 | ||||||
San Diego Housing Bubble News and Analysis |
||||||
~Navigation~~User login~~RSS~ |
U.S. Home Prices to Fall Through 2011’s First Quarter (Bloomberg News)User Forum Topic
Submitted by ravinos on July 7, 2009 - 5:44pm
California has 5 of the top 15 according to the economist in this article, with San Diego included. http://www.bloomberg.com/apps/news?pid=2... July 7 (Bloomberg) -- Home prices may fall in more than half of the largest U.S. cities through the first quarter of 2011 as unemployment and foreclosures rise, mortgage insurer PMI Group Inc. said. Thirty of the 50 biggest metropolitan areas have at least a 75 percent chance of lower prices through March 31, 2011, Walnut Creek, California-based PMI said in a report today. The decline is likely to spread to “all regions of the nation” from California, Florida, Nevada and Arizona, the states most affected by the housing slump, PMI said. “The housing market has been hit by a demand shock of high unemployment and a supply shock of distressed foreclosure sales,” LaVaughn Henry, senior economist at PMI, the fourth- largest U.S. mortgage insurer, said in an interview. Unemployment rose to 9.5 percent in June, bringing the total number of jobs lost to 6.5 million since December 2007, the Labor Department said July 2. Foreclosure filings may hit a record 1.8 million in the first half of the year as more jobless homeowners default on their loans, real estate data service RealtyTrac Inc. said last month. Home prices in 20 major U.S. metropolitan areas dropped 18.1 percent in April from a year earlier, following an 18.7 decrease in March, according to the S&P/Case-Shiller index. Prices are forecast to fall 41.7 percent from their peak, Deutsche Bank AG analysts led by Karen Weaver wrote in a June 15 report. Florida Drops Predicted “Affordability is no longer the driving issue in the housing market, and we believe prices still have a ways to fall in many areas before home prices reach their trough,” the Deutsche Bank analysts wrote. The 15 areas with the highest probability of lower prices in 2011 each have a 99 percent chance, PMI said. They include Miami, Fort Lauderdale, West Palm Beach, Orlando, Tampa and Jacksonville in Florida; Riverside, Los Angeles, Santa Ana, Sacramento and San Diego in California; Las Vegas; Phoenix; Providence, Rhode Island; and Detroit. Edison and Newark, in New Jersey, have a 97 percent and 96 percent chance, respectively. Nassau, New York, has a 92 percent chance. New York City showed an 88 percent chance of lower prices, according to PMI. “The New York area has gone from a moderate level to an elevated level because of the big hit from the financial crisis,” Henry said. Declines Predicted Washington showed a 92 percent chance of lower prices; Portland, Oregon, and Baltimore each have 90 percent; Atlanta has 81 percent; Boston has an 80 percent chance; San Jose, California has 78 percent; and Minneapolis has a 75 percent chance, PMI said. The probability of lower prices is 66 percent in the San Francisco area; 58 percent in Warren, Michigan; 46 percent in Seattle; 45 percent in Milwaukee; 41 percent in Cambridge, Massachusetts; 36 percent in Chicago; and 30 percent in Philadelphia, according to PMI. The areas with the least chance of lower prices, each with less than a 6 percent probability, include Cleveland; Pittsburgh; Columbus, Ohio; San Antonio; Houston; Dallas, and Fort Worth, Texas, according to PMI. The insurer compiles its “market risk” index from income, interest-rate, home-price and affordability data going back to the early 1980s. To contact the reporter on this story: Dan Levy in San Francisco at dlevy13 [at] bloomberg [dot] net
|
~Finance and investing~*Investment advisory services and securities offered through Girard Securities, Inc., member SIPC/FINRA. ~Recent articles~~Active forum topics~
Sponsored Links
~San Diego median home $/sq.ft.~
|
||||
| © 2004-2008 piggington enterprises llc | terms of use | privacy policy | powered by Drupal | ||||||
 |  |  | ||||
WoW!! San Diego price decline have a 99% chances - not a surprise as per several in this forum-
This company has been publishing this index for a while. It is interpreted as the percent chance that an area will experience lower prices in two years.
Let's see what they said 2 years ago:
In the Summer of 2007, the percent chance of San Diego experiencing lower prices was ... 55.5%.
I don't know what to make of this index, it appears to be good at projecting recent past data into the future. That's about it.
There are other interesting things in their report.
Their affordability index for San Diego for 1Q 2009 is 131*. This index is based on affordability relative to 1995. The interpretation is that housing in SD in 1Q 2009 was significantly more affordable than in 1995.
* Reference - Pages 6-7 of the "2nd Quarter 2009 Economic and Real Estate Trends Report" found here:
http://phx.corporate-ir.net/phoenix.zhtm...
Their affordability index for San Diego for 1Q 2009 is 131*. This index is based on affordability relative to 1995. The interpretation is that housing in SD in 1Q 2009 was significantly more affordable than in 1995.....
Affordability as measured here can be misleading. Prices are higher than in 1995, even when compared to wages. So homes are less affordable for cash buyers. But if you're paying using other people's money, and don't plan to repay it any time soon, then lower interest rates makes a purchase more affordable.
I would surmise that if you expect home prices to continue to decline into 2011 in the two biggest home markets NY/SoCal.
Being that The interpretation is that housing in SD in 1Q 2009 was significantly more affordable than in 1995 .
Then you would also expect the economy to continue to decline into 2011.
My guess the equation would look a little like below:
(bigger decline home values) == (bigger decline economy)
Just some food for thought.
I just don't think you can have a broad economic recovery without at least stabilization in housing.
Their affordability index for San Diego for 1Q 2009 is 131*. This index is based on affordability relative to 1995. The interpretation is that housing in SD in 1Q 2009 was significantly more affordable than in 1995.....
Affordability as measured here can be misleading. Prices are higher than in 1995, even when compared to wages. So homes are less affordable for cash buyers. But if you're paying using other people's money, and don't plan to repay it any time soon, then lower interest rates makes a purchase more affordable.
While I think what you are saying is probably true for a good part of SD, I would not say that for all SoCal, especially in places like TV where I think you are getting a lot more for your money than you did in 1995 (again minimum wage does not count, My wage has tripled since 1995 minimum wage has not).
Agree about TV, Nor-LA-SD-guy. But disagree about incomes tripling. My income has tripled since 1995 also, but I know that's higher than the average. When we talk about affordability, we don't mean for Warren Buffett, or other individuals who aren't close to averages. I don't think most incomes have tripled since 1995.
If Obama follows through with the minimum wage promise he made during his campaign, we can expect a 50% rise in minimum wage soon.
If the PMI group were any good at predicting housing prices their stock would not be under 2 bucks and facing solvency issues.
Bingo !
The real question is where will the money come from?
The real question is where will the money come from?
If I have to guess, it's the same place that provided the $ for the Trillions of $ in bailouts.
I agree with former and mojo, this outfit is kinda weak, good for headlines and soundbites, but there's not much that I find impressive about their research or predictions.
They cited this source "Prices are forecast to fall 41.7 percent from their peak, Deutsche Bank AG analysts led by Karen Weaver wrote in a June 15 report"
OK, that's bold prediction since Rich just posted numerous charts where S.D. has exceeded that drop in median, ppsf, condos, sfr's and most any other way you want to look at it. Maybe tomorrow, about 2 o'clock, after the temperature breaks 80 degrees, these guys can predict it be hotter than 70.
san diego is a big area...
with the coastal communities retaining their market value how valuable is this data in re. to those areas?
with the coastal communities retaining their market value how valuable is this data in re. to those areas?
See TG's response,
But yea I think the thing (or point) most long time san diegans miss, is just like my old home town of Newhall, it's just not the same anymore, it's now a fair sized city called Santa Clarita.
In short it has grown up (and will continue to grow as well), it will never be the same small town where I grew up ever again !!!
To an even greater extent the same thing has happened to SD while most (or at least a good number) of san diegans weren’t looking apparently.
Personally I don't think most of coastal SD will ever be as affordable as it once was, but that is just my opinion.
The real question is where will the money come from?
If I have to guess, it's the same place that provided the $ for the Trillions of $ in bailouts.
Nope the rise in minimum wage will result in higher unemployment. There is only so much in payroll to go around in the current environment and forcing raises in this climate will only take jobs and replace them with higher wages for those who still have them.
The real question is where will the money come from?
If I have to guess, it's the same place that provided the $ for the Trillions of $ in bailouts.
Nope the rise in minimum wage will result in higher unemployment. There is only so much in payroll to go around in the current environment and forcing raises in this climate will only take jobs and replace them with higher wages for those who still have them.
Unemployment is a totally different topic all together. I totally agree with you regarding unemployment. The question was asked, where will the money come from. My guess would be from the government. The government would subsidize one way or another. However, they won't be able to cover all the cost of rising wage. So, unemployment would occur.