CHESSNOID

The housing market bust is still unfolding.  It doesn’t seem to be letting up.  When will it bottom?  This is the latest piece I read online:

NEW YORK (CNNMoney.com) –

The 10-city index is now 23.4% off its peak price, which came in June 2006; the 20-city index is down 21.8% from its July 2006 high and the national index has fallen 21% since the third quarter of 2006.

Home prices in the 10-city index have fallen for 26 consecutive months. The decline has broadened over the past 12 months, with prices dropping in every city of the 20-city index during September.

In the weakest market, Phoenix, the 12-month loss came to 31.9%. Las Vegas prices plummeted 31.3% and San Francisco recorded a 29.5% decline. The best performing markets, Dallas and Charlotte, N.C., still posted drops – 2.7% in Dallas and 3.5% in Charlotte.

With San Francisco and Las Vegas, the other members of the 10-city index are: Miami, down 28.4% year-over-year; Los Angeles, down 27.6%; San Diego, down 26.3%; Washington, down 17%; Chicago, down 10.1%; New York, down 7.3%; Boston, down 5.7%; and Denver, down 5.4%.

In addition to Phoenix, Dallas, Charlotte and the cities in the 10-city index, the 20-city index is made up of: Detroit, down 18.6%); Tampa, Fla., down 18.5%; Minneapolis, down 14%; Seattle, down 9.8%; Atlanta, down 9.5%; Portland, Ore., down 8.6%; and Cleveland, down 6.4%.

Foreclosures continue to take a heavy toll, with sales in some cities dominated by properties repossessed by banks and then put back on the market, often at bargain prices. In Las Vegas and Cleveland, for example, about half of all homes for sale are bank-owned properties, according to the real estate Web site, Trulia.com.

“Foreclosures are clearly a part of the market now,” said Blitzer.

The levels of most of the housing markets are near the prices of 2004 and before. Will the prices go below 2000 prices? It is hard to say, but from my understanding, prices won’t really stabilize until income-to-housing loan ratios balance out. What does that mean? I think houses have to become affordable without exotic loans.
Generally people can afford only to allocate 30-40% of their income to housing payments. If you make $50,000 a year that means you can only afford $150,000 house payments. The average price of homes are still way above that, and the average American household income right now is about $50,000 and fluctuates from state to state. The average income isn’t going up so that means the average price will continue to drop until that balance is reached.