Home prices fall by the most in at least two decades

[Harry Hope]

From Bloomberg, 11/27/07:
http://www.bloomberg.com/apps/news?pid=20601087&sid=acGASBwZyEYs&refer=home

Home Prices in U.S. Fell Record 4.5% in Third Quarter (Update2)

By Bob Willis

Nov. 27 (Bloomberg) --

Home prices in the U.S. fell in the third quarter by the most in at
least two decades as the subprime lending crisis caused sales to
slump.

Home values retreated 4.5 percent in the three months through
September from the same period a year before, the most since records
began in 1988, according to a report today by S&P/Case-Shiller.

It followed a 3.3 percent drop in the second quarter.

Prices will probably keep sliding as foreclosures force more
properties on to the market and sales weaken as mortgages become
harder to get.

The slump threatens to slow consumer spending as fewer homeowners will
be able to afford vacations, new autos or home improvement projects.

``We see this as just the beginning of a downward trend,'' said
Michelle Meyer, economist at Lehman Brothers Holdings Inc. in New
York, who correctly forecast the quarterly decline.

``Weaker home prices imply a weaker consumer.''

Home prices in 20 U.S. metropolitan areas dropped 4.9 percent in the
12 months ended September, the most since S&P/Case-Shiller began
compiling the index in 2001.

The decline followed a 4.3 percent drop in August.

Economists forecast the 20-city gauge would decrease 4.8 percent in
the quarter, according to the median of 13 estimates in a Bloomberg
News survey.

_________________________________________________

Harry

 

[B1ackwater]

On Tue, 27 Nov 2007 15:07:52 -0500, Harry Hope <rivrvu@ix.netcom.com>
wrote:

>
>From Bloomberg, 11/27/07:
>http://www.bloomberg.com/apps/news?pid=20601087&sid=acGASBwZyEYs&refer=home
>
>Home Prices in U.S. Fell Record 4.5% in Third Quarter (Update2)
>
>By Bob Willis
>
>Nov. 27 (Bloomberg) --
>
>Home prices in the U.S. fell in the third quarter by the most in at
>least two decades as the subprime lending crisis caused sales to
>slump.
>
>Home values retreated 4.5 percent in the three months through
>September from the same period a year before, the most since records
>began in 1988, according to a report today by S&P/Case-Shiller.
>
>It followed a 3.3 percent drop in the second quarter.
>
>Prices will probably keep sliding as foreclosures force more
>properties on to the market and sales weaken as mortgages become
>harder to get.
>
>The slump threatens to slow consumer spending as fewer homeowners will
>be able to afford vacations, new autos or home improvement projects.
>
>``We see this as just the beginning of a downward trend,'' said
>Michelle Meyer, economist at Lehman Brothers Holdings Inc. in New
>York, who correctly forecast the quarterly decline.
>
>``Weaker home prices imply a weaker consumer.''
>
>Home prices in 20 U.S. metropolitan areas dropped 4.9 percent in the
>12 months ended September, the most since S&P/Case-Shiller began
>compiling the index in 2001.
>
>The decline followed a 4.3 percent drop in August.
>
>Economists forecast the 20-city gauge would decrease 4.8 percent in
>the quarter, according to the median of 13 estimates in a Bloomberg
>News survey.


Ya know ... I really see this as the "re-normalization" of
home prices, not a "slump". The term "slump" assumes that
homes SHOULD have been and remained hyper-expensive. What
we are seeing is a return to SANITY - and fair value.

Yep ... twits who jumped-in on the 'bubble' at the last
minute (and twit bankers who lent them the money) are
gonna suffer.

However there IS a class of people who will benifit
greatly ... good credit risks with a minimal existing
debt burden who have been wanting to buy a home but
didn't want to spend insane amounts on one. For them,
this 'slump' is a great boon, a great opportunity.

They'll be able to get their new house, make payments,
pay taxes and everything else that helps refire the
overall economy. The value of their homes WILL rise,
albeit slowly for a few years, so those homes will
be "good investments".