I think we are in this for another 2-4 years. I don't think that home prices will ever return to a level where people will move up as an investment strategy. My home is so underwater, I am just disgusted, but I invested too much in it and can only hope the area improves. Fortunately, I didn't buy my home for a quick investment, don't have kids, so I don't care about the schools...My location to everything in the area is the only thing that is keeping me from walking away and just renting again.

I'm reminded of the annoyed child in the back seat during the family road trip: "Are we there yet?" No Johnny, we aren't there yet.

But neither do the parents inform little Johnny of just how long the trip really is... choosing instead to describe the distance or time to certain roadside attractions along the way.

We'll be at the swimming pool at around 3pm (Read: Hotel, room service, and bar) which gets Mom and Dad through the first day.

The next day they'll have to figure some other story to tell Johnny to keep him entertained and away from the dreaded question: "Are we there yet?"

And so on.

And there is still far too much talk of 'investment" rather than simple housing and community and the principle of mortgage interest deductions for the stable when discussing a family (or dink) home for the 20-30 years a mortgage will require to be paid off.

There is just way too much uncertainty out there for a truly accurate forecast. My humble opinion is that if everything stays on the track it is now, the local market will bottom out mid next year, but won’t come storming back like before. We will more than likely see under 3-5% gains for a little as this all works itself out, which is probably not too bad of a concept. However, there are so many factors out there that can just blow everything up if they fester any further. Rising unemployment, foreclosures, “strategic” foreclosures, shadow inventory, eventual increase in interest rates, further bank failures drying up credit, and other issues could be of concern in the future.

M it isn't about the specific accuracy of any forecast (whether this group Jamie referred to today or yours or mine included).

It is about the steady reporting of declining numbers in dribs and drabs from multiple sources that people can be distracted with by arguing the fine points of as they digest the larger lesson without going so far as to un-digest their breakfast in the process.

A price drop of 11 percent "from here" would only be meaningful if "from here" prices were not overinflated, and most of them are - as evidenced by the considerable length of time houses are sitting on the market, unsold (especially in the above $500,000 range).
As long as sellers (and their agents) continue to price homes within 5-15 percent of all time (bubble) highs, it is completely unreasonable to assume the bottom is only @11 percent below "here".

Well, mbt, there's a difference between asking prices of homes and selling prices. Fiserv is projecting an 11 percent drop from the median SALES price in June. You're right that a number of would-be sellers would have to decrease their asking prices more than that to attract buyers.

I say this to my friends and colleagues very often and everyone agrees with me. Why would housing prices stop coming down in this area? The housing market was a bubble caused by greed, fraud and ignorance. The "ridiculous" prices started about 2001-2002. If you bought something after that time - you overpaid. Plain and simple. Regardless if someone overpaid for your house. I find it funny those who think we have "stabalized" or "bottomed" when we have ridiculously low interest rates, first time buyer credits, calls from the real estate industry to continue credits, mortgage modifications, blah, blah. The problem for people who can afford to buy a house now is that you may be buying something that could lose half of its value easily once interest rates rise and all of this "assistance" is gone. Let free markets happen. it will be painful people but as soon as we let housing prices lower and chips fall where they may - we can get on with our lives. Otherwise - like people listing their homes these days outrageously high - you are simply "hoping". Good luck with your lottery tickets.

A post about falling home prices and Darwin Rules hasn't shown up for the party. I'll take his place:

1997 prices here we come!

Hee! That made my day.

Not sure if any "nationwide median" forecast can even be taken seriously. Forget the "nationwide" part - even here, in MD within every country and within every price segment we can see different tendencies and different effects.

My personal forecast is that, if there will be no buyer credit extension, the prices will fall about 5% in the price range <350K and 10% and more in the price range above.

If the credit gets extended, the prices will most likely stay flat or might even go up in the lowest pricing segment.

People are starting to realize that they need to live within means and are looking for more affordable homes. And, if you haven't noticed yet, there are not that many of them to begin with.

There are more ARMs waiting to reset and more foreclosures are coming in 2010. Some unforeseen circumstances aside, I don't think we'll see the bottom of the housing market until employment market will start improving.

Just one observation though - the non-foreclosure sellers might actually be in a good position right now because the banks are taking so long to respond on their foreclosures. But if the banks improve their procedures, that advantage will be lost and the _median_ price might go down slightly further.

I'd be willing to accept 1999 prices as the likely "bottom" for home prices, but Kevin R. (and, vicariously, Darwin Rules) have the thrust of it: home prices have MUCH further to fall before homes prices stabilize.

What most people do not realize is that there was a speculative run up in the price of property, a bubble!
In the heat of the bubble the prices did not reflect people's ability to pay.

Simply put, across the US, the values of property will drop to erase the bubble and will return to normal valuation based on peoples ability to pay!

Combine this with a squeeze on wages and property values will drop MORE than expected.

I think we have almost hit the bottom. My original estimate back in '07 was that we would reach the bottom in '10. I think I am going to push my prediction back a couple years to '12. I think when the Gov't passed the Debt Forgiveness Act, they knew that the problem was much worse then anyone ever anticipated. This law allows homeowners not to be held liable for the loss of their home until '12. The lender sends the homeowner a 1099 as income for the loss. Then they file the IRS tax form to write it off. More and more people will walk away from their home as they become more and more underwater. They are calling these "strategic foreclosures". They let their underwater home go, and buy another home in cash for the lower price. It is happening all the time.

In MD, the main sales are REO's, foreclosures, short sales, etc. Those sales are driving down prices at record paces. A homeowner who is not delinquent will ask for the full price. They can't compete with these distressed properties. Most people can't afford to lower their price and take a loss on their home. They have no choice but to be firm with their price or continue living there.

If you are a buyer in this market, and not looking at REO's, then your agent is not serving you well. Bank owned properties is where you find the best deals. That is what everyone wants in todays market. "Let's buy a foreclosure". Only problem is, most agents do not deal with these distress sales. They try to push clients to buy homes on their MLS. I wonder why?

House prices never fall!

Its hard to comment here because there is very little meat on the bones of the analysis. In terms of the responders, I tend to agree with the observation, "As long as sellers (and their agents) continue to price homes within 5-15 percent of all time (bubble) highs, it is completely unreasonable to assume the bottom is only @11 percent below "here".

The only thing that I am convinced about is that prices will not be going up and that buying an expensive house is a poor, risky investment in the 3 year window ahead.

sorry i am late to the party - very busy this week. But it is Friday and I'm gonna party like it's 1999 (and so will the rest of the area in the next couple of years)!! little debbie your invite is on the way - no guns allowed, and your gold will not be confiscated

Some folx dont give up...

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