Housing hits bottom and stays there

At least there are those who hope and think it’s hit bottom, but no one is predicting it will rise again for years.

There’s more that will keep home prices from rising, once they do hit bottom. First, many Americans don’t have the required down payment or can’t qualify for a mortgage. Banks are making borrowers jump through more hoops in order to produce loans that can’t be subjected to a costly “buy-back” demand from Fannie Mae, Freddie Mac or other investors if the loan defaults. That is keeping credit very tight.

More than one-third of all homeowners have less than 25% equity, including 15% that are underwater, meaning their homes are worth less than what they owe.

Second, inventory declines may be less of a sign of health than they would suggest and instead reflect one of the structural problems holding back housing: Sellers are frozen, either unwilling or unable to sell at current values. Markets above the entry level, where demand from investors and first-time buyers isn’t as strong, face a particularly steep climb because of that equity hole.

“Nobody’s voluntarily putting their home up for sale,” said John Burns, a home-builder consultant based in Irvine, Calif.

6 Comments

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6 responses to “Housing hits bottom and stays there

  1. Anonymous

    What is the story for this? Premium area however, this price for a rebuild???? 30 KHAKUM WOOD RD – $4,345,000. Someone please explain with an intellectual answer rather than it’s”khakum wood”

  2. polly pavel

    If everyone thinks that, must be about to take back off.

  3. Rude Poster

    No Polly, the market is NOT about to take off. Please go back to sleep.

  4. Out Looking In

    Has anyone seen any cross-sectional analysis of the “shadow inventory”? For example, the % of said inventory at different price points/ state of repair (or disrepair). Also the gographical market. For example, there may be 50,000 homes valued at $70k or less in the hoods of Chocago, Detroit and Cleveland. Kiss that shadow good-bye- it is relatively emaningless in the broader discussion of national home prices. Just like 45% of all americans don’t pay federal income taxes, perhaps 45% of the shadow inventory is less than 100ks (aka “move down and out” market). Just wondering- if anyone has any insigts, please inform.

  5. Will

    I’ve seen a bit of the “stubborn seller” syndrome out there myself. People who likely overpaid for their own properties and chose now to sell but don’t want to face market realities by lowering their asking prices to levels where they’re more likely to sell. They’re trying to appeal to buyers within a certain price range, but ignoring the fact that there are much better properties within that same range that aren’t necessarily overpriced, and so their own houses sit there for a year or more because why would anyone overpay for something when they can get better? It’s silly. Also, it seems like most of the properties (sub-500K, anyway) that are hitting the market are kind of bottom-of-the-barrel, especially in Greenwich (though not limited to here, definitely). Anything decent that comes out gets snapped up fairly quickly, but the rest, which usually need work of some sort to fix whatever, just sit there. As a buyer, I’d rather wait and try to get something I consider decent, not drop good money on what I see as mostly overvalued garbage.