Real estate data firm Clear Capital puts the Baltimore region's price drop last year at 6.2 percent, a figure calculated from repeat sales of homes to try to capture the true gain or loss over time.

The average drop in home prices last year, by contrast, was about 4 percent in the region -- considering everything that sold in 2011 vs. everything that sold in 2010.

It's not unusual for price stats to differ, especially if they're measuring the market differently. That's one of the reasons it can be helpful to look at a variety. Triangulation, if you will.

Clear Capital says Baltimore's price loss in 2011 was 12th largest among big markets, with Atlanta No. 1 for its 18 percent decline.

At the other extreme of its 50-region ranking were metro areas that have seen big declines already and posted gains last year, including Dayton, Ohio (up more than 11 percent), Orlando (up almost 7 percent) and Miami (up 5.6 percent).

Continue reading "Clear Capital: Baltimore-area home prices dropped 6% in 2011" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (0)
Categories: Housing forecasts, Housing stats
        

Moody's Analytics is predicting that home prices in the Baltimore region will climb back to previous peaks in five or six years. Do you think that's likely? What's your own personal prediction?

It's easier, of course, to take a stab at what will happen within the current year. But you'll find plenty of varying forecasts. 

Forty-five percent of the nearly 200 readers who took last week's poll think home values near them will fall in the next six months, 41 percent think values will be unchanged and 14 percent think values will rise. Pretty similar to the results of a HomeGain poll of Maryland homeowners, as it happens.

And that's it for me today -- lousy cold. Hope you're feeling well, and feel free to talk amongst yourselves.

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (8)
Categories: Housing forecasts, Survey says ...
        

Some predicted a housing bust before it happened. Some of those people even predicted a big one. But most Americans, including those who should have been minding the store, went blithely along under the assumption that prices would not take a sharp U-turn.

This makes me wonder what we're not paying attention to now that we ought to be zeroing in on -- good trend or bad.

There's so much noise, it's hard to focus. Foreclosures. Robo-signing. Mortgage terms potentially changing. Mortgage-interest deduction potentially shrinking. The economy trying to right itself. What's in store for mortgage rates. How prices compare with incomes. How prices compare with rents. Federal budget cuts on the one hand, BRAC on the other.

It's all so much easier when you can throw on the 20-20 hindsight glasses.

But hey, give it a shot anyway. Here's your question of the day: How do you think the housing market will change in the next few years -- assuming you foresee any change -- and why?

Will the results be better or worse for most of us?

The last question of the day asked accidental landlords -- people renting their former homes because they can't afford to sell -- how the rental business is treating them. Interesting discussion, including advice from chappy10, an on-purpose landlord:

"If you're only getting enough to pay mortgage, taxes, and insurance, you are LOSING your money renting. You need a COMFORTABLE margin--I'd say 20-25%, minimum, to make up for wear and tear. Even if it's not for 5-10 yrs in the future, you need to do roof repair, buy new water heaters, change the locks and deadbolts, have the HVAC serviced, etc."

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (8)
Categories: Housing forecasts, Housing history, Question of the day
        

Real estate information firm Delta Associates thinks the Baltimore metro area's housing market has hit the "recovery phase" of this unprecedented cycle and will end the year with prices up about 2 percent.

"We expect that renewed demand, in part by migration to the area due to BRAC, will yield modest price gains by mid-2011," the firm says in a new report.

However, it notes, "The pace of the recovery may be uneven."

Very uneven so far for the condo part of the market:

Continue reading "Report: Expect 2% increase in 2011 Baltimore-area home prices " »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (4)
Categories: Housing forecasts
        

If you bought a home in the Baltimore metro area three years ago and put down less than 20 percent, you're probably underwater on your loan.

That's the takeaway from a new housing analysis by Fiserv, which says home prices in the region dropped 17 percent between summer 2007 and summer 2010.

Fiserv, provider of the data that fuels the Case-Shiller index, expects a decrease of not quite 2 percent in the metro area -- that is, Baltimore and its surrounding suburbs -- over the 12 months ending this summer. Prices in Washington, by contrast, "have already stabilized," the firm says. (It produces its forecasts with Moody's Analytics.)

Here's another forecast to add to your score card if you're keeping track at home: Fiserv and Moody's are predicting that three-quarters of metro areas will see prices stop falling by the end of this year, with all leveling out by the end of next year.

But don't count on significant price gains anytime soon, the firm says: 

Continue reading "Report: Baltimore-area home prices down 17% since mid-2007" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (24)
Categories: Housing forecasts, Housing stats
        

A real estate data firm that says home prices fell about 8 percent in the Baltimore metro area last year expects declines of nearly 6 percent this year.

Clear Capital released a forecast today for the 50 largest metro areas, ranking our region 32nd. Washington, D.C. topped the list with an expected gain of more than 6 percent, while the Virginia Beach/Norfolk area of Virginia -- with a forecasted drop of nearly 13 percent -- is at the bottom.

Quite a range in a fairly small geographic region.

Here's how Clear Capital believes all the largest metro areas will do this year, compared with how they fared last year:

Continue reading "Forecast: Home prices will fall 6% in Baltimore area in '11" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (9)
Categories: Housing forecasts
        

Nearly 60 percent of Americans think the housing market won't recover until after 2012, according to a recent survey by real estate site Trulia.com and foreclosure-tracking site RealtyTrac. More than 20 percent are especially bearish, expecting no turnaround until 2015 or later.

Predicting the market is a tricky thing, as I was reminded when I took a walk down forecast memory lane for this post. For instance:

In January 2008, economist Lawrence Yun with the National Association of Realtors predicted while he was in town that the local market had bottomed. "Ten years from now, people will look back at 2008 and say, 'Wow, that was a great time to become a homeowner," he said. (Instead, 2008 was the year of the financial meltdown.)

In May of that year, the managing partner of hedge fund Traxis Partners declared in a Wall Street Journal piece that the worst was over for the U.S. housing market. (Nope.)

Fannie Mae's chief executive said around the same time that his best guess at when things would start improving was 2010. (Home sales and prices were on the upswing in many places early in the year, but once the homebuyer tax credit expired, that trend reversed.)

The company that spun off CoreLogic predicted in 2009 that home prices in Maryland would be 4 percent higher in October 2010 than they were a year earlier. (Instead, they fell.)

That's just a small sampling of the too-optimistic forecasts, of course. (And they're not limited to words. Here's a visual!) The pessimists have the advantage here -- it'll be a while yet before we'll know if the most bearish of bears are just as far off the mark.

But why let that stop you from joining in on the forecasting fun? Weigh in:

Continue reading "Americans aren't expecting a quick housing-market turnaround" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (12)
Categories: Housing forecasts, Polls, Survey says ...
        

Wonk reader Jaded indirectly suggested today's poll when he predicted where home prices will head from here. I figured you all might like to play this parlor game.

Put on your forecasting hat and weigh in:

What does Jaded think? "I'm predicting a further 7-10% decline in home prices in the Baltimore metro area," he wrote in a comment Friday. (He didn't specify the time period, so this prediction might not be strictly comparable with the poll.)

He's hoping prices will fall, even though he's a homeowner:

"When are we going to realize that this market is still way over inflated and has nowhere to go but down? I know that no one wants to hear that but lower prices are the only thing that is going bring about equilibrium. I own my home and don't want its value to decline but in a few years I hope to be able to purchase a larger home and if prices go up I'll never be able to afford more house! I don't mind a little depreciation now in order to be able to move up later."

It makes sense that renters would root for lower home prices, but I think people (and certainly policymakers) assume that homeowners want the slump to be Over with a capital O. So, homeowners: Do you want prices to rise, or do you agree with Jaded?

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (4)
Categories: Housing forecasts, Polls
        

Home prices were up in 40 percent of the nation's metro areas at the end of last year, compared with a year earlier, but Baltimore was not among them.

That's according to Fiserv, the company whose data is the basis of the popular Case-Shiller index. It shows prices in the Baltimore metro area declining 3 percent from the fourth quarter of 2008 to the fourth quarter of 2009.

But because Fiserv is forecasting a temporary return to falling prices in some of the rising markets, and big drops in regions already hard-hit by the bust, it thinks the nation as a whole will take a bigger cut on price than the Baltimore area in the near term. The company is predicting a 1.8 percent drop in prices over the 12 months ending in the fourth quarter of this year in the Baltimore metro area, compared with a 3.1 percent drop nationwide.

On the one hand, says Fiserv Chief Economist David Stiff, more consumers "have confidence that buying a home doesn't mean catching a falling knife." On the other: "The first-time homebuyer tax credit has expired, the Federal Reserve has stopped buying residential mortgage backed securities (MBS) and the projected number of foreclosures remains extremely high."

Homeowners in our metro area haven't felt the housing crash as keenly as wide swaths of Florida, California and other big-population states in the eye of the storm. You probably knew this already -- it's been the story since the slump was a mild little infant rather than a rampaging toddler -- but here's a comparison to put that in perspective:

Continue reading "As home prices begin to rise elsewhere, Balt. area still declining" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (17)
Categories: Housing forecasts, Housing stats
        

Three-quarters of Americans polled for the National Apartment Association said renting is preferable to owning in the current market. But another large group of Americans -- close to two-thirds polled by Fannie Mae -- of are the opinion that now is a good time to buy.

So I asked you to break the deadlock.

Is now a better time to buy or rent? Or does neither have a clear advantage these days?

Forty-six percent of you say it's a better time to buy, the most popular answer -- though a plurality rather than an absolute majority.

Thirty-nine percent say it's a better time to rent.

And the rest -- about 15 percent -- say "six of one, half dozen of another."

There's been a lot of discussion about prices, rents, property taxes, tax deductions and the like, but I'd be interested to hear about how the process of finding a place to buy or rent has gone for you in recent months. Difficult? Easy-peasy?

Did you intend to buy, get frustrated midway through and switch to renting -- or vice versa?

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (4)
Categories: Housing forecasts, Housing market experiences, Renting
        

Predicting when the housing market will recover and/or when prices will rise is a game that has attracted many players, if only because the slump has dragged on for so long that everyone's had an opportunity to weigh in.

Here are two more forecasts in that vein:

Metropolitan Regional Information Systems, the company that runs the local multiple-listing service used by home buyers and sellers, says in a report issued today with real estate information firm Delta Associates that it's "too soon to declare the Baltimore metro area housing market in recovery, but 2010 may herald recovery."

"Yearly statistics show a modest decline in prices since the 1st quarter of 2009, but improvement in both volume and days on market," the report said.

First American CoreLogic, another real estate information firm, offered its own take in a separate report on single-family home prices. Baltimore metro area prices were down 6.6 percent in February compared with a year earlier even as national prices bumped upward ever so slightly, it said.

The company expects continued -- but smaller -- decreases for a while in the Baltimore metro area. Its forecast is that prices next February will be down almost 1.5 percent.

Maryland, meanwhile, had the seventh-largest price drop among the states in February, the company said -- 7.5 percent.

Distressed sales are playing a significant role there. Counting only traditional home sales, prices are down 3.2 percent in the state, the company said. And its forecast for Maryland is for a 1.5 percent drop in price overall next February, but a more than 5 percent gain when excluding distressed sales.

More food for thought ... and debate.

Posted by Jamie Smith Hopkins at 8:00 AM | Permalink | Comments (5)
Categories: Housing forecasts
        

Along with all the other things that buying a home represents, it's an act of faith that the purchase will be a good deal. No one plunks down their hard-earned cash at the settlement table and says, "Boy, what a lousy idea this is!" (Well -- very few, at least.)

But there are apparently a lot of buyers going in with the expectation that home prices are not poised to start rebounding in the immediate future.

Century 21 said this week that it polled first-time buyers, and 48 percent of them said they think prices will rise over the next year. Which, if my mad math skillz are not failing me, means 52 percent think prices won't rise over the next year at the very least.

First-time sellers, Century 21 said, are slightly more optimistic. Fifty-three percent expect prices to rise within the next year.

Here's a discussion point: If you think prices have farther to fall, does it make sense to buy now? When do lifestyle considerations (like, "I'm so sick of leases") outweigh financial considerations (like, "Buy low, sell high")?

Other tidbits from the Century 21 poll:

--84 percent of first-time buyers say they're aware of the $8,000 federal tax credit for first-timers, and 64 percent of those in the market to buy for the first time say they qualify

--Just as many first-time sellers say they're aware of the $6,500 credit for repeat buyers who have owned their homes for at least five years of the last eight, but just 33 percent say they qualify

Here, weigh in on prices in this just-for-you Wonk poll:

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (4)
Categories: Housing forecasts
        

Fiserv Case-Shiller map

If you're waiting for real estate prices in the Baltimore area to get back to their pre-housing-bust peak, don't hold your breath -- unless you can hold it for six years.

That's the message from Fiserv, which provides the data used for the Case-Shiller index and has put together a price forecast with Moody's Economy.com. They predict that prices in the Baltimore metro area will bottom out in the last three months of this year -- dropping about 22 percent in total -- but won't return to their previous peak until the summer of 2016.

It could be worse. Much worse. Fiserv expects that Orlando and Sacramento won't equal their price peaks until -- wait for it -- after 2039.

But it also could be better.

"In fact, our analysis projects that some markets are poised for a relatively fast recovery, including some areas that never experienced large declines in prices," said David Stiff, Fiserv's chief economist. "Markets that could see prices come back within the next few years include Pittsburgh, Pennsylvania; Columbia, South Carolina and several metro areas in Texas, Washington and upstate New York."

First American CoreLogic had a report out recently that predicted how long underwater borrowers would need to wait to get abovewater. No quick and easy way out of this mess.

Not the best way to kick off a Friday, but hey -- at least the weekend's just around the corner.

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (19)
Categories: Housing forecasts
        

As co-host of HGTV's Real Estate Intervention show, Mike Aubrey offers reality checks to homeowners having trouble selling. As he says on one episode set in Fells Point, people "need to be reactive to this declining real estate market that we're in."

Touring the competition and re-evaluating whether your asking price is anywhere near what buyers would pay -- a far cry from all the house-flipper programming of the bubble days.

Aubrey, a North Potomac real estate agent who got into the business in 2002, chatted with me recently about what he's seeing in the market these days.

Q. You're based in the Washington suburbs. Do you work in Baltimore at all?

Because of the work that I do on Real Estate Intervention, I end up in Baltimore a lot. We do a lot of shows in Baltimore. That is probably because, sort of the format of this show, at least the first two seasons of the show, has been a little bit dark, and things have been tougher in Baltimore than they’ve been in the D.C. area.

Q. Why?

I think that Baltimore City was ... gentrifying a lot of the areas inside the city during the real estate boom, [neighborhoods] that never necessarily got to complete that gentrification. And so those areas that were in transition are the areas I think really got stymied as we saw the market fall off. Places that I think, had the market not turned in Baltimore, would ... be flourishing right now. 

Continue reading "A Q&A with Real Estate Intervention's Aubrey" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (5)
Categories: Housing forecasts, Housing market experiences, Q&A
        

Hope may spring eternal, but many of you responded with skepticism to First American CoreLogic's prediction that Maryland home prices will be 4 percent higher next October than they were in October of this year.

Forty-one percent of you Wonk readers who took the poll this week expect prices will fall. Thirty-four percent of you think they'll rise, though not necessarily the amount First American is forecasting. And 24 percent of you believe prices will be flat.

(Among the bearish folks, the breakdown between those who expect a slight decrease vs. those who expect a significant one was about 60/40. Among the bulls, the most popular answer was an increase of about 4 percent, followed by less than 4 percent, and finally "I expect prices will increase more than that.")

And one reader wrote in an answer: "Depends where in MD. Balt = signif down. DC= up."

Frank Rizzo summed up a number of the bears' concerns in a comment:

Once the rate subsidies expire, mortgage rates will be at least 6%, if not 7% since investors do not want to buy the paper. When the tax credit expires the end of next year, you will see prices fall again as people will be forced to pay more money out of pocket. The 3.5% down payment [required by FHA] has left many buyers with very little skin in the game. As more and more homeowners become underwater, you will see more strategic defaults which only make the problem worse. The housing bubble was over inflated by these very same programs. Instead of letting the free market correct itself, Gov't intervention is only trying to "re-inflate" a bubble that will once again burst.

The chief executive of real estate search engine Trulia, Pete Flint, noted some of the same issues when he recently made predictions for U.S. real estate in 2010:

Continue reading "Your 2010 home-price predictions" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (1)
Categories: Housing forecasts, Polls
        

First American CoreLogic, which follows the housing market, has its share of downer statistics. Lots and lots of homeowners under water on their mortgages, for instance. But this week it released a home-price forecast to give those homeowners some hope.

It believes Maryland home prices will be a little more than 4 percent higher next October than they were in October of this year. (You read that right -- higher.) That's a bigger increase than the not quite 2 percent the company is projecting for the nation as a whole.

An increase would be a big turnaround from the 12 months ending in October 2009. First American estimates that Maryland home values dropped more than 11 percent, the sixth-highest decrease in the country. (Nevada was No. 1, down 24 percent, followed by Arizona, Florida, Michigan and Idaho.)

North Dakota -- that island of low unemployment -- saw home prices rise 7 percent in the 12 months ending in October, according to First American.

So: 4 percent higher prices in Maryland next October? What do you think?

Take the poll:

Continue reading "Baltimore due for increasing home prices in 2010?" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (8)
Categories: Housing forecasts, Polls
        

Here's another analysis to make home sellers groan and first-time buyers cheer: financial analysis firm Fiserv expects prices will fall just over 11 percent -- here and nationally -- in the 12 months ending next June.

If its forecast for an 11.4 percent decline in median home prices in the Baltimore metro area proves accurate, local homeowners are facing a slightly bigger one-year decline than they've already weathered. Prices fell just under 11 percent from June '08 to June '09.

So what about the housing-market bottom we've all heard so much about for, oh, the last few years? Fiserv sees Baltimore-area prices stabilizing after the middle of 2010. In June 2011, it forecasts, prices will be up almost 1 percent from a year earlier.

For the U.S. as a whole, the company expects a price bump-up of 3.6 percent.

There are a lot of housing-market question marks right now that make forecasting tricky.

Continue reading "Analysis: Expect 11 percent drop in home prices " »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (17)
Categories: Housing forecasts
        

He said in a press release that he thinks this wave is creeping north:

As long as year-over-year totals continue to increase in Maryland, we should see that market continue to improve, first in the D.C. suburbs, and then in the Baltimore region. Assuming things continue as projected, the spring of 2010 should see price stability in Maryland and another wave of buyers entering the market.

More specifically, he said: "While we do not expect the Baltimore region to improve as quickly as the Maryland side of Washington, D.C., it should continue to slowly tighten during the next 12 months, perhaps with the core counties reaching equilibrium in mid- to late 2010.”

Equilibrium in a housing-market sense means buyers and sellers in basically equal numbers.

Do you agree with Wenhold's forecast?

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (9)
Categories: Housing forecasts
        

Here's its argument:

By every measure, except foreclosures, the housing market has stabilized and many areas are recovering, according to a spate of data released in the past two weeks. Nationwide, home resales in June are up 9 percent from January, on a seasonally adjusted basis. Sales of new homes have climbed 17 percent during the same period. And construction, while still anemic, has risen almost 20 percent since the beginning of the year.

Even home prices, down one third from the top, edged up in May, the first monthly increase since June 2006.

The AP story notes that many economists aren't expecting a quick upturn -- just that things probably aren't going to get worse for homeowners.

Do you agree with this conclusion for the country as a whole? What about for the Baltimore metro area?

Home sales in the metro area (in case you need the reminder) rose 2 percent in June vs. a year earlier, according to Metropolitan Regional Information Systems. Average prices fell 10 percent. There were about 18,800 homes on the market, just under eight for every one that sold that month.

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (23)
Categories: Housing forecasts
        

You've probably heard people talking about V-shaped housing-market recoveries -- sharply down, sharply up -- and U-shaped turnarounds (down, flat, up).

But letters of the alphabet as economic metaphors are so 2008. The hot new thing: kitchen implements.

David Stiff, chief economist at Fiserv, tells Time's Curious Capitalist blog that he's expecting a recovery will look like a frying pan. Here's what he means:

Once the glut of low-priced foreclosures thins out and buyers are back to choosing between homes owned by more typical sellers, he anticipates a short increase in price, followed by more-or-less flat values. The Curious Capitalist says, "Following the housing bust in the northeastern U.S. in the 1980s, home prices were fairly flat for four to five years. It takes a while for folks to regain their confidence to go out and buy a house—especially a more-expensive one."

If you're scratching your head over the comparison to a frying pan, picture a two-dimensional drawing: down, then flat, then up a bit, then -- along the handle -- flat once again. (Actually, you don't need to imagine it. You can see Stiff's doodle here.)

This prompted a tongue-in-cheek response from a reader who wondered if the frying-pan handle could "possibly have an upward tilt, or perhaps an ergonomically designed grip," and warned that if "it's a Pyrex frying pan, you could slip right off that handle into the fire."

Ouch. Don't get folks started on the subject of "green shoots," either.

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (2)
Categories: Housing forecasts, Housing humor
        

"Prices have more to fall, given the high level of foreclosure, but sales and construction, I think, are at bottom," Zandi said. "And part of it is related to much-improved affordability."

Zandi's not expecting much in the way of sales gains, though. Just the promise of some stability after years of retrenching.

"As long as the job market is sinking, it's hard to imagine home sales taking off to any considerable degree," he said.

 

A smaller drop for our area, then, but Zandi expects it will be over sooner for the U.S.: the third quarter of next year, compared with a first-quarter 2011 bottom in prices for the Baltimore metro area.

Here's what he had to say about our market and its price outlook:

"It's certainly been hit hard, but it's held up much better than I thought it would through this period. It may be that I've been overly pessimistic. The region's economy has actually held up reasonably well given the severity of the national downtown. That may go to the preponderance of health-care activities in the region, which is the one industry nationwide which has continued to do reasonably well.

"It may also suggest, though, that Baltimore house prices don't start rising to any significant degree for longer. Prices didn't come down as much as I thought, so that means affordability hasn't improved as much as I would have hoped for. ... Prices need to fall a bit more to sufficiently restore affordability based on incomes and effective rents in the Baltimore metro area."

What's the magic number? He thinks an affordable median price for the metro area is around $210,000 to $220,000. Right now, as measured by MRIS, it's $250,000.

Thoughts?

Posted by Jamie Smith Hopkins at 1:14 PM | Permalink | Comments (6)
Categories: Housing forecasts, Housing stats
        

Deutsche Bank economists think the country as a whole has already ridden out the majority of the home-price decline it's going to see. But most of Baltimore's price drop, they believe, is yet to come.

A June forecasting report by the company lists us as one of the metro areas with the "largest expected future depreciation." It projects that Baltimore prices will drop almost 29 percent from the beginning of this year to the "trough," whenever that might end up being. That puts us No. 6 on the biggest-expected-drop list, after New York, Fort Lauderdale, West Palm Beach, Salt Lake City and Miami.

Add in the drops the Baltimore area has already seen, and the economists expect a total price decline of about 37 percent.

Why? "Affordability is the main factor that puts Baltimore on this list," the economists write. They say Baltimore is one of the relatively few metro areas in which prices are still too high for typical family income.

By contrast, the economists project a 14 percent drop for the United States from the beginning of the year onward, for a grand total (peak to bottom) of about 42 percent.

The report considers affordability first and also looks at the amount of distressed property for sale, at unemployment, at the change in unemployment and at "home price momentum" -- that is, which direction (and how quickly) prices are moving. "Home price trends are highly self-perpetuating — downward movement begets more downward movement, and vice versa when prices are increasing," the economists write.

So, even though many metro areas are as affordable now as they ever have been (thanks in part to low interest rates), Deutsche Bank doesn't think the housing market has hit bottom yet:

Unfortunately, affordability is no longer the driving issue in the housing market, and we believe prices still have a ways to fall in many areas before home prices reach their trough. The bottom is getting closer, but we are not there yet. ... Foreclosures are still running at a very high pace. The U.S. unemployment rate is now 9.4%, and Deutsche Bank economists see that rate exceeding 10% by early 2010. While home sales activity has picked up in some regions, much of it reflects clearing of distressed inventory and is accompanied by falling prices.

Have you seen other recent home-price forecasts? Let me know so I can share them with everyone.

The Deutsche Bank economists also address an issue that several of you have been chatting about here in recent days: What impact do mortgage rates have on price?

Clearly, higher mortgage rates will reduce affordability; for markets that are only barely affordable now, the rate increase could put downward pressure on prices.

Posted by Jamie Smith Hopkins at 9:59 AM | Permalink | Comments (53)
Categories: Housing forecasts
        

As Struever Bros. Eccles & Rouse grapples with millions in debt and related woes, the state is worried the Baltimore developer won't be able to handle its lead role in the long-discussed State Center redevelopment, Annie Linskey reports today.

From the story:

Maryland officials still hope to ask the Board of Public Works to approve in June a master development agreement that would allow the project to break ground by late 2010, said Michael A. Gaines Sr., assistant secretary for real estate in the Department of General Services. But Howard Freedlander, an aide to State Treasurer Nancy Kopp, said "we've been told that the state is examining the structure of the development team in light of what everybody knows" about Struever Bros.

Meanwhile, the city is letting the developer "walk away from $700,000 in loans" on another project. From the same story:

On Wednesday, the city's Board of Estimates renegotiated a loan it granted Struever 25 years ago to redevelop Church Square Shopping Center in East Baltimore.

The travails of the housing market and economy at large make this a difficult time for most developers. There's been a lot of crystal-ball pronouncements from economists lately about when we can expect things to improve.

Mark Zandi, chief economist of Moody's Economy.com, offered a forecast at a recent National Association of Home Builders conference. He said sales have probably bottomed and prices will likely stop falling at the end of the year, with foreclosures peaking at the beginning of next year, according to the NAHB Nation's Building News. (This is nationally speaking, of course. Experiences can vary at a local level.)

Also:

From peak to trough, there will be a 36% decline in prices, and it will be more than a decade before home prices return to the highs recorded during the recent housing boom, he added.

Posted by Jamie Smith Hopkins at 10:40 AM | Permalink | Comments (0)
Categories: Housing forecasts, New developments
        

One more volley in the debate about home prices: IHS Global Insight suggests in a new report that housing in the Baltimore metro area is pretty close to fairly valued.

The economic forecasting firm says its number-crunching, which takes historical values into account, puts prices in the Baltimore metro area at 2.9 percent overvalued at the end of last year. That's within IHS Global Insight's margin of "historically normal."

By contrast, the metro area was 11 percent overvalued last summer and 26 percent overvalued at the peak of the housing frenzy in 2005, the company says.

According to the report, out this week:

Extreme overvaluation is now essentially nonexistent. Only Atlantic City, New Jersey met our definition for extreme overvaluation during the fourth quarter, a sharp contrast to 2005 when 52 metro areas were judged to be extremely overvalued. For the country as a whole, the housing market is slightly undervalued. When the 330 metro areas are weighted by market value, the nation is 8.4% undervalued. When weighted by housing units, the nation is 10.2% undervalued.

What numbers did the company crunch to come up with this evaluation, you ask? OK, fine, maybe you're not asking, but here's the answer anyway:

Our approach to determining statistically normal house values considers not only house prices and interest rates, but household incomes, population densities, and any historical premiums or discounts metropolitan areas have exhibited over time.

Looks like you have to sign up on the company's site to get the report, but you can see the press release here.

I'm getting the sense from agents and house-hunters that price range matters when it comes to sorting out whether values (or at least asking prices) are fair. One reader commented on yesterday's post about home prices vs. incomes: "We still feel priced out of the market and have been looking to buy a home in the $320K range."

Are there price ranges where the homes seem undervalued? Or where many of the properties on the market seem overpriced? And what -- as Goldilocks would say -- seems just right?

Posted by Jamie Smith Hopkins at 9:31 AM | Permalink | Comments (2)
Categories: Housing forecasts