CNNMoney: 'Overpriced' housing gets more overpriced

[DeepModem Mom]

'Overpriced' housing gets more overpriced
Despite a slowdown, more housing markets are overvalued than ever, says one economist.
By Les Christie, CNNMoney.com staff writer
June 13, 2006

NEW YORK (CNNMoney.com) - The rich have gotten richer, at least when it comes to home prices, according to a study released Monday.

The most overvalued housing markets in the United States recorded much higher price increases during the first quarter of 2006 than the least overvalued markets, according to the latest analysis by National City Corp, a financial holding company, and Global Insight, a financial information provider.

In the 50 most overvalued markets, prices increased 2.5 percent from the fourth quarter to the first, an annualized rate of 10.1 percent. In the 50 least overvalued markets, prices increased just 0.7 percent, an annualized rate of 2.7 percent.

Overall, U.S. home prices rose at an annualized rate of 7.3 percent for the quarter....

***

According to Richard DeKaser, National City's chief economist, what usually happens when markets are returning to normal is that extremes of the market - the low and high ends, should move back toward the average; overvalued markets should rise slowly, if at all, and undervalued ones should shoot up.

Just the opposite is happening....

http://money.cnn.com/2006/06/12/real_estate/overvaluation_even_worse/index.htm?cnn=yes

[ananda]

1. I just don't understand..

.. how people can afford those houses.

I think the mortgage companies must be doing some really creative,
screwed up financing... and people are going to suffer for it down
the line.

Sue

[YellowRubberDuckie]

3. I can tell you what is going on...

They can't afford it. They qualify people for mortgages they can't afford, then they default. I work at a mortgage company that services FHA and VA loans. We have so many loans in foreclosure right now that we had to build a team in the loss mitigation department where I work just to handle them.
Duckie

[NMDemDist2]

5. exactly why I sold my "overpriced" home and am buying my new one

sans mortgage in a place where my property taxes are less than $200 a year

if I can't pay them, I've got bigger trouble than losing my house :evilgrin:

[Matariki]

7. how far away do you have to move?

that was my plan, but after i sold i realized i didn't want to live that far from my friends and the excitement of the city. i was going to buy some land and build a very cool home from Oregon Yurtworks. didn't help that my beau doesn't want to go with me. *sigh*

[Warpy]

9. I just switched cities

I was offered a condo in Boston while I was there, an apartment that had been carved from an old Victorian house and done very badly, with many things not up to code. It would have taken every cent I had and then some and saddled me with astronomical real estate taxes. I turned them down.

I moved to central NM and spent the same amount on a fixer upper house in a bad but improving neighborhood that is convenient to everything. No, I don't get the Pops on the Esplanade, but I do get Blues at the Zoo, the International Balloon Fiesta, and juried art shows galore. The weather is better here and it was a good move.

People who cling to either coast are just going to have to cling to those astronomical prices. People who can be content with a smaller city and lakefront property instead of beachfront property are going to be able to do rather well.

In the short term, those ever escalating prices on the coasts will mostly represent unsold properties whose owners are willing and able to wait for a bigger fool to come along and pay the inflated price. In the long term, they may fall considerably as those unsold properties provide a drain on owners' finances.

[partylessinOhio]

2. This over-priced housing also puts all of our property taxes UP.

Thanks to the Ohio legislators our property is re-evaluated every six years, with an "update" every three years. What do they base their evaluations on? Property sales figures of course.

In accordance with state law, The County Auditor is to conduct a reappraisal every six years; an update every three years; and a valuation of improvements based upon building permits received from each city annually. We are currently conducting the six-year reappraisal that consists of each property being personally inspected and reappraised. Any increase or decrease on the valuation of property will be effective in January 2007.

[EVDebs]

4. CA and FL are the worst. But anywhere along a coastline in a blue state

is more heavily populated and underrepresented in the congress.

US Population Density by counties
http://www.census.gov/dmd/www/pdf/512popdn.pdf

compared with

2004 Election results by county
http://www.usatoday.com/news/politicselections/vote2004/countymap.htm

[MadMaddie]

6. Washington State is there too....

[Bamboo]

8. Celebration,Florida

It seems like the mortgage rate hikes do not affect those who also receive the tax cuts.

07/02/06 ISSA HOMES INC. to Ben and Sheri D. Lerner, Celebration, $2.5 million.

In 2003 house prices were falling in Celebration,now there are no apartments since they have all gone condo.

The ice cream truck in Celebration plays "We're in the Money"

[Sammy Pepys]

10. We just bought a place in Washington, D.C.

Which is always an expensive market, no matter what. We'll struggle a bit, but we're penny pinchers by nature so our adjustment shouldn't be too hard.

The thing we notcied in our search was that the properties which tend to be overvalued the most are the ones which should be the cheapest in reality. We also noticed that the quality of what you get can be nearly identical between a $325K house versus a $350K house versus a $400K house because some sellers still think the boom is going. I'll be incredibly happy when things settle down.

[fasttense]

11. You don't have long to wait. n/t