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Here's Why House Prices Will Now Drop Another 20%

Gina_W
13 years ago

Comments (11)

  • logic
    13 years ago

    20% may be the average...but some areas will see a much bigger drop...others, not so much.

  • ncrealestateguy
    13 years ago

    Everyone is guessing. House prices will level off when three things happen.
    1. New foreclosures coming into the market start declining.
    2. The unemployment rate starts declining.
    3. The consumer confidence starts increasing.

  • western_pa_luann
    13 years ago

    meh...
    in my area, housing did not drop 20% in the first place. So dropping ANOTHER 20% here will not happen.

  • logic
    13 years ago

    Same in our area..except for some that were WAY over priced at the outset.

    In addition, two nearby developments that were stalled for almost two years have started construction again...with each having homes under contract.

    Prices range from 500K to 900K.

  • brickeyee
    13 years ago

    Someone needs to remember that housing prices and markets are LOCAL, and the best that can be done on a larger basis is averages that do not tell anything about a particular area.

    South of me in Virginia there have been a lot of foreclosures.

    Almost none in my actual area, and prices have not declined significantly.

  • chisue
    13 years ago

    One of our neighbors lost both his bank and his home. There are lakefront homes on the market for peanuts -- but they are NOT SELLING. Heck, nobody's even looking. It's not just 'factory jobs' that are going away.

    Tell me please, why is the Dow up?

  • logic
    13 years ago

    chisue: "Tell me please, why is the Dow up?"

    Because it is no longer based upon any semblance of reality.It's all about speculation, shadow deals, naked short selling, hedging and manipulation..just for starters.

    When unemployment was at an all time low in '99, the Dow was around the same as it is now...

    Enough said.

  • brickeyee
    13 years ago

    "Tell me please, why is the Dow up?"

    The housing market is not the sole factor in the DOW.

  • earthworm
    13 years ago

    These averages have limited value and use. Logically, in prosperous counties/areas, the markets will be good. York County, PA,must be OK, judging from some indicators..
    I think home prices are determined by the bottom line - the greater the interest cost, the lower the house price.
    Remember the days of 10 to 20% mortgage interest?

  • chisue
    13 years ago

    logic -- Yes, I was looking at the spreading unemployment when I asked about the Dow -- and thinking about our neighbor-banker. If so many people are unable to pay their mortgages, why aren't more banks going under? Whoops! Getting off the forum topic.

  • brickeyee
    13 years ago

    "If so many people are unable to pay their mortgages, why aren't more banks going under?"

    The number of banks going under (and on the watch lists at FDIC) are much higher than in previous years and setting all sorts of records.

    Unless you own stock in the bank you are generally unaffected.
    The stockholders (and sometimes bond holders) are wiped out.
    Depositors have the FDIC to protect them, and most of the seized banks open within days as a new entity, often with the same employees but new owners and senior management.

    A Friday seizure by the FDIC often allows the new bank to open by Monday.

    There have been so may failures and seizures that even the FDIC is running out of money, and is starting to borrow from the Federal Reserve.

    Most banks that originate first mortgages immediately sell them into the secondary market (Freddie and Fannie, who have GONE BROKE and been taken over by the governement).

    Only the largest banks typically hold mortgages.

    The bank needs the loaned money back to make further loans.

    A number of banks have become insolvent (gone broke) when the bonds backed by the mortgages owned by Freddie and Fannie became worthless.

    This forces the bank to raise new capitol to meet reserve requirements (10% of deposits).