Comments on: Decatur Home Price Recovers, But Sales Grind To Near Halt

By: what_what

what_what — Fri, 15 May 2009 03:14:22 +0000

this.

its called shadow inventory. there are a lot more houses out there than one thinks.

By: cubalibre

cubalibre — Fri, 15 May 2009 02:06:14 +0000

D’accord! Just two of the prime examples: The $1M house on Pinetree Street, and the $1.2M house on Sycamore Street (and this one needs a TON of work on the inside). These people need to put down the crack pipe and get a hit of reality.

By: Matt

Matt — Wed, 13 May 2009 23:12:11 +0000

Meh. True enough. Over the past ten years I believe that housing grew at a faster rate than population. This is contrasted with places like the U.K. which had much stricter building requirements, and thus it would make more sense if their housing prices stayed somewhat elevated. In atlanta especially there was MASSIVE overbuilding. If you look at the Case-Shiller housing index, that is why atlanta had almost no growth in home prices relative to other cities over the past 10 years. Yet, at the same time, ATL home prices have dropped ~15% in the past year. Excess of inventory, limited population growth, a long recession and sustained unemployment of 8-10% for 3-4ish years, and I think that there will definitely be a drop in home prices in Decatur. Now, it might not be nearly as bad as other areas, and may be better than Atlanta on a whole due to the unique Decatur situation, but a drop – definitely. That isn’t to say that home prices won’t bottom out sometime this summer or fall (more likely) in Decatur and then start to rise. Analogous to the stock market – everyone is excited over the recent 20-30% rally in the last month, yet the S&P 500 is still down ~40% from the peak. Better – yes. Still crappy – absolutely.

Not to be super down on things, I just think that things are going to be more difficult than expected – more of a Japan 90′s recession with a long period of very low growth and higher than normal unemployment. It’s not going to be a depression, but it also isn’t going to a quick bounce back.

Most relevant:
http://www.calculatedriskblog.com/2009/03/housing-two-bottoms.html
http://www.calculatedriskblog.com/2009/03/more-on-housing-bottoms.html
http://www.nytimes.com/interactive/2008/12/04/business/economy/HOUSING_PRICES_GRAPHIC.html

Less relevant:
http://www.calculatedriskblog.com/2009/05/fact-checking-bernanke-on-real-estate.html

By: dedogur

dedogur — Wed, 13 May 2009 21:09:50 +0000

If homes are not overpriced relative to the fixed costs to create them, then you can’t expect any price declines to be long-term unless you think we’re in for years of deflation and a population exodus out of the US. Considering the trillions injected into the economy, I think the opposite will be the case.

In Decatur, there is not much inventory, and no room to increase that inventory of single family homes. There is also a surprisingly low amount of inventory for sale. The growth rate of home prices tracks the rate of inflation for the most part in Decatur. It didn’t make some huge leap off that trend line like other places did. There many be individual exceptions of people who need to sell in the short term, or been told the sky is falling by their highly-motivated realtor. But long-term, prices in Decatur have little (if any) room to fall, and a lot of room to grow.

Regarding credit, bank lending behavior and standards in an economic crisis are not the same as that outside of economic crisis. For instance, many lenders are requiring comps sold within a 3 month period for lending appraisals, whether refi or purchase. This, and many other practices limiting lending right now are based on short term fear, and are not long term changes.

By: Macarolina

Macarolina — Wed, 13 May 2009 18:25:57 +0000

I wasn’t advocating for everyone, regardless of ability to manage finances, to jump into homeownership. Or that 22 year olds just out of college hurry into a condo or house they may not want or need just to join some bandwagon. My point was that the downpayment assistance programs serve a valuable niche of homebuyers, particularly young professionals. Perhaps because I worked for a while prior to graduate school, then was in graduate school for another while, I am glad that downpayment assistance programs were available to those with student loan debt who have carefully considered homeownership and the financial responsibility that goes along with it. I’m glad that paying one’s own way through graduate school didn’t automatically preclude homeownership and investment in the long term future. Being glad an opportunity exists is a far cry from feeling entitled to owning a home- a financial product offered to the public is not an entitlement. There are still some downpayment assistance products on the market, and my comments relate the idea of thinking prior to automatically vilifying such programs or the people that use them responsibly.

By: CSD Snowflake

CSD Snowflake — Wed, 13 May 2009 18:01:01 +0000

Agree that there’s no reason young adults should feel entitled to owning a home. First of all, if one isn’t lucky enough to inherit money from Mummy and Daddy, one needs to earn the financial stability to own a home. And two, because home ownership isn’t all that darn much fun. It’s a lot of responsibility, financial pressure, and just plain hard work. One should do it because one really wants to and is ready for that responsibility, not just to own a home like another accessory or toy. Renting can be appropriate and a heck of a lot easier. When we last renovated our home, we rented in one of those nice complexes with a pool, washer/dryer off the kitchenette, cable and broadband, and a helpful office/concierge. It was nicer than our home and I hated to leave! No yardwork, no emergency repairs, no property taxes, and reasonable monthly payments!

I once heard excellent advice–owning a home is an excellent investment IF one wants to be in the home for a long time. Over the long run, they aren’t making any more land on this planet so land values will probably always go up unless the world population declines (not likely). But over the short run, your home could go up or down in value by thousands of dollars and one has to be able to handle it. You can’t count on getting your investment out of it on short notice.

By: Matt

Matt — Wed, 13 May 2009 17:06:01 +0000

Just a quick comment. I would pretty much disregard the median home sales price (and that is pretty much what every reputable economist would say right now – http://www.calculatedriskblog.com). What a high median sales price in decatur says is that there are almost no foreclosures – which is essentially the only thing selling right now. I believe that ~50% of existing home (as in not new) sales are foreclosures. As someone stated previously, this is b/c in a foreclosure it has to sell, so the sales price is more reflective of the current market conditions than areas where people are willing to ‘wait it out’. As in most cities right now there is a huge inventory of people who would want to sell, but b/c it is hard for buyers to get financing and b/c the sellers refuse to recognize the drop in their home values, no one is willing to buy. At the same time, Decatur is definitely a LOT better off than other areas, but I’d be stunned if there wasn’t a 10- 15% drop in home values from peak to trough in decatur.

By: WinnonaMom

WinnonaMom — Wed, 13 May 2009 16:51:36 +0000

“Just because someone didn’t have parents able or willing to pay for college doesn’t mean that they should have to wait 8-10 years to have access to homeownership. ”

Huh? I guess I’m a REALLY “old timer” because I paid my way through college AND waited over 10 years to buy a house. Call me crazy, but I enjoyed renting intown during my young professional, single days.

Wasn’t part of our current real estate problem that everyone at all levels on the economic scale felt like they needed to jump into the housing market or get left behind. Isn’t that carnard busted yet?