Wednesday, April 22, 2009

Required Reading

This New York Times article has been making the rounds, and I strongly suggest reading it from top to bottom:

The Bottom for Housing is Probably Not Near

As is often the case at these auctions, the seller of the condo — Fannie Mae — retained the right to refuse the winning bid and keep the property. But Mr. Houtkin told me he was optimistic his bid would be accepted. An R.E.D.C. employee suggested to him that $30,000 wasn’t much below the minimum price that Fannie Mae had hoped to receive.

How could that be? Because Fannie Mae, like many banks, is inundated with foreclosed properties. In recent weeks, banks have begun accelerating foreclosures again, after having held off while waiting to find out which homeowners would be eligible for the Obama administration’s assistance program.

The glut of foreclosed homes creates a self-reinforcing cycle. Falling prices lead to more foreclosures. Foreclosures lead to an excess supply of homes for sale. The excess supply then leads to further price declines. Jan Hatzius, the chief economist at Goldman Sachs, says that the “massive amount of excess supply” means that home prices nationwide will probably fall an additional 15 percent.

via CalculatedRisk


  1. Fall 15% - over what time frame.
    By end Q2 maybe!!

  2. Except Long Beach, Ca. According to the Real Ass State community, prices are going up, and after the next couple of months no homes will be available for sale. Haha, it means, no need for used house salesmen.


  3. Hey LTO!!! We all know that the LBC is different. The economy, and the 11.2% statewide unemployment will NOT affect Long Beach.

    I also know that everyone in Long Beach who bought between 2002-2008 used at least 40% down, and has a conventional 30 yr. fixed, so when the refi, then will have the required LTV.