As you can see, housing prices are supposedly back to where they should have been before the housing bubble began to form. What that means, nationally, is that if you bought a house before 1998, you did OK, but if you've bought a house in the last ten years, not so much.
Those, of course, are national figures. Adjusted for inflation, housing prices in Las Vegas are lower than they have been in over 20 years. Some other areas aren't so bad, but you still have to have held your home for nearly a decade in order to break even (unless you were one of the lucky ones who sold out for big bucks and then rented).
I mention the above because of this story in today's NY Times, which indicates that the banks have a shitload of properties on their books and millions more to come. Bank-owned properties are often not maintained very well. If the banks are willing to deal, those homes can be reasonable deals for buyers. But for other sellers, those foreclosed properties push down the market.
It's not just a matter of market economics. People who bought a home in the mid `00s (or who refinanced to pull cash out) may be stuck. If the banks won't accept a short sale, then homeowners are effectively chained to those homes, unless they either live in a state where mortgages are not personal obligations (they can "jingle mail" the keys to the bank) or if they declare bankruptcy and surrender the house. Even jingle mail may not be effective, as in most places, deeds have to be accepted to be recorded, so the homeowner is still on the hook for the property.
Short sales are no panacea. The homeowner basically ended up paying rent (the mortgage payment) and the downpayment, which they may have had to save for for a very long time, is gone (unless the property was 100% financed).
The housing market may have quite a bit further to slide.
And the concept of home ownership is now suspicious. There's no assurance for any homeowners, even those with paid-off houses, that a bank won't send thugs to stake a claim when you're out. Or when you're in.
ReplyDeleteMy credit is shit, but I wouldn't take a house now if a bank begged and begged, and paid me to move into it.
The other shoe has not dropped.
I'm sure there are quite a few banks that would go under if they had to account for the true value of their REO inventory. I've read that there are local government actions around the country trying to get banks to keep up their properties, so as not to blight neighborhoods, but I don't know if they are successful or not. There is still a lot of bad stuff to shake out of this housing market, and all we can do is sit back and enjoy the train wreck.
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