According to a Merrill Lynch report, home prices will drop 15 percent this year, and declines will continue in 2009.
NEW YORK (CNNMoney.com) -- The worst housing financial crisis in decades is only going to get worse, a Merrill Lynch report said Wednesday.

The investment bank forecasted a 15 percent drop in housing prices in 2008 and a further 10 percent drop in 2009, with even more depreciation likely in 2010.

...

But for those who think that the worst is over, Merrill Lynch said that housing prices still remain comparatively high. The brokerage believes that home prices are still far above historical norms when compared to other measures such as rent or GDP. "By our calculations, it will take about a 20 to 30 percent decline in home prices to correct this imbalance," said the report.

Merrill Lynch believes that housing starts will most likely slide another 30 percent by the end of 2008 - a historic low.

http://money.cnn.com/2008/01/23/real_estate/merrill_forecast/index.htm?postversion=2008012313

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Of course, the guy from the NAR disagrees, but that's what he's paid to do.

i dunno, i just don't see that happening given current economic data. the fed rate cut was basically them producing billions more dollars, which will trickle down to consumers and give them extra cash. couple that with the tax cut and we'll see a lot more liquidity in the money supply. this means it'll be cheaper to borrow money, and rates will go down, especially on ARM's. if folks have gotten smart (and i think enough have) they'll quickly convert to 30/fixed and stave off foreclosure. the more money in consumer's pockets means the more money they'll spend (hey this is america) and in turn that will raise our GDP and increase demand for goods and services.

now whether or not the way to fix the current mini-crisis is by giving money to poor people is a whole different debate :)

you are forgetting, many who have ARMS do not qualify for 30 yr mortgages, hence the reason they have ARMS and are being forclosed.

They used ARMS, IO's, and Neg-A's to buy a house with the intention on selling (and making money) in a short time frame (1-3 years). No way could they get a jumbo loan @ 30yr/fixed with stated income.

The increase in Freddy Mac and FHA loan limits to 700k will help some jumbo's refi to a slightly lower rate, but it isn't going to blow enough air back into the bubble. It may buy some people time, however when the do default, who guarantees those loans? Yes, you and I!

what we have seen for the past 4-5 years is artificial. it will correct itself, regardless of how much the gov't tries to keep it from doing so. At this point they know what they are doing is damage control and being an election year, no one party wants to be seen as not trying to 'help the poor people who are losing their homes.'

as to whether or not its the way to fix the mini-crisis, look at what the VISA cards issued to Katrina victims were used for. We know it wasn't for food and diapers.

Beer!

No way could they get a jumbo loan @ 30yr/fixed with stated income.

s.

We actually got a 30 year jumbo @ 30 year/fixed with stated income in 2005. =)

that was 2005.

i thought you paid 3xx for your place?

$449k :shck: I think the conforming limit at the time was 363 or something, I don't remember. It was actually a "good deal" at the time. Far more beatup houses were selling for $500k!

Luckily, we've fixed it up well and like living there. If I felt trapped, I don't what I would do. Look at the sales history:

Sale History
Sale History & Tax Info Sale History
01/31/2005: $449,000
03/30/2001: $245,000
07/11/1996: $150,500
No other sale data is available


The people we bought it from fucking scored.

Just curious how much do you think it would sell for now ? Not how much you think it's worth. 2 totally different numbers.

Based on recent sales:

http://www.sandicor.com/statistics/stats2007/12-2007/sfd-1207-stats.pdf

29 homes sold with an average price of $444k. My house is average for the area square footage wise and above average condition wise. Average days on market was 76 days. If I gave it 3 months to sell, I would range it $400k - $435k. You have to factor in real estate agent fees ( 6% ) unless you think you can sell it yourself, so that's a huge hit there. I am down around $50,000 after 3 years of ownership. It doesn't mean anything unless I have to sell though. We bought a home, not a short term investment.

I am surprised to see that number. Brand new 4-5 bedroom homes are selling for under 400k in Temecula. My parents live in a very nice part of Escondido, and nothing is selling for over 400k. I guess it's just the luck of the draw once you put your home up for sale.

I am surprised to see that number. Brand new 4-5 bedroom homes are selling for under 400k in Temecula. My parents live in a very nice part of Escondido, and nothing is selling for over 400k. I guess it's just the luck of the draw once you put your home up for sale.

You can't compare Temecula to San Diego area. Price per square foot in Santee is 2x that of Temecula. This is actual sale data, not a guess.

Escondido is on there too:

http://www.sandicor.com/statistics/stats2007/12-2007/sfd-1207-stats.pdf

Two zip codes in Escondido had both average and median over $400k for December. 1 had over $400k average but less than median. Another thing with Temecula is you get NO LAND. Lot sizes on most new homes up there are 4000 square foot. Mine is 14,400. That adds quite a bit to the value. Use Sandicor as it lists actual sale data, not guesses from people with crystal balls.

Another thing to keep your eye on is the Sale price:List price percentage. 29 homes in Santee sold in December. On average, they sold for 95.68% of their list price. Not bad at all. It shows people aren't "dreaming" when listing their homes.

The situation is shit, but it isn't nearly as bad as the sensational media is claiming it is.

I really don't look at the numbers the media put out much. I go by what I see from people I know. I'm fairly familiar with most of San Diego county. The pros and cons of most areas. I've chosen to live in North County since I moved here from NY. I know we all have different things we look at , thus the diversity of the communities in the county. I can tell you that Temecula is a better place to live , than 90 % of San Diego. It is a great value to people looking for a newer home and affordability. It also was one of the hardest hit by the current drop in the market.

Don't get me wrong, Temecula is great minus the bros. You just can't compare the pricing to SD...

Yeah, it would be great if the bros left. Kind of like if the rednecks left El Cajon.

Rednecks are in Lakeside, Bros are in Santee, Meth addicts in El Cajon. Get your East County right!

The weird thing about Temecula is it has bros and a ton of bible thumpers. It is weird combination. They hate the casino, but embrace the result when Pechanga writes $50k checks to each school in the area. Sin money is only really sin money when it isn't yours, I guess.

On another note...

Temecula finally had its first property sell for less than $100 sq.ft.

4BR 3BA 2118.0sf+\- single-family. Built 2006. Approx .08ac lot.

sold for $216k!

Sale History
02/13/2007:$390,125
12/23/2005:$470,000
No other sale data is available

http://www.williamsauction.com/propertydetails.aspx?searchType=null&propertyId=182890

$449k :shck: I think the conforming limit at the time was 363 or something, I don't remember. It was actually a "good deal" at the time. Far more beatup houses were selling for $500k!

Luckily, we've fixed it up well and like living there. If I felt trapped, I don't what I would do. Look at the sales history:

Sale History
Sale History & Tax Info Sale History
01/31/2005: $449,000
03/30/2001: $245,000
07/11/1996: $150,500
No other sale data is available


The people we bought it from fucking scored.

$417k is the current conforming limit. If this bill passes, then it will go up to $125% of the current median... So a rough guess would be $535k.

Worse case for you, you rent it if you had to move (job opportunity, etc).

Another thing to keep your eye on is the Sale price:List price percentage. 29 homes in Santee sold in December. On average, they sold for 95.68% of their list price. Not bad at all. It shows people aren't "dreaming" when listing their homes.

The situation is shit, but it isn't nearly as bad as the sensational media is claiming it is.

One thing to be careful about when comparing these numbers is the fact that it will show as sold when it is actually a repo.

They may list for 399, have 375 outstanding, and that's the 'sold' price once the property reverts to the lender.

Damn. Might be interesting to price some homes in Temecula right now. I doubt I can qualify for the 20% high risk loan though.

I'm gonna shoot some time this weekend and look around here and in NC.

I'm gonna roll by the McMansions in Morgan Valley for an updated price list. Curious how much they have changed.