Home values are plunging. They just need you to believe they are rising for feel good reasons. The truth is that they are still falling. The only way they can sell homes down here in Wilmington NC is by auctioning them off. We recently had what was once a Million dollar home just before the Figure Eight Island bridge on Edgewater Road Auction for $322,000. People just want out and can't wait for home prices to rise so they can dump. I myself am waiting for them to come back so i can sell and where i live no homes have sold in over 2 years. Things are bad people, terribly bad. GL
here's what bernanke needs to do to stop falling home prices. It is so easy.
1. Set a target price for new homes 10% below current prices to allow for prices to fall further.
2. crank up the gold price
3. commodities follow, because all commodities are linked to gold.
4. keep cranking gold until commodity input prices plus labor = target price. There is no profit at this price.
5. housing now has a floor.
Done. Balance is restored and gold is repriced to what it should be. This isn't rocket science people.
Problem we have at current housing prices, there is still a profit. Retards are still building houses adding to the glut. Houses are still overpriced. We need to get rid of profit motive by increasing commodity costs dramatically.
It is reported that there is massive fraud in the $8000 new home purchase fiasco.
Notice that foreclosures are being ruled impossible, due to the bundling that they did... no way to trace the "real" lended... Judges ruling in favor of the buyer.
No job, no money, no buyers.
New home sales drop unexpectedly? Yah, sure, I expected them to drop, as i expect them to continue to drop, until they devalue the currency further. The only thing that will bring home prices back,(not values), is Inflation, double digit inflation. My view. Remember, an estimated 5 Million more ARM resets will put strain on another 5 Million American homeowners. This will leave over 20 million American homeowners owing more on their house than it is worth.
A talking head explanation of this that I tried to digest this morning was that the stimulus money had to have closings done by end of Sept. There were not enough lower priced existing homes to fill the "1st time home buyer" stipulation and you can't close on a new build till it's finished and that wasn't going to happen by end o Sept. if you just bought land and signed a contract for a new build.
While this MIGHT be a scenario to explain it, I question the lack of median or entry level homes as most of the signs I see around here are on those, NOT the $300,000 and up homes.
And what do you get for $300+?
Is the supply problem being "solved" there like it is here in parts of CA?
I'm referring to the tendancy of foreclosees to strip their homes. I saw one where they had stripped out almost all the inside, and were starting to cart away wood siding. They would have recycled the entire house had they not been evicted.
That reduced the property to land value only: $350k at the height of the bubble, $50k now. "Value in the permits" since you can remodel and rebuild with less red tape.
Home prices have popped up just a bit.
It is caused by two things. FHA mortgages with only a 3.5% down payment required, coupled with, the $8,000 first-time home buyers credit.
People were out in droves summer of 2009 buying homes with none of their money in them. All funded and backed by the US government. 100% financed loans compliments of the US government.
Some folks buying a very inexpensive home, end up paying nothing down, no closing costs, and end up getting cash from the government to boot.
Who wouldn't want a piece of that.
It just adds another layer of crappy mortgages to the already overly underwater financial firms.
When things get tough, mortgagees can just walk away from the property, or just stop paying and probably stay in the home for a year or so until the bank catches up with them.
Best of luck,
Houses became grossly overvalued relative to incomes. Incomes are not climbing so Bernanke's effort to keep home prices high is a fools errand on behalf of the banks books, which are being cooked by FSBI anyway.
New mid-market condo here was listed for $264K and now $178K. And, none of the banks will make loans on the property because they are less than 50% sold. Oh the irony!!!
New low-end 55+ condo here was listed for $118K and now $79K hasn't sold in three years despite continually dropping asking price.
Houses were incredibly overvalued relative to other assets. The fed is printing as much money as it takes to put a floor under housing. Therefor most other assets have to rise in value to relative to houses. Pretty simple IMO.