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  • July 13, 2011 at 12:51 PM #18940
    jpinpb
    Participant

    Marketplace
    With too many houses on the market, the real estate industry could be far worse than most think.

    Jeremy Hobson: Today is the deadline for eight of the country’s largest mortgage servicers — including Bank of America, Citigroup, and JPMorgan Chase — to submit new plans to the government on how they’ll handle foreclosures going forward. This is related to the settlement being negotiated between the lenders and all 50 states over how foreclosures were handled, or mishandled after the housing market collapse.

    And while the housing market may not be collapsing any more it seems in no hurry to bounce back either. And it could be a while before it does according to the latest piece by Roben Farzad, a senior writer at Bloomberg Business Week. He’s with us now from New York. Good morning.

    Roben Farzad: Good morning, Jeremy.

    Hobson: Well you say that the housing market is worst than we think? How bad is it?

    Farzad: If you had housing starts from their current half-century low rally at unprecedented — let’s say 60 or 70 percent — they would merely hit the average low of the past six housing recessions since 1950. Did you get that? We dug ourselves that deep a hole, so there’s very, very little comfort here.

    Hobson: Well why hasn’t housing recovered along with so many other sectors of the economy?

    Farzad: I think because of the bubble on the way up. I mean, the easy answer is that the construction and the fraud was just so enormous. By one estimate, five million people who should have been renters were prematurely made homeowners. And now they’re kind of in the wrenching process of having the market evict them out of it. And meanwhile, all of these barely used homes, you have stories and the excerpts of Phoenix and Tuscon of bobcats and coyotes taking over half-empty homes.

    Hobson: But you’re saying that this is really an issue of inventory — they’re just too many houses on the market.

    Farzad: It’s so out of whack right now in terms of the foreclosures of the existing homes that could be cleared out, there’s just an enormous backlog. The oversupply of homes, according to one analyst, is now at 1.6 million homes, and that’s not an incidental number.

    Hobson: OK Roben, tell me this: how long until we finally see a recovery in housing?

    Farzad: If you subscribe to the idea that housing is a busted-up asset bubble and it was the biggest asset bubble we ever had, all you need to do is look at need analogs in history — the United States railroad-building bubble in the 19th century, the tech bubble at the beginning of the last decade. In a lot of cases, these prices have not come back to bubble-level, certainly if you look at NASDAQ and companies like Cisco and Dell. I mean, they’re nowhere close to where they were back then. So this could well be a generational thing, and that’s very hard for a lot of people to hear.

    Hobson: Roben Farzad, senior writer with Bloomberg BusinessWeek. Thanks so much.

    Of course, if the banks drag their feet foreclosing and/or short selling and/or listing all these place, it might be in our kids’ lifetime.

    July 13, 2011 at 1:51 PM #709524
    UCGal
    Participant

    Ok… I think most people would agree that housing was overpriced during the bubble.
    Do people want it to “recover” to the overpriced values? Or find a natural market.

    For decades housing appreciated VERY slowly… Often less than inflation. People might have to get used to that mindset again.

    July 13, 2011 at 1:51 PM #710734
    UCGal
    Participant

    Ok… I think most people would agree that housing was overpriced during the bubble.
    Do people want it to “recover” to the overpriced values? Or find a natural market.

    For decades housing appreciated VERY slowly… Often less than inflation. People might have to get used to that mindset again.

    July 13, 2011 at 1:51 PM #709619
    UCGal
    Participant

    Ok… I think most people would agree that housing was overpriced during the bubble.
    Do people want it to “recover” to the overpriced values? Or find a natural market.

    For decades housing appreciated VERY slowly… Often less than inflation. People might have to get used to that mindset again.

    July 13, 2011 at 1:51 PM #710373
    UCGal
    Participant

    Ok… I think most people would agree that housing was overpriced during the bubble.
    Do people want it to “recover” to the overpriced values? Or find a natural market.

    For decades housing appreciated VERY slowly… Often less than inflation. People might have to get used to that mindset again.

    July 13, 2011 at 1:51 PM #710219
    UCGal
    Participant

    Ok… I think most people would agree that housing was overpriced during the bubble.
    Do people want it to “recover” to the overpriced values? Or find a natural market.

    For decades housing appreciated VERY slowly… Often less than inflation. People might have to get used to that mindset again.

    July 13, 2011 at 4:35 PM #709544
    pemeliza
    Participant

    Yes, it was a huge bubble but the excesses in terms of price have mostly been wrung out. The nasdaq peaked at around 5000 and is now back close to 3000 so that is 40% down from the peak. Realistically if you look at sales prices and not wish prices, 40% off peak pricing is about where we are now in housing. I have seen a few places in decent parts of Point Loma go for nearly 60% off of peak pricing but they seem like oddball deals.

    At this point there still remains considerable distressed inventory but frankly how much of it is in the desirable areas? When considering interest rates the current prices seem reasonable and will be a good base to rebound off of (albeit at a more gentle pace) once the economy and job market recover.

    July 13, 2011 at 4:35 PM #710754
    pemeliza
    Participant

    Yes, it was a huge bubble but the excesses in terms of price have mostly been wrung out. The nasdaq peaked at around 5000 and is now back close to 3000 so that is 40% down from the peak. Realistically if you look at sales prices and not wish prices, 40% off peak pricing is about where we are now in housing. I have seen a few places in decent parts of Point Loma go for nearly 60% off of peak pricing but they seem like oddball deals.

    At this point there still remains considerable distressed inventory but frankly how much of it is in the desirable areas? When considering interest rates the current prices seem reasonable and will be a good base to rebound off of (albeit at a more gentle pace) once the economy and job market recover.

    July 13, 2011 at 4:35 PM #710393
    pemeliza
    Participant

    Yes, it was a huge bubble but the excesses in terms of price have mostly been wrung out. The nasdaq peaked at around 5000 and is now back close to 3000 so that is 40% down from the peak. Realistically if you look at sales prices and not wish prices, 40% off peak pricing is about where we are now in housing. I have seen a few places in decent parts of Point Loma go for nearly 60% off of peak pricing but they seem like oddball deals.

    At this point there still remains considerable distressed inventory but frankly how much of it is in the desirable areas? When considering interest rates the current prices seem reasonable and will be a good base to rebound off of (albeit at a more gentle pace) once the economy and job market recover.

    July 13, 2011 at 4:35 PM #709639
    pemeliza
    Participant

    Yes, it was a huge bubble but the excesses in terms of price have mostly been wrung out. The nasdaq peaked at around 5000 and is now back close to 3000 so that is 40% down from the peak. Realistically if you look at sales prices and not wish prices, 40% off peak pricing is about where we are now in housing. I have seen a few places in decent parts of Point Loma go for nearly 60% off of peak pricing but they seem like oddball deals.

    At this point there still remains considerable distressed inventory but frankly how much of it is in the desirable areas? When considering interest rates the current prices seem reasonable and will be a good base to rebound off of (albeit at a more gentle pace) once the economy and job market recover.

    July 13, 2011 at 4:35 PM #710239
    pemeliza
    Participant

    Yes, it was a huge bubble but the excesses in terms of price have mostly been wrung out. The nasdaq peaked at around 5000 and is now back close to 3000 so that is 40% down from the peak. Realistically if you look at sales prices and not wish prices, 40% off peak pricing is about where we are now in housing. I have seen a few places in decent parts of Point Loma go for nearly 60% off of peak pricing but they seem like oddball deals.

    At this point there still remains considerable distressed inventory but frankly how much of it is in the desirable areas? When considering interest rates the current prices seem reasonable and will be a good base to rebound off of (albeit at a more gentle pace) once the economy and job market recover.

    July 13, 2011 at 5:00 PM #710249
    jstoesz
    Participant

    Living in sac…things could be/may be getting a lot worse for SD. Many neighborhoods around here can only wish for the “meager” 30-40% reductions of SD. Granted the economy up here is not much better than Detroit, but houses are certainly much more affordable.

    July 13, 2011 at 5:00 PM #710764
    jstoesz
    Participant

    Living in sac…things could be/may be getting a lot worse for SD. Many neighborhoods around here can only wish for the “meager” 30-40% reductions of SD. Granted the economy up here is not much better than Detroit, but houses are certainly much more affordable.

    July 13, 2011 at 5:00 PM #710403
    jstoesz
    Participant

    Living in sac…things could be/may be getting a lot worse for SD. Many neighborhoods around here can only wish for the “meager” 30-40% reductions of SD. Granted the economy up here is not much better than Detroit, but houses are certainly much more affordable.

    July 13, 2011 at 5:00 PM #709649
    jstoesz
    Participant

    Living in sac…things could be/may be getting a lot worse for SD. Many neighborhoods around here can only wish for the “meager” 30-40% reductions of SD. Granted the economy up here is not much better than Detroit, but houses are certainly much more affordable.

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