The sinking feeling in home values
Zillow: Nationwide decline to hit $2 trillion in '08
By Inman News, Monday, December 15, 2008.Research conducted by Zillow, a company that provides online real estate values and other information, found that U.S. home values will plunge a total of $2 trillion this year.
Home values dropped 8.4 percent year-over-year in the first three quarters of 2008 compared to the same period last year, Zillow reported today, for a total nationwide home-value loss of $1.9 trillion.
One in seven (14.3 percent) of all homeowners were underwater by the end of the third quarter, owing more on their mortgage than their homes are worth.
Out of 163 metro areas tracked in Zillow's market report, 30 had gains during the first three quarters of the year compared to the same three quarters in 2007.
The values are based on the company's estimated values of individual homes, which are calculated with a proprietary formula. The company's value index calculates the median value of all single-family homes, condos and cooperatives in a given area using this formula, regardless of whether the properties are for sale.
All of the top-five worst-performing markets for home-value changes during the first three quarters (compared to the same period last year) are in California, while three of the five best-performing markets are in North Carolina.
The Stockton, Calif., metro area was the worst-performing housing market in the country during the study period, with values diving 32.3 percent in the first three quarters of 2008 compared to the same period last year. Next on the list was Merced, Calif. (down 31.2 percent); followed by Modesto, Calif. (down 30.4 percent); Salinas, Calif. (down 30 percent); and Vallejo-Fairfield, Calif. (down 27.8 percent).
And the best-performing housing markets during the same period were Jacksonville, N.C. (up 4.9 percent); Winston-Salem, N.C. (up 4.1 percent); Anderson, S.C. (up 3.5 percent); State College, Pa. (up 3.4 percent); and Burlington, N.C., up 3.1 percent.
The latest quarterly University of California, Los Angeles, Anderson Forecast noted that declines in U.S. home prices since a record peak in 2006 amount to an estimated $4.5 trillion loss in wealth. And that is coupled with a stock-price slide valued at about $7.4 trillion since December 2007 (see Inman News).
And the Federal Reserve reported this month that the combination of falling prices and stock-market declines amounted to a U.S. household loss in wealth of about $2.8 trillion during the third quarter alone (see Inman News).
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Submitted by Wenceslao Fernandez Jr, BS, Realtor, CDPE on December 15, 2008 - 5:17pm.
As we all know...all real estate is local, and in Miami-Dade County, Florida, we have, not surprisingly, seen pretty dismal results as well.
The Average Active Price in 11/07 was $545,000 while the Average Sold Price was $471,000 or about 15.7% less.
However, for 11/08, the Average Active Price of a home in Miami was $509,000 or 7.7% lower than during the same period a year ago while the Average Sold price was $299,999 or 69.23% of the Average Active Price in 11/08 and a drop of 57.53% from 11/07 Sold prices.
Similarly, the Median Price of homes in our county dropped from $298,000 to $189,000 year over year or a drop of 57.67%. This represents an average price drop of roughly 4.8% per month.
It is clear to see that homes in Miami-Dade are now better than half priced!!!
Between October and November, 2008 alone, we experienced a drop of 10.58%, which is a slight increase from the previous 2-month period which reflected a drop of 10.04% between September and October, 2008.
For sellers in distress who are looking to salvage as much of their credit standing as possible, this means that it is time to turn up the heat with your lender, write to your congresperson, and do anything and everything possible to make sure the negotiation of your short sale goes as smooth as possible.
For sellers who are still looking to recover their investment and can afford to stay, the best way to handle this is to turn off the news channels and reconnect in about 5 years. The sooner you get off the market, the sooner our inventory drops and the faster the months of inventory will begin to approach the more normal levels of 6-9 months rather than the current 26 months (based on Pending sales) or 43 months (based on Closed sales).
For buyers, this means that you should pair up this price drop opportunity with today's low rates which are among the lowest in about 4 years.
By 2013/4, when most of this craziness is hopefully behind us, you will want to know you were among the brave and smart folk who invested in 2008/9. After all, why else are there lines at Wallmart or Macy's if not to take advantage of sales events?
Real estate is also "on sale" and will likely remain this way for a while. Some think it may be a couple of decades!
Jim Cramer of CNBC's Mad Money has predicted 6/30/09 as the day America's real estate hit bottom.
As interest rates drop and other incentives are implemented by the incoming Obama administration, we will begin to see a gradual stabilization of the market.
Of course, the recovery back to 2006 price levels may still take years. But if you buy right today, there is no foreseable reason why you couldn't feel proud come this time 5 years from now in 2013/14 (except...you may wonder why you did not buy even more!).
If you wish to receive my monthly newsletter with local statistical data or have any questions about the real estate market in my area, don't be shy and write.
www.MiamiRealEstateKing.com
Certified Distressed Property Expert
Miami-Dade County, Florida.