Home prices heading for triple-dip

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    Oct 31, 2011 6:40 PM GMT
    http://money.cnn.com/2011/10/31/real_estate/home_prices/index.htm?hpt=hp_t2

    NEW YORK (CNNMoney) -- The besieged housing market has even further to fall before home prices really hit rock bottom.

    According to Fiserv (FISV), a financial analytics company, home values are expected to fall another 3.6% by next June, pushing them to a new low of 35% below the peak reached in early 2006 and marking a triple dip in prices.

    Several factors will be working against the housing market in the upcoming months, including an increase in foreclosure activity and sustained high unemployment, explained David Stiff, Fiserv's chief economist.

    Should home values meet Fiserv's expectations, it would make it the third (and lowest) trough for home prices since the housing bubble burst.
    The first post-bubble bottom was hit in 2009, when prices fell to 31% below peak. The First-Time Homebuyer Credit helped perk prices up by mid-2010, but by the time the credit expired, prices fell again.

    In the second dip, which was reached last winter, prices were down 33%before staging a mild rally that was artificially spurred as banks slowed the processing of foreclosures following the robo-signing scandal, which found that loan servicers were rapidly signing foreclosures without properly vetting them.

    Now that the scandal is mostly resolved, lenders are speeding more cases through the foreclosure pipeline and back onto the market, weighing on home prices even further.

    Earlier this month, RealtyTrac reported the first quarterly increase in foreclosure filings in three quarters. Even more discouraging: new default notices were up 14%.

    There's also a "shadow inventory" of homes in foreclosure that have yet to go back onto the market.

    The specter that those foreclosed homes could flood the market at any time and drive prices significantly lower is a huge concern, said Mark Dotzour, an economist for Texas A&M University. "That's the elephant in the room," he said, noting that there are 6 million home currently in shadow inventory.
    Biggest losers

    Many of the regions that will be hardest hit were already beaten up during the previous two dips.

    Naples, Fla., for example, is expected to take the biggest hit of any metro area, a price drop of another 18.9% by the end of next June, according to Fiserv. Home prices in the area have already fallen 61% from the peak.

    Other cities expected to be hit hard include the not-so-lucky Las Vegas, which is expected to see home prices fall another 15.9% for a total loss of 66%; Riverside, Calif., is projected to fall another 14.8% (for a total decline of 61%); Miami is expected to decline by 13.2% (total loss: 57%), and Salinas, Calif. could drop by another 13% (for a total loss of 66%).
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    Oct 31, 2011 7:32 PM GMT
    I'm so sick of seeing these articles....its death by 1000 little cuts....The government needs to put a statute of limitations on banks foreclosing on properties. Banks keeps homes in "short sale limbo" for years to squeeze every last dime out of a property. This is dragging the entire economy down.

    Pass a law that says the bank must foreclose and evict the homeowner after 3 missed payments. Foreclosure hearing within 30 days. Auction the house off within the next 30 days. Give local counties money to fast track the process. Deputize eviction sheriffs, hire judges to hear the cases, etc.

    This whole "housing crisis " would be solved in 60 days. If you pick up a $200,000 property for $15,000 cash...good for you. But after the big sale, and after no more deals to be had, the market will return to normal.
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    Oct 31, 2011 9:15 PM GMT
    White4DarkerFL saidI'm so sick of seeing these articles....its death by 1000 little cuts....The government needs to put a statute of limitations on banks foreclosing on properties. Banks keeps homes in "short sale limbo" for years to squeeze every last dime out of a property. This is dragging the entire economy down.

    Pass a law that says the bank must foreclose and evict the homeowner after 3 missed payments. Foreclosure hearing within 30 days. Auction the house off within the next 30 days. Give local counties money to fast track the process. Deputize eviction sheriffs, hire judges to hear the cases, etc.

    This whole "housing crisis " would be solved in 60 days. If you pick up a $200,000 property for $15,000 cash...good for you. But after the big sale, and after no more deals to be had, the market will return to normal.


    The US government has done exactly the opposite, making it more difficult for banks to foreclose on people and trying to keep up real estate prices - but I'd agree - let prices fall where they will and move on. The problem is that this would mean a lot of buyers would be substantially underwater. They would end up selling for a lot lower than they bought with mortgages that were even larger. What I think makes the policymakers short sighted is that this doesn't change if they just drag it out and like you say - it's like a death of a thousand cuts.
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    Oct 31, 2011 9:50 PM GMT
    riddler78 said
    The US government has done exactly the opposite, making it more difficult for banks to foreclose on people and trying to keep up real estate prices - but I'd agree - let prices fall where they will and move on. The problem is that this would mean a lot of buyers would be substantially underwater. They would end up selling for a lot lower than they bought with mortgages that were even larger. What I think makes the policymakers short sighted is that this doesn't change if they just drag it out and like you say - it's like a death of a thousand cuts.


    A huge real estate fire sale would expose the losses and mistakes of the bankers. But individual investors could pick up some nice rental property for cheap. It would be good for everybody. Even the foreclosed families could move on from the uncertainty, and start paying rent to their new landlords. Most importantly, it would get the economy moving again...and housing prices would again start their slow descent upward.

    But the poor bankers would no longer have something to complain about....and that's why it will never happen.