Three Notes on Housing

1) One part of the story that does not get much play is the demographic story on real estate. (Note graph.) Baby boomers will try to cash out of homes to fund their retirement. Now, that effect will vary by region, because oldsters will want to live in warmer or drier climates. Perhaps apartments in Florida, the South and the West will benefit, as homes in the Midwest and Northeast languish. Then again, at least in the Midwest, it would be cheap to live there, as well as less popular areas in the South. Perhaps we should turn New Orleans into a haven for retirees.

2) Housing prices down by another 25-30%? Sounds too severe to me, but markets do overshoot, particularly illiquid markets.

3) Even when recourse is available, lenders often find it not worth their while to pursue those who “mail in the keys.” There are many who are giving up on their homes, and rationally so, because they know that the home is beyond their means. They may have known it from the time they took out the loan, realizing that they got a lot more house than they ever dreamed of. Well, we wake up from dreams and face reality. Given the slipshod nature of the lending, many banks will not pursue for recourse. You can’t squeeze blood from a stone.

Comments

[Rocktex]

I love your 3rd note. Exactly what I have perceived and argued with real estate professionals who favor a short-sale approval from banks. Please see my article at:
A Funny World (16): Why ASK Lender's Mercy? Why Don't You Do Lender a Favor? activerain.com/blogsvi...

I believe, I am an optimist who always says "tomorrow will be better" as Annie sang. But to your 2nd note, I am unable to get your point cross. Housing prices go down 30% will be too much for you? Common, give me a break!

The price cut, more than 30% off the peak is here NOW in the most California areas. What do you expect where it shall go from the present point of time? If you anticipate now is the housing bottom and against the public sentiment, yes, you can say it will go North. But I doubt you were.

Certainly, you may have a good reason to say: “you get my idea wrong. I am using the year of 2000 as the base year.” Well, everybody can have different stats just as Zillow.com counts a forced “foreclosure” as a volunteer “sale” and included it into its area sale figures of normal transactions at its website. What can I say?

[Rocktex]

My friend David,

Here is a piece of brief quoted from Judy's housing tracker, for your reference:

Home Prices Coming Down In Area
Arthur Broslat of Re/Max Palm Realty in Port Charlotte said there is a sizable local inventory of "relatively new" homes... selling for 40% of what they went for three years ago: "I'm showing a... home in North Port that was selling for $250,000 in 2005. Now, you can get it for $130,000 to $150,000." Jason Painter of Program Realty LLC in Port Charlotte, who specializes in Cape Haze real estate, said home prices there "are off a good 35%." (Sun Herald, Jan. 22nd)