How much value your house will lose

[russ 1]

http://money.cnn.com/galleries/2007/fortun...tune/index.html

My market is #3 on the list. After prices fell 10.8% last year, it looks like we still have 34% to go. Good news, since I'm looking to buy a house in the next 2 years.

[w¡n9Nµ7 §£@¥€r 123]

A few years ago, there were media articles denying the very existence of a real estate bubble and saying valuations were 'fair'.

The media knows nothing. Let's see how this pans out.

ps. A new construction in my town had an asking price of 399k, was recently jacked up to 419k. I have a feeling they priced below market to get a bidding war and they got it.

ETA: the article predicts 15.7% decrease over the next 5 years in Northern/Central NJ. I can live with that.

Edited November 8, 2007 by VJ Troll

[russ 1]

A few years ago, there were media articles denying the very existence of a real estate bubble and saying valuations were 'fair'.

For such a surge in prices without any corresponding increase in real earnings, obviously it was a bubble.

The way they generated these numbers is important - comparing rents to sale prices, and watching how that multiplier changes. It is 14.5 here in Tampa, where an average rental is 1000 sq ft at $900/month. That would imply that an average house should be about $156,000.

Prices here suddenly jumped about 40-50% in the bubble here, a 30% drop is really just going back to reality. Of course, the surplus of units built during the boom has left a big inventory that will probably push prices even lower.

[Jasman0717 9]

I went through this before so will ride this one out. It may mean working a bit longer but that will just increase my retirement

[w¡n9Nµ7 §£@¥€r 123]

A few years ago, there were media articles denying the very existence of a real estate bubble and saying valuations were 'fair'.

For such a surge in prices without any corresponding increase in real earnings, obviously it was a bubble.

The way they generated these numbers is important - comparing rents to sale prices, and watching how that multiplier changes. It is 14.5 here in Tampa, where an average rental is 1000 sq ft at $900/month. That would imply that an average house should be about $156,000.

Prices here suddenly jumped about 40-50% in the bubble here, a 30% drop is really just going back to reality. Of course, the surplus of units built during the boom has left a big inventory that will probably push prices even lower.

Agreed.

And consider this: the surge in construction during the bubble years was, in part, to meet the artificially high demand created by 'exotic' loan products. Many of those people had no business owning and will be washed out in the chaos of the next few years. So what happens to the housing stock? A large number of owners will no longer be owners and will revert to their natural state of renters. A portion of the existing housing stock will, therefore, have to become rental stock. What happens to those neighborhoods?

The answer to that will, in large part, dictate what happens to prices in your neighborhood. NJ.COM has old (2005) data on subprime origination in New Jersey showing, by census tract, the % of subprime originations. Watch those neighborhoods for deep values in the years ahead. JMHO.