Flood of Foreclosures Could Cause Home Prices to Drop 20%: Gary Shilling (Aug 10, 2012)
As Shilling sees it, the banks have three options to get the bad mortgages off their books:
- Flood them onto the market
- Institute a mortgage modification plan
- Try to convert the properties into rentals
He says the second and third options are a lot less likely because mortgage modifications rarely work and rental properties are very difficult to maintain on a large scale, which may detract institutional inventors.
As a result, he believes the more likely scenario could very well end up being option number one, which would have a negative impact on home prices. The latest National Association of Realtors survey shows foreclosed properties tend to sell at a 19 percent discount to the market.
Too many foreclosures flooding the market at the same time could drive down prices of the surrounding homes.
“It would take a 22% house price drop to return to the long-run trend going back to 1890,” he writes in his research note. “Since corrections of bubbles often overshoot on the downside, our forecast of a further 20% decline may be conservative.”
Tell us what you think! Has the housing market bottomed?
CNBC: Flood of Foreclosures (Sep 13, 2012)
US home sales surge to highest level in 3 years (Dec 20, 2012)WASHINGTON (AP) — U.S. sales of previously occupied homes jumped to their highest level in three years last month, bolstered by steady job gains and record-low mortgage rates. The report was the latest sign of a sustained recovery in the housing market.
The National Association of Realtors said Thursday that sales rose 5.9 percent to a seasonally adjusted annual rate of 5.04 million in November. That’s up from 4.76 million in October.
Previously occupied home sales are on track for their best year in five years. November’s sales were the highest since November 2009, when a federal tax credit that was soon to expire spurred sales. Excluding that month, last month’s sales were the highest since July 2007….
U.S. home prices drop in October in 12 out of the 20 biggest markets in the country (Dec 26, 2012)
The housing boom is being driven by Detroit, Las Vegas and Phoenix. Simply hysterical. You can get a 30 year mortgage for 3.25% with zero points, the FHA will guarantee any moron’s loan with 3.5% down, the Wall Street shysters are withholding millions of foreclosed properties from the market, and prices actually declined in 12 out of the 20 biggest markets in the country. Of course, when you spin it through some seasonally adjusted bullshit model, prices actually rose. The housing bulls, who never ask why something is happening, will continue to cheerlead and attempt to convince the ignorant masses to buy. One problem. The ignorant masses have run out of money and the Obamanistas have very little left of our money to give to the ignorant masses. So it goes….
MARKETWATCH: City-by-city look at U.S. house prices (Dec 26, 2012)
Here’s a city-by-city breakdown of the S&P/Case-Shiller 20-city composite.
Prices declined in 12 of the 20 metropolitan areas in October on seasonal weakness, but they are up 4.3% from the prior year. The overall level is about one-third below a 2006 peak. Read more: Home prices tick lower in October.
Atlanta: Prices fell 0.4% in October, but were up 4.9% from the same period last year. Atlanta is one of two cities where home prices are below January 2000 levels.
Boston: Prices decreased 1.4% in October — one of the weakest results among the cities — but posted an annual gain of 1.6%.
Charlotte: Monthly prices decreased 0.5%, and increased 4.1% over the past 12 months.
Chicago: Prices decreased 1.5% in October, the weakest monthly result among the 20 cities. Prices in Chicago were down 1.3% over the past year, making this one of two cities with negative annual results.
Cleveland: Prices decreased 0.6% in October, but were up 1.8% from a year earlier.
Dallas: Prices fell 0.7% in October, and were up 4.6% from a year earlier.
Denver: Prices were unchanged in October, and have gained 6.9% in the past 12 months.
CNNMoney: Homeowners Now Foreclosing on Banks (Dec 26, 2012)
In an odd kind of role reversal, homeowner and condominium associations are foreclosing on banks that have not paid association dues for properties they own.
Banks are supposed to pay association fees after they foreclose on properties, including unpaid fees going back 12 months in Florida, according to CNNMoney. But sometimes they don’t.
And if they don’t, the condo association and other homeowners still paying their dues must pick up the slack by paying higher bills or skipping maintenance or services. Hundreds of homeowner associations in Florida are now fighting back by foreclosing on bank-owned properties, CNNMoney reports.
Under laws in North Carolina and many other states, banks are only responsible for assessments after the foreclosure deed is recorded and they obtain the property’s title, not fees the former owner failed to pay, Hunter explains.
However, some states, such as Florida, he says, have “super lien” laws that require the bank to pay some of the previous unpaid fees, usually capped at six or 12 months or a percentage of the total unpaid debt.