Across the Washington region and around the country, the expectations of buyers and sellers are out of whack, thwarting deals that could potentially lift the U.S. housing sector from its long funk. The nascent rebirth of the market earlier this year proved to be a mirage. Despite record-low interest rates, many would-be buyers are retrenching, hamstrung by meager growth in their wages, gripped by fears over the possibility of losing their jobs or another recession. Sales of existing homes plunged in July to the lowest level in more than a decade, and sales of new homes were slower than at any time since the government started tracking the data in 1963. The results were far worse than some of the most pessimistic economists had expected and added to the doubts nagging at Wright and other prospective buyers, even in areas such as Washington that have been relatively insulated from the housing bust. There are now so many homes for sale and so few selling that, at the current sales pace, it would take over a year to clear the existing inventory on the U.S. market. That is more than double the time required in a healthy market and up significantly just since June. "That's a powerful cocktail working against the housing recovery," said Mike Larson, an analyst at Weiss Research. "There's going to be a long-lasting psychological hesitancy for ordinary buyers to believe again in the dream of building wealth through homeownership."
Across the Washington region and around the country, the expectations of buyers and sellers are out of whack, thwarting deals that could potentially lift the U.S. housing sector from its long funk. The nascent rebirth of the market earlier this year proved to be a mirage.
Despite record-low interest rates, many would-be buyers are retrenching, hamstrung by meager growth in their wages, gripped by fears over the possibility of losing their jobs or another recession. Sales of existing homes plunged in July to the lowest level in more than a decade, and sales of new homes were slower than at any time since the government started tracking the data in 1963. The results were far worse than some of the most pessimistic economists had expected and added to the doubts nagging at Wright and other prospective buyers, even in areas such as Washington that have been relatively insulated from the housing bust.
There are now so many homes for sale and so few selling that, at the current sales pace, it would take over a year to clear the existing inventory on the U.S. market. That is more than double the time required in a healthy market and up significantly just since June.
"That's a powerful cocktail working against the housing recovery," said Mike Larson, an analyst at Weiss Research. "There's going to be a long-lasting psychological hesitancy for ordinary buyers to believe again in the dream of building wealth through homeownership."
Home sales, showing new signs of life two years after the credit crunch drove down home prices, must gain more ground before policy makers can "declare victory," Housing and Urban Development Secretary Shaun Donovan said. "It is too early to certainly declare victory," Donovan said in an interview for Bloomberg Television's "Political Capital with Al Hunt," airing this weekend. He said prices picked up over the last year and Americans added $1.1 trillion in equity to their homes. An index of pending home sales rose an unexpected 5.2 percent in July, the National Association of Realtors reported Sept. 2, after seasonally adjusted pending sales dropped 2.8 percent in June and almost 30 percent in May. July 2010 was down more than 19 percent from a year ago.
Home sales, showing new signs of life two years after the credit crunch drove down home prices, must gain more ground before policy makers can "declare victory," Housing and Urban Development Secretary Shaun Donovan said.
"It is too early to certainly declare victory," Donovan said in an interview for Bloomberg Television's "Political Capital with Al Hunt," airing this weekend. He said prices picked up over the last year and Americans added $1.1 trillion in equity to their homes.
An index of pending home sales rose an unexpected 5.2 percent in July, the National Association of Realtors reported Sept. 2, after seasonally adjusted pending sales dropped 2.8 percent in June and almost 30 percent in May. July 2010 was down more than 19 percent from a year ago.
MILWAUKEE -- When the housing bubble burst, one of the culprits, economists agreed, was exotic mortgages, including those that required little or no money down. But on a recent evening, Matthew and Hannah Middlebrooke stood in their new $115,000 three-bedroom ranch house here, which Mr. Middlebrooke bought in June with just $1,000 down. Because he also received a grant to cover closing costs and insurance, the check he wrote at the closing was for 67 cents.[...] Although home foreclosures are again expected to top two million this year, Fannie Mae, the lending giant that required a government takeover, is creeping back into the market for mortgages with no down payment.
MILWAUKEE -- When the housing bubble burst, one of the culprits, economists agreed, was exotic mortgages, including those that required little or no money down.
But on a recent evening, Matthew and Hannah Middlebrooke stood in their new $115,000 three-bedroom ranch house here, which Mr. Middlebrooke bought in June with just $1,000 down.
Because he also received a grant to cover closing costs and insurance, the check he wrote at the closing was for 67 cents.
[...]
Although home foreclosures are again expected to top two million this year, Fannie Mae, the lending giant that required a government takeover, is creeping back into the market for mortgages with no down payment.
There's going to be a long-lasting psychological hesitancy for ordinary buyers to believe again in the dream of building wealth through homeownership."
I'll say this one final time and then, I promise, I'll shut up.
The idea of "...building wealth through homeownership." is relatively new; thirty years ago my Ph.D. Prof in Davis owned 14 houses, 12 of which he rented, but that was not the buy and flip days. What I tell my students is, once you have a stable job (best bet ... work for the Fed. Govt.) stop flushing money down the toilet in the form of rent cheques and get a place you can own/afford.
That's it. Sorry to bother you. In the end, might makes right. Nothing has changed since the caveman.
Ten years ago, when the housing prices were much lower than they are now (and the rents comparatively higher), you certainly could make the case. Nowadays, you'd better take a cold hard look at the numbers before deciding whether this is the best use of your money.
Your mileage may vary of course, depending on the local situation in your country/region, house price trends, rental costs, renters protection (or the lack thereof)...
That's where the rub is: home ownership as a social status more than a rational financial decision is so ingrained in our social consciousness that we don't even pause for a thought, so convinced we are that "renting is throwing money down the drain". That's the cornerstone of the pwn3rship society touted by W and his European ilks. Europeans think a hundred miles is a long way. Americans think a hundred years is a long time.
If you stay in your house 10, 20 years or more, buying it is certainly the best plan (unless exceptional circumstances such as Detroit or Baltimore). Less than 10 years? Better do the numbers before: closing costs, property taxes, maintenance works... In many places (not Sacramento, though according to the NYT), you'll only get ahead if your house appreciates several percent every year. Who can be sure of that?
Younger people are more likely to be moving to another place in less than 10 years: better think twice before getting shackled. Again: your mileage may vary, depending on the market and regulation in your country/region. Europeans think a hundred miles is a long way. Americans think a hundred years is a long time.
