Jamie

Would it be safe to say its a buyers' market these days ?

When my mortgage payoff and retirement comes , the talk of ' price reductions ' will be thing of past ( fingers crossed )

Do these numbers include the sales that were under asking price? I've seen quite a few sales records lately that did not have price reductions but the selling price was much lower than asking price.

What will it take for the sellers to realize it's not 2005 anymore? Why don't they at least take a realtor and tour other properties for sale? Why don't they check their schools, crime data, etc.? Do they think buyers have no Internet?

Jelena, these figures are only for homes on the market, not sales.

Allan, it's been a buyer's market -- in the sense that buyers have the upper hand over sellers -- for several years now, if you judge these things by inventory vs. sales and falling prices. (Of course, competition for lower-priced homes toward the end of the tax credit period shifted some of the balance of power toward sellers temporarily.)

The "natural forces" of the economy are striving for deflation - while our bailout nations leaders are throwing more and more cash at avoiding what is probably (hopefully!) inevitable.

Looking at the data over the last century, the massive bubble of the last decade is not yet reverted to the mean. I truly beleive that "what goes up must come down", and thus I am willing to call it a sellers market as long as they can pass off a home for anything more that late 1990's prices. It becomes a buyers market when we start seeing late 1990's prices.

DR:

In real or nominal terms?

Debbie,
When deflation kicks in, real and nominal may hit parity - so I am suggesting very near nominal prices!

Cash will be king - those that rpepare will be able to buy ahome with cash at nominal 1990's prices - YEAH BABY, YEAH!

This is more a reflection on seller's attitudes than the health of the market.

DR, parity would be at an inflation rate of zero. Deflation would lead to a flip flop of traditional positions. Real means to adjust for changes in the price level or purchasing power, either up or down. Nominal is just the number, but makes no consideration of what that number could actually buy compared to what it could have bought at a different time.

I couldn't agree more with DR. Homes are still disgustingly over priced and sellers need to wake up and stop living in denial of what their house is actually worth in today's economy.

DR,

I thought you were predicting extreme inflation?

Say my house sold for x in 1987 and y in 1995. Can you provide me with an algebraic formula to let me know what my house is worth now and what it will be worth in 2 years and 5 using both variables. (I'm serious).

DR:

What will the prices of gold, oil and gas be?

How are you investing your money with MASSIVE deflation on the horizon?

Will you still have a job in this post apocalyptic revelation?

I wonder what this will do to home prices?

http://finance.yahoo.com/news/Homes-lost-to-foreclosure-on-apf-1853308236.html?x=0&sec=topStories&pos=main&asset=&ccode=

Homes lost to foreclosure on track for 1M in 2010
US homes lost to foreclosure on track to eclipse '09 levels as banks work through backlog

Alex Veiga, AP Real Estate Writer, On Thursday July 15, 2010, 12:17 am
LOS ANGELES (AP) -- More than 1 million American households are likely to lose their homes to foreclosure this year, as lenders work their way through a huge backlog of borrowers who have fallen behind on their loans.

Nearly 528,000 homes were taken over by lenders in the first six months of the year, a rate that is on track to eclipse the more than 900,000 homes repossessed in 2009, according to data released Thursday by RealtyTrac Inc., a foreclosure listing service.

"That would be unprecedented," said Rick Sharga, a senior vice president at RealtyTrac.

By comparison, lenders have historically taken over about 100,000 homes a year, Sharga said.

The surge in home repossessions reflects the dynamic of a foreclosure crisis that has shown signs of leveling off in recent months, but remains a crippling drag on the housing market.

The pace at which new homes falling behind in payments and entering the foreclosure process has slowed as banks continue to let delinquent borrowers stay longer in their homes rather than adding to the glut of foreclosed properties on the market. At the same time, lenders have stepped up repossessions in an effort to clear out the backlog of distressed inventory on their books.

The number of households facing foreclosure in the first half of the year climbed 8 percent versus the same period last year, but dropped 5 percent from the last six months of 2009, according to RealtyTrac, which tracks notices for defaults, scheduled home auctions and home repossessions.

In all, about 1.7 million homeowners received a foreclosure-related warning between January and June. That translates to one in 78 U.S. homes.

Foreclosure notices posted monthly declines in April, May and June, but Sharga said one shouldn't read too much into that.

"The banks are really sort of controlling or managing the dial on how fast these things get processed so they can ultimately manage the inventory of distressed assets on the market," he said.

On average, it takes about 15 months for a home loan to go from being 30 days late to the property being foreclosed and sold, according to Lender Processing Services Inc., which tracks mortgages.

Assuming the U.S. economy doesn't worsen, aggravating the foreclosure crisis, Sharga projects it will take lenders through 2013 to resolve the backlog of distressed properties that have on their books right now.

And a new wave of foreclosures could be coming in the second half of the year, especially if the unemployment rate remains high, mortgage-assistance programs fail, and the economy doesn't improve fast enough to lift home sales.

The prospect of lenders taking over more than a million homes this year is likely to push housing values down, experts say.

Foreclosed homes are typically sold at steep discounts, lowering the value of surrounding properties.

"The downward pressure from foreclosures will persist and prices will be very weak well into 2012," said Celia Chen, senior director of Moody's Economy.com.

She projects home prices will fall as much as 6 percent over the next 12 months from where they were in the first-quarter.

Economic woes, such as unemployment or reduced income, continue to be the main catalysts for foreclosures this year. Initially, lax lending standards were the culprit. Now, homeowners with good credit who took out conventional, fixed-rate loans are the fastest growing group of foreclosures.

There are more than 7.3 million home loans in some stage of delinquency, according to Lender Processing Services.

Lenders are offering to help some homeowners modify their loans. But many borrowers can't qualify or they are falling back into default. The Obama administration's $75 billion foreclosure prevention effort has made only a small dent in the problem.

More than a third of the 1.2 million borrowers who have enrolled in the mortgage modification program have dropped out. That compares with about 27 percent who have received permanent loan modifications and are making payments on time.

Among states, Nevada posted the highest foreclosure rate in the first half of the year. One in every 17 households there received a foreclosure notice. However, foreclosures there are down 6 percent from a year earlier.

Arizona, Florida, California and Utah were next among states with the highest foreclosure rates. Rounding out the top 10 were Georgia, Michigan, Idaho, Illinois and Colorado.

AP Real Estate Writer Alan Zibel in Washington contributed to this report.

I think this tells us that Home Prices are on the rise!! Back to the bubble prices but this time I bet is different as far as people paying their mortgages because of the better employment picture and all. JP Morgan just reported an awesome profit this morning. Financial industry is back to doing business. Glory days are here again!! I am trading up houses..I need a bigger bedroom!!!

Debbie - you're right I felt (and still feel) hyperinflation is on the horizon, due to the Feds massive quantitative easing. Problem is, they cannot keep up with the massive deflationary forces as defaults and write offs takes hold, due to all of the imaginary, digital monetary units created during the credit boom. Foreclosures and short sales are extremely deflationary. I know it is very difficult to time markets, but I feel that there are still billions in bad loans of all types that are going to have to be resolved before we hit the nadir. Once we do, however, I believe the effects of the dollar printing presses will take hold quickly and there will be a short window to buy hard assets before inflation destroys purchasing power.

My plan: Hoard dollars and pay down all debt. Keep a close eye on market forces, and try to shed the dollars buying hard assets - real estate, gold are good examples - when the price is right. Based on historical prices, I am still holding for late 1990's real estate prices as a target.

For what it is worth, being completely debt free and having savings building up every month is a very liberating feeling.

I second what DR said.

We had deflation or disinflation in late 2009, then inflation in first half of 2010. Now we are entering another deflation situation. Look for the Fed to pump serious amounts of money to try to counter deflation.

But I'm not so sure that I believe we will have hyperinflation or mass inflation. Should either of those occur, the Rothschilds will lose money on their bonds and I doubt they would let that happen. Expect a target of slight to moderate deflation since this will make bonds worth more. Just have to remember who owns the financial system and try to think from their viewpoint.

Very good point Bubblemore - the oligarchs have truly hijacked the government and our system. We will see if they can maintain control of the beast.

So you are going to allow anti-Semitic slurs to be bandied about?

I am officially finished with this blog and cancelling my Baltimore Sun subscription.

"Little Debbie," neither Bubblemore nor Darwin Rules' comments struck me as across the line in a way that would require me to delete them. See it from my point of view: Do I delete comments that suggest wealthy people have more influence over the financial world than average Joes? That's a pretty worrisome thing for a newspaper blogger to do, don't you think?

That's how I read these comments. Admittedly, I knew nothing about the Rothschilds at the time, and I've been reading up since your complaint. I take it that you see these comments as playing into anti-Semitic conspiracy theories that the Rothschilds by themselves control the world's financial institutions.

You're welcome to leave, though I'll miss you. But I'd suggest you instead start up a conversation by asking Bubblemore how he meant it.

Don't worry "Little Debbie". You should be able to ignore comments like those even if they are unwarranted, unfounded, and plain wrong.

Who really owns our financial system? THE GOVERNMENT!!!!! Besides, I am pretty sure it is China and Japan who are our largest debtors and continue to fuel/fund our out of control spending.

Regardless, that has very little to do with real estate values. As I pointed out in the other thread on how to end the crisis, no one responded. I don't understand why. I suppose it was a bit drastic and would cause more pain. But isn't that what we need to end this? As long as foreclosures continue to increase year over year, how can anyone say this is over? I just don't get it. Maybe, I never will.

If this will continue for another 3 years and you estimate over that time period there will be 4 million additional foreclosures, why wouldn't we want to foreclose on the 4 million THIS YEAR or at the very worst NEXT YEAR to get it over with? Why do we want to continue this over such a long period of time? What will that accomplish?

I don't see any anti-Semitic comments. I see an anti-Rothschild, and anti-international banker comment, but nothing more.

LD, you're clearly smart and highly analytical. I think however you're reading way too much into this. Many, including myself are anti-Rothschild, and anti-international banker conglomerate, without being anti-Semitic. I didn't even know the Rothschilds were Jewish until looking it up just now.

On a final note, why don't you use your superpowers to enlighten the masses instead of try and make them feel inferior?

I'm going to answer your math question for the benefit of anyone who cares: It's a compound annual growth rate problem, followed by a compound interest problem. The CAGR problem can be thought through as "what is the fraction that if multiplied by itself for the number of years compounded would yield the total fraction growth?" In formula form you have (end value/start value) to the Nth root-1. The Nth root can be expressed as to the power of 1/N. After calculating the CAGR, you then see what that growth rate would have grown to today, which can be thought through as if we multiplied this interest rate by itself for N years, what would the result be? Formula for that is: FV=PV(1+your CAGR)to the Nth power.

Wait a minute. If the Banks are posting record profits. Homeowners are asking bubble prices and some people are STILL buying them...What am I missing? What is the problem?

Oh - and Frank, I would say Wall Street runs the govt. Not, the other way around.

It looks like "Little Debbie" has packed up her snack cakes and left the room!
All kidding aside - I have honestly enjoyed many of Debbie's comments on this blog and I'd hate to see her leave. I do feel that leaving permanently is a slight overreaction. I disagree with DR and Bubblemore 99.99% of the time however I did not interpret the "Rothschilds" comment as being racist.

I hope you stick around Debbie!

Huh?

In all honesty - not that it matters - but i thought the Rothchild's were of British extraction - nevertheless, to me the name is synonymous with the oligarchs who have robbed the common citizen blind. So I admit, my history trivia is a little off.

Peter,

The reason banks are posting profits is because of the new accounting method being used. Mark to market is no longer. Otherwise, the banks would still be required to raise capital or would be posting losses. Ever since this change took effect, the banks have been making money. Also, when you borrow money at 0% to .25% and buy Treasuries that yield a decent return, it would be pretty difficult to post a loss.

As far as the banks owning the government, I would agree with that other than the fact that the banks were forced by Paulson to take the TARP. If they refused, their CEO would be taken out and the government would take them over. Also, the Financial Reform Bill allows the government to takeover any bank they deem necessary as a threat. So, I guess it works both ways. They are in bed with each other.