What you said about home prices
As of 9 a.m. today, 77 percent of you declared falling home prices to be a good thing. Twenty-three percent of you say it's bad.
That might suggest that a lot of you are trying to buy a home, especially your first home.
But the other nugget I draw from this is -- in case it wasn't clear already -- you're not in lockstep on this issue. Seventy-seven percent may be a significant majority, but almost a quarter of folks is nothing to sneeze at. And both sides have cogent points to make, because some of you have made them here already.
If you wonder why I do my best to present information without saying "this is good" or "this is bad," well ... this is why. It's sometimes clear that something is good or bad for a particular group, like borrowers, but often the ripples are pretty complex. (And besides, I'm a reporter, not a columnist -- damn it, Jim -- and so I really need to stay away from opinionatin'.)
But that's OK. You get to bring your own opinions. And I'm always interested to hear them.
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Comments
Lower prices on the surface may appear to be a good thing but anytime you have price contraction there are victims. Those victims will have less to spend than otherwise thus putting a drag on the economy and believe it or not entry level housing.
If buyers don't have the resouces to step up to buy larger houses how are entry level homes ever going to drop to realistic "values."
Prolonged declining home values are NOT a good thing. Not even for those that think they benefit from them. Slow growth is the best thing, but we are far beyond that. Let's hope for slow growth 3% and not any more "price corrections" and certainly not hyperinflation.
Posted by: Anonymous | February 24, 2009 12:44 PM
"Slow growth is the best thing, but we are far beyond that. Let's hope for slow growth 3% and not any more "price corrections" and certainly not hyperinflation."
Agreed. The question that comes into play is how far back you go to establish a 'reasonable" price level for a given property to which you then apply that 3% multiplier.
This is the crux of the "price corrections" that are going on.
The tougher ones to do this on are the new homes purchased during the price rising crest. Not impossible... just tougher.
Tough as in sticking in the craw of that buyer who genuinely thought a $150K house was worth the $275K he committed himself to.
Posted by: MrRational | February 24, 2009 12:59 PM
Anonymous, not having the resources to move up to a larger house means that the prices of such houses will have to come down lest the house sit on the market forever. As the high-end comes crashing down, it puts pressure on stuff in the middle and at the lower-end of the market. Thus, an across the board price decline takes hold. Now average people will soon be able to own what they want without an obscene amount of debt, particularly later this year. Those who were serious about living within their means will be treated by lower costs to move up due to the nature of percentage declines.
Prolonged declining values are bad, yes, but so is the hyperinflation that gripped the real estate bubble. Bringing prices down to sustainable, historically-normal levels is the fastest way to end the housing depression. Housing prices were propped up by easy money and they're slowly coming back to reality now that the easy money has been removed. Some people will get trampled in the process due to the way risk works, but most of those "victims" were the ones hoping for the best and planning for something even better instead of planning for the worst.
Posted by: BigDragon | February 24, 2009 2:35 PM
BigDragon,
Why would someone sell a large house at a loss? How will someone who's is upside down on a mortgage take advantage of the lower price on a bigger home. What you will see is lower values and continued stagnet home sales market. Only those that have to sell will do so. Kinda like now but for a much longer time period. Can we handle that?
Posted by: Anonymous | February 25, 2009 2:29 PM