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Michael David White has seventeen years in real estate as both lender and owner. He has purchased and sold more than 275 properties for his own account. Mr. White, the CEO of The New Mortgage Company, originates residential mortgages from his office in Chicago’s Loop financial district. He is... More
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  • Conservative Property Index Predicts We Are Less Than Half Way Through Fall 1 comment
    Nov 8, 2009 06:27 PM | about stocks: DMM, FNM, FRE, FRI, ICF, ITB, IYR, UMM, VNQ, XHB
     

     

    Price Trends / The most conservative price data on residential properties predicts that values have fallen from the peak less than half of the way towards their long-term trend.

    The total projected fall from Federal Housing Finance Agency (FHFA) data shows a peak-to-trend fall of 27%. Values on this index have fallen 11% from the high. The index predicts prices will fall an additional 18% from their current levels (please see chart above “Figure 2: Monthly House Price Index for USA”).

    The FHFA prediction of a total fall of 27% is far less than the total fall of between 49% and 60% predicted by Case-Shiller. Click here and here to see recent posts with Case-Shiller data on either 22 years or 118 years of prices.

    Based upon the three data sets reviewed, we can estimate a total fall of between 27% to 60% from the bubble top to the long-term trend. After averaging the three indexes, we may estimate a total fall of 45% from the bubble high.

    Looking ahead from today, property values will fall a total of between 18% to 44% if they return to trend. The average of the three data sets says we still have 27% to fall from current levels. Please see the chart below which shows the three data sets and the averages.

    Click here to see the data in both numbers and charts at “Property Price Index”.





     

     

    Themes: Bailout, bank crisis, Bank losses, banking crisis, banks, financial, Financial Crisis, housing, modification programs, mortgage crisis, negative equity, plan orange, property values, real estate, TARP Stocks: DMM, FNM, FRE, FRI, ICF, ITB, IYR, UMM, VNQ, XHB
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