Real Estate Prices Down 35% Since Peak… But It’s Not Over

by | Oct 31, 2011 | Headline News | 107 comments

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    Remember when leading real estate analysts forecasted a housing recovery and return to housing market growth? Or when the government promised that the $8000 home tax credit would stop the decline? Or when monetary experts recommended printing more dollars in the form of stimulus to stabilize prices?

    All of it was for naught:

    The besieged housing market has even further to fall before home prices really hit rock bottom.

    According to Fiserv (FISV – News), a financial analytics company, home values are expected to fall another 3.6% by next June, pushing them to a new low of 35% below the peak reached in early 2006 and marking a triple dip in prices.

    Several factors will be working against the housing market in the upcoming months, including an increase in foreclosure activity and sustained high unemployment, explained David Stiff, Fiserv’s chief economist.

    Should home values meet Fiserv’s expectations, it would make it the third (and lowest) trough for home prices since the housing bubble burst.

    Source: CNN Money

    Foreclosures and unemployment are the elephants in the room when it comes to housing. If there are not enough jobs being created to offset those being laid off and new people entering the workforce, then people find it increasingly difficult to make their monthly mortgage payments. Couple that with an already saturated foreclosure market with a shadow inventory of millions of homes sitting unoccupied and you have the makings of a serious housing decline.

    But the experts continue to predict a return to housing prosperity starting next summer:

    Even after the housing market begins its comeback in mid-2012, the recovery is predicted to be modest at best. Nationwide, Fiserv is projecting that home prices will climb just 2.4% between June 2012 and June 2013.

    Just like they did in 2008, 2009, and 2010:

    Housing Markets Will Roar Back in 2009
    The nation’s foreclosure hemorrhage has finally slowed and 2009 should see a significant decline in foreclosures as buyers return, pushing home prices up and fueling a real estate recovery. (link)

    U.S. Housing Recovery Delayed to 2010
    “My prediction is we’ll probably recover on a seasonal basis. It’s generally accepted that the homebuilding industry is off the mat and on the road to recovery.” (link)

    Home prices should bottom out in 2011
    Most experts expect home prices to bottom out in 2011. That should be welcome news for home buyers looking to take advantage of the lowest possible prices and sellers who have endured three years of steep declines in property values. (link)

    For an example of how severe these types of cyclical downturns can be, consider the massive declines experienced in real estate prices in the United States during the Great Depression:

    During the 1920s prices reached their highest level in the third quarter of 1929 before falling by 67 percent at the end of 1932 and hovering around that value for most of the Great Depression.

    Source: Social Science Research Network

    As we’ve opined from the beginning of the housing crisis, we need look only at Japan for a modern day example to see how far we can fall and how long this can take:

    It’s hard to imagine the average price of a home losing 40% – 60% of its value during the course of this real estate bust. For those who say its impossible, we point you to the Japanese real estate decline of the 1990′s, which saw Japan’s property values lose more than 70% from top to bottom, and the Japanese have yet to recover.

    Developers, both residential and commercial, can build all they want, but if nobody is buying or renting, then it really doesn’t mean much. In the coming years, we expect to see hundreds of residential developments sitting without residents and continued commercial vacancies.

    Real estate is not bouncing back any time soon – perhaps for a decade or more.

    Don’t fall into the trap of expecting recovery because expert analysts and Realtors say prices are stabilizing or headed back up.

    We remain in the middle of the worst economic and financial crisis in the history of our nation. While there may be isolated pockets of sporadic growth on a month-over-month basis, the long-term trend is one of sustained decline. A 50% to 75% price collapse from peak to trough is not out of the question – though it may be outside the realm of possibility for many.

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      107 Comments

      1. Claymation

        Hey Mac, This is going to be an interesting week with unemployment numbers out this Friday, not that those numbers are to be believed. What seems so obvious to those of us who are not experts in economics, seems to elude those who are so called experts. The government has printed itself into hole and continue to spend like drunken sailors on a weekend pass. While the average sheeple continue to say, cut spending, just not what you are spending on me! When I read stories like this it is incentive to just go buy another bag of rice and beans. Peace

        • Mr. Blutarsky

          I don’t trust any numbers provided to us by the government. Seriously, they just told us last week that economic numbers are good and we are not in a recession!!?! Can anyone said campaign tactic?

          I read an article earlier today that said unemployment is solidly 23%.

          • eaglescoutprepper

            i’m with ya, at this point, i don’t even believe baseball scores unless i was at the game…

          • Claymation

            Absolutely, even if the 9.1% unemployment were true, this number has remained steady. This means that as people run out of benefits they are being replaced by others enrolling. 23% sounds like a very real number to me. The old saying ya here over and over again, in one form or another “Figures can lie and liars can figure” applies here for sure. Have a great day Mr B 🙂

            • c

              The problem is they report the unemployment roles only. The statistics that track those who fell off the unemployment roles are much harder to compile AND DON’T SAY WHAT THIS ADMINISTRATION WANTS THEM TO SAY. But there are agencies that track and report this info and they have the real unemployment between 20 and 24% which is as bad as it ever was in the Great Depression.

        • Beefcake

          You shouldn’t make insulting comments that the government spends money like drunken sailors, the sailors will get upset because they actually have to work for their money.

          • Claymation

            Beefcake, You correct, but I will tell ya, my Dad retired with 30 years in the Navy, so I have seen my share of drunken sailors over those years. LOL, Peace

          • Gunner

            A drunken Sailor will STOP spending when he is out of money.

          • PatriotOne

            I believe Ronadl Reagan said that would be an insult to drunken sailors.

        • Claymation

          Here is a link to an Interview with Adam Fergusson the Author of “History of the Weimar hyperinflation, When Money Dies” I own this book, when I first read it the parallels with what’s happening here in the US and what happened all those years ago really became apparent. Adam is a history scholar and not really an economist. hope you enjoy!

          http://www.goldmoney.com/video/fergusson-turk-interview.html

      2. Farm cat

        Home prices will keep dropping past 2011. We keep having 400,000 job losses a week with few new jobs. More and more people will lose their homes. Until job losses start to equal new jobs we won’t see any strengthening in home prices. Real estate prices are a lagging indicator. In other words, when someone gets laid off they get unemployment compensation. Their job loss doesn’t lead to a foreclosed home for a long time. I see nothing in the economy that would lead me to believe that we’re anywhere near the bottom right now.

        • Odd Questioner

          If that 400k per week loss number were actually true, then nobody will be employed in 8 years, and the unemployment rate would be at 12% by year-end.

          400k*52= 20.8 million per year. There were 152 million working adults in the US in 2006.

          Things may be going downhill, but I sincerely doubt it’s moving that quickly. Can you verify the stats showing a net loss of 400k jobs per week?

          • Farm cat

            Unemployment numbers come out weekly. New job totals come out monthly. 400,000 job losses per week has been the norm for six months now. A good month has 100,000 new jobs. One month half the new jobs were at McDonalds.

            • Odd Questioner

              I guess the point I’m getting at is that you might have one or two months where things spike down to that level, but it certainly ain’t the average. Otherwise, the numbers just wouldn’t add up.

            • durango kidd

              Farmcat: I read your original post and was about to comment when I caught the response from OC. Your numbers are definitely out of whack.

              The average monthly job loss over the past ten years is 50,000 a month, 6 million a year, 60 million altogether.

              Every job America or the EU loses creates two or three Chinese jobs, which is why China now has more than 300 million workers with some “disposal income” to buy consumer goods from the CCP and the GB’s who own the means of production in China.

              I submit the loss of 50,000 American jobs a month IS bad enough and constitutes TREASON by OUR elected officials, of both parties who have allowed this to occur.

              EVERYONE should be demanding the arrest and conviction of the PTB for malfeasance in office and TREASON!

            • durango kidd

              Hey Farm Cat!: I owe you an apology … of sorts. You are right about the 400,000 jobs “lost” per week, in the sense that these are new unemployment claims for UI.

              These are “layoffs” and not necessarily the “loss” of jobs as I was talking about (but try to split that hair with those who are newly laid off).

              The “loss” of jobs that I was talking about are the ones that have been transferred offshore and will never come back because their factory has been closed.

              Hopefully, these weekly layoffs do not represent a permanent loss of the job from the states, but some of them might be part of the 50k that are now history every month.

              Maybe someone is tracking that stat to see if the 50k permanent job loss every month is growing.

              Sorry if I misread or misinterpreted your post.

      3. Justice100

        I live across the street from the neighbors from hell. I live in a rural area but the property taxes are one of the highest in the nation. These pigs have strewn garbage, and old appliances, toilets, refrigerators, junk cars, old dirty trailers etc. all over their front yard for years. The town quit taking them to court since it costs them on average, $14,000.00 each time. These people have not paid their mortgage in almost a year. The town has repeatedly called their out of state mortgage broker to have them thrown out, only to be hung up on. They are now removing all the cupboards, light fixtures, anything that is of value. I have a beautiful piece of land, but looking at this hell hole whenever I leave my place is disgusting. I couldn’t sell my place if I wanted to because of these slobs. However my property taxes still increase regardless. So many of these forclosed houses are nothing but ravaged dumps now, that need to be torn down. This is becoming the face of America. This guy is a master electrician and still works, he’s obviously saving his money until he is forced out. I know there are a lot of innocent familys that are being forclosed on, but it’s people like my neighbors that are destroying towns and neighborhoods everywhere. I will stay put and pay my mortgage, it is a contract that I signed and regardless of how much my home is worth, it was a gamble and not a given that my home would be worth more today than when I bought it. The government is to blame for most of this mess and yet we will be the ones to pay.

        • JJ

          One word….matches.

          • T

            A box of matches and a can of gasoline would do more to help the real estate market than anything else.

          • Claymation

            I think they call that Urban Renewal.

            • Claymation

              For the record I do not believe burning someone out of their home is the way to go either. Just trying to funny. Sorry i it didn’t come out that way.

        • Matt

          Justice,

          Sounds like an easy fix to me…gallon of gas and a match?

        • Odd Questioner

          It’s easy enough to fix… remove their meter at the power pole when no one is looking. Power companies would refuse to turn anything back on if the house were considered unsafe for running any kind of electrical power, and most utilities do inspect at least somewhat for this. A week later (especially as winter is coming on), they’d be actively looking for a new home.

          • alc

            Because arson is SO funny!

            How about making friends with ’em? They might be just the kind of “survivor” neighbors you want to have as times get worse.

            • Odd Questioner

              Ah – I see your aim was off a bit.

              Nope, I don’t advocate setting anyone’s place on fire either.

          • Odd Questioner

            So, what part of shutting off someone’s power equals “arson”? Last I checked, arson requires deliberately setting a fire.

        • Ben Dover

          You’re probably right. Many of these homes will never again be fit for occupancy. They will be neglected while empty, cannibilized for scrap metals, homeless people will squat and trash them, and the homes will cost more to repair than they’re worth.

          • Odd Questioner

            True story: When I gave the house back to the bank early last year, I went back a week later to pick up a box I had forgotten in the attic. It was the 2nd walk-through w/ the bank representative, to whom I had given the keys and did the inspection the week before. The guy didn’t have to do it, but while his employer (BoA) can burn in hell, the guy was actually decent and let me in to get the box.

            We opened the door and found that the place was trashed. The fridge, stove, every light bulb(!?), all of the closet shelving, a light fixture from the living room, all the curtains, the short fencing around the garden, and basically anything that wasn’t nailed down.

            six months later, the bank managed to sell the place at auction for roughly 1/2 what it went for originally (Chap. 13 kept them from coming to me for the difference). For giggles I went to see the place just before auction with everyone else, and by then it was a wreck. I’m just glad my wife stayed home both times. The garage shelves were gone at that point (big 2×4 wood shelving), as were the baseboard heaters, some of the cabinetry, carpeting from one room, and someone had used the toilet in spite of there being no running water in the joint for six months. Broken/empty bottles and cans, a few used condoms strewn about the place, dirty blankets that were never in the house when I lived there, graffiti, and occasional animal feces (I assume they got in via the dog doors I had installed a long time before)…

            It was rather ugly by that point. I’m just amazed that the walls hadn’t gained any holes and that the glass was still intact. The back door had been replaced by the bank though – guessing the previous one was broken into.

            On the way home to the apartment, I saw a former neighbor’s garage door open, and couldn’t help but notice that there was a large side-by-side refrigerator in there… the exact same model and color that I had *custom-ordered* for the kitchen at the house a long time ago.

            • Claymation

              OQ, Sorry you lost your home. I hope you are getting back on your feet. Nothing worse then seeing ones hopes and dreams destroyed before their eyes. Peace!

            • Odd Questioner

              Actually, I consider it to be somewhat of a blessing.

              I bought the place back during the bubble, and in a SHTF situation, it would’ve been the wrong place to be.

              Medical bills did us in (the missus spent two years in and out of the hospital), but I have 4 years left on this silly Chapt. 13, which gives me time to rent a place out where survival could be at least somewhat of a good bet. Renting also gives me a chance to check out the community and see if it’s worth living there permanently (something I highly recommend anyway).

        • Kevin2

          Justice100

          “The government is to blame for most of this mess and yet we will be the ones to pay.”

          Be it wars or economics the above holds true however the US government operates with the consent of the governed. The politicians that gave us NAFTA were re-elected and then to top it off they gave us China Free Trade. OBTW they were then re-elected again. Interest rates were held falsely low and people ran to borrow ever increasing amounts putting their families in potential economic danger.

          The leadership is a reflection of those being led.

      4. Old Fuzzy

        The decline is not temporary. Because of the destruction of the dollar our standard of living is in permanent decline. The destruction of the demographic integrity of this country is another nail in our coffin. A new dark ages is being thrown on us by the PTB. Good luck. Fight hard, fight often.

      5. watchermax

        Mr Clay, this morning the same people who have told us that food prices have gone up a modest .8% ytd. now predict prices to clime 3.5% for fiscal 2012. From my records(yes strange as it may seem i note prices from month to month). real inflation in grocery prices rose 18% since jan.God help us if the multiplication factor on there “reported” rise stays true. better make that 2 large bags of rice, and equal amount of rice. btw thanks for the thoughtful and comic replies.

        • Claymation

          Watchermax, My wife keeps tracks of our purchases as well, but it is not for the faint of heart. They can be scary looking back even a couple of years. As far as humor goes, there are many on this site much more clever then I am, and if we didn’t laugh a little, we would all be in tears on the thoughts at whats coming. Keep your rice dry and soak your beans well, those living with you will appreciate it! Peace

      6. smbizandy

        We must ALL hope for the best..BUT prepare for the worst..

        I DON’T FEEL THAT ANYONE HERE WANTS TO SUFFER A MASS DISRUPTION OF OUR WAY OF LIFE.

        ONLY God knows when the our life plug is going to be pulled out.. “Everything else is just Speculation”

        • NetRanger

          I do. The fake government must go. Prosperity will not return until after a crash. If it keeps going on a slow grind they will grind us down to a third world county because the sheople will just live within the parameters set the the crooked cabal in washington and the statehouses.

          *I* want it to crash. I don’t think it will be fun. I won’t enjoy it. I won’t like it. But, I didn’t like a camera poked up my butt to see if I had anything wrong and I didn’t like being cut on to get my gal bladder out. The alternatives, however, are worst.

          Burn this house down! Stand back! I got hot dogs and marshmallows!!! …and when its a smoldering ash heap and the crooked bastards are all swinging from the trees, we’ll put America back together like it should have been all along.

          Government (in collusion with banksters and corporatists) have proven to be the enemy of the people, of freedom and, in the end, of prosperity. They will hang on until it collapses and then they’ll leave it droves. (…hopefully followed by really fast moving pieces of copper coated lead.)

          Let it crash! Stop holding on. If you hold on you’ll go into the ditch with it. Let it go!

          • Old Fuzzy

            I agree. Nothing will change for the better if this government doesn’t collapse. It won’t be pretty, but it will be necessary. There will be pain. I, too, look forward to the coming trouble, because I know it is needed.

      7. Mr. Blutarsky

        You know what’s not down in price?

        Land. Farmable Land with a good water source.

        It’s difficult to find a reasonably priced piece. I know, I’ve been looking into some. A realtor told us that everyone is looking for what we want.

        My house is down at least 35%. Probably more. You will see more & more strategic defaults in the coming year or two.

        • anonymouslady

          In my part of Georgia there are a lot of small farm land lots available. Some have houses on the lot, some do not.

        • countryboyseein

          You’re absolutly correct, I’ve searched all over the Ozarks and you can’t buy a piece of decent farmland. Interestingly, you can buy a repo house on a lot >2 acres, for under 10k if you want to fix the house or under 25k for one that you can move into 2mro. Of course you need perfect credit or cash.

          Land is entirely different, although you can find lots of land unsuitable for farming cheap, anything like a creek bottom or meadow costs a fortune.
          I’m to the point that I’m going to try and find a little land that I can live on under a long term lease.

          • countryboyseein

            oops..
            less than 2 not “>”

          • fallout boy

            country boy i’m right there with ya i too live in the ozarks and land with ponds with a creek or farmable is down right outragious

            • NetRanger

              Wow! So I made a good investment, then? 30 acres, 20 wooded, 10 pasture. 7x24x365 creek, always runs in the driest weather. Block and steam coal underneath all surrounding my 2 acre lot with my 1500 square foot home (+full basement).

              What could I ask for such a jewel? 100k? 200k? 400k?

        • 41MagMan

          Farmland with a good water source is maintaining its value in most areas because people inherently understand that it has REAL value. What is being rejected today is the never-ending stream of things of temporary or fake value.

          This will also come to pass in the area of money. Fake money is being printed in HUGE quantities. It has zero backing. It is produced out of thin air. It only has value via public agreement. If anyone but the Fed did it, it would be widely understood to be counterfeiting. This agreement will cease to exist once enough people understand how they are being robbed of their savings by the banksters and the government. A pox upon both their houses!

        • The Old Coach

          Farm land will drop too, if the huge subsidy for ethanol dries up. That’s what is driving the runup.

      8. Rick Blaine

        One other thing to keep in mind…

        Mortgage rates, and interest rates in general, are still insanely low…

        Which, by the way, is one of the things that got us into this mess in the first place…

        Well, what happens WHEN rates start to go up?

        • admin

          Excellent point Rick… Everyone assumes rates will stay under 5%… If they go to the levels of the 80’s (in excess of 10%, as high as 18% in some cases!!) then the housing market is going to be absolutely destroyed.. .Considering this possibility, 75% doesn’t sound so unreasonable.

          • Odd Questioner

            The trick is to buy a house/property that you can (comfortably!) pay off on a 7-10 year note, or pay off within 7-10 years if the note is longer**. I learned a long time ago that 30-year fixed mortgages are for suckers, and 30-year ARM mortgages are for drooling idiots.

            ** so how do you do that in the face of early pay-off fees? Well, most mortgages have a bit of a loophole, so you pay the hell out of it until you get down to the last 5 grand or so, then make regular payments on that until you’re down to the last couple hundred bucks. That is what you pay off, plus whatever percentage of that couple hundred bucks they calculate as your early payoff penalty. 😉

            • durango kidd

              OC: A great idea be WE don’t have 10 years (and remember this is from the guy that says the EU will not collapse! 🙂 )

        • 41MagMan

          > Well, what happens WHEN rates start to go up?

          The system that has been built upon fraud and deceit will come crashing down on all our heads, that’s what. The house of cards that has been created by the Wall Street, Bankster, Government cabal MUST have cheap money available to it to sustain the illusion of prosperity. When money is no longer cheap, they will not be able to meet their financial obligations and their game will come to an end. It will be messy… VERY messy.

      9. anonymous

        It’s just geography with a little supply & demand problem brought to you by your U.S. Federal Reserve (never on the posted richest list) family.

      10. European American

        Let’s be clear, Real Estate prices were ARTIFICIALLY HIGH into the 2000’s, i.e. severe types of artificially manipulated cyclical UPturns. Look who really profited during that time.

        Now, as we all face reality setting in, these Real Estate prices are simply finding their rightful average price. So what appears to be a downturn is an illusion.

        Those who were using their second mortgage as a revolving ATM card are, well, getting exactly what they deserve. Real Estate agents who were exacerbating the problem; the greedy, grimy leaches as they were, are now facing the consequences of their actions. Bankers, well, they were always the instigators and see what’s happening in their sector.

        These artificially high prices were a reflection, top to bottom, of greed gone ballistic. It was a set up. It was designed that way.

        It’s good that prices are coming down, they should. For those that bought high, too bad.

        • JJ

          And not only that process(revolving ATM cards) has screwed idiots trying to make a buck, how about those buying with ‘interest only'(told us by a millionaire when we questioned how these certain people afforded what they were living in) loans?? Think they get the picture now??
          Houses are no longer ‘easy’ investment strategies.
          Your investment which was probably 10/20% is gone; you haven’t any equity due to paying interest only!!

        • Claymation

          Correct, When we bought our home, we didn’t say hey lets go make some money on a house. We wanted a “home” to raise kids and a family, that was to be our investment. Greed and unreal expectation struck to many people, and now that the cows have come home, they need to bailed out, according to them at least. As far as a second mortgage goes, I don’t even want my first one I can’t imagine taking a second and I hope never to need to. Clay

        • 41MagMan

          Absolutely right, EA. The real estate bubble that formed in the 2002-2007 time period was vastly over-inflated. A lot of that extra air needed to be let out of the bubble. Sometimes bubbles can be deflated over a period of time that creates the much ballyhooed “soft landing”. Most of the time, this does not happen. It just goes BANG! and most of the air in the bubble gushes out with little control. A great deal of pain is created this way but it is also over and done more quickly than via the soft landing approach.

          My BIG problem with the government and the Fed right now is that they are both pointing to the glory days of the GIANT real estate bubble as “the good old days”. They aspire to return us to these days of great success. Unfortunately, those days in very large part created the crap days we have now… and would happily do so again, IF this bubble were to be somehow reinflated. Most adults learn from our mistakes. We pick ourselves up, dust ourselves off, and move forward in a way that does not recreate the problem that just laid us low. Not so the political or bankster types. For them, it is ALL about getting reelected or creating new financial investments that will make them obscenely rich and not about doing what is good, right, or just.

          The good news is that we will find these people absent in Heaven. 😉

        • durango kidd

          There were a lot of mortgage brokers pushing people into two year adjustable, too, to develop a revolving clientle. I saw it but never did it.

          I always pushed a 30 year fixed when I was in that biz ….

      11. BJ

        Good post EA…..prices were and still are in some cases way too high, the bubble needs to let out more air to be real and healthy

        • Ben Dover

          Vegas is a prime example. 60-70% of mortgsged homes “underwater”. These are people who (for the most part) bought near the peak. Who thought home values could appreciate 20-30% every year?

          Owning a home has NEVER been a “wealth building tool”. Your home is a place to keep the rain off your back and sleep in relative safety.

          Investment property is a different thing. So many people gambled with their primary residence and abused second mortgages. Do you really want to pay for that vacation or flat screen TV for 30 years?

          • durango kidd

            There were times when home appreciation was significant and safe. As an appraiser I could always find a bargain.

            You make money on the purchase of anything, not on its sale.

      12. redgypsy

        Housing price drops are a blanket look at the problem.
        Here in western WA prices in some areas are almost to 2006 levels.
        Yet drive a few miles and they are in the crapper.
        5-20 acres of farm land with a house is still bringing top dollar and has been going up this year with sales of said properties brisk. Hmm whats driving it……
        Yet small lots with expensive homes are not moving much.
        Just some observations from the extreme west end of the redoubt.

        RED

        • European American

          Western Washington, for the most part, is not getting hit (as hard) as other areas are. Yes, there are pockets here and there that reflect what we are seeing in meltdown areas, but Washington, because of the industry that still continues to thrive, is actually doing fairly well, considering. Meaning; MONEY, and massively large quantities of it, are still very much part of the landscape. Because of this wealth, that needs to be invested in something, there are areas where real estate prices are not dropping, much. They will though, as the dis-ease slowly works itself in to all walks of life. But let’s face it. The Wealthy have money. And there is a lot of money out there. That is why certain areas, appear to be caught in a time continuum of infinite expansion. It’s a reflection of a Fascist State. The Wealthy Rule. And the wealthy do no want to live with the peasants. Birds of a Feather…

          • 41MagMan

            I live in SW Washington State and would agree that we do not have the severe real estate problems here that many other areas of the US do.

            As to the wealthy ruling, when have they not? Wealth and power are intimately related and have been for a VERY long time. Not saying that this is right or fair, just that it IS.

            My wife and I have a large house on a hill that we bought in 1994. It is the 3rd house that we have owned, so the equity from our 1st two homes got rolled into this one. We put $100k down on it and have never used it as an ATM. Because of that, we still have equity, just not as much as we had back in late 2007. I sympathize with anyone who is now under water on their mortgage but a lot of that came from them believing the real estate people who told them that they could afford to spend 40% of their income on a house. When they told me and my wife that, we looked at each other, and both burst out laughing. They seemed terribly confused that someone has come along who did not believe their B$. We knew what we could and could not afford and always bought homes that we could afford. We know a lot of people in this area who did the same. Maybe that is why we have not been financially savaged by the bursting of the real estate bubble.

      13. The Moon is a Harsh Mistress

        Just have to stockpile more food and ammo and when the time comes that you will need to use those items, houses will be free for the taking for anyone willing to defend it.

        • European American

          You are right. Houses will be vacant. I don’t know about free for the taking. Nothing is free, so to speak. Someone has worked hard for that home, more often than not, and leaves and comes back and a group of “somethings” are now occupying the home. Not a pretty scene.

          I suspect there are a lot of “have not’s” who are dreaming of moving in to someone else’s home. This scenario always brings to mind the movie “Dr Zhivago”. THere was a scene when the Doctor came home, after having been forced, as a physician, to help the revolutionaries, and when he got back to the home where his wife and her father were living, much to his surprise, this elegant home that used to be theirs, had been turned into a “hotel” for all the citizens. They only had a couple of small rooms to themselves. I saw that movie when I was a kid but that scene always stuck in my mind. THere was a women now in charge of entire home, Bolshevik/socialist/communist who was the rude, and on a power trip, policing and managing the home. Everyone seemed to have an equal portion. Even as a kid something didn’t quite feel right with that scene.

          I think there will be a lot of people roaming the country, looking for greener pastures. Homes will be moved into then out of then moved into by the next wave. But that won’t be everywhere. There are a massive number of homes vacant right now in America. What a waste.

      14. Fed Up

        If I were a gambler, I’d be looking for a sweet piece of property right about now. Yes, you read that right. I’d be LOOKING and when I found something worthwhile I’d buy it in the next couple of months.

        Assuming you have a steady income, some (a lot) of money saved up because you don’t live a non-stop consumer lifestyle and can afford to make a huge downpayment and still have money “just in case” I’d take that gamble.

        IMHO Having a home out in the boonies is an essential part of being prepared. I know some people are going to disagree with me about this being a good time to buy, but its just my opinion and thankfully I can still express it without fear of being hauled off by the gestapo.

        • Sam not sam

          Vee are Vatching you…

        • 41MagMan

          I agree with that, Fed Up. Now IS an excellent time to be buying a country place. Rates are low and it is a buyers market for sure. Consider also that if there is a financial collapse, those who have a lot of debt will fare the best. That debt will disappear with the lenders, who will be collapsing and disappearing in droves, and they will still have the goods that they bought. Anyone doing this needs to be very careful about it, however. Having the resources to pay off that debt, if necessary, will be essential. Gold and silver will be quite useful at that time and it will be absolutely amazing at just how far it will go.

        • durango kidd

          Fed UP: I agree. It is a great time to find a bargain if you can buy. You can name your price on a foreclosure or walk away.

          Get a another 20-30% off and pay “cash” if you have it or are prequalfied with your bank. I think prices will drop more than another 3.6% overall, year over year by next summer, but it depends where you are located as all markets, like politics, are local.

          I found a fantastic property in an AMAZING location. 3100 sf 18,000 sf lot, with a pool. It once sold for $500,000.00. The listing price was around $275,000

      15. Patriot One

        Well that’s pretty optimistic. My forecast calls for continued decline in housing prices at least through 2015-2019 which is more then a decade peak to trough.

        I still hold to my opinion that we will see 1968 pricing for homes or what I call cash pricing $8000 to $30000 for a single family unit. Of course this all is with the assumption that the economic state remains as it is today, which I doubt.

        Housing is currently 35% worse then anyone is willing to go on the record with. Some markets in America and their populations don’t even feel the depression yet; Washington DC Metro area for one.

        In the Jacksonville, Fl. region we are already seeing homes and condos selling in the $8000 to $27000 range. I just had a customer buy a 3/3 2400 square foot condo for $56000. Folks that’s $23.33 per square foot.

        If one compares material and labor cost to the sales price of homes on a square foot basis you can really see
        how bad things have become. In 2007 the average replacement cost of a home was $133 per square foot. Today new construction, I can built for around $57 per square foot.

        What I’m saying is that sales prices have completely decoupled from construction cost. You just can’t build a new home for the prices existing homes are selling at.

        Until construction cost and sale prices couple again I think its safe to say there will be no recovery.

        If we have a financial collapse you can take everything I just said and throw it out the window. Security, Air, Water, Shelter and food will be all that matters. Stack it deep..

      16. Signs of the End

        Isaiah 5:9
        In mine ears said the LORD of hosts, Of a truth many houses shall be desolate, even great and fair, without inhabitant.

      17. truelove

        These days will be called “the good old days” in the next few years. Prep., store, stack and pray! Good luck and GOD Bless you and yours.

        • 41MagMan

          Absolutely so, TrueLove. It cannot be over emphasized that our one greatest asset will be to be surrounded by others of like mind insofar as being prepared is concerned and having the skills necessary to survive any really bad times that may come. Good luck to us all, love, peace, and happiness for you and yours.

      18. geo-lithic

        It’s a great time to buy!!! get some land with a tiny house or fixer upper cheap an get a little off the grid. Buy in the dip

        • The Old Coach

          Don’t buy as an investment. The bottom of the “dip” is nowhere near. And when prices do start to rise, it will be due to the destruction of our currency, not supply and demand.

          But you are right about buying cheap. Always buy the worst house on the block – old real estate trader’s rule.

      19. Kevin2

        Fast food wages cannot pay a $200K mortgage.

        Lovel
        “Jack how did you come up with that, they have half the PHDs on the plant working on this”.

        Jack
        “I can add”!

        • Jim

          Depends on the minimum wage; here in CA its $8.00 an hour. That is $1,386 a month gross. 28% may be pledged to a home mortgage maybe 35% if credit is good. The later means $485 a month. If there are two people in the home working minimum wage they can actually afford a principle and interest mortgage of $970 which should cover $184,700 in a mortgage……way more than is needed for a nice 3 bed 2 bath here in central CA.

          • Farm cat

            No, those numbers don’t add up. At $184,700 and 4% the interest alone is $7388 a year or $615 a month if there’s no principle paid off. And of course you’d never get a mortgage with two people working minimum wage jobs.

            • Jim

              The numbers do add up, but you are probably right in that two people with $8 hr jobs won’t get approved. Not unless mom and dad are forking over 25% down. A $184.7k mortgage is less than $1000 a month principle and interest, and creditors will approve of you spending up to 35% of your income but prefer 28%. You’d be wise to go 20% or less.

              The point was made that no one can buy a 200k home on a minimum wage job. That would be false if they the down payment. $200k home, 20% down leaves a $160k mortgage, and $8 an hour for two people would meet the income qualification requirement. Other requirements (credit worthy, down payment, appraisal) still have to be met.

          • Kevin2

            Anyone pay property taxes in California? How about a car and insurance? Food? Medical? clothing?

            No way two minimum wage earners can afford that for any length of time.

            • Kevin2

              Jim

              Who waking minimum wage has $40,000 to put down? They need another 6-7K for settlement to boot.

              Prices of homes are dropping because the wages have dramatically decreased regardless how creative Uncle Sam and bankers can be.

            • Jim

              In the good ole days people would get help from parents fora down payment. Also note that here in, Ca, nice homes are 125k not $200 and even less. A ” starter” home can be found for $100k easy. If parents help a couple out with the 20% it’d be possible to enjoy 700 a month, principle, interest, taxes and insurance.

      20. Shane Vandrell

        Hey cool article! Listen To anyone out there not fully prepared for heat, when the SHTF. This may sound crazy but it’s true. Get a fire pit (40.00) at wal-mart or a little grill (20.00) or anything else you think might work. Next buy rubbing alcohol (2-3 bucks) dependiing on what size bottle. Put 2-3 oz. in a empty tuna can or whatever. Throw in a match! No I am not crazy…I’m not. Just ahead of the curve! This will burn clean and warm. 2-3oz will give you about 30min. of heat and light! Easy to buy. Easy to store. Perfect for fire if you are running low on wood or just don’t have any!

        • The Old Coach

          Not MUCH heat. Alcohol has lousy BTU per unit volume. That much alcohol won’t noticeably heat a 2-man pup tent if the ambient temperature is below 45 degrees F.

      21. Jim

        35% oh silly people….the home I sit in right now was purchased by my wife and I in December of last year for $134,500. It was sold in September of 2006 for $369,000. The condo I bought as an investment in December and paid $48,500 in cash for and now rent out was once sold in 2006 for $242,000.

        The home I’m in now will make a nice rental and produce a decent ROI once I’m not with some improvements (most notably making it a duplex). There really wasn’t much to spend money on with it. Between both of these “investments” I’ll have contributed to a healthy retirement. IF “SHTF” occurred I can rent property to worthy assistants. IF not I have a healthy retirement contribution.

        Win Win

        • Patriot One

          Are you in Florida to? I’m not real sure where they get their numbers from. Your purchases are 74 and 80% below peak. The real bad news is that even at the prices you paid I think you will still lose money.

          If the SHTF good luck with the rent unless they work for you or you barter the rent.

          I never though I would say this, but with the economic condition of America I’m wishing I was a renter.

          • Jim

            Central California Patriot One, heart of foreclosureville, unemployment stated to be 16% is much more like 33% and yes the housing market here has hid the low/mid value homes (that were $200k to $400k) very very hard since 2008. This was the area where all that you needed was a signature the banks gave you a loan at the bequest of a government who made anything but an approval an act of discrimination. 3% down was certainly “ok” here for quite some time.

            The condo I bought, 48.5k, absolutely could not be financed because too many units in the complex were now rentals or vacant. If you did not have cash – you could not buy – no loans were available even with 50% down and great credit – I tried.

            I’m elated at my home that I’m in right now. Huge lot – enough to grow kibble for me, my lovely wife and kids (2 great danes). Lots of veterans around me, good neighborhood, and if I didn’t have a sweet BOL it’d be a solid bug in property.

          • 41MagMan

            > If the SHTF good luck with the rent unless they work for you or you barter the rent.

            Indeed so. Perhaps I have a different definition of “SHTF” but in my lexicon it means that we will be faced with great difficulty in mere physical survival, let alone making a profit on it. IMHO, investing in rental property is a fine idea in most times. SHTF will not be one of those times.

        • eeder

          jim, pal, if shtf, were all screwed.. you will not profit at all… you will be lucky if you can maintain control of what you have.get the rose colored glasses off and think…. how will you profit from anything if everyone is broke essentially… your win win is actually a lose lose in reality… silly man.

      22. ninaorket

        The Montana V.A. Veterans Administration, it is where Veterans go to Die!

        Montana V.A. Health Care = Eugenics
        Eugenics = Montana V.A. Health Care

        eu·gen·ics
           [yoo-jen-iks] Show IPA

        noun (used with a singular verb)
        the study of or belief in the possibility of improving the qualities of the human species or a human population, especially by such means as discouraging reproduction by persons having genetic defects or presumed to have inheritable undesirable traits (negative eugenics) or encouraging reproduction by persons presumed to have inheritable desirable traits (positive eugenics).

        Origin: 1880–85; see eugenic, -ics

      23. ninaorket

        In Amerika one does not OWN land , one is simply a serf … leasing a piece of the Lords Estate!

        Stop payin’ your land taxes and … see Just How FREE You are!

        Debt Slaves one and all!

        • 41MagMan

          Nothing that can be taxed is ever “owned”. Ownership under such conditions is an illusion… a very comfortable one but an illusion nonetheless. As you say, just try not paying your taxes on property and see what happens to both it and you.

      24. ED

        Jim, I have friends who bought cheap like you and are now spending money on lawyers to evict their deadbeat tenants who lost their jobs. And on top of that, dealing with their trashed out rentals.

        • Jim

          Ed, that bites for sure. I rented to people that worked for me though I sold my business so I don’t have that going for me now but they still work for the business and if they plan on hosing me over like what happened to your friends I’m not seeing it coming – at least with these tenants. Govt. does not make renting easy, but there are ways to be careful with who you get.

        • The Old Coach

          I(‘m seeing that where I live, rural Ohio. Old small farm houses or even “mobiles” get rented, and within a few months the tenants have stripped them. Some even strip off the aluminum siding to sell. Funny to see an older “mobe” with all the studs and the insulation showing. Like an old crone without her clothes.

          Even in the good times I would never be a landlord. I rented for ten years in Michigan; I was an excellent tenant, and the old guy who owned the place almost had tears in his eyes when I moved out. He had three other places, and two of them were empty, rather than put up with the cretins that he normally got for tenants.

          • Jim

            You know my brother feels like you do Old Coach. He’s a CPA, and doesn’t know a lot of working people that don’t already own. The thing is I owned a small business for a long time and had plenty of people working for me. So it was, and still is because I know others in the business, easy to find good people to rent.

            In a “SHTF” scenario renting will be harder, but the form of rent might be different. Its an opportunity to obtain more desirable assets – like barter – in trade for a condo or residence to rent.

      25. Mad Max

        Real-estate can’t come back with out rhe jobs problem being fixed. The jobs problem can’t and wont be fixed. That’s impossible, I don’t care what the stupid experts say. Technology is killing everything directly or indirectly. We have one way out, the nuclear option.

        Wake up America. It’s time…

        “THE REVOLUTION HAS STARTED”
        Read “Common Sense 3.1” at ( http://www.revolution2.osixs.org )

        FIGHT THE CAUSE – NOT THE SYMPTOM
        “Spread the News”

      26. ninaorket

        White House land grab
        Obama / Soetoro cia fruity agent seizes land for Chinese money loans!

        You’d think the Obama administration is busy enough controlling the banks, insurance companies and automakers, but thanks to whistleblowers at the Department of the Interior, we now learn they’re planning to increase their control over energy-rich land in the West.

        A secret administration memo has surfaced revealing plans for the federal government to seize more than 10 million acres from Montana to New Mexico, halting job- creating activities like ranching, forestry, mining and energy development. Worse, this land grab would dry up tax revenue that’s essential for funding schools, firehouses and community centers.

        President Obama could enact the plans in this memo with just the stroke of a pen, without any input from the communities affected by it.

        At a time when our national unemployment rate is 9.7 percent, it is unbelievable anyone would be looking to stop job-creating energy enterprises, yet that’s exactly what’s happening

        • 41MagMan

          Does anyone visiting this web site truly believe that unemployment in the US is less than 15%? Those silly 9% or so numbers are pure unadulterated horse pucky. I really do wish that people would stop repeating them. They are one of those BIG LIES that gain credibility every time someone repeats them.

          The finest economic analysis I’ve ever seen can be found on the ShadowStats web site. Some of it is for paid members but a lot of it is available to guests. Look up the true unemployment number there. It is MUCH higher than 9.x%.

          As to Mr. Obama… he has a HUGE problem. He is leading but most Americans are not following. Yes, he can do a lot of damage and he is doing it but this is a very strong nation. We came through the Revolutionary War, the Civil War, WW I, The Great Depression, and WW II. We will get through 4 years of an attempt to force feed us socialism. If anything, it may even be of help to us in the long run. As others have said, “Without Carter would be ever have had a Reagan?”. One can only wonder who will be spawned from this experience.

      27. johndtrucker

        Historically,median home prices in any given area should reflect the median income in the area. If you were to research this, you would find that prior to the price run-up (that actually began in 1997) home prices were about 2 1/2 times the median income. Homes are the only commodity appropriately sold by payment, and the total payment must never exceed 28% of the borrowers income. As interest rates rise, prices must decline and vis-versa.

      28. Fighting Duck

        I Agree with Net Ranger. Let’s get it over with quick so we can begin to rebuild this country. The status quo is just a long, slow slide into the abyss. The longer it takes for the system to collapse, the more the middle class disappears. I’m actually considering voting for Obummer to help speed things along!

        • The Old Coach

          Yupper! What we’ve got now is like gangrene. Amputate now, or die later. And not much later at that.

      29. mc

        We have an ageing population for the forseable future.Never use the term “Owning a Home”.If one cannot pay the taxes with deed in hand you own nothing.We are aging in America.Climbing ladders and doing all the maint is a physical chore as well as a finacial one.We will return to simple life not by choice but by ageing and economic reality from past greed and corruption.A home is a place of refuge and should of never been treated like a high flying stock.I been a renter and had to endure people for the last two decades of saying “BUY BUY BUY”only to here them bitch about property taxes and stress.It’s all crashing down and i for one love it.I might have been a renter but i came and went without a ball and chain attached.Into this earth age with nothing and will leave with nothing.Peace

      30. VRF

        from sipsey st. erregulars

        The Obama administration’s efforts to fix the housing crisis may have fallen well short of helping millions of distressed mortgage holders, but they have led to seven-figure paydays for some top executives at troubled mortgage giants Fannie Mae and Freddie Mac.

        The Federal Housing Finance Agency, the government regulator for Fannie and Freddie, approved $12.79 million in bonus pay after 10 executives from the two government-sponsored corporations last year met modest performance targets tied to modifying mortgages in jeopardy of foreclosure.

        The executives got the bonuses about two years after the federally backed mortgage giants received nearly $170 billion in taxpayer bailouts — and despite pledges by FHFA, the office tasked with keeping them solvent, that it would adjust the level of CEO-level pay after critics slammed huge compensation packages paid out to former Fannie Mae CEO Franklin Raines and others.

        The sucker, in case you hadn’t figured it out, is you, the taxpayer.

      31. Frank Thoughts

        Things are fine in the UK and prices are rising again (they never crashed). Maybe the solution is to work together as an elite and use various nefarious ways to game the tax system and use invisible supports to the housing market to prop prices up. Then marginalise the poor and the suckers who rent and make them pay for it.

      32. R8drz

        Jim’s right on. I also live here in Northern California and my personal residence that I purchased in 1991 for $140,000 peaked in 2005 at $485,000 (same model down the street sold for that much) House next door to me just sold (again, same floor plan) for $190,000. Thats a 60% drop from the peak. It seems the Central Valley has always lead the nation. First into a decline first out. I’ve told my relatives throughout the country to watch us and it’ll be their turn in one or two years.
        Have you seen a 60% drop in YOUR home prices wherever you are throughout the US? If not, are you ready because it’s on it’s way…

      33. Zel

        Put your money into some desirable acreage, hopefully with a source of water, and bust your ass building an earthbag house for $6 – 8,000, which will last a couple of hundred years easily. You can see examples of these houses in New Mexico, Arizona, California and Southern Colorado. Use scoria instead of earth, if building in a colder climate, and watch the realtors soil themselves when you don’t buy their 2X4 and sheetrock crap boxes.

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