Zillow has posted their latest quarterly home value reports.
Their charts for the Seattle area include a graph of the percentage of homes sold at a loss (approaching 30%) as well as a chart showing the percentage of recent buyers with negative equity (over 50% of 2007 buyers).
Interesting stuff from Zillow as usual.
You can also find additional news coverage of Zillow’s report at the Seattle Times and at Aubrey Cohen’s blog.
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Tags: home equity, negative equity, Zillow
The Center for Economic and Policy Research has released another report on the prospects for building home equity over the next four years, and much like their April report, their conclusions are not good for current home buyers hoping to build short-term equity.
Despite the collapsing housing bubble and consequent fall in house prices in bubble markets, the prospects for accumulating equity still look grim for homeowners as prices are still far from reaching their historical norm. The relative merits of owning and renting will be affected by the extent to which homeowners can accumulate equity. Even with the general increase in house prices at the same rate as the overall rate of inflation, homebuyers are at risk of facing plunging home values in bubble inflated markets.
Based on calculations that compare the cost of buying a home at 75 percent of the median house price, they predict that current home buyers in the Seattle area will have between -$117,471 and -$123,373 equity by 2012.
Here’s how Seattle’s situation compares to other areas around the country, according to CEPR’s calculations.
Figure 2 shows the updated projections of equity in the 100 largest metropolitan areas after four years for a household buying a home at 75 percent of the median price. Blue circles indicate positive equity, while red circles imply negative equity. The calculations deduct 6 percent of the projected sale price for realtor fees and other selling costs.
The only metropolitan areas outside California predicted to have a larger amount of negative equity than Seattle are Honolulu Hawaii and Bridgeport Connecticut.
To calculate the projected negative equity, CEPR assumed that the (75 percent of median) house price will adjust over the next four years to a value of 15 times the annual rent (adjusted upward by 33% to adjust for the difference between apartments and houses and then again by 12.6% to account for rent increases). For full details on CEPR’s methodology, download the pdf (which has been added to the Library for future reference).
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Tags: CEPR, fundamentals, home equity, library, negative equity
A couple people pointed out a piece in the Wall Street Journal yesterday titled The Housing Crisis Is Over. I don’t doubt that the mere fact that it was printed in the WSJ makes it gospel to some folks. I am not interested in writing a rebuttal to this piece, as that has already been handled quite well by our friends at Calculated Risk. All I would like to add is to point out that this is an opinion piece, not a news article. In the opinion of a guy that runs a hedge fund and stands to profit healthily from the recovery of the housing market, the crisis is over. Not exactly a shocking revelation.
Meanwhile, Fannie Mae, “the nation’s largest buyer of home mortgages” announced huge losses today, and forecasts “a steeper drop in home prices this year.” Yeah, the crisis is over folks, nothing to see here, move along.
In other news, Les Christie of CNNMoney.com is singing a bit of a different tune than she was in mid-2006, when she was touting our “strong fundamentals” and declaring Washington State to be the “next hot market,” or just last summer, as the local market was hitting its peak, when she declared that in Seattle, “the housing boom goes on.” Her latest headline is not quite as positive: Bulletproof housing markets get hit.
Some of the last, best housing markets – the ones that continued to climb even as the rest of the country cratered – have turned south lately.
Seattle, Portland Ore., Charlotte, NC, and Salt Lake City all posted home price gains during 2007, even as more than half of the 150 markets tracked by the National Association of Realtors registered declines. Now they’ve joined the losers.
Of course, the Seattle market was never “bulletproof,” just late.
Speaking of the local decline, Zillow released their latest Quarterly Home Value Reports this week, which contain some interesting information about our area’s market. Of particular interest is the chart showing the approximate percentage of homeowners who bought each year that now have negative equity:
There’s also a corresponding map on the charts page showing how all that negative equity is distributed around the region. Interesting stuff.
I think that’s enough to digest in one post.
(Cyril Moulle-Berteaux, The Wall Street Journal, 05.06.2008)
(CR, Calculated Risk, 05.06.2008)
(Les Christie, CNNMoney, 05.06.2008)
(Quarterly Home Value Reports, Zillow, 05.05.2008)
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Tags: Calculated_Risk, Christie, CNNMoney, negative equity, Opinion, Seattle_is_special, Wall_Street_Journal, Zillow
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