Yesterday’s Yahoo News had an AP story by Janna Herron about the continued decline of home prices across the nation. http://news.yahoo.com/s/ap/b_us_home_prices Prices are dropping for many reasons, including a shaky employment future and lender reluctance to part with funds, but the article cites others as well: “Millions of foreclosures are forcing home prices down. Many people are holding off on making purchases because they fear the market hasn't bottomed out, analysts say.”
Noting that this year is on pace to finish as the worst for home sales in more than a decade, the writer turns to Mark Zandi, chief economist at Moody's Analytics, a media go-to guy for his supposed insight on the real estate market [I have my bias here, as you can see from quite a few of my 2006 and 2007 blog entries, where I begged people with a soapboax, like Zandi, to stop the sugarcoating about the economy and the BS about the market not crumbling.]
In light of the lack of willing and funded buyers, and the flood of inventory from foreclosures, any economist, analyst, or plain ol’ real estate attorney can see that home sales will continue to suffer in the immediate future, putting anyone who wants to or has to sell at a real disadvantage in getting out. But I don’t smoke what Zandi smokes, apparently, because I read this portion of the article (my emphasis added):
Also, the number of homeowners who owe more than their house is worth is expected to remain high. They are more likely to default if they run into trouble, Zandi said. Homeowners who have equity can sell their homes if they face a job loss, divorce, or illness that makes it impossible for them to pay their mortgage.
If I face a situation that “makes it impossible” for me to pay my mortgage, who am I selling it to, Mr. Zandi? The non-existent buyer, the buyer who can’t qualify for a mortgage, the buyer without a job, or the buyer waiting for the eventual severe price-slashing of one of the 14 homes for sale within a mile of my house?
Take heart, cash-strapped homeowners. If you have a problem, just sell your house. Problem solved!
Happy Birthday, Effie!