We own commercial real estate (shopping centers) and DH keeps up with both - residential market too. Everyone here (central AL) says it is going to get worse before it gets better. Most are estimating early to spring 2010 to hit bottom.

Figure by 2019 that with a little luck the market will have recovered enough to start showing an uptrend in prices once again....Otherwise figure 2024 or later to see home prices and sales recover to pre-2008 levels...

(It's at least 10 years between normal real estate cycles, but this one is worst than most...or may be the worst ever...)

Toll Brothers, one of the largest publically traded home builders in the US, and one of the bellweather indicators of residential construction performance, posted a 51% decrease in sales since this time last year, with new contract signings and cancellations continuing to decline.

Myself. I don't see anything to be optimistic about. We built a year ago...had a paid for house that we had a buyer's deposit on (non-refundable). Needless to say, the deal fell through but we'd taken that into consideration as an alternate scenario we could live with , using the house as a rental. That's where we sit now...the reality is that the house is better kept as a rental than sold at today's prices. My concern is that at some point soon, rental prices will drop...there are so many un-occupied structures out there and I'll be tightening my belt with the small mortgage we had to take out to build our new home (without the sale of the old one). I'd think selling a house is better done sooner than later in this market. In my case, I'll just milk out what I can in rent until it becomes unprofitable. Another battle coming soon regards everyone's property tax... is you home worth what your municipality claims it is?

Here in western PA, we did not have the bubble, so nothing 'burst'.

In fact, there was a recent report that said that housing pricing increased here over the past year.

I think the best source of information would be realtors (yes, multiple) who specialize in your area. Even VA has very different areas, I'm sure you're aware, and so the market conditions in Hampton Roads, NoVa, Richmond, and out in the rural areas will not all be the same. I live outside Richmond and the market has been hit but not nearly as bad as some areas. Homes in my cookie cutter neighborhood have been selling at prices close to what they would have gotten 4 years ago which is not altogether bad.

Regardless of where you are, it does seem that one generality that can apply is that the rental market is pretty good. We had a home for sell in Orange County, VA over a year ago that sat on the market for 8 months. As soon as we converted it back to a rental we were flooded with calls. You just have to be careful about screening potential tenants; we have been extremely cautious in the screening process and fortunately we've had very good tenants for quite a while.

All RE is local. Around here, we couldn't find what we want in a resale in our price range. The spec houses are discounted but probably only 5-10%. So we decided to build - now we saved a bit on land, our GC gave us a discount and lumber is at an unsustainable discount. We'll see but I don't see that this is the worst time to build at all.

Now if I lived in Florida - I might have a different viewpoint. But I've always heard that resales were a lot cheaper there since everyone wanted new. Certainly, anyone who built there recently (ie 2006) probably paid too much and may think everyone is in the same situation.

Interesting...the responses seem to indicate there are a lot of areas that the housing market is holding up quite well. We took a cross country trip in December and while we didn't check real estate prices, I was concerned that only in Texas did we see any tower cranes in the cities. I've found that to be a pretty good, though un-scientific, indicator of real estate activity.

The most accurate index of US home values, the Case Shiller Index, shows the slide continues at a record pace nationally. But there are exceptions.

The future? If you believe in The One, your views will be rosier than mine. At this point, a ten-year slump sounds optimistic. My principal investment is land under a Hawaii shopping centre, now in its 133rd year of lease. It pays to take the long view.

Here is a link that might be useful: Home Prices Fall at Record Pace

Although I'm generally a pessimist on the economy, I'm going to kind of side with those looking on a more local scale. When you look at overall numbers (Case Shiller, RealtorWatch, USGov), etc., particularly at a national level; it looks bad. It's bound to when you look at one area mentioned as having a 5% downturn, which ain't too bad, then you throw in my area with housing prices approaching 30% of value. Or when you look at an area like Las Vegas which has had a 200% decline in new starts. Yeah; that kind of skews the numbers. But, there are still areas that ARE growing, and some that are stable, and some that have only modest losses.

And who are you talking about, Worthy?

Hint:

That kinda looks like George Washinton.

My remarks may be straying a bit from the stated topic. As far as I know, some small portion of the foreclosures are by people who bought and financed at higher prices, but now their house is worth less than the amount owed. So they abandon the property even if they are capable of making the payments. In my opinion, that is incredibly dishonest. The lender would not participate in the gain if the property value rose. So why should the lender be penalized by a drop in the value of the property?

"So they abandon the property even if they are capable of making the payments" Many people did that in our area in the early ninties when our town went down because of defense cuts and layoffs on the naval base here. We are solely dependent on the base, so things are different here than with the rest of the country as a rule. As of now, things are fine here, but if the current administartion cuts defense budgets, we will be in the same boat as the early ninties and current with the rest of the country.

According to Zillow, one in six American homeowners with mortgages are "under water". In the worst markets, foreclosures represent the majority of sales, says Zillow. Only a handful of markets, such as Charlotte, N.C. and Yakima, Washington, have been experiencing increased prices.

The recently announced Mortgage Relief programs are designed to reduce those numbers.

Will these and other Washington schemes ameliorate the slide in prices or just delay them? Clearly, to the extent that they bolster prices that would otherwise drop, they make buying a home more expensive than it would otherwise be. Government intervention always creates winners and losers.

Be sure to check on the details coming on 4 March to see which one you might be.

Bus Driver, I'd normally agree with you on your assessment of people who abandon their homes but I tend to see so much blame on the lender's side where they threw money around like drunken sailors to people who they knew couldn't possibly pay for the property. This reckless attitude drove up prices then demolished the value of the homes of so many people who 'played by the rules' when the bubble burst that I have lost any sympathy for the culprits who have kicked the props out of real estate value.

Gary, The majority of folks "walking away" here were engineers making six figures with no chance of getting laid off. They simply couldn't handle the value of their home being way less than what they owed, so they walked with some even bragging about it. Something aint right with that picture!

The buyers who made these agreements are as fully responsible as anyone else. My present home, completed in 2004, was built with cash. I budgeted about half my available cash for the house with the idea that unexpected overruns, if any, would not be disruptive to the process. All worked well, financially. If my house is now worth less than when built, who do I blame? Not the bankers! Are those who apply for and accept mortgages somehow less personally accountable for THEIR personal decisions than I am?

At this point in my life I do not put any weight into what the market is doing, atleast not into decisions pertaining to my home. My home is a place for me and my family to be comfortable and pleasing.

I certainly blame the bankers. Around 2002, the 'sub-prime' perversion popped into the market. This allowed people who didn't have the means to pay to buy into the housing market. Had that not been allowed, the excess inventory we see now would not have been created and this horrible downward pressure on home prices from oversupply would not have happened. We travel a lot and have certainly observed how huge housing tracts have popped up all over the US in the last 5-6 years. Another problem the bankers have graced us with is so little connection with those who pay their mortgage and the people servicing the loan. Vast numbers of people might have been able to salvage their financial situation had someone with the authorization to help them been available. The 'loan servicing' industry typically only had the ability to dun for payments then foreclose according to their 'script'. The packaging and selling of loans have left little connection with who actually owns any particular mortgage. Someone gets in trouble and 'nobody's home'......

No blame on the bankers from me.

People got greedy and overextended themselves.
It was their choice.

garymunson,

"The packaging and selling of loans have left little connection with who actually owns any particular mortgage. Someone gets in trouble and 'nobody's home'......"

As a lender, I can tell you that all of those people had the choice of getting their mortgages with a local lender that did not sell their loans. Instead, people shopped for the absolute cheapest loan they could locate...nobody cared about "service" during the boom.

We all make choices & have to live with the consequences.

/tricia

I'm with m101. I could have bought a house for much less money that it's costing me to build. But I wanted a place --a HOME--for me and my family. I hope that it will be a good investment, long-term. But if it's not, hey--I feel certain it will be a great home and serve us well.

triciae....I may be wrong, but I see the overwhelming majority of the current mess involving tract development that occurred over the last 5 years or so. Most buyers in those cases were steered into the tract's financing arm (think Countrywide) who were the instigators of this dilemma. Myself, I went with my local bank on my build who I expect will keep my mortgage until it's paid off but I remember about 25 years ago buying a Home in Reno and accepting the builder's financing that had the same rate as the lowest I could find other places (in retrospect I'm sure the builder just raised the home price to be able to buy-down the rate). Most of us here in discussion forums either are more savvy than the average family (or quickly become so) but I'd suspect most of those caught up in the predatory lending didn't shop mortgages or if they did were 'insulted' by a lender who said they didn't qualify which sent them back to the wolves who said 'NO problem...those folks just don't know what they are talking about'. As a lender, do you think everyone who comes to you can fully understand the complexities of lending? Plenty of people can't, hence the need for usury laws (which have also been pretty gutted over the last few years).

We attended a Home and Garden show yesterday. Our builder was there, and told us that on the first day of the show, he had 4 people set up appointments with him to get started on the home building process. One lady even said "Can you dig tomorrow"! We attended three seminars and all were packed.

"Building an Energy Effecient Home" had the largest audience by far. We learned alot, and got great resources for energy rebates, etc.

Everyone's to blame for the state of things with housing.

People trusted banks to only approve them for what they can afford, when banks started approving based on exotic loans, people bought more than they should. Historic home ownership rates are around 68%, the Clinton Admin tried getting that higher through programs... this helped create the glut of buyers, run up of values and now a burst bubble.

Rating Agencies rubber stamped Mortgage Backed Securities for the last decade, ignoring the increasing Alt-A and Subprime percentages of new mortgages.

Buyers of those securities ignored everything, trusted Rating Agencies and bought at prices that didn't reflect the underlying risks.

And the SEC, Fed and Treasury all missed the shift in mortgage issues and didn't raise red flags to banks, rating agencies and investors.

Everyone was asleep at the wheel. We need to let the market forces bring prices to the correct level, let inventories decline to normal levels and move on.

Legislation propping up prices will just make this last longer. We need to let the people who made poor decisions pay for their mistakes and move on. The sooner they cut their losses and start over, the sooner they'll take their first steps back to financial security.

I live in WV, where "the realtors" say there is no problem with the market. WRONG! We are in the process of refinancing our loan. After finishing building in Dec. '07, we closed at a 6% rate. We now have locked in a 4.87% rate for the refi. Since we moved in, we finished our bonus room and added 350sf to the house to make a media room/5th BR. We figured that would increase the value quite a bit, right? WRONG! In fact, the house just appraised for $5K LESS than it did in Dec. '07 with 350 sf less! I am just so glad we did not have that room finished as part of original construction. At our sf rate to build, it would have cost over $40K. We had it finished by a local contractor for a drop in the bucket compared to that. We were planning to move in a few years. Now it looks like we will be staying put to avoid losing the equity we poured into this house that we have built up over ten years and 3 other houses. Sigh...

I have trouble with those who blame "greed" for the crisis. It's like blaming gravity for a plane crash. Greed has always been around and it's government's role to make sure it doesn't get out of hand. They failed...miserably!

There were five government actions/inactions without which none of this would've happened:

1. Repeal of the Glass-Steagall Act (a Depression-era banking regulation act that limited banks involvement in risky investments) in 1999
2. OTC/OCC blockage of state regulations against predatory lending practices
3. Failure of the Fed to enforce HOEPA
4. SEC regulations changes that allowed the five biggest investment banks to increase their leverage limits from 10 to 40 times
5. Failure to designate Credit Default Swaps as insurance policies, requiring reserves against losses

Lots of lenders and home owners did really stupid, greedy things. But the government would have prevented them from doing so if they'd done their job. And for those who would love to use this as an opportunity to foist the blame on one political party or the other, recognize that BOTH sides have LOTS of blood on their hands. The Republicans fought against banking regulations and the Democrats wanted poor people to be able to buy homes they couldn't afford.

Ditto............

Wasn't just the Democrats that wanted poor people buying homes....see this speech..

http://www.liveleak.com/view?i=198_1222057886

True, Gary, and it wasn't just the Republicans that were after banking deregulation. Clinton signed the repeal of Glass-Steagall and Democrats were solidly behind relaxing regulations at Fannie/Freddie and supported the leverage limit increases on the likes of Bear-Stearns, et al.

In general, the Republicans and Democrats aligned themselves as I stated but my point was that both groups of politicians were incredibly irresponsible and/or inept, as were many of the bureaucrats (e.g. SEC investigators of Madoff). Instead of voting on the basis of divisive but irrelevant issues political issues, we need to start moving competence to the top of the list in making our ballot selections. Hey, what a concept!