The runup in prices is regional, but the drop in prices will be national.
Exotic lending and overbuilding are national phenomena, and they are the fundamental reason behind the impending price collapse in San Diego, besides the fact that all excesses correct.
The recession will further lower house prices, as people who lose jobs will be forced into foreclosure. Even people with 15 year or 30 year mortgages will be forced to sell, and in many cases their home value will be less than their mortgage.
I hope everyone reading this get the point: the housing prices will go down nationwide. Expect a 50% drop in nominal prices in San Diego, a 5-15% drop in places like Omaha, NE and Des Moines, IA.
LicketiSplit, did you read my post about the lady in Georgia in foreclosure? That’s not a bubble region, but it has one of the the highest foreclosure rates in the country.
Foreclosures in the US are up 28% over May 2005. Colorado, Texas, Georgia, and California lead the pack.
QUOTES
“…foreclosure activity in Massachusetts was reaching an epidemic level and clogging the court system. ”
“The problem of home loans going into default has caused Indiana to be dubbed the foreclosure capital of the country, a title it recently lost to Georgia.”
The Kansas City Star has this on foreclosures in that state. “The number of home foreclosures in Kansas has increased over the past year, a new report says. There were 436 mortgage foreclosures in the state in April, slightly more than double the number from April 2005. Through the first three months of 2006, lenders foreclosed on 600 homes, about one-third more than the 440 foreclosed during the same period a year ago.”
“Kirk McClure, at the University of Kansas, said he thinks declining home values in western Kansas contributed to many of the foreclosures. For example, McClure said someone holding a $100,000 mortgage on a home valued at $90,000 has little incentive to keep making payments.”
“‘One of the best tools for our housing market in western Kansas is a big bulldozer,’ he said. ‘We’ve got too many units.'”
“McClure also said lenders offering ‘100 percent financed, no-money-down’ loans haven’t helped people with inconsistent incomes. ‘If we take someone whose income is very low and it’s irregular, and we get them into a home that they can’t sustain two years, three years down the road, we have not done them a service,’ he said. ‘There’s a reason a bank turns somebody down.'”
“Kirk Lowry, vice president of Farmers State Bank in Atwood, also blamed ‘brain-dead finance companies’ for approving loans worth more than the property. The companies, few of which regularly do business in the area, roll fees into the mortgage payment, meaning that if the owner defaults, he or she is left with almost no equity.”
END QUOTES
I think you get the idea: Nationwide housing price drops!!!
I will ask Rich to update his Housing Bubble reports to include the national stuff, because even our well-read piggington members are still in the dark about the national lending bubble and its housing implications. I guess I thought it’s clear, but I’ve had several people the last couple days, who didn’t know about the national housing glut.
