Disappearing Now: $6 Trillion in Housing Wealth

[Zeno Swijtink]

Disappearing Now: $6 Trillion in Housing Wealth
PETER VILES - Los Angeles Times

https://latimesblogs.latimes.com/lal...earing-no.html

A Washington think tank is warning that housing prices are falling at an accelerating level, destroying wealth at a pace that will cost the average homeowner $85,000 in lost wealth this year alone.

The projections by the Center for Economic and Policy Research are based on the numbers in Tuesday's Case-Shiller home price index, which showed accelerating price declines in most big cities.

The annual rate of price decline over the last quarter was 24.9% in the 20-city index and 25.8% in the 10-city index," the center said in its Housing Market Monitor today. "At this rate of price decline, the excesses of the housing bubble will have largely disappeared by the end of the year. At the same time, the price decline implies an incredibly rapid loss of wealth. In real terms, the rate of price decline in the 20-city index would imply a loss of almost $6 trillion in real housing wealth over the course of the year, an average of $85,000 per homeowner."

I'm a so-so student of economic history, but I'd have to bet that, even adjusted for inflation, the only time that many Americans have lost that much wealth in a short period of time would have been during the Great Depression. I'm not even sure it happened during the Depression. (I understand: This hasn't happened yet; it's only a prediction.)

Repeating again: The CPER says prices are falling so rapidly that the bubble will be gone by the end of 2008, but the loss of housing wealth will be massive.

[thewholetruth]

The truth is that the $6 trillion they claim we're losing was never really there. The real estate market has been a house of cards for the past 8 years. Realtors propped up false values as fast as their greedy little hands possibly could, and now Reality has finally sunk in. If you buy a house at $300k, then Realtors in your area get people to pay way more than your neighbors houses are worth (say, $600k), then the values drop back to $300k, did you lose any money? The money was never really there. It was an illusion. They'll do it again, first chance they get. Realtors don't care about their clients. They care about their bottom line: their paychecks. Trusting Realtors is like trusting politicians. They'll tell you whatever it takes to get as many dollar$ out of your pocket as possible.

The House of Cards disappeared. That's all.

Don

Disappearing Now: $6 Trillion in Housing Wealth
PETER VILES - Los Angeles Times

https://latimesblogs.latimes.com/lal...earing-no.html

A Washington think tank is warning that housing prices are falling at an accelerating level, destroying wealth at a pace that will cost the average homeowner $85,000 in lost wealth this year alone.

The projections by the Center for Economic and Policy Research are based on the numbers in Tuesday's Case-Shiller home price index, which showed accelerating price declines in most big cities.

The annual rate of price decline over the last quarter was 24.9% in the 20-city index and 25.8% in the 10-city index," the center said in its Housing Market Monitor today. "At this rate of price decline, the excesses of the housing bubble will have largely disappeared by the end of the year. At the same time, the price decline implies an incredibly rapid loss of wealth. In real terms, the rate of price decline in the 20-city index would imply a loss of almost $6 trillion in real housing wealth over the course of the year, an average of $85,000 per homeowner."

I'm a so-so student of economic history, but I'd have to bet that, even adjusted for inflation, the only time that many Americans have lost that much wealth in a short period of time would have been during the Great Depression. I'm not even sure it happened during the Depression. (I understand: This hasn't happened yet; it's only a prediction.)

Repeating again: The CPER says prices are falling so rapidly that the bubble will be gone by the end of 2008, but the loss of housing wealth will be massive.

[Braggi]

The truth is that the $6 trillion they claim we're losing was never really there. The real estate market has been a house of cards for the past 8 years. Realtors propped up false values as fast as their greedy little hands possibly could, and now Reality has finally sunk in. ...

I was going to make a post similar to Don's but he stated it pretty well. Thing is, the realtors don't have a monopoly on greed. It's been a loose conspiracy on the banking side along with the appraisers. When the appraisers put the price at whatever the buyer is willing to pay, whether the property is really worth it or not, the bank goes ahead and loans the money to buy. If the comp values drop afterwards, the "homeowner" is left "under water;" that is, owing more than the property is worth. Some are choosing to stop making payments instead of honoring their commitments and so the banking system is falling apart. So who is greedy? Certainly the foolish homeowners who borrowed every penny they could against their property as values inflated and now are left needing to pay the money back. The realtors? Well sure, but they're just doing their jobs. Everyone else in the picture gets a cut too. The loan sharks (brokers) who put people into loans they couldn't afford to pay. The whole banking system and their bizarre "instruments" of investment based on nothing but paper and hot air. It goes on and on. Greed kills. I'm sure the suicide rate will skyrocket along with home values falling, though I've seen no reports on it. It certainly happened in the 1930's.

The thing is, the drop in value if far greater than is proposed because of the crash of the US dollar (due to Bush & Co. deficit spending). Not only are the properties worth less than what was borrowed against them, but those dollars are now worth less even though wages haven't risen. We're being ripped off over and over.

What this means is over the next few years we'll see a massive transfer of ownership of US assets to foreign hands, especially Chinese and OPEC. Everyone should brush up on Mandarin because Bush is giving the country away so he can be a "War President." He's a traitor in so many ways.

-Jeff

[thewholetruth]

I was going to make a post similar to Don's but he stated it pretty well.

Thanks.

Thing is, the realtors don't have a monopoly on greed. It's been a loose conspiracy on the banking side along with the appraisers. When the appraisers put the price at whatever the buyer is willing to pay, whether the property is really worth it or not, the bank goes ahead and loans the money to buy.

I've been in the mortgage business for 10 years, and actually, that kind of colusion ended about 4 or 5 years ago when lenders started doing their own comps on properties, checking appraisers' work. Before that, you are correct: Realtors and appraisers and loan officers did whatever it took to get the transaction done, and loan officers loved certain appraisers who would make the necessary 'adjustments' in order to get the value needed to refinance a property when the borrowers needed 'help' to qualify. When I was in the mortgage business, I had an appraiser who did that for us lenders. 4 or 5 years ago, however, lenders started doing their own comps and this lady got blacklisted at several of the nation's largest lenders. They wouldn't honor any appraisal done by her. She had to start being honest in order to stay in business.

If the comp values drop afterwards....

Like we're seeing right now...

...the "homeowner" is left "under water;" that is, owing more than the property is worth. Some are choosing to stop making payments instead of honoring their commitments and so the banking system is falling apart. So who is greedy? Certainly the foolish homeowners who borrowed every penny they could against their property as values inflated and now are left needing to pay the money back. The realtors? Well sure, but they're just doing their jobs. Everyone else in the picture gets a cut too. The loan sharks (brokers) who put people into loans they couldn't afford to pay. The whole banking system and their bizarre "instruments" of investment based on nothing but paper and hot air. It goes on and on. Greed kills. I'm sure the suicide rate will skyrocket along with home values falling, though I've seen no reports on it. It certainly happened in the 1930's.

Very accurate picture, Jeff. Brokers, Realtors and appraisers all had a field day at the borrowers' expense. Granted, at the time, the borrowers were happy to be in it, but they had no idea what would happen next, and the brokers, Realtors and appraisers all DID know what was going to happen, which is happening right now: the bottom dropped out of the market. The 'professionals' all made a fortune, the borrowers are left holding the bag.

The thing is, the drop in value if far greater than is proposed because of the crash of the US dollar (due to Bush & Co. deficit spending). Not only are the properties worth less than what was borrowed against them, but those dollars are now worth less even though wages haven't risen. We're being ripped off over and over.

Correctamundo.

What this means is over the next few years we'll see a massive transfer of ownership of US assets to foreign hands, especially Chinese and OPEC. Everyone should brush up on Mandarin because Bush is giving the country away so he can be a "War President." He's a traitor in so many ways.

He's no worse than Clinton or Bush Daddy. Both of them were busy working on the "One World Government" and selling out US interests to the enemy, too. WE elected every one of them. WE need to be more discerning when we elect someone president. So who are we looking at now? LOL Nothing but Good Old Boys Network candidates, that's who, and we're fighting over which one we're gonna let screw us out of more of our freedom and life savings. What's that say about us? Let me answer that question: We are responsible for what's going on here. We could elect Ron Paul, but we won't. We'll elect another Good Old Boy Flunky, it'll be business as usual, and we'll look back in 4 years and say again "He/She's a traitor in so many ways", and yet we're about to elect the next traitor this November, and we'll do it gleefully.

We're so messed up...or do I mean 'We're so mislead'...

Don