Home Sales Up, but the Outlook for Home Values Is Bleak

by Nikhil Hutheesing Aug 1st 2010 6:00AM
With mortgage rates at all time lows, you would think this would be a good time for the housing market. The government, after all, provided some incentives: It paid tax refunds of up to $8,000 to home buyers who signed contracts before May, in a move that helped drive up total sales activity.

But Michael Feder, CEO of New York City-based Radar Logic, thinks it would be a mistake to read too much into the increase in volume. His company recently released its RPX Monthly Housing Market Report, which includes an analysis of the housing market in 25 metropolitan areas of the U.S.

In a video discussion with DailyFinance, Feder says the housing market is fragile, exhibiting signs of strain. And while sales volume may be up, prices are not. That may indicate people are buying cheaper, smaller homes, many of them out of foreclosure.

Of course, some markets are worse than others. Feder discusses where the biggest price declines are and what to expect for the housing market going forward.

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27 Comments

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FreedomRat

If Obama would have simply left things be, the economy would be revovering faster than it is now. If a Republican was in office, the economy would have recovered by now. Remember this whole mess happened because Clinto deregulated the banking and mortgage industry. Stubborn Democrats, including then-senator Obama refused to re-install the regulations simply because pres. Bush requested it. These regulations were put in place back in the Great Depression. You'd think a Democrat, of all people would have recognized this.

August 02 2010 at 10:56 AM Report abuse rate up rate down Reply
1 reply to FreedomRat's comment
MARK SAUNDERS

what planet do you live on ??? mr Bush, the worst president in history, let the bank go about what ever they likes for his eight years in office, only a blind man would nt see who the bad guy is here !

August 02 2010 at 2:42 PM Report abuse -1 rate up rate down Reply
Randy

"Make no mistake" this administration has stalled growth for 4 years & maybe 8

August 02 2010 at 10:27 AM Report abuse +3 rate up rate down Reply
phunyuns

I totally agree with you Alice. I cant stand Obama-type folks, those white people are crazy arent they?! I would never want them to be my neightbor...

August 02 2010 at 10:05 AM Report abuse rate up rate down Reply
hockeydc

There will be no recovery until Obama gets desperate prior to his 2012 race. Only then will he junk his special interest spending that he calls stimulus and obey what conservatives have told him all along he needs to do. That is, encourage business to grow by cutting taxes and limiting the quagmire of government interference and over regulation.

August 02 2010 at 10:00 AM Report abuse +6 rate up rate down Reply
1 reply to hockeydc's comment
Martine

Yes, because those conservatives did such a great job with our economy between 2000-2008.

August 02 2010 at 10:35 AM Report abuse -2 rate up rate down Reply
Fred

With the national credit crunch, 10% unemployment, an uncertain economy and anticipated increases in Federal taxes, of course the housing market is bad and will continue to be bad. If taxes escalate as projected, a second round of foreclosures and defaults will occur perhaps dropping the rate of ontime payments to as low as 85%, which would translate into an 8 to 10% foreclosure rate. To add to the housing problems are local and state tax increases which will further stain home budgets. Also, indirect taxes, such as the new luxury tax and the raising of the captain gains tax rate on the middle class ($100,000 to $250,000) by allowing the current tax structure to end will increase the cost of goods and services for individual consumers. It will be interesting to see where our economy goes but the lowering of national living standards has already begun with the cutting of services by federal, state and local governments and by individuals and households whose discretionary spending is being reduced by shrinking home budgets. For job creation, increase of taxes on the middle class and for those who make over $250,000 will effect the 65% of the job base in a negative way by forcing employers in small and midsize businesses to restructure to recapture lost margins. Translation, lost of jobs. That should hurt the housing market even more. It is my greatest hope that I'm wrong but numbers don't lie. Rolf C. Schuetz, Jr., Attorney at Law

August 02 2010 at 9:58 AM Report abuse +2 rate up rate down Reply
tmbdab

The problem is here, not overseas, not because we are in a war, and not because of transfer payments or anything else. The banks, the gatekeepers to credit, let people who wanted homes but couldn't afford them, buy them and it came home to roost. Don't blame the people...they wanted a home and were told they could afford them. I know, I saw it with my own eyes. The deals got better and better. The issue now is to get it all cleaned up once and for all. You need to clean up every last home due to foreclose. There are ways to do this but for whatever reason, our administration hasn't gotten its arms around it. They gave it some good tries, but it isn't working. I know, I am living in this industry. Real Estate is the first leg up in an economic cycle and if we can't get that going, we won't recover. Unfortunately, I sent my suggestions in to the administration, but they simply acknowledged receiving them. I will try again as this has gone on far too long. Again, you will see us recover strongly, once the vast inventory of foreclosures is cleared.

August 02 2010 at 9:51 AM Report abuse +1 rate up rate down Reply
pheassie

HOW ABOUT WE SUPPORT SOME MORE FOREIGN COUNTRYS, WITH MONEY OUR GOVERNMENT BORROWS FROM CHINA SO THEIR PEOPLE CAN HAVE A HOME TO LIVE IN, WHILE THE AMERICAN PEOPLE LIVE OUT IN CARDBOARD BOXES, SEEMS FAIR TO ME. DOESNT THAT MAKE YOU FEEL ALL WARM AND FUZZY ...,WISE UP PEOPLE.........LOOK IN YOUR OWN BACK YARD. THE NEXT PERSON OUT ON THE STREET MAY BE YOU..........

August 02 2010 at 9:02 AM Report abuse +10 rate up rate down Reply
mpeter4876

OH and I forgot to say, I am caucasion and Alice get a grip on a real life. Your negative thinking is a product of what also is your own personality problems.

August 02 2010 at 9:01 AM Report abuse -3 rate up rate down Reply
mpeter4876

I myself do not discourage the tax imposed on us. It does pay for the necessary programs this country needs. I for one have always thought that a flat tax on every dollar made or donated would be done at ten percent or the figure needed to make it work. No deductions for church or such and they also would have to pay taxes.No non-profit status for anyone or anything. With a flat tax taken out of your paycheck their would be no need to file a tax return as you would not pay more or get a refund. Unfortunately this would cause a loss of jobs at the IRS but not entirely wipe out the department. Businesses would have to have a different tax structure and penalty enforced for frivolous write offs and such.

As for the huge dollars given to presidents, ceo's and other personnell for trying to RETAIN them. Bull crap. Let them go. Change is often good with new ideas and what has already been put in place by these so called executives has tasked their brains to the limit anyway. It is human nature for most of us to slack off when things are going to well. Its called your comfort zone. Its time to shake up the so called movers and shakers.

August 02 2010 at 8:57 AM Report abuse -4 rate up rate down Reply
3 replies to mpeter4876's comment
Alice

These young people have a false sense of security thinking that Obama is helping them out. We have a house for sale on our street and have seen many interested people looking at it but many of them are Obama types which would cause our properties to lose value if they moved in. Fortunately the cost is too high for them ($250,000), even with Obama's help. Once the Tea Party has all Democrats voted out, America will return to being a great country.

August 02 2010 at 8:30 AM Report abuse +5 rate up rate down Reply
1 reply to Alice's comment
tuck1vabch

not

August 02 2010 at 9:23 AM Report abuse rate up rate down Reply