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Which Markets are recovering - and why?

Recently, I was talking with a friend from New York about why real estate prices are falling nationwide. The conversation turned to a discussion about why some cities felt the pain more so than others.

He advanced the theory that it was all due to sub-prime mortgages - the higher the percentage of all mortgages in a given metro area, the higher the foreclosure/short sale rate and the greater the price decline.

I agreed that this factor impacts the number of properties entering the market, but the price is also largely impacted by the number of buyers. And buyer confidence, I think, can be well measured by the unemployment rate.

After I hung up, I thought more about it and did a bit of internet sleuthing the results of which are below. Which of these factors do you think is more important?

Metro Price Change

Posted by Max Eydelman on 06/30/2009 08:53 PM

Comments (3)

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3 Comments on Which Markets are recovering - and why?

JUN

Twenty three percent in Miami, wow that is high, many are condo's I read about empty condo's all the time and upside down owners.

We are supposed to be a compassionate country, who is helping all these folks?

Yhe height of the subprime ARM resets were in the fall of 2008, precisely at the time the banks were threatened with collapse. The speculative loans drove up prices in the market and the market was destined to fall when the speculative game was played out. These speculative loans should never be sold to the general public again as most people do not understand the inherent risk to the system they pose. The foundation of the economy was being undermined by the proliferation of these loans. It was inevitable that we were going to be in the situation we are now in. There were many forcasters warning of the bubble coming in the market. Their voices fell on deaf ears.

Greenspan said it something like this - "History has not been kind to those economies that have sustained protracted periods of low interest rates." (August 2005). He was warning everyone even at that time.

Widespread suprime loans = widespread speculation = disaster IMHO

JUL

Monika - the market has now feelings; but that's life...

Dan - when things started happening in the spring of 08, i thought every one of these bankers deserved a medal. to think, they sold securities based on these phony mortgages to foreign investors - that had to be one of the biggest transfers of wealth to 1 country in the history of the nation-state. It turned out they drank the kool-aid too and, what's worse, thought they were immune to it because of their credit default swaps.

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