Home Prices Forecast: First Ever Drop

(CBS)  The already rough real estate market may be about to get bumpier.

Economists predict a government report due out Thursday will show a national drop in the median price of single family homes since last year. If economists are right, it will be the first time that's ever happened.

"Cumulatively, prices should fall somewhere between five and 10 percent nationwide," said economist Mark Zandi.

The median price for a single-family home is currently $223,800. The median price is the number midway between the least expensive and most expensive houses sold in a given period.

Zandi says too much inventory, weak demand and tighter credit have been problems in some markets for two years.

"Well over half the country is now experiencing price declines and will experience further price declines through this time next year into 2009," Zandi said. "That's unprecedented."

In Reno, home prices are down more than 6 percent from a year ago and are expected to drop close to 11 percent in the next year.

Minneapolis prices are down 2.6 percent from last year.

And in Hartford, home prices are down more than 5 percent from a year ago and are expected to fall further.

But the price slump hasn't spread everywhere. Home prices are up in places like Charlotte and Austin.

With home prices dropping in so many areas, many families could lose a big financial cushion—their home equity.

"For those homeowners who bought in over the last couple of years, that piggybank is broke," Zandi said. "There is no cash the to pull out because house prices have been declining and they have no equity in their home."

[gomanny1]

When banks and S/L made all the mortgages everything was in control, now with all the Mortgage brokers wanting to get rich by giving mortgages to anybody with a pulse, we all have to pay for this clean-up.

[toolmangler-2009]

I paid $11,500 for my house nearly 40 years ago. It has a market value of $275,000 on the current market. I guess I won''t lose much if it devalues back to under $20.000. That will happen if Bushit gets his way. (''course I''ll probably be over 100 by then anyway.)

[nottellin1]

developers and flippers need a reality check and realize the housing prices need to drop at least 10% if not more to make up for the past 4 years of rediculous over pricing of homes.
Posted by fiteit1 at 01:35 AM : Aug 27, 2007

Of course if you live in So Cal, prices need to drop about 50% to make buying a home affordable for any but the super rich here.

[tuckerndfw]

I built my own custom, 3 room home for less than a dollar.

After locating a nice area beneath a not very heavily travelled bridge, I went to a local appliance store and retrieved three of those large cardboard boxes they use for large appliances.

I also have a vacation home made of the same material.

The GOP economy will require a lot more flexibility on the part of potential home owners.

They were called "Hoovervilles" the last time the GOP bankrupted the US Treasury. I suppose I can call my new subdivision "Bushville." I hope none of those "others" decide to move in and bring down property values.

[gheemaster38]

Can someone please unplug oakishpines Computer!!! or at least get him a Translator. I am sure what he is stating is interesting and informative if I could only DECODE IT!!!

[cepe10-2009]

I built my own 3500 sf custum rancher with full unfinished 3500 sf basement and a 3 car garage for less than $200k. The same house from a builder would be $450K+ in my area. It took me two years weekends and evenings but obviously a quarter of a million dollars is worth it. Bottom line houses these days - materials and labor are WAY over valued.... Especially considering $10/hr laborers are actually build the house. The contractors are raping the American dream.

[ov442]

I dont think being a loser or teenager is what Brianbwb meant.

I think the matter at hand is that the prices are way too high for housing/cost of living compared with what the VAST majority of americans earn in a job here.
The IRS publicized median household income in 2005/2006 is $41,000 thats HOUSEHOLD, meaning any household with more than one income or job is included.
Now, that means there are a lot more households making less than 41k, than more because you can only go so low - to 0$ but you can go as high as your accountant can count on the upper scale.

That being fact, How does the average household live on approx 41k, and hope to ever buy a home averaging 223,000.00 which is the american dream?
The fact is they cant, and wont as long as the government does NOTHING to stop corporations and big financial companies from *** the public.

Unfortunately, although it''s the job of government - to protect the populace from unscrupulous characters, corporations, and threats of any kind, they dont do it under GOP dictatorship because the GOP makes their profits off of *** the public, then their minions of evil support that.

[bernieb14]

brianbwb

Teenagers are usually not home buyers. I''m assuming you''re a teenager if you''re still making minimum wage. If not, why are you only making minimum wage? If you goofed off in school and didn''t plan your life better than you should have to make better than minimum wage as an adult ready to buy a home, then don''t complain to me or anyone else about your poor life and blaming it on humanity. If you''re a loser just admit it.

[brianbwb-2009]

$223,800 divided by the minimum wage is 34,431 hours needed to buy it. That is 12 years of stable employment, if you don''t need to eat, drink, buy clothes, take transport, and don''t need lights, water, and gas.

Part of what is wrong with the economy is that humanity is not figured into the equation, so it is not a valid measurement of the country''s economic health.

[shanev137]

Wow, Bush is finally admitting that his economy isn''t doing well.

Amazing.