Tuesday, December 19, 2006

Markets Heading for a Fall

From CNN/Money, a forecast for the top 100 housing markets in the US for 2007. It should be no surprise to see that 2 of the top 10 forecasted declines are here in the Sunshine State.

'This time last year the big question was whether the real estate market was going to slow down. Today it's "How bad will it get?"

The numbers tell a confusing story. For existing homes, buyers are trickling back into the market - sales inched upward in October even as the median home price fell by 3.5 percent, the largest year-over-year drop on record. And that comes after price declines in August and September.'

And new homes....?

'On the new-home front, sales in October fell, but the median price crept upward. For homebuilders, cancellations are up and orders down. '

Mark Zandi, from Economy.com, says it best.

'"It's possible that the broader housing market will firm in the next few months, that the worst is over," says Mark Zandi, chief economist at Moody's Economy.com. "But that to me is a dead-cat bounce." In a word, yikes.

So Fortune asked Zandi's group and real estate valuation company Fiserv Lending Solutions to give us their take on what lies ahead for housing in the country's 100 largest metropolitan areas. '

Full Article (with forecasts for all 100 markets)

29 comments:

crazy g said...

In line with Crazy's stated objective of having some FUN:

What is a failed 'flipper'????


>>>>>"""A FLOPPER""<<<<<

CRAZY G said...

Come on.....TELL THE TRUTH ""NOW""

>>>>"""ARE YOU A LIAR???""""

The Comptroller of the Currency, John Duggan thinks somebody is lyeing.....

Is it you???? Here's what he has to say....
===================================

The Concerns of Comptroller of the Currency About the Excesses in the Mortgage Market
Nouriel Roubini | Dec 18, 2006
A colleague in the financial sector pointed to my attention a speech that the Comptroller of the Currency - John Duggan - has recently given where he expressed some serious concerns about the growth of exotic mortgages in the last few years (David Rosenberg of Merrill has made similar points in a recent research note).

Here are some of the alarming statistics that Mr. Duggan has pointed out:

5% of mortgage originations in 1994 were sub-prime; that is now up to 20%.
Interest-only and payment-option ARMS were 2% of loan originations in 2000, they now account for 40%.
20% of payment-option ARMs originated in the past two years have loan value greater than home value, a figure that would double to 40% if home prices were to decline another 10%. Thus many mortgage holders have significant negative equity in their homes.
50% of the sub-prime market is now made up of ‘stated income’ mortgages where "the borrower pays the lender not to verify the borrower’s stated income on the loan application, making it possible for the borrower to artificially inflate the size of his or her income in order to qualify for a bigger mortgage."
A study by the Mortgage Asset Research Institute found that 60% of applications for these ‘stated income’ loans exaggerated income by at least 50%.
The increase in debt-servicing ("payment shock") coming from negative ammortization mortgages can be severe: if rates are reset even only by 2 percentage points the payment increase will amount to a near doubling of the amount of the initial monthly payments.
Given the recent rise in default, foreclosures, financial distress in the subprime segment of the mortgage market, these basic facts about the growth of exotic or "monster" mortgages give something to ponder and worry about. And the fact that such concerns are expressed by one of the leading regulators of the US banks suggests that even regulators - who had been effectively "asleep at the wheel" for the last few years while the housing and mortgage bubble was festering - are now getting worried abou the state of mortgage finance.

==================================

Fess up now.....Otherwise we'll be coming to take your house away!!!!
And then some homeless person can live in it!!!!

super supper said...

I like how money magazine did the interactive layout.

However, their existing numbers are badly corrupt because they employ figures provided by the NAL(R) (National Ass. of Liars/Realtors).

Tampa's median is more like $285K right now. $229K is a joke (that no-one is laughing at).

Anonymous said...

I'm from S.E. florida -
The national numbers aren't very relevant to this blog (who cares what the national medium house price is): although everyone except So Florida homeowners, realtors and builders recognizes that the market here is on a downward spiral. Only the those people continue to ignore the facts. They are keeping prices high, hoping for a miracle and all the rich out-of-staters come and buy their properties. But seriously, those exotic mortgages will continue to be the most popular as long as home prices are out of reach for middle class americans.

zippo said...

"Wealthy Retired Boomer Who Wants To Live in Florida" - A fictional entity drempt up by reelt-whores in the sunshine state to convince moronic investors to purchase properties they they had no intention of living in. See also, "The Great Real Estate Collapse of 2006-2012"

jayz said...

Fiction? Or just plain Urban Myth?

Good one, zipp.

Anonymous said...

I think what FL needs is another round of monster storms. Or rather, I should say that's what the FB's of FL need.

My family's been touched by FL hurricanes twice. Both times, it seems the damage led to higher pricing for the real estate. I suspect it's caused by the following:

1) Increased media attention on the locale where the hurricane hits. It brings "name recognition" of a city to those from other states. How many out-of-towners had ever heard of Punta Gorda until two years ago?
2) A surge of money from the insurers which:
A) Leaves some people with extra cash
B) Fixes up properties all spic 'n span.
3) Creates a wave of jobs as local contractors are quickly swept up in a wave of reconstruction. In these times, having a pulse is good enough to get you hired rebuilding someone's home. If you are experienced and work hard, you will make a LOT of money during these times.

I suspect #2B is the strongest influence. Anyway, I saw first hand how Hurricane Andrew was the Ultimate Gentrifier of Homestead. And I saw the high runup in real estate (especially land) prices following other storms. It's like people go on a RE feeding frenzy right after a big storm.

No major storms in the 2006 hurricane season? Could partially explain the RE speculators' troubles in the state.

FL - Paradise Lost said...

Wow - I like your theories.

From what I've read, the same thing is happening up in Louisiana: spec-u-vestors ran amok last year, buying up properties on the cheap. Especially waterfront properties. And the construction contractors will hire any Tomas, Django, or Julio that wants a job.

Verrrrry interesting, indeed!

lizziebeth said...

The hurricane theory may hold some truth in a normal market, but this market is the result of fraud and greed. If this theory really were true, then why are we experiencing a national bubble? My old town of Charlotte, Nc is starting to experience the bubble burst. They aren't impacted by hurricanes. They were impacted by greedy developers throwing out the get rich quick by flipping properties rhetoric... I can't tell you how many of my friends and former neighbors bought properties to flip. Mcmansions sprang up all over, people buying them with negative amoritization loans and struggling to make the payments. No, this is a national bubble and hurricanes have nothing to do with it.

A bad hurricane season will only hurt the Florida market. Insurance will go up even further. The only folks that may benefit are those coastal homes that get completely destroyed. They can take their money and run as fast as they can out of Florida. The folks further inland with some roof damage, broken windows... will end up worse off. They have to pay big bucks from their deductibles and find that it scares off even more potential buyers! Nice theory, but unfortunately this market is so deep, hurricanes won't help sell the inventory of homes! Those that lose their homes will leave the state! Why wouldn't they! They build a new home or buy a new home, their taxes go up. Their insurance goes up....... A good hurricane, fire, other disaster is what FB's are looking for.

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