Double-digit home price drops coming, says Moody's

[w¡n9Nµ7 §£@¥€r 123]

People that make their money in the housing industry will suffer but I doubt if it will spread to the economy in general.

I don't see why the Fed would decrease rates 50 bp's unless they thought otherwise.

[GaryC 7]

People that make their money in the housing industry will suffer but I doubt if it will spread to the economy in general.

I don't see why the Fed would decrease rates 50 bp's unless they thought otherwise.

That is why it will not spread to the rest of the economy. If the fed does it's job right then things will continue to go well.

[w¡n9Nµ7 §£@¥€r 123]

Gary, I don't share your optimism but do hope you're right.

[ChristinaM 0]

42 Portland-South Portland-Biddeford ME 06Q1 08Q3 -10.2%

Praise be. Given the wages in Maine, the current prices are just insanity. God knows we need a break.

I sincerely hope that the Fed pays attention and is careful. They were talking on NPR this morning about the possibility of dramatic inflation if we're not careful.

[GaryC 7]

Gary, I don't share your optimism but do hope you're right.

The other factors that determine our economies health are not changing. Now if inflation was getting out of hand and unemployment was rising I would have to agree with you. But all the other indicators still point to a healthy economy.

[Geist 0]

*reads thread title* Cool! Looks like it's time for hubby and me to start house shopping! Muhahahahaha!!

I don't see why the Fed would decrease rates 50 bp's unless they thought otherwise.

That is why it will not spread to the rest of the economy. If the fed does it's job right then things will continue to go well

It will affect the rest of the economy because each time the fed decreases the interest rate (to stave off a recession, in this case) it pumps more money into the economy, which causes the dollar to inflate, which means it's worth less, which means your savings, earnings, etc. are all worth less.

I'd rather have a recession to get this bubble dealt with than have a worthless dollar.

[w¡n9Nµ7 §£@¥€r 123]

Gary, I don't share your optimism but do hope you're right.

The other factors that determine our economies health are not changing. Now if inflation was getting out of hand and unemployment was rising I would have to agree with you. But all the other indicators still point to a healthy economy.

Rising unemployment is a lagging indicator. You don't look for that first, once you see that it's too late. The leading indicator index is signaling a weak recession.

... each time the fed decreases the interest rate (to stave off a recession, in this case) it pumps more money into the economy, which causes the dollar to inflate, which means it's worth less, which means your savings, earnings, etc. are all worth less.

I'd rather have a recession to get this bubble dealt with than have a worthless dollar.

Bingo.

[Dan J 277]

Gary, I don't share your optimism but do hope you're right.

The other factors that determine our economies health are not changing. Now if inflation was getting out of hand and unemployment was rising I would have to agree with you. But all the other indicators still point to a healthy economy.

Unemployment is rising. http://money.cnn.com/2007/08/03/news/econo..._july/index.htm

The job losses in construction and mortgage industries will put some strain on other industries.

[Jasman0717 9]

I went through the housing drop back in the early 90s, it went down about 30% but then came back to be 300% higher than when I first purchased the condo. It would be nice if the condo were 300% higher than now when I get ready to retire

[Jaseball 0]

Gary, I don't share your optimism but do hope you're right.

The other factors that determine our economies health are not changing. Now if inflation was getting out of hand and unemployment was rising I would have to agree with you. But all the other indicators still point to a healthy economy.

Gas and Energy costs are spreading to all other facets of life. If you compare a grocery bill on items you buy regularly from 1 year ago to now you'll see a dramatic difference, not to mention at the pump.

Unemployment is also rising, but what was worse was how many people do you know who had their incomes rise as fast as the real estate asking prices in the past 4 years?

I'm with the people who say the faster the bubble bursts, the better it is for us little people. If you have the cash reserves and the ability you can milk any economic situation and make money, but these types are rare compared to the common man.

Don't forget all the people who took out equity loans to buy new cars, remodel homes, buy luxury items they drooled over....their house isn't worth as much now either and those loans with interest still have to be paid back.

[brtlmj 0]

...and those price drops do not take into account free upgrades, plasma TVs, seller-paid closing costs etc.

My personal guess is that we will see double-digit price drops within the next two years. All "creative" ARM mortgages will reset within this time and prices will stabilize somewhat. They will, however, appreciate below inflation for a long, long time.

[Jasman0717 9]

...and those price drops do not take into account free upgrades, plasma TVs, seller-paid closing costs etc.

My personal guess is that we will see double-digit price drops within the next two years. All "creative" ARM mortgages will reset within this time and prices will stabilize somewhat. They will, however, appreciate below inflation for a long, long time.

My friend just got free landscaping

[Dan J 277]

...and those price drops do not take into account free upgrades, plasma TVs, seller-paid closing costs etc.

My personal guess is that we will see double-digit price drops within the next two years. All "creative" ARM mortgages will reset within this time and prices will stabilize somewhat. They will, however, appreciate below inflation for a long, long time.

Well its not exactly free upgrades, they are part of the price you pay for the house.

Your right, the Rate for ARMs will probably improve a bit, but if they have to move, well they have a bigger mortgage than the house is worth.

[Caladan 19]

*reads thread title* Cool! Looks like it's time for hubby and me to start house shopping! Muhahahahaha!!

I don't see why the Fed would decrease rates 50 bp's unless they thought otherwise.

That is why it will not spread to the rest of the economy. If the fed does it's job right then things will continue to go well

It will affect the rest of the economy because each time the fed decreases the interest rate (to stave off a recession, in this case) it pumps more money into the economy, which causes the dollar to inflate, which means it's worth less, which means your savings, earnings, etc. are all worth less.

I'd rather have a recession to get this bubble dealt with than have a worthless dollar.

The Canadian dollar has risen something like 20% in the past year against the American dollar and 60% since 2002. Now, granted, the high price of oil is helping with that, but quite a lot of it is the U.S.'s faltering economy.

[GaryC 7]

Gary, I don't share your optimism but do hope you're right.

The other factors that determine our economies health are not changing. Now if inflation was getting out of hand and unemployment was rising I would have to agree with you. But all the other indicators still point to a healthy economy.

Unemployment is rising. http://money.cnn.com/2007/08/03/news/econo..._july/index.htm

The job losses in construction and mortgage industries will put some strain on other industries.

Unemployment Claims Make Surprise Drop

Thursday September 20, 8:38 am ET

By Martin Crutsinger, AP Economics Writer

Applications for Unemployment Benefits Show Unexpected Drop

WASHINGTON (AP) -- The number of laid-off workers filing claims for unemployment benefits fell to the lowest level in seven weeks, an unexpected sign of improvement for the jobs market.

The Labor Department reported Thursday that new applications for unemployment benefits totaled 311,000 last week, a drop of 9,000 from the previous week. It marked the lowest level for jobless claims since July 28.

The decline came as a surprise for economists who had been forecasting a rise in claims of around 6,000.

The four-week average for claims, which smooths out some of the volatility, also showed an improvement, falling to 320,750 from 324,250 the previous week.

The labor market is being closely monitored for any signs that recent turmoil in financial markets and a deepening slump in housing are causing serious problems for the overall economy. Analysts believe the risks of a recession have risen significantly.

To ward off a possible downturn, the Federal Reserve on Tuesday cut a key interest rate by a half point. It was the first reduction in the federal funds rate in more than four years and was double the quarter-point change many analysts had expected.

The rate cut occurred after a report earlier this month showed that businesses cut 4,000 jobs from their payrolls in August. It was the first monthly job loss in four years, led by sharp declines in manufacturing as well as construction, which has suffered from the worst downturn in housing in 16 years.

For the week ending Sept. 8, a total of 34 states and territories reported declines in the number of people filing jobless claims while 19 reported increases.

The biggest declines were in California, a drop of 4,349, reflecting fewer layoffs in construction and trade industries, and Texas, which had a drop of 2,470 that officials attributed to fewer layoffs in finance and manufacturing. Other big declines were in New York, Florida, Wisconsin and Kentucky.

States with big increases were Michigan, up 1,741, reflecting rising layoffs in the auto industry, and Georgia, up 1,268, reflecting higher layoffs in the textile and other manufacturing industries.

http://biz.yahoo.com/ap/070920/jobless_claims.html?.v=5