U.S. homes are predicted to have lost $2 trillion in value over the past year. There is no end in sight for the mortgage crisis and the falling property values compound the problem. Now homeowners owe a mortgage that is worth more than their home.
Stan Humphris, CEO of zillow.com, said,"When we look for a turnaround we look for two or three consecutive quarters [of smaller price declines]...We also want to see sales numbers pick up, inventories go down and improvements in foreclosure figures. Foreclosures really muddy the picture."
One area of the country where home values are increasing are in metropolitan North Carolina and South Carolina.
5 comments:
No End in Sight- is the title of a pretty good movie, or so I hear. I haven't seen it yet.
metropolitan North Carolina is definitely to be watched in the next few years. Expect more business there and a whole new flourishment (think i made that word up) of economic activity. i was watching a segment on it in the news asking the question "why it turned blue (politically) for the first time in like a gazillion years (actually when Carter won in '76) and they were talking about how there have been significant demographic changes.
I'm not surprised by this article. Everything is losing value. Like all other assets though, people just need to remain calm and not do anything irrational.
Dr. Simon said she expected it will take the economy about 4 years to get back to normal. How long is the average home loan? We need to look at the long run. Housing prices will be back up and before people even come close to paying off their homes the economy will be back to normal.
To put a positive spin on this whole thing-if you can afford to buy right now, housing prices are great!
As bad as the housing/financial crisis may seem right now, I think it is important to remember that owning a home is something that people do for the long-term, and that over time, eventually, values will go back up again. I've asked my parents several times how things are at home, and my dad always reminds me that they arent planning on selling the house anytime soon, so any value they might have lost on the house won't be realized until they sell it.
Here's a thought... since we are supposedly in this recession largely because of the housing industry, why don't we put more economic thought into fixing that industry. Maybe it could help bring us out??? Obviously that is not enough in itself, but it seems like a less complicated problem to solve and it couldnt hurt...
Actually I see the housing market to continue to drag our economy down. I just watched 60 minutes this weekend (I know I sound like I'm an old person like Goran) and it appears that there are more issues besides the sub-prime mortgage crisis. One of the types of mortgages are called option-arms, where the interest rate resets to a higher level after an introductory period. The amount of these types of mortgages are about the same if not more than that of sub-prime mortgages, quantity wise.
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