GARY SHILLING: House Prices Will Drop Another 20%

[boink]

This is good news as I'm looking to buy a second home.

It will keep me from overbidding.
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GARY SHILLING: And Now House Prices Will Drop Another 20%

March 26, 2011

http://www.businessinsider.com/gary-...es-2011-3?op=1

[TheJoeFlaccoShow]

Awesome article. I noted in another thread the price drops that were happening over the last few months after we allegedly hit the "bottom".

[BS21213]

I don't know about other cities like the midwest but houses in baltimore (and rents) are way over priced. We can only hope housing prices decline.

Interest rates need to go back up to where they should be and then housing prices will go back down to where they should be as well.

[BS21213]

wow. that is some page!

[BS21213]

but don't look at it unless you want to be depressed!

[TheJoeFlaccoShow]

I know that is about as in depth as it gets! You can tell this isn't some knee jerk reaction that brought him to this conclusion.

[bmore_ken]

Awesome article. I noted in another thread the price drops that were happening over the last few months after we allegedly hit the "bottom".

Looks like it may be time for me to buy another investment property

[TheJoeFlaccoShow]

Looks like it may be time for me to buy another investment property

I would wait until next winter, we could be in a serious crisis right about that time.

[daravenator]

Just in the York,Pa market we have had pages and pages of sherrif sales the past 2 years. Everything I read in the article holds true in our market

[BS21213]

what is a sherrif sale? a foreclosure?

[ChiefWiggum]

I don't know about other cities like the midwest but houses in baltimore (and rents) are way over priced. We can only hope housing prices decline.

Interest rates need to go back up to where they should be and then housing prices will go back down to where they should be as well.

Interest rates rise and housing prices keep dropping too?

[TheJoeFlaccoShow]

Interest rates rise and housing prices keep dropping too?

That is how it works.....usually.

When pretty much your entire mortgage payment is interest the rates drive market values. Most people have a certain amount they can allocate towards a mortgage, and when the rates are low people can afford more house, hence values go up. When rates are high it depresses the market because you can't afford as much house, and values will decline or stay where they are.

But when a bubble bursts like it is now values aren't going up with ultra low rates, just look at the past 2 years when we have been at all time lows with interest rates.

This is why the Fed is keeping these rates at rock bottom, because if they went up in this market you might see price depreciation that would make what we have seen over the last 3 years look like a drop in the bucket. I can only imagine what the housing market would look like with rates at 6.5% or so, which honestly is STILL pretty low historically. The rates hovering around 5 is the only thing keeping this market from a complete collapse.

[daravenator]

what is a sherrif sale? a foreclosure?

yes, the step after forclosure is selling the home to the highest bidder

[BS21213]

Interest rates rise and housing prices keep dropping too?

yes. see the post 2 up for a good explanation.

[boink]

http://www.nytimes.com/2011/04/30/bu...0estate&st=cse

A Reversal for Real Estate After Some Mild Gains

By FLOYD NORRIS
Published: April 29, 2011

PRICES for both homes and commercial real estate are falling again. Meaningful improvement may have to wait until there are many fewer distressed properties for sale.

Indexes of the two markets showed this week that the latest declines had almost wiped out the mild gains the two markets had shown after prices appeared to have hit bottom.

The Standard & Poor’s/Case-Shiller index of home prices ended February 3.3 percent below where it was a year earlier, and just 0.5 percent above the low reached in May 2009. The Moody’s/REAL Commercial Property Price Index was reported to be down 4.9 percent over the last 12 months, but still 0.8 percent above its low, reached last August....

[Foxtrot]

i dont know, just today I read where homes in SF, Oakland, Stockton, LA, Boulder, and several others where selling in 50 to 70 days. A friend of mine in Oakley Ca listed his house for 150 and imediatly got three offers around 165.
Its hard to say what will really happen.

http://realestate.aol.com/blog/2011/..._lnk3%7C211647

[wayne florida]

i went to several auctions in the wv area, nothing sold the bids were to low.

[TheJoeFlaccoShow]

There is an auction set for the end of May in my neighborhood, I am very interested to see what it brings.

[boink]

http://www.bizjournals.com/baltimore...l-falling.html
Baltimore-area home prices still falling
Baltimore Business Journal - by Ryan Sharrow, Staff
Date: Monday, May 9, 2011, 11:05am EDT - Last Modified: Monday, May 9, 2011, 5:01pm EDT


http://online.wsj.com/article/SB1000...810406782.html
Home Market Takes a Tumble
Turnaround More Distant After 3% Drop, Steepest Quarterly Decline Since 2008


http://www.cnbc.com/id/42955097
Home Values See Biggest Drop Since 2008


http://www.marketwatch.com/story/hou...MW_latest_news
Housing crash is getting worse: report


http://www.bloomberg.com/news/2011-0...llow-says.html
U.S. ‘Underwater’ Homeowners Increase to 28 Percent, Zillow Says

[TheJoeFlaccoShow]

http://www.bloomberg.com/news/2011-0...llow-says.html
U.S. ‘Underwater’ Homeowners Increase to 28 Percent, Zillow Says

This is the number everyone should be watching, we are now closing in on 1 out of every 3 properties that theoretically could be walked away from at any time piling more and more inventory on top of the already saturated market.

That number was just 22% a year ago, and if the trend continues we will be at 34% in spring of 2012.