The latest verbiage from the world’s most vocal housing-bubble cheerleader, NAR economist David Lereah, actually predicts that home prices will drop by 0.7 % in 2007.
Lereah is notorious for his delusionally optimistic real estate estimates that run directly contrary to reality, to the point that Motley Fool openly mocks him in the article. So, for Lereah to be forced to say prices will fall for the first time in 40 years means things must be getting very bad indeed.
David Lereah Watch has more.
There will be of course regional variations. The market in New England, for example, is expected to continue to be poor, while Los Angeles is already showing signs of recovery. Even here in Utah, much of the state (which missed the housing boom) is expected to rise healthily, while the southwest of the state (where I live) will decline or hold steady.
However the subprime pain is only just starting. What we’ve seen so far is just the leading edge. Enormous numbers of ARM’s will flip higher in 2007 and 2008 and more than a few of them won’t be able to pay.
With the subprime spigot closed, that means many who want to buy won’t be able to, which in turns slows down the trade-up market.
Seems to me, all the indicators are pointing down, not up.
Again, it all depends on where you are. But on average, yes, it’s headed down.
More on regional variations, from the UAR weekly newsletter of 4/13/07:
“While national foreclosures keep climbing, Utah rates are trending the other direction. The most-recent data from RealtyTrac indicates February foreclosures in Utah dropped nearly 9 percent compared to January, and foreclosures were down about 30 percent from last year. In contrast, foreclosures on a national level were up from 2006. From February 2006 to February 2007, U.S. foreclosures increased nearly 12 percent… Utah had the 15th-highest foreclosure rate.”
If the 15th-highest foreclosure rate is below average, this would suggest an unusually high foreclosure rate in a small number of markets (so far).
http://thehousingbubbleblog.com/
They have numerous posts on the soaring foreclosure rates in big urban areas, places where the speculation was the heaviest are now getting hit the worst.