Merrill Lynch, a national mortgage lender, sees prices falling 15% in 2008 (Reston: sales, refinancing)

[mojo_1979]

Housing prices to free fall in 2008 - Jan. 23, 2008

In other news, the National Association of Realtors (NAR) expects prices to start going up in 2008...

NAR: Home Prices Expected to Recover in 2008 As Inventories Decline (http://www.realtor.org/press_room/news_releases/2007/hef_july07_housing_prices_recover.html - broken link)

Do we even need to discuss who is the more credible entity here?

[Nancy in Nokomis]

just shoot me....

[McScootch]

So the Fed's actions to drop the rates isnt working to stimulate the purchase and Refi's of mortgages?

As mortgage rates plunge, refinancing demand soars - USATODAY.com

[McScootch]

Let me ask this question... Are we talking about the Washington DC Metro area, or we talking the nation as a whole when we referrence these statistics? WDC Metro is muy different than the rest of the nation. The national median income for 2006 was $48,023.00. In Virginia alone we brought home $55,368 (10th in the nation) while Maryland brought home $63,082 (2nd in the nation behind New Jersey at 66K)

In 2007, HUD Housing reported the Median Income for the Washngton DC Metro Area was $94,500 (roughly two time better than the rest of the country).

In 2006 Washington DC Metro:

was listed the 5th least expensive locale by KPMG (of cities rated with a population of at least 1.5 million)

Chief Executive Magazine listed Virginia as the 7th best state for Business

Eweek Magazine cited the Metro area as the 4th hottest area in the nation for Technology

( tp://www.metroatlantachamber.com/images/2006metroatlantarankings.pdf (http://www.metroatlantachamber.com/images/2006metroatlantarankings.pdf - broken link) )

According to statistics released by the Bureau of Labor Statistics (BLS), job creation was up in 46 of the 50 states in the last year, and the unemployment rate was down in all regions and in 47 of the 50 states.

The Wash DC Metro Area was ranked 3rd in the nation's hottest job markets

The 2005 BRAC Comittee has redirected, through base closures and realignments, 27,000 billets (jobs) to Fort Belvoir and Quantico and mandated that these changes be in place prior to 15 Sept 2011.


My point being to all of this is that WDC Metro is a desirable place to be and live and conduct business. The area is one of the cheapest, yet highest paying of the Major Metropolitan areas in the country. Incorporate that with 27,000 government billets being moved to this area (mostly frm Ft. Monmouth, NJ) and the contrator support jobs created by this massive move only paint a bright horizon for this areas housing market.

[mojo_1979]

Originally Posted by McScootch

So the Fed's actions to drop the rates isnt working to stimulate the purchase and Refi's of mortgages?

As mortgage rates plunge, refinancing demand soars - USATODAY.com

A quote from the article you cited... "Tighter lending conditions make it hard to estimate how many of the applications will be successful, he said. Lenders have pulled back on credit to borrowers of all credit histories after soaring delinquencies on subprime loans created billions of dollars in losses."

Point is these are simply applications.... they don't mean anything for the housing market at this point. If a desperate borrower applies for a refi b/c they can't afford thier house, this doesn't help the price of homes... especially if they get denied. And to take that a step further, how is a refi going to support home prices? Most people that refi do it b/c they need more cash from their "Home ATM Machine" so that they can continue going to Starbucks and the mall. For most people, a refi puts them further into debt !!!!

The fact of the matter is that the American consumer is tapped out. As a whole, the American consumer cannot support anymore debt.

100% financing is essentially dead. Joe 6-Pack now must bring a minimum of 5% to the table. The problem is, Joe 6-Pack doesn't have $20-30k in the bank. In fact, he has 20-30k in Credit Card debt instead. Let this guy apply for all the home loans he wants, he will be denied them all.

I cannot understand why people are in denial that home prices surged way beyond the fundamentals the last few years. This correction is not a problem. THIS IS A GOOD THING. The faster that the home prices correct, the better off this nation will be. Finally the average person will be able to spend just 25% of their wages on a home. They will have extra money to invest and send their kids to college.

[mojo_1979]

Originally Posted by McScootch

Let me ask this question... Are we talking about the Washington DC Metro area, or we talking the nation as a whole when we referrence these statistics? WDC Metro is muy different than the rest of the nation. The national median income for 2006 was $48,023.00. In Virginia alone we brought home $55,368 (10th in the nation) while Maryland brought home $63,082 (2nd in the nation behind New Jersey at 66K)

In 2007, HUD Housing reported the Median Income for the Washngton DC Metro Area was $94,500 (roughly two time better than the rest of the country).

In 2006 Washington DC Metro:

was listed the 5th least expensive locale by KPMG (of cities rated with a population of at least 1.5 million)

Chief Executive Magazine listed Virginia as the 7th best state for Business

Eweek Magazine cited the Metro area as the 4th hottest area in the nation for Technology

( tp://www.metroatlantachamber.com/images/2006metroatlantarankings.pdf (http://www.metroatlantachamber.com/images/2006metroatlantarankings.pdf - broken link) )

According to statistics released by the Bureau of Labor Statistics (BLS), job creation was up in 46 of the 50 states in the last year, and the unemployment rate was down in all regions and in 47 of the 50 states.

The Wash DC Metro Area was ranked 3rd in the nation's hottest job markets

The 2005 BRAC Comittee has redirected, through base closures and realignments, 27,000 billets (jobs) to Fort Belvoir and Quantico and mandated that these changes be in place prior to 15 Sept 2011.


My point being to all of this is that WDC Metro is a desirable place to be and live and conduct business. The area is one of the cheapest, yet highest paying of the Major Metropolitan areas in the country. Incorporate that with 27,000 government billets being moved to this area (mostly frm Ft. Monmouth, NJ) and the contrator support jobs created by this massive move only paint a bright horizon for this areas housing market.

I'm sorry but the "its different here" argument ALWAYS proves to be a fallacy. The article is about the nation as a whole. But OPEN YOUR EYES. Here is a compilation, based upon REAL data, of how far home prices have fallen in JUST THE LAST 12 MONTHS.

Prince William County -16%
Loudoun County -7%
Fairfax County -4%

And I've been following these numbers for months. They are published on about the 10th day of every month. The numbers are getting worse, not better. The momentum is building in the negative direction. The declines started in the far out suburbs of DC and are now encompassing the closer in counties and the city itself.

Source: http://www.mris.com/reports/stats/route.cfm (broken link)

[McScootch]

Mojo, I agree with you that people (not all, but a lot) use(d) the equity in thier homes like an ATM machine. Truely irresponsible financial behavior. I can name many friends and acquiantences who have done so and are now paying the price. Plus that boat and that convertible are no fun in the winter and who needs a second Harley, "just in case"?

I get very frustrated when I hear these peope say that they own these new toys outright. Sure they may have the title in the files at home, BUT they are still paying a monthly premium in the form of a HELOC for said toys. It baffles me how people do not realize that.

I think that I am just very optomistic about the return of the market here. And by return, I do no envision increased housing sales in the 10 - 30 percentile. I envision a more evenly paced supply and demand than we are currently witnessing.

[scimitar12]

Originally Posted by McScootch

Let me ask this question... Are we talking about the Washington DC Metro area, or we talking the nation as a whole when we referrence these statistics? WDC Metro is muy different than the rest of the nation. The national median income for 2006 was $48,023.00. In Virginia alone we brought home $55,368 (10th in the nation) while Maryland brought home $63,082 (2nd in the nation behind New Jersey at 66K)

In 2007, HUD Housing reported the Median Income for the Washngton DC Metro Area was $94,500 (roughly two time better than the rest of the country).
...

My point being to all of this is that WDC Metro is a desirable place to be and live and conduct business. The area is one of the cheapest, yet highest paying of the Major Metropolitan areas in the country. Incorporate that with 27,000 government billets being moved to this area (mostly frm Ft. Monmouth, NJ) and the contrator support jobs created by this massive move only paint a bright horizon for this areas housing market.

So, if an area of the country has median income half of D.C., their housing values will also be half? I don't think so. Look at Johnson County, Kansas. It too has a high median income level (61,455/household), a very educated workforce, good jobs, good growth, excellent schools, superb neighborhoods, etc.

Johnson County, Kansas - Wikipedia, the free encyclopedia

Housing there is no where near D.C. in price, even after the huge declines in homes prices. You can buy a real nice 4 bedroom house, two car garage in neighborhoods as good as anything in Reston, Vienna, Falls Church, etc. for WAY less than half, even close to a third, of what homes go for in those and other excellent D.C. communities. In Johnson County you can get that nice 4 bedroom house (with granite counter tops, saunas, etc.) for $250,000 easy. Heck, homes in Sterling Park are priced above that number.

I do agree that the housing crunch is worse in some areas versus others. D.C.'s crunch is bad becasue housing soared early this decade for no real reason. The market is taking its price adjustment to compensate.

[mojo_1979]

Originally Posted by McScootch

Mojo, I agree with you that people (not all, but a lot) use(d) the equity in thier homes like an ATM machine. Truely irresponsible financial behavior. I can name many friends and acquiantences who have done so and are now paying the price. Plus that boat and that convertible are no fun in the winter and who needs a second Harley, "just in case"?

I get very frustrated when I hear these peope say that they own these new toys outright. Sure they may have the title in the files at home, BUT they are still paying a monthly premium in the form of a HELOC for said toys. It baffles me how people do not realize that.

I think that I am just very optomistic about the return of the market here. And by return, I do no envision increased housing sales in the 10 - 30 percentile. I envision a more evenly paced supply and demand than we are currently witnessing.

McScootch, we definitely agree on the irresponsible financial behavior of many Americans. It is sad that many people misconstrue debt for wealth. Driving a Mercedes or a Hummer that was bought with money from a HELOC is just irresponsibly taking on more debt. Pure and simple. People think they are showcasing their "wealth" but they are really just showcasing their financial ignorance.

As far as your optimism, you are undoubtedly entitled to your opinion. But, I respectfully disagree and I truly believe that this year will be far worse than 2007 for housing. I think that this will be the year that "breaks the camel's back" and the masses finally move from denial to acceptance that the price run-up of the past 3-5 years was entirely unjustified and based on nothing more than speculation. IMO, the good news is that by the end of this decade, the American people will be better off as a result of housing prices going back to their historic norms.

[Zack]

I'm not sure how much advice on housing forecasts I'd take from a financial company that's about to write down $15B due to their forecasting. These are the big losers when it comes to investing; they can't see a top and think everything will keep going up, but then when things start going bad they panic and sell at fire-sale prices without any evaluation. It's an investment strategy that gets one slaughtered on both ends.