How’s The Housing Market In Your Neighborhood?

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The slowdown continues in my neck of the woods – a recent house that had been stubbornly overpriced for over a year on my street (we actually made a verbal offer, but the seller wouldn’t budge) finally sold for over $120,000 less than its initial list price. I’m sure the relatively low purchase price of our house didn’t help. At least we are not hit by the collateral damage from foreclosures to condo owners who have never missed a payment. When a multiple units are being foreclosed upon, nobody pays the maintenance fees, which means the existing residents have to pick up the slack. Of course, this means less people want to buy into that building… creating a bad downward spiral.

However, some areas seems to be fairing better than others, even if only being one county over. In a recent speech by Ben Bernanke, he showed some interesting geographical heat maps revealing the variation in both foreclosure rates and price trends across the country. Keep in mind the graphs only go until the end of 2007.

You can find both the text of the speech and additional graphs at the bottom of this Federal Reserve page. Via Matrix via Mapgirl.

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  1. Interesting, but I think including the first quarter of 2008 would add a lot of red to those maps.
    That said, I think Chicago has a relatively stable market. There is a lot of condo inventory available right now, though.

  2. I find it particularly interesting how they choose to color the graph. Note that, except in the case of red, every sector of the map indicates an INCREASE in housing prices, however minuscule. Even in the case of red sections, some portion of that lower map indicates NO CHANGE, which is not necessarily bad.

    They love to group things together that ought be separate to make it seem more dire than necessary.

    Also, in the upper graph, the highest rate of foreclosure was circa 2.5%, which is also telling, since I know personally a significant number of real estate speculators who got caught holding the bag with two homes they can’t really afford. I would like to see the >2.5% sector broken down into more gradations, because I don’t think it’s as bad as it seems.

    Trust the government to make scales and color schemes that don’t make sense.

    Confusion Level Red: Highly Elevated

  3. Woo! Thanks for the link repost! Maps are a great way to visual lots of information which is why the heat maps are pretty awesome. Though sometimes, the data doesn’t thrill me when I look at my own county. *sigh*

  4. Curious how the change in home price index appears to correlate strongly to states borders, not necessarily to regions.

    The Nevada-Utah border, and the Minnesota-Dakotas border are two examples.

    Is there an easy explanation for this? Is the home price index affected strongly in some way by state taxes or laws?

  5. Ted Valentine says

    I wish the figures were zoomable. (Is that a word?)

    PS – I just noticed the data goes to the end of 2007. That makes the figures largely irrelevant to today’s market. Things have changed since then.

  6. William G. Peregoy says

    I know the housing market is still strong here in Austin, TX. They’re building new houses and new condo’s all over the city, it almost makes the decline in the housing market I hear about on TV seen unreal.

  7. clicclic says

    Douglas: I know firsthand that property values in San Francisco – the East Bay is what I’m talking about – have fallen at least 20% across the board. I’m being conservative here…

    Example: my best friend in Point Richmond – Houses that were sold for $1 million+ just two years ago are being auctioned for $650k. That’s a 45% discount.

    Example: in Alameda, my favorite little island, homes that people were able to refi in 2005 for $xxxk in free money are now worth 35% less.

    A foreclosure auction pulls down the price for ENTIRE neighborhoods. And spurs more and more people to walk away from an obsolete mortgage.

    Greenspan did no one any favors when he created the housing bubble – well, except wall street. He created higher gas/grocery/mortgage payments for the working class / middle class – who always end up bearing the burden of largesse. Thanks Alan!

  8. CD Rates says

    We are in the nice red areas of CA. The high end markets such as CA, NY, FL, etc have been especially hard hit. Although, there isn’t so much red on the 2nd map in other areas, the red areas tend to be larger population sets so the affect on the total economy is higher. It doesn’t take too many foreclosed McMansions to cause serious problems.

    I’ve seen posts elsewhere also discussing property tax problems. Areas hard hit by foreclosures or delinquent loans are also seeing late tax payments. In CA, this is causing serious concerns especially with the looming budget cuts and many cities already pushed to the brink.

  9. Ted, They do need add the zooming in feature. I wish I could see closer to where I live.

    Nice link though.

  10. are u sure the bank that owns the condo does not have to pay the monthly assesment?

  11. The graphs are not the most current, but I would say there would be some residual similarities. The same places that had large sales price increases over 2007 might have only increased a little bit since, and the places that already went down probably went down even farther.

  12. This brings up a good point that I’ve been considering lately – I know there must be a lot of worry and hardship in those red areas, but the housing prices had to come down. In Colorado, when I lived there, we complained constantly about Californians coming into Colorado with their money from their newly sold homes and driving up prices. A friend of mine bought a 1800 sg. ft. house for $800K with an interest only loan. Those prices and those types of loans had to stop.

    In Pittsburgh, where we live now, housing prices continue to go up – slowly, as they always have.

  13. Will the market ever come back to present day figures? Otherwise, how does one justify maintaining a home whose value has dropped so much, and keeps on dropping? I live in one of the very hot zones in CA, i.e., loss of value has been pretty steep. Purchased home 2 years ago NOT with the intent to make a quick buck. So, it’s very distressing to see property values drop so much at such a fast rate. Your thoughts, anyone?

  14. Dan Isaacs says

    I live a suburb of Raleigh, NC (Apex, NC) which is pretty close to RTP, to which I and tens of thousands of other tech workers commute. Best I can tell from homes that have sold in the last few months in my ‘hood, they seem to be staying on the market for about 30 days, and getting pretty close to asking. it’s not like it was even a year ago, but not as bad as a lot of other places.

    Builders have slowed down, certainly, but haven’t stopped. I think we do have a larger inventory of sub-300K houses. And buyers are certainly acting like values have dropped, coming in with extremely low ball offers as though every seller is desperate. But as I said, nothing really going for less than the Tax appraisals that were done in Nov.

  15. Dan Isaacs says

    if you can afford your mortgage, just keep paying it and hope for a rebound. Doesn’t really matter what the house, or anything, is worth until its time to sell it. 🙂

  16. Started negotiating on a price for a condo 3 weeks ago. There were back and forth negotiations/concession amounts and a preferred lender involved initially. It took the developer a long time to agree to the numbers. They wanted protection of their asking price on the HUD but had concessions to move over on the HUD to reach an agreed price.

    Found a bank that would recast the loan and apply the large $$$ concession to principle — ie not just toward closing and return the money to the seller.

    All of a sudden, they report limits on their financial institution and dropped the contribution several thousand dollars and wants the new lender to kick in on the CC. So bizarre when you’ve furnished numbers to a lender and the seller tries to change in the middle of the stream. Has any had experience along these lines?

  17. By the FED lowering interest rate, rather than raising them to head off inflation, they retain many more buyer or likely buyers in this ill fated housing market. I too see them continue to build here in the DFW area. Most of the newcomers are either from states such as California or Florida. If they looked around more, they would get an even better deal. However, they still think they are getting a steal.
    Fact is that the demographics would suggest that most baby boomers have homes and there is no economic basis for the housing boom to begin with. A greedy mortgage industry over built by allowing anyone who fogged up a mirror to buy. These bundled up home loans where at one time considered safe low interest investments by large pension groups/institutional investment groups. They were duped by the mortgage/banking industry, who put these bad apples in the usual basket/bundle. Now they are mad (the low return safe investors) and have created the so called credit crunch. The fiscal and monetary branches of the gov’t have devalued the dollar by holding these interest rates down in hopes of selling these ill fated homes (foreclosed homes). In capitalism we should not reward failure and failure should be liquidated. Why should gov’t come to the rescue of these fools who made bad loans? We will all pay for this in higher prices. Those who invest in the dollar (treasuries) will make haste to the EURO or something better. Inflation in itself may erode the purchasing power of the dollar. Therefore, it may take more dollars to buy a home. Hence a higher price on a home may not add any wealth and or gains to the average homeowner. But we must bailout these big mortgage/bank industries and again Wall Street gets to live off Main Street. The deregulation which started under Reagan is coming back to haunt us. Wall Street has no ethics and or moral fiber. Their greed will erode the nations middle class and this is another case of welfare for the wealthy. We buy their stadiums/arenas and they are just pathetic examples of capitalist/risk takers. Does risk need to be rewarded?
    So if I sell my home for lets say $250,000 and am able to buy ten car with the $250,000 before the sub prime mess.
    Now if I sell my home for $500,000, but can only buy two cars with the $500,000 after the sub prime mess.
    Am I better off prior or after the sub prime mess?

  18. @ frank…
    how many cars do you need, man?? 🙂

  19. T Wheeler says

    Hey is that Dan Isaacs from Maryland? If it is email me Old friend from high school!

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