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Tue Sep 25, 2012, 09:14 AM

Home prices rebound

Last edited Wed Sep 26, 2012, 09:50 PM - Edit history (1)

Source: CNN

NEW YORK (CNNMoney) -- In another sign of a turnaround in the long-battered real estate market, average home prices rebounded in July to the same level as they were nine years ago.

According to the closely watched S&P/Case-Shiller national home price index, which covers more than 80% of the housing market in the United States, the typical home price in July rose 1.6% compared to the previous month.

It marked the third straight month that prices in all 20 major markets followed by the index improved, and it would have been the fourth straight month of improvement across the full spectrum if not for a slight decline in Detroit in April.

The index was up 1.2% compared to a year earlier, an improvement from the year-over-year change reported for June. While home prices have been showing a sequential change in recent months, it wasn't until June that prices were higher than a year earlier.

Read more: http://money.cnn.com/2012/09/25/real_estate/home-prices/index.html



Gee, you'd think people were feeling economically secure enough to start buying again...

35 replies, 4735 views

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Arrow 35 replies Author Time Post
Reply Home prices rebound (Original post)
brooklynite Sep 2012 OP
pscot Sep 2012 #1
JackRiddler Sep 2012 #15
AnnaLee Sep 2012 #2
brooklynite Sep 2012 #4
JackRiddler Sep 2012 #10
genxlib Sep 2012 #12
magical thyme Sep 2012 #18
AnnaLee Sep 2012 #22
magical thyme Sep 2012 #29
OnionPatch Sep 2012 #32
dipsydoodle Sep 2012 #3
AlphaCentauri Sep 2012 #23
davidn3600 Sep 2012 #25
AlphaCentauri Sep 2012 #34
davidn3600 Sep 2012 #35
banned from Kos Sep 2012 #5
dmallind Sep 2012 #6
banned from Kos Sep 2012 #7
n2doc Sep 2012 #8
JackRiddler Sep 2012 #9
Roland99 Sep 2012 #30
jtuck004 Sep 2012 #11
tk2kewl Sep 2012 #13
JackRiddler Sep 2012 #14
On the Road Sep 2012 #16
high density Sep 2012 #17
We are Devo Sep 2012 #20
senseandsensibility Sep 2012 #21
We are Devo Sep 2012 #24
magical thyme Sep 2012 #19
pa28 Sep 2012 #26
kestrel91316 Sep 2012 #27
GeorgeGist Sep 2012 #28
JackRiddler Sep 2012 #31
JackRiddler Sep 2012 #33

Response to brooklynite (Original post)

Tue Sep 25, 2012, 09:46 AM

1. Market Watch is reporting a 2-year high

That seems a lot more plausible. Nine years would put us above the peak bubble prices.

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Response to pscot (Reply #1)

Tue Sep 25, 2012, 03:17 PM

15. The headline is an outrageous falsehood and CNN...

has corrected it at the link. I request that the OP do the same, this is misleading to everyone reading the forum headlines.

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Response to brooklynite (Original post)

Tue Sep 25, 2012, 09:48 AM

2. Explain to me why rising house prices is a good thing?

Let's see. In 2012 houses are the same price as in 2003 which is before the 2003-2007 insane increases precipitated by low rates. The only thing that makes inflated houses affordable is low rates. Can we keep rates this low (or even as low as in the 2000s)?

Unless people assume that the Fed will keep rates low despite inflation, unemployment, ruining savings, etc. A house is only worth what the worker can pay at an ordinary interest rate (say 6%).

Why do we want to prop these up and, worse, create another price bubble?

I guess my opinion is that it would have been better to subsidize a unwinding of the price itself. But that's just IMO stuff.

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Response to AnnaLee (Reply #2)

Tue Sep 25, 2012, 10:37 AM

4. Becasue it means that people are able and willing to pay higher prices...

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Response to brooklynite (Reply #4)

Tue Sep 25, 2012, 12:17 PM

10. No, it means that lenders are desperate enough for high yield...

that they are once again delving into high risk.

It also means that shadow inventory is being kept off the market, and there's no accounting in these "analyses" for the enormous numbers of underwater mortgage holders.

However, in this case it most of all means this: The headline is blatantly, factually untrue. Beyond belief shamelessness. (See post #9, below.)

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Response to AnnaLee (Reply #2)

Tue Sep 25, 2012, 01:53 PM

12. If it were true

The basis of this story is false since housing is no where near a nine year high. At 2003 levels would be a better way of saying it but the way the headline is written is simply not the case.

However, i will tell you why it is helpful if they do rise. I see two major reasons.

One, the economy is largely stagnated right now due to lack of consumer spending. A lot of consumers are locked into bad deals on their houses. Many would love to sell them and start over but they are so upside down that they can't. Rising prices will begin to put those individuals right side up again and should unlock alot of frozen consumer spending.

Two, one of the underreported aspects of this recession is that public employment has been falling even while private employment has been rising. Even those individuals keeping City and County jobs have had to take lower pay and reduced hours. Furthermore, government spending on local improvements (roads, sidewalks, parks, schools) has been slashed. These budgets at the city and county level are directly linked to property taxes. The budgets have been decimated by lower taxable values and non-paying properties.

There are other reasons it would help but those are the two big ones I see.

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Response to AnnaLee (Reply #2)

Tue Sep 25, 2012, 05:38 PM

18. why should people who invested their retirement savings into their homes be penalized

just when they're getting ready to downsize/rightsize for retirement?

It's better to support wages than to penalize people who were responsible. Or should be be financially ruined because we didn't buy into the 401K myth?

Imho, of course, but if I can't get back at least what I invested into my home, then I get no retirement after decades of saving for it.

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Response to magical thyme (Reply #18)

Tue Sep 25, 2012, 09:41 PM

22. Do you mean make a choice in favor of the owners of over-priced houses?

I'm not sure I understand what you are trying to say. I guess I wonder how people sell a house for an inflated price without creating the bubble all over again. In other words selling to someone who will find later that they cannot afford it. That assumes that buyer can be found. The subject isn't 401Ks for the majority of retired workers. It is their bank accounts that are suffering from the Fed actions.

You know, one assumes the Fed action choses one generation over another and to a great extent it does. But, yes, someone near retirement that bought a house that is now underwater might be the same as a younger person in a similar predicament.

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Response to AnnaLee (Reply #22)

Wed Sep 26, 2012, 09:10 AM

29. No. I mean make a choice that doesn't penalize anybody who has been responsible.

Wages have been stagnant for decades. I mean paying fair wages for work. That way, working people can get off food stamps and start moving forward again.

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Response to AnnaLee (Reply #2)

Wed Sep 26, 2012, 09:56 AM

32. For one, because millions are trapped in their homes.

The housing crash robbed the middle class of what little wealth they had...their home equity. So many have mortgages that are underwater and they would take a HUGE hit if they sell at these deflated prices. Most simply can't afford to sell even if they need to. (Who has thousands of bucks to give to the banks?) Hence, no moving to new jobs, no borrowing to start businesses or anything else, no retirement (can't move to downsize). About half the people I know are in a stagnant economic situation until the value of their homes improve. And no, these aren't people who bought at the peak of the housing bubble madness with risky loans, these are people who owned before the bubble and bought with a down payment and a fixed loan. These deflated prices are seriously hurting a lot of people who did nothing wrong.

I would NOT want to see another bubble like the one that got us into this mess, but prices need to rise to a reasonable level so that there aren't so many people underwater. Our home is still worth less than we paid for it eleven years ago, which was just before the bubble. (and so I think this headline lies) We need to at least get back to pre-bubble home values before we can feel like this recession is ending.

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Response to brooklynite (Original post)

Tue Sep 25, 2012, 10:18 AM

3. So those currently without homes

will have even more difficulty in buying them.

Whoopee.

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Response to dipsydoodle (Reply #3)

Tue Sep 25, 2012, 09:58 PM

23. Not only that

investors are buying houses to rent them, so next big thing, rents go up again. Remember rents didn't change at all during the housing collapse.

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Response to dipsydoodle (Reply #3)

Wed Sep 26, 2012, 12:54 AM

25. How low do you want them to go? Low values will hurt the poor.

You got millions of homeowners right now underwater in their mortgages.

Keep in mind also that property values are tied to property taxes. When the values plummet, so does the tax revenue for local and state governments. That means less money for school, police, fire, health services, etc, etc.

So declining values will actually hurt the poor.

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Response to davidn3600 (Reply #25)

Wed Sep 26, 2012, 07:22 PM

34. Income, Savings vs. Drowning in Debt

Inflation is hurting the poor more than low housing prices. People who has been saving money for 30 years, today they can't buy nothing with their savings. The poor doesn't hurt if there is affordable housing that they can buy. As more people own a house more tax revenue, volume vs. high cost.

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Response to AlphaCentauri (Reply #34)

Wed Sep 26, 2012, 08:28 PM

35. A deflationary period is nowhere in the forecast

With the debt problems, inflation will likely get worse for the foreseeable future. There is no way to halt inflation while the budget is in the red.

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Response to brooklynite (Original post)

Tue Sep 25, 2012, 10:44 AM

5. Wait, I read at ZeroHead that banks are sitting on "toxic assets"

 

and are therefore "insolvent".

None of which is true, of course.

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Response to banned from Kos (Reply #5)

Tue Sep 25, 2012, 11:23 AM

6. Well the first part kind of is

Banks own a huge number of foreclosed homes they are not selling. Doesn't make them insolvent, or even wrong. Why would you sell assets at very low prices unless you had to? Coal is very cheap now, and corn quite expensive. If you owned an area that could either be mined or grow corn how much of an idiot would you be to start selling coal? Banks can take write-offs on foreclosed houses rather than sell them at bargain prices and with trivial mortgage rates. As long as they are NOT insolvent there is little incentive to flood depressed housing markets with more inventory, especially as by definition mosre foreclosures are in hard hit markets. What fool if they owned say 100 houses and could live without selling them would choose to sell them until prices recover? Why should banks behave differently.

Wannabe buyers have had several years of bargain basement prices and historically low mortgage rates. It is in most markets massively cheaper to buy rather than rent equivalent homes.

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Response to dmallind (Reply #6)

Tue Sep 25, 2012, 11:32 AM

7. Rational for sure.

 

Really, I am just glad the robo-signing bullshit is over with.

The bubble popped - prices fell and people got hurt. End of story.

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Response to brooklynite (Original post)

Tue Sep 25, 2012, 12:02 PM

8. Not in Savannah, GA n/t

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Response to brooklynite (Original post)

Tue Sep 25, 2012, 12:12 PM

9. So the headlines can just lie and you believe it?

Nine year high?! Seriously? And you're presenting this blatant falsehood here? Nine years ago, that was 2003!

Here is the real Case-Shiller index against inflation for the last decade-plus:



EMBARRASSING.


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Response to JackRiddler (Reply #9)

Wed Sep 26, 2012, 09:31 AM

30. yeah, that was my first thought, too. 9-year high??

something's high but it ain't home prices.

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Response to brooklynite (Original post)

Tue Sep 25, 2012, 01:01 PM

11. LOL - Some people have mush for brains...


Whoever wrote that headline for CNN Money is one...

From the link -

"NEW YORK (CNNMoney) -- In another sign of a turnaround in the long-battered real estate market, average home prices rebounded in July to the same level as they were nine years ago."

Prices are not at a 9 year high. They are higher than they were 9 years ago. They are also higher than they were in, say, 1950. Or 1850.

No wonder we are making rich people richer at the expense of everyone else.

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Response to brooklynite (Original post)

Tue Sep 25, 2012, 02:01 PM

13. not in my local market the haven't

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Response to brooklynite (Original post)

Tue Sep 25, 2012, 02:23 PM

14. Can you please be honest & change the headline to...

CNN's corrected version.

"Home Prices Back to '03 Levels"

They are as high as they were 9 years ago.

They are about 1/3 off a 9-year high - and 20 percent above where they are inevitably heading, as the Case-Shiller returns to its historic level of running below CPI.

The current headline is evil hype.

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Response to brooklynite (Original post)

Tue Sep 25, 2012, 04:24 PM

16. I Think What the Article is Saying

is that this particular indicator showed a bigger increase in July than any other month since 2003.

The metric is the S&P/Case-Shiller national home price index, which compares repeat sales of the same homes in an effort to study home pricing trends. That type of metric does not indicate how high prices are -- in fact, it may change most dramatically when prices snap back from a big drop.

http://en.wikipedia.org/wiki/Case%E2%80%93Shiller_index

Having said that, this is very good news and it seems that prices are recovering somewhat from the lows of the last few years.

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Response to brooklynite (Original post)

Tue Sep 25, 2012, 05:27 PM

17. Who is buying these houses?

I see multiple for sale signs in my neighborhood that linger for months. I look at the properties online and see $300k+ prices on them. Not a lot of families can afford that.

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Response to high density (Reply #17)

Tue Sep 25, 2012, 06:50 PM

20. Check out homes in my 'hood...

These $$$ places go pending within days or weeks. Crazy. And no, I don't own!

http://www.redfin.com/CA/South-Pasadena/905-Monterey-Rd-91030/home/7005047



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Response to We are Devo (Reply #20)

Tue Sep 25, 2012, 08:32 PM

21. Well, that one is a craftsman home.

Those do go for big bucks, even up here in the San Francisco Bay Area. They don't look like much to the untrained eye, however.

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Response to senseandsensibility (Reply #21)

Tue Sep 25, 2012, 11:01 PM

24. Just showing

CA real estate prices. Shocking to most of the country.

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Response to brooklynite (Original post)

Tue Sep 25, 2012, 06:48 PM

19. Right. which is why when I interviewed a local realtor who is head of the local realty board

He started shaking his head and moaning about a house that just sold for 1/2 my house's *current* market value (which is down considerably from its market value at the peak).

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Response to brooklynite (Original post)

Wed Sep 26, 2012, 01:36 AM

26. The link tells us that prices have returned to 2003 levels.

Great news because we may have seen the worst of mean reversion but everybody knows prices are not at a nine year high.

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Response to brooklynite (Original post)

Wed Sep 26, 2012, 01:59 AM

27. That's not possible. 2006 was the year things peaked and crashed in CA.

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Response to brooklynite (Original post)

Wed Sep 26, 2012, 06:03 AM

28. 9-YEAR HIGH ...

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Response to brooklynite (Original post)

Wed Sep 26, 2012, 09:50 AM

31. CNN changed this lying headline...

Why can't brooklynite?

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Response to brooklynite (Original post)

Wed Sep 26, 2012, 06:47 PM

33. Hit and Run? No reply from brooklynite.

The headline is a mistake - CNN corrected it. You need to do the same.

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