I will tell you right now that the information that I have posted is from Wikipedia
The information was so voluminous and in depth that I just didn't want to be accused of, or run the risk of, putting my own spin on the material.
I am older than most of you on Active Rain and I will tell you in my entire lifetime I have never seen such a debunkel in the housing market, ever. This is such a serious matter for so many families. Yes, some will recover to buy another day, but there are those that will never recover from losing their homes and or their jobs due to what has happened in the housing market.
The time for pointing fingers has passed. Each industry has had their part, as have a few of the home buyers, the sad truth is, we are here. The time has passed for saying that this "market correction" will weed out the bad Realtors. Too many good agents have had to leave the profession and try to find work elsewhere. The sad truth is they did not have the money to sustain themselves while the market corrected.
I know we are all hearing about the glut of buyers there are in the market right now. Yes, it is true that there are buyers out there, but with the regulations in the mortgage industry and the regs getting tighter most of those buyers don't or won't qualify. Gone are the days of 100% financing unless you have AAA credit. Yes, I know there is one major company that will still consider 100% but that is a crap shoot at best. Also, gone are the day's of unstated. It is harder now for the buyer in the market. What buyers are there, think they can get a home that was selling for $700,000 six months ago for $230,000 now.
It is time to start educating the buyers to the fact that the day has returned when they now (again) have to save for the down payment and closing cost ( in some cases) of 20/30%. Rude awakening for the younger market that is used to getting houses their parents only dreamed of having and then going into debt to furnish it in grand style.
It is time for the agents that are left and are doing well to consider how they are and will continue to market themselves to help the market regain some of its allure. Not in false promises or making a killing on the backs of those less fourtunate.
I guess you can tell I have seen some of the above and it makes me nervous. I have seen agents tell their clients although they will have to take less for the home, they are selling it will sell.
I know not all states have not been as badly effected as California, but they have all been effected to some degree and it is time that we recognize that when you dance you have to pay the band.
I know the following material is long but I would be interested in hearing what you have to say about what you are experiencing in your market.
Wikipedia
Bubble bursts
The booming housing market appears to have halted abruptly for many parts of the U.S. in late summer of 2005, and as of summer 2006, several markets are facing the issues of ballooning inventories, falling prices, and sharply reduced sales volumes. In August 2006, Barron's magazine warned, "a housing crisis approaches", and noted that the median price of new homes has dropped almost 3% since January 2006, that new-home inventories hit a record in April and remain near all-time highs, that existing-home inventories are 39% higher than they were just one year ago, and that sales are down more than 10%, and predicts that "the national median price of housing will probably fall by close to 30% in the next three years ... simple reversion to the mean."[15]Fortune magazine labelled many previously strong housing markets as "Dead Zones;"[16] other areas are classified as "Danger Zones" and "Safe Havens." Fortune also dispelled "four myths about the future of home prices."[78] In Boston, year-over-year prices are dropping,[163] sales are falling, inventory is increasing, foreclosures are up,[17][18] and the correction in Massachusetts has been called a "hard landing".[164] The previously booming[11] housing markets in Washington, D.C., San Diego, Phoenix, and other cities have stalled as well.[165][166] Searching the Arizona Regional Multiple Listing Service (ARMLS) shows that in summer 2006, the for-sale housing inventory in Phoenix has grown to over 50,000 homes, of which nearly half are vacant (see graphic).[19] Several home builders have revised their forecasts sharply downward during summer 2006, e.g., D.R. Horton cut its yearly earnings forecast by one-third in July 2006,[167] the value of luxury home builder Toll Brothers' stock fell 50% between August 2005 and August 2006,[168] and the Dow Jones U.S. Home Construction Index was down over 40% as of mid-August 2006.[169] CEO Robert Toll of Toll Brothers explained, "builders that built speculative homes are trying to move them by offering large incentives and discounts; and some anxious buyers are canceling contracts for homes already being built."[170] Homebuilder Kara Homes, known for their construction of "McMansions", announced on September 13, 2006 the "two most profitable quarters in the history of our company", yet filed for bankruptcy protection less than one month later on 6 October.[171] Six months later on April 10, 2007, Kara Homes sold unfinished developments, causing prospective buyers from the previous year to lose deposits, some of whom put down more than $100,000.[172]
As the housing market began to soften in winter 2005 through summer 2006,[173][174]NAR chief economist David Lereah predicted a "soft landing" for the market.[175] However, based on unprecedented rises in inventory and a sharply slowing market throughout 2006, Leslie Appleton-Young, the chief economist of the California Association of Realtors, said that she is not comfortable with the mild term "soft landing" to describe what is actually happening in California's real estate market.[176] The Financial Times warned of the impact on the U.S. economy of the "hard edge" in the "soft landing" scenario, saying "A slowdown in these red-hot markets is inevitable. It may be gentle, but it is impossible to rule out a collapse of sentiment and of prices... If housing wealth stops rising... the effect on the world's economy could be depressing indeed."[177] "It would be difficult to characterize the position of home builders as other than in a hard landing", said Robert Toll, CEO of Toll Brothers.[178] Angelo Mozilo, CEO of Countrywide Financial, said "I've never seen a soft-landing in 53 years, so we have a ways to go before this levels out. I have to prepare the company for the worst that can happen."[179] Following these reports, Lereah admitted that "he expects home prices to come down 5% nationally", and said that some cities in Florida and California could have "hard landings."[20] National home sales and prices both fell dramatically again in March 2007 according to NAR data, with sales down 13% to 482,000 from the peak of 554,000 in March 2006 and the national median price falling nearly 6% to $217,000 from the peak of $230,200 in July 2006 . The plunge in existing-home sales is the steepest since 1989.[21] The new home market is also suffering. The biggest year over year drop in median home prices since 1970 occurred in April of 2007. Median prices for new homes fell 10.9 percent according to the Commerce Department.[180]
Based on slumping sales and prices in August 2006, economist Nouriel Roubini warned that the housing sector is in "free fall" and will derail the rest of the economy, causing a recession in 2007.[27]Joseph Stiglitz, winner of the Nobel Prize in economics in 2001, agreed, saying that the U.S. may enter a recession as house prices decline.[181] The extent to which the economic slowdown, or possible recession, will last depends in large part on the resiliency of the U.S. consumer spending, which now makes up approximately 70% of the US$13.7 trillion economy. The evaporation of the wealth effect amid the current housing downturn could negatively affect the consumer confidence and provide further headwind for the U.S. economy and that of the rest of the world. The World Bank recently lowered the global economic growth rate due to a housing slowdown in the United States, but it does not believe that the U.S. housing malaise will further spread to the rest of the world. The Fed chairman Benjamin Bernanke said in October 2006 that there is currently a "substantial correction" going on in the housing market and that the decline of residential housing construction is one of the "major drags that is causing the economy to slow"; he predicted that the correcting market will decrease U.S. economic growth by about one percent in the second half of 2006 and remain a drag on expansion into 2007.[182] The White House Council of Economic Advisers recently lowered their outlook for U.S. economic growth in 2008 from 3.1 percent to 2.7 percent and forecast higher unemployment, reflecting turmoil in the credit markets and residential real-estate market. The Bush Administration economic advisers also revised their unemployment outlook and predict the unemployment rate could rise slightly above 5 percent, up from the current unemployment rate of 4.6 percent.[183]
Others speculate on the negative impact of the retirement of the Baby Boom generation and the relative cost to rent on the declining housing market.[184][185] In many parts of the United States, it is significantly cheaper to rent the same property than to purchase it; the national median mortgage payment is $1,687 per month, nearly twice the median rent payment of $868 per month.[91] However, the appreciation of home prices in many parts of the country has lured many renters to become homeowners. Yet the appreciation of home values far exceeded the income growth of many of these homebuyers, pushing them to leverage themselves beyond their means. They borrowed even more money in order to purchase homes that were far more expensive than their ability to meet their mortgage obligations. Many of these homebuyers took out adjustable-rate mortgages during the period of low interest rates to purchase homes of their dreams. Initially, they were able to meet their mortgage obligations due to their low "teaser" rates in the first few years. However, as the Federal Reserve Bank exercised monetary contraction policy in 2005, many homeowners were stunned when their adjustable-rate mortgages began to reset to much higher rates in mid-2007 and their monthly payments jumped far above their ability to meet the monthly mortgage payments. Some homeowners began to default on their mortgages in mid-2007 and the cracks in the U.S. housing foundation began to appear.
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