Tuesday, November 25, 2008

If you're wondering what's up with housing prices...

...see my new article posted at The UOJ Group. I nearly messed that one up, at first uploading the wrong chart. I fixed it, though, and now the correct chart is in place. It's heart-stopping enough - the older one gave even worse results! Shalom!

UPDATE!

Worse Times Ahead for Housing
Posted by: Michael Dudley
25 November 2008 - 7:00am
Latest figures are indicating that as many as 4 in 10 mortgage holders in America could soon be "underwater," with the potential for millions to simply walk away.

"[A]bout 25 percent of all U.S. mortgages are exceed the value of the homes the mortgages are financing. In the case of half the homes that are underwater, homeowners are paying a mortgage that's now 20 percent higher than the value of the home.

That's bad — but it's likely to get worse.

A recent report by First American Core Logic, a real-estate data firm in Santa Ana, Calif., estimated that as of Sept. 30, 7.5 million mortgages, or 18 percent of all properties with a mortgage, had negative equity. The group thinks there are another 2.1 million mortgages that are within 5 percent of going underwater.

If home prices fall another 10 to 15 percent...then four out of every 10 mortgages in the U.S. could be underwater. That means that for homeowners who owe 35 percent more than their homes' value, it would take, at historical averages, about 15 years just to break even on their home investment. They won't build equity. It would be a huge incentive for millions to hand the keys back to the lender and seek cheaper housing."


"Seek cheaper housing" is an euphemism for letting the bank repossess and renting or moving in with friends or relatives as boarders. As I mentioned in the article, with average wages the way they are, and financing the way it is, it now takes three adult wage earners to pay for the average mortgage and still have money to live on left over. So joining up with parents, siblings, cousins, or even very good friends to find affordable housing is going to become the norm, not the exception. Single family housing as we know it is simply not affordable for the average single family, and that just isn't going to change anytime soon with wages and benefits continuing to fall.

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