by Goldy, 04/29/2008, 11:00 AM

S&P/Case-Shiller Home Price Indices

Housing market…? Worst year-to-year monthly decline ever.

There is already a ton of supply. With foreclosures increasing at incredibly high rates supply will obviously increase. At the same time, US consumers are faced with record levels of household debt and payments on that debt, a tanking job market and declining income. In other words, supply and demand of the housing market is seriously out of whack which will lead to declining home prices for the foreseeable future.

Let’s see, a housing market collapse wiping out equity for millions of homeowners, $4.00/gallon gasoline, skyrocketing food prices and falling incomes. Are you feeling better off than you did eight years ago?

I sure hope John McCain continues to campaign on more tax cuts, more deregulation and more war.

36 Responses to “Affordable Housing Update”

1. michael spews:

There is already a ton of supply. With foreclosures increasing at incredibly high rates supply will obviously increase. At the same time, US consumers are faced with record levels of household debt and payments on that debt, a tanking job market and declining income.

So, how long until what’s happening in the housing market starts to happen with retail space?

2. rhp6033 spews:

It’s actually a lot worse than the figures indicated. Some experts are saying that the number of units which “should be in foreclosure” is approximately twice the actual number.

There is so many units currently in foreclosure or “post-foreclosure” sales, that lenders are increasingly reluctant to start new forclosures. Apparantly having somebody in the house is better than having an empty house subject to being trashed by vagrants, crack addicts, meth producers, etc. Also, more empty units coming onto the market just depress the price the banks will get for the units they already have up for sale.

A lot of the borrowers under this “temporary reprive” are faced with balloon payments or APRs rolling over into impossibly high interest rates. They have to re-finance or sell, and when housing prices plummit they can do neither because now they owe more than the current market price for the house.

You might think that having banks allow their borrowers to stay in their homes is a good thing, rather than pushing them onto the street. But it’s only temporary. They aren’t doing much to fix the situation – in banking circles, losing tens of thousands of dollars in foreclosure is safer (for the bank executives) than working out a deal with the borrowers who no longer qualify for loan packages, especially under these new circumstances and tougher scrutiny.

So those pre-foreclosure units will be fed into the foreclosure system in the coming months, stretching out the problem for many months, if not years.

3. GBS spews:

Becareful of what you ask for you just might get it.

All these yum yums wanted Republican control of everything, they got hoodwinked again by Trickle Down economics. Tax cuts for the wealthy, who invest their capital, which makes the entire economy grow is bull shit. It’s been proven not to work by three Republican administrations Reagan, Bush 41 & Bush 43.

What has proven to work, is the more you make the more you’ve benefited from society the more your fair share of the tax burden rises. Pay as you go and and balance the budget and pay down the national debt as done by President Clinton and the Democrats, then the “rising tide lifts all boats.” That’s what worked, and will work again.

The more pain these Republicans feel the more they either won’t vote or will vote Democrat.

It’s like President Clinton said “When more Americans vote Democrats get elected.”

Looking at the voter registrations, it’s going to be one hell of a year for Democrats.

4. YLB spews:

Anyone see Bush’s bullshit today on the Economy?

It’s all the Dem’s in Congress’ fault.

November please get here!

5. "Hannah" spews:

@2 – you make a good point in the banks being a temporary fix! All these loans given to people who clearly can not afford these loans, they will eventually lose their homes, as it is just a matter of time before their “re-financed” payment starts to drag them down.

I beleive the mortgage industry execs should be held accountable for this mess and give up their “bonuses” and allow the people some help, even though I don’t think most these people deserve to be bailed out.

6. correctnotright spews:

@5: Bush – in charge for coming up on 8 years (with a republican majority before 2006) has bankrupted us – and now has the gall to claim that not renewing the tax cuts for the rich is what is bringing down the economy – what about the three trillion dollar sewer hole of Iraq, the huge trade deficits or the immense budget deficits and the non-existent energy plan of Dick Cheney and Enron?

Bush must think we americans are just plain stoopid! I can’t wait for the election in November – McSame is going down on the economy, oil prices and Iraq and republicans will hit record lows and resort to their usual infighting over why….coming up with the same lame excuses and ideas as last time – not conservative enough….no conservatism as it is now practiced is a bankrupt ideaology that bankrupts our country and ruins our competitiveness and our economy. Lack of regulation led to this bubble that is bursting – and greed on the part of the banking industry that is underregulated.

7. phule spews:

Hmmmm

The democrats took congress in 2006.

The housing market and the economy has gone to shit since 2006.

Hmm…any connections?

8. "Hannah" spews:

@ 7

This housing bubble started almost 15 years ago and has been leading up to this disaster. I don’t believe it has anything to do with just the past 2 years, but a combination of 15+ years of slacked regulations and no one in the government doing anything to tighten the regulations for so many years.

9. Daddy Love spews:

7 p

Hmmmm

Bush was inaugurated in 2001.

New York City and Washington DC were attacked and 3000 people were killed eight months later, enabling Idiot Boy to make a (full of crap) case for invading Iraq.

Hmm…any connections?

10. Daddy Love spews:

The real point, of course is that Republicans were running Congress from 1994 on, and running the Executive Branch from 2001 on.

The REASON that Democrats took control of Congress in 2006 was the same reason that a Democrat will be president beginning Jan. 20, 2009: Republicans have fucked up EVERYTHING.

11. Mr. Cynical spews:

Affordable Housing???
In Seattle???
Has anyone actually read this Seattle Times Article re: the University of Washington Study which shows $200,000/home is the result of Local & State Regulation and delays in building permits??
Please read it
http://archives.seattletimes.n wsource.com/cgi-bin/texis.cgi/ web/vortex/display?slug=eicher 14&date=20080214&query=economi sts

If you read this and cannot connect this Bureaucratic Tub of Goo as a major cause of the housing crisis….
you must be one of them Oba-Morons!!

PS–Same post as 2/20/08

12. Politically Incorrect spews:

Don’t plan on making a ton of money in real estate unless you’re gonna live in an area for a long, long time, have a good job that will give you the cash flow to cover the debt obligations for the properties, and have a cast-iron stomach for the ups and downs.

Real estate is a good investment, over time, but you can have your ass kicked pretty good in the short run. I know: I had my ass kicked in ’83, ’93, and ’96. I suppose I’ve lost over $50,000 in real estate over the last 30 years, so don’t get into the game unless you know the risks.

13. Daddy Love spews:

11 C
Yes, foreclosures are sky-high and home prices are plunging across the country because of what one professor alleges is “over-regulation” in Seattle. Uh-huh. That must be it.

After all, why listen to the analyses of those economists who are studying the effects of speculation, HELOCs, the collapse of complex debt vehicles, and fraud and corruption in the financial industry?

14. Milo spews:

Village idiot @11

And this explains what is happening in most of the country how?

15. rhp6033 spews:

# 6: The only thing that worries me is that with the economy going so bad now, it’s due for a little bit of good news, however temporary, which will probably occur sometime in the summer – just in time for the election.

It’s not that the economy will significantly improve from the basic infrastructure problems the Republicans will have created – record budget deficits, high national debt, shaky lending markets, instability in the Middle East, a declining middle-class. It’s just that the immediate scenario will not be quite as bad as the “worst-case-scenario” the media is having fun with right now. By summer the oil prices may have retreated a little bit ($3.15 p/gallon?), the DJIA might up-tick a bit (flirting with 13,000?), and the Republicans will be crowing about how things are improving, and taking credit for it all.

What worries me is our capacity for short-term memory, and an inability to realize how feeble those temporary gains might be in comparison with how strong our economy might be if Bush had not become President in 2000.

16. Silverstar spews:

Has anyone actually read this Seattle Times Article re: the University of Washington Study which shows $200,000/home is the result of Local & State Regulation and delays in building permits??

Yeah, like I believe anything the Blethen Times says about regulations. The high costs of homes here basically started with the Californication in the late ’80s. I know, I was here. It cost $30,000 for a mobile home in Bellingham, one just like the one we sold in Colorado for $6000. I doubt regulation has much to do with it, but allowing developers to build large tracts of McMansions, or to build condos downtown with starting prices of $500,000 is making it difficult for everyone, because it raises everyone’s assessments. You can’t build/maintain affordable/low-income housing when your valuation is tied to the $4,000,000 condos down the block. A rising tide lifts all property taxes. Renters, except those like me who live in public housing, get hit, too.

17. Blue John spews:

Yes, foreclosures are sky-high and home prices are plunging across the country because of what one professor alleges is “over-regulation” in Seattle. Uh-huh. That must be it.

Let’s see, No regulation is like Mexico, Columbia and Nicaragua. Lots of regulation like Norway and Sweden. Which has a better, more stable society for more people?

18. rhp6033 spews:

Well, let’s be fair about the mortgage markets. The Democrats have been in favor of government participation in the mortgage markets since the Depression, with the idea that home ownership by the public was desirable. Initially this was opposed by the Republicans, in part because they where philosophically opposed to government intervention in the economy, and in part because they represented the landlords’ interests.

During WWII the Democrats proposed the G.I. Bill, which provided for, among other things, no-down payment and low-interest loans for returning G.I.s so they could own their own homes. Initially this was also opposed (proceedurally) by the Republicans, but when it came up for a vote the virtually no one dared to vote against it – anything for our troops!

Additional programs made home purchases affordable for all workers under the FHA, etc., although strict standards were set to ensure that the buyer was unlikely to default on the loan, including minimum down-payment requirements, regulation of closing costs, income verification, etc.

By the early 1980′s (the Reagan years)some of these standards were relaxed – 5% down home purchases became more common. This wasn’t due to FHA changes as much as it was due to Reagan-era deregulation of the banking and savings & loan industry – which contributed to the collapse of the savings & loan industry in about 1987.

During the later years of the Clinton administration the FHA rules were indeed loosened to expand home ownership. The reason for this was simply that although home prices had increased, real wages had not increased for quite some time, and it was unrealistic to expect workers to save up a large down payment (10%) if the cost of housing was rising faster than their ability to save. This expanded authority for the FHA to issue low-down payment loans created a very large rise in the percentages of home ownership, especially among the blue-collar middle-class.

When Bush came into office, he was a bit jealous of Clinton’s statistics. He eventually informed his housing secretary (Johnson) that he wanted the numbers of increased home ownership to surpass that of Clinton. (Johnson’s statement, made last week after he announced his resignation). But Bush didn’t want to use the FHA, which was among the federal agencies he wanted to de-fund and privatise.

So the government unoffically took a “hands-off” approach as private lenders competed with themselves to engage in a predatory lending environment where zero-down mortages with “teaser” interest rates were offered, and “liar’s loans” (stated income, no verifiaction loans) became the norm. Financial firms came up with new schemes to bundle and market those loans to investors, and banks would make deals only to sell them off to the next guy to service. Real estate agents counseled first-time buyers to use such loans because it was the only way they could buy a house, appreciation in the housing market would solve all problems, and that if they passed on buying a home under those conditions, they might never be able to buy a home again in their lifetime.

So there is some truth that the current crisis had some roots during the Clinton administration. It also has roots in the Roosevelt, Truman, Eisenhower, Kennedy, Johnson, Nixon, and Carter administrations.

But it really is a question of degree, timing, and reasonableness. It’s kind of like having two guys switch off on driving a car without bothering to stop. The first one (a Democrat) accelerates to get over the hill, then hands the car off to the next guy (a Republican). The Republican crests the hill, then hits the accelerator, and doesn’t bother to even tap the brakes until the car looses control and crashes at the bottom of the hill. When the Republican wakes up at the hospital, and the policeman asks what happened, the Republican points his finger at the unconscious Democrat, and says: “It’s all HIS fault – he was accelerating before I was, he just started the trend, it wasn’t my fault I happened to be at the wheel when the crash occured!!!!!!”

19. mark spews:

Considering all the horrible things that are
going on, one good thing is democrats taste
like chicken and there are plenty to be had.
All seriousness, that $200,000 per house certainly isn’t helping. Then the democrats running Martin Luther County have the gall to
raise sales tax twice in what, 6 months? I’m
done shopping in Martin Luther County.

20. Daddy Love spews:

http://www.nytimes.com/2008/04/29/business/29econ-web.html?hp

In the 12 months ended in February, the Case-Shiller home price index, which measures the value of single-family homes in 10 major metropolitan regions, fell 13.6 percent, the biggest decline since records began in 1987….The slump in home prices was more severe than the worst point of the recession of the 1990s, the last time values fell so far, so quickly.

….The problems have contributed to a deepening gloom, which was reinforced on Tuesday by a grim confidence survey released by the Conference Board. The private report, which surveys up to 5,000 American households, dropped to its lowest point since March 2003, at the start of the invasion of Iraq. Americans feel worse about the economy’s prospects than any time since the mid-1970s, and many are bracing for job losses.

If only Seattle did not have such burdensome regulation! Look what they’ve done to this country.

21. Daddy Love spews:

http://www.nytimes.com/2008/04/29/business/29econ-web.html?hp

In the 12 months ended in February, the Case-Shiller home price index, which measures the value of single-family homes in 10 major metropolitan regions, fell 13.6 percent, the biggest decline since records began in 1987….The slump in home prices was more severe than the worst point of the recession of the 1990s, the last time values fell so far, so quickly.

….The problems have contributed to a deepening gloom, which was reinforced on Tuesday by a grim confidence survey released by the Conference Board. The private report, which surveys up to 5,000 American households, dropped to its lowest point since March 2003, at the start of the invasion of Iraq. Americans feel worse about the economy’s prospects than any time since the mid-1970s, and many are bracing for job losses.

If only Seattle did not have such burdensome regulation! Look what they’ve done to this country.

22. Mr. Cynical spews:

Part of the Seattle issue is huge real estate inflation in part due to the costly & excessive regulations and delays passed on to buyers. Prices held up for quite awhile because demand to live in Seattle (hard to imagine) was still high.

Goldy entitled this thread….Affordable Housing Update.
My comment is What Affordable Housing to update?
How disingenuous for the KLOWNS to KROW about affordable housing when THEY masterminded all the cost regulations that make it impossible.

PS Government Subsidized Housing IN NOT Affordable Housing KLOWNS!! It is subsidized.

23. GBS spews:

If you don’t like the high cost of real estate in the Seattle area, then move to an area that is made up of predominately conservative voters.

There is a direct correlation between the desirability of a particular location and the demographics of the population in that location.

The more desirable a location is to live, the higher the cost of living is in that area. The higher the cost of living is for a given area, the higher the concentration of college educated Liberals. The higher the concentration of college educated Liberals you will find more and better paying jobs.

Hmmmm . . . any connections?

Yes. Yes there are connections. Liberals create better economies than conservatives who tend to think making Blizzards at the local Dairy Queen is a good job while living in the State of Denial.

24. GBS spews:

There you go again, Mr. Cynical.

Talk about subsidizing. Why is it Republicans think big oil companies should continue to get billions and billions of tax breaks while they are making more profit than any industry ever??

Making profits, good thing. Making record profits, a great thing. Having your bottom line padded by George W. Bush and the Republican congress, well, that’s just plain stealing from the public and giving to big Republican donors.

25. ArtFart spews:

7 “The democrats took congress in 2006.”

Yup…and for some inconceivable reason, they’ve been sucking Bush’s dick ever since.

Everyone’s going down with this ship, pardner.

26. mark spews:

The best part is revenues collected by the state are going to fall so far that alot of the
no good no service arrogant state employees are gonna get canned cause the freeload is
coming to an end. Yafuckinghoo. All those
people that are over their heads in their mortgages is because they have financed the huge beauacracy and it doesn’t work. We need a
tea party, this is gonna be good.

27. "Hannah" spews:

Mark – revs won’t fall when the state catches up to the poor senior citizens…

http://www.komotv.com/news/local/18389174.html

This is what happened to my grandparents years ago with their house on Alki…prop tax was eating up too much of their fixed income, so developers got it. Although wierd thing was, as individual property owners they were NOT allowed to sub-divide, but once the developer bought the chunk, they sure were…put 4 homes on the lot my grandparents had 1 house…money talks!

28. Mr. Cynical spews:

Hannah–
The KLOWNS call that “Smart-Growth”
They love high density… for everyone but themselves!
We live in rat-mazes…they have a flat in the City and a villa in the country.
How Yer-a-peein’!!!

29. Roger Rabbit spews:

It was inevitable that after Republicans lowered wages to $2.13 an hour (and the boss keeps the tips) demand for $600,000 homes would go into the crapper.

30. Roger Rabbit spews:

As I’ve said all along, if they ship half of America’s jobs to other countries, slash wages on the other half, and raise prices on everything, who the fuck is going to buy their goods and services? By screwing workers, conservatives are shooting themselves in both feet.

31. Roger Rabbit spews:

@2 I recall reading somewhere that the total amount of bad mortgages is something like three times the total capital of U.S. banks.

32. Puddybud spews:

Hannah, why should I subsidize people who entered into loans where they could not afford them in the first place, and they knew it?

33. "Hannah" spews:

@31 – I don’t believe in bailing out the people who wanted a champagne lifestyle on a beer budget, let them lose their homes, they should have never gotten them to begin with, but I do hope the government can help those (mostly senior citizens and a few who were misled) who were taken advantage of by greedy lenders.

34. mark spews:

@32 How about school of hard knocks?

35. "Hannah" spews:

@33 – yes I think most these people who are crying about not being able to afford their ARM rates need a lesson in the school of hard knocks. They bought way more than they could afford (with no money down, knowing in 3-5 years there was no chance in hell they’ be making x amount of money more per month to pay that ARM rate) and are blaming everyone and everything else under the sun.

If they bail out all homeowners at risk of losing their homes, will the next step be to bail everyone out with credit card debt? The only people who should get any help are those who can prove they were swindled.

36. FricknFrack spews:

@ 18. rhp6033 spews:
“But it really is a question of degree, timing, and reasonableness. It’s kind of like having two guys switch off on driving a car without bothering to stop. The first one (a Democrat) accelerates to get over the hill, then hands the car off to the next guy (a Republican). ..”

Now THAT is an EXCELLENT analogy!