More encouragement - home prices stabilizing

[Greebo]

http://www.msnbc.msn.com/id/32184856...s-real_estate/

The Standard & Poor's/Case-Shiller home price index of 20 major cities rose 0.5 percent from April, but was still 17.1 percent below May a year ago. Thirteen cities showed monthly increases with the best results in Cleveland, Dallas and Boston.

In our own neighborhoods (home and rental property), we're a bit ahead of the curve, I suspect, because of our proximity to I-95 and the Washington DC area influence. We're up a bit more than half a percent in terms of home value.

I had read somewhere that investors have really started buying up the properties lately - so that indicates that they too believe we've gotten close enough to the bottom to start planning on the upswing.

Good indicators.

[Karen1]

home prices stabilizing here, not as many "reduced again" signs...LOL

but not many are buying here at all

[Denvergirlie]

You have to look at the bigger picture... and not just listen to MSM, but look at everything.

Investors are snapping up properties, this is a known.

Foreclosures are still rising, and will continue to do so as many, many ARM's have yet to reset. Unemployment is still rising, 10% or 20% if you look at U3 or U6 numbers. People are losing their jobs still left and right, they are not going to be able to make their house payments, foreclosures will continue to rise. People are running out of unemployment benefits too.

Investors will run out of cash to keep buying these properties and we all know that traditional lending is curtailed, leaving yet another glut of houses on the market which will further depress prices.

FHA is still handing out mortages with 3.5% down payment, but can use 1st time homebuyers credit to pay that 3.5%, so once again, a bubble is being created for people who really not not afford a house.

Interest rates are rising, inflation is climbing because the Fed keeps printing money, banks are not writing down their toxic assests yet are showing "profits".

It's a big house of cards still being built on top of the same foundation of sand. Sure it looks shinny and good, but when the accounting books are cooked, it's not a true picture.

I read a lot, and don't see a single point of poistive news regarless of what MSM says. MSM never saw this coming, they certainly can't now proclaim to see the end.

My .02 cents

[frugalfranny]

But they also said that the banks were really limiting on what they would lend to the investors so that will stop sometime soon.

Until we see a better job market I don't think I will feel too great. I want the businesses investing, not just the people that already had the money and are gobbling up 'bargains'..............SOON PLEASE!

[Greebo]

But they also said that the banks were really limiting on what they would lend to the investors so that will stop sometime soon.

The investors who are buying right now are mostly going to be paying cash, I suspect. If they are borrowing money, they're doing it at 7% with 20% down. I know THAT for a fact...

[Denvergirlie]

Yes, investor are buying with cash for the most part. When investor cash runs out, so will the buying glut right now. Also, must factor in that this is the seasonal uptick in housing sales, so any increases in houeing sales can be correrlated to the normal June buying season.

As interest rates continue to climb the amount of house people will be able to afford will drop. A monthly house payment at 4.5% interest is a lot different than a monthly house payment at 9% interest. So if they payment is higher due to interest, it means that the amount of house one can afford is less, thus further pressing down on the housing market.

Here is a great little read should anyone be so interested:
http://theautomaticearth.blogspot.co...d-context.html

[Greebo]

An interesting read, but he spends an awful lot of words up front trying to sell us on why its really the numbers this year vs. the numbers same time last year that matter... which isn't entirely true. After all, an increase in sales *IS* still an increase in sales, and while the numbers certainly AREN'T as good as last year, 2 things:
1) its better than going down, and

2) last year at this time, the numbers from may to june went DOWN in 08. And they went down in 07, 06 and 05 and 04 too. The last time they went up from may to june was 03.

This guy argues about how last year's numbers are important and dismisses the surge in June as "usual" but it hasn't been usual in 5 years.

So maybe I'm too willing to see the good news - but this guy is inconsistent with his own arguments while pointing out the bad...

[monkeywrangler71]

Foreclosure and inflation rates are both trailing indicators and only tell you where the economy's been, not where it's going. Unemployment rates are a great indicator of current conditions, but not a predictor, and the data tends to be lagging.

Recovery begins at the bottom, so yes things look their worst when they are about to get better. Just as downturns begin at the top and everything looks it's best when they are about to get worse. Stable doesn't mean your back at the top of the world, stable means you've hit the bottom of the well and are ready to start climbing back to the surface.

If someone wants to dismiss all positive indicators because they don't fit with their agenda, that's certainly their perogative. But the economy runs on perception and confidence, not statistics. So good news, right wrong twisted or straight, does have a positive impact. House of cards it may be, but people have been building that house and knocking it down nonstop since 1602, and this time is no different than any other.

[Telephus44]

I'm not seeing a real big recovery in housing for the next few years. Too many people still losing their jobs, thus losing their houses. Also, while we're past the biggest number of subprime ARM resets, Alt-A won't peak until 2010 and neither will a lot of commercial property loans. 40% of people that get loan modifications are in default again within 6 months. Investors are buying, but they aren't going to buy every house out there, or enough of them to stabilize the market.

I think that with the coming inflation, home prices will probably stay where they are, so they'll effectively be valued less but the prices will stay the same. But this is my view for 3-5 years out, not this year.

I do expect more "positive" numbers to come as people will believe all of the "economy is getting better" hype for a few more months, and the expiration of the $8000 first time homebuyer credit in Dec. will undoubtedly push up home sales for the rest of the year. But I don't put faith in it suddenly turning around for long.

[frugalwarrior]

I don't see real estate stablizing here until all the foreclosures are snatched up. And of course all the foreclosures will keep accumulating as long as people lose jobs. I know,I know Michiganders don't count because we lost our industry. But ground zero shows the most reality.