounce back until asking prices come in line with the ability of prospective purchasers to buy.

Let’s not forget that in the old market, for every owner who was getting rich off appreciation, there was someone with pretty decent income who wanted to buy a house and really couldn’t afford to. And now, for every person whose equity has gotten hammered or is negative, there’s someone who can now afford to buy a house. The market balances out when the relationship between the bid and ask prices narrows. And that’s what’s finally happening.

Tully is right. It’s about accepting reality. And the reality is that even though “the economy” is not in a recession, the combination of decreased equity and higher prices mean that many Americans have experienced a substantial decrease in accumulated wealth and an unpleasant change to their relationship between income and expenses.

By: Tully

Tully — Tue, 26 Aug 2008 20:44:56 +0000

This is actually a sign of the market truly bottoming out, and people reaching acceptance of reality. Volume sales of existing homes were down, what’s being sold are must-move properties.

By: mw

mw — Tue, 26 Aug 2008 20:35:58 +0000

"Weâ€™ve already had gas-price demagoguery, I hope we donâ€™t have the same for housing prices." - ASC

Not to mention the incredibly stupid "lets borrow another $150 billion from the Chinese to be repaid by our children and grandchildren so we can each have an extra $600 in our wallets" stimulus package. This is why I fear Presidential election years.