Robert Shiller was quoted in this Reuters’ article today; here are excerpts:
“My gut feeling is we might see a continuation of the decline” in home prices, Shiller said earlier Thursday at a Standard & Poor’s housing summit. He added that a 10 percent to 25 percent slump in real home prices “wouldn’t surprise me at all,” though he cautioned that was not a forecast.
Shiller pointed to the glut of unsold homes on the market and the large amount of homeowners under water on their mortgages as pressuring prices. As for when home prices might bottom, Shiller told Insider that was unclear and it was possible prices could slide for 20 years.
“We’ve seen five years of decline already since the peak in 2006 and I don’t see evidence that we’re coming out of it,” he said.
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I think he’s right about the national stats being on the decline for years to come.
It’s due to people downsizing, and it has multiple fronts:
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The elderly going off to the ‘home’.
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Seniors in two-story homes who are trying to give up the stairs – and re-establish savings.
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Middle-age families who are being more fiscally conservative with all their choices + savings.
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First-timers and investors preferring the cheaper stock.
These forces working together should cause the typical statistics to show a surge in lower-priced homes, while the higher-end struggles.
But there are more parts of the puzzle. What’s occuring is a re-shuffling of all housing priorites.
Examples of buyers re-sorting their housing priorites:
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Multi-generational – elderly who buy a new home with their kids who help them to the finish line.
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Older folks who sell a long-time residence in the more- expensive coastal areas, then buy a home in the upper price ranges of a smaller town – and still bank some money.
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First-timers moving further out to spend less money, but get more value.
These are examples I’ve seen just this week, but it makes sense that as long as you’re moving, you might as well look hard at every component. Improving the quality of life seems to be the biggest priority – for many that’ll hopefully mean that they move to, or stay in San Diego!
As a result, while we will probably see national statistics reflect more downward trends, the best-quality areas could dodge the bullet.
Where is the current dividing line between “lower-priced” and “higher-end?” I’ve lost track.
$500,000 in SoCal, less elsewhere.
In the areas with quality employment nearby, there’s a third tier that starts at $1,000,000.
If you look at SF/LA/OC/SD there are incredible numbers of million-dollar homes selling, in spite of the downturn.
So far this year in SD County there have been 670 homes close for $1,000,000+, or 4.9% of the 13,546 total, YTD.
But there are 1,861 for sale over $1M currently, and the reason why it’s squishy.
Last year between Jan 1-June 7th:
607/14,387 = 4.2%
My neighbor sold the first week in listing 6 months ago (between Thanksgiving and Christmas) for 1.12M, just under asking of 1.125. Million dollar listings are still going, and it seems that when they do move, it’s due to lots of cash. They just aren’t as common as before.
Chuck
Wow- payday loans for realtors:
http://www.signonsandiego.com/news/2011/jun/09/real-estate-agents-needing-cash-turn-advances/
High-end realtors happy to talk to the press about it, too!
Last line in Reuters article:
Sources told Reuters earlier this week that the Obama administration has grown increasingly frustrated with the country’s struggling housing sector and is exploring ways to keep it from weakening further.
Let’s have a Ben and Barry’s Double Dip!
Jim,
I noticed that as well…
Sounds like another payday is brewing for the freerenters/deadbeats.
I know what they could do. Just issue more debt and pay off all the loans! Then everyone will have lots of money to spend. And we could borrow against our homes and buy even more stuff!
Jim, did Hunter fall out of escrow?
thanks.
Yes, Hunter did BOM and we lowered the price today to $419,152.
https://www.bubbleinfo.com/2011/05/21/will-price-fix-anything/
Yes, an oddball price but right at 2.5% off previous list, after 19 days on market. Must be the BofA formula?
The housing QE3?
Housing QE1 = Fed buying MBS
Housing QE2 = Last year’s tax credit
There isn’t a tolerance for another housing tax credit, what’s going to be next out of their bag of tricks?
My guess:
The Fed/Gov paying closing costs.
A new program just rolled out on the Fannie Mae REOs that the buyers can receive 3.5% credit for costs from the seller, plus the buyer’s agent gets a $1,000 bonus.
Spread that to all govie REOs? Fannie/Freddie/FHA owns the majority by now, don’t they?
Simple,
Solution #1) Give every worker a 50% raise starting tomorrow !!
Solution#2) Make walking away completely painless, no credit hit and no recourse, So they can go out and buy tomorrow (and make it retroactive, for the last 5 years).
Solution#3) Make banks write down all home loan to 5% less than current value and make it universal/unilateral no qualify requirements.
Yea I know none of this is going to happen,
Enjoy the recession for the next 5 to 10 years.
Jim the Realtor wrote:
So we can expect another Government Program to screw up the already screwed up housing market that’ll just exasperate the problem?
Shiller is one of the only guys that is the real deal. He also called the tech stock crash in the late 90’s. He’s a guy you want to listen to.
“As a result, while we will probably see national statistics reflect more downward trends, the best-quality areas could dodge the bullet.”
It’s different here! 😉