Except maybe stocks. I mean, both plummeted in value taking your savings and built up equity with it, right? Except with stocks, at least those have rallied some 45% in prior months (assuming that lasts and stays). Meanwhile, home prices remain depressed by some odd 15% year over year and almost 40% dating back to the real estate boom a few years back.
Last week we learned the home prices actually ROSE for the first time in nearly 3 years, rising nearly 3% in the second quarter of 2009 from the first quarter. What a meteoric change, right? Well, maybe not -- consider that bumping up that increase was an expiring tax credit for first time home buyers who buy starter homes mostly (i.e. prices under $200,000). Homes with values of greater than $200,000 continued to fall. Moreover, that tax credit is set to expire in a few months (end of November). Also consider the low interest rates that helped encourage new buying.
And last, consider short sales and foreclosed houses that were up for grabs. These are great for first time home buyers --- but not for home price appreciation. Foreclosures and short sales mean houses are sold at bare knuckle prices if not lower. This means the neighbor who may be selling a comparible/similar home then hasn't to sell for less, and so on and so on.
What's worse?! Is that the currently number of foreclosures on the market total approximately 1.5 million homes. The number of prime rate mortgages that are seriously delinquint in payments... as in 90+ days overdue on mortgage payments... is between 3.5 million and 4 million! Talk about a flood of new foreclosures hitting the market.
What's even more worse?! These are normal mortgages, not sub-prime. This is your average Joe how lost his job or just can't make ends meet anymore. So not only is that tough on the core of the economy (dependable consumer Joe), but it's also scary because those situations don't qualify for the loan modification programs set up by the government. So these people are literally out of money and out of luck. Suddenly their house might be up for sale - and suddenly we have the ripple effects of foreclosure sales weighing down average home prices all over again.
I wonder how many first time home buyers there are in this country?
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