Yahoo Finance ran an article on Monday from the WSJ Online, “Playing the Housing Slump: Is it Time to Make Your Move?” With a nod to our own Sweet Digs blogger, David Gordon, and his bloodystreet blog, Jonathan Clements suggests pouncing while there is blood in the streets and makes some great arguments for trading up, doubling down, and helping out your kids during these troubled times.
DataQuick published its February 2008 sales report and while sales were up 7.1% over the previous month, they were down from 2007—by 34.3%. Ouch. For the full scoop and all the data, you can read the full story here. The other good news out of DataQuick is that Bay Area home sales stink. Like we didn’t know that? But they do compile the data to support their statement, and if you want more of the same, go here.
I have often thought that walking away from your home, abandoning it and your mortgage, is a risky thing to do, resulting in years of financial recovering and delaying any possibility of owning another home in the near future. Carolyn Said wrote up the pros and cons of this trend in Sunday’s edition of the SF Chronicle. On the other side of the coin is an article in the NY Times by Elsa Brenner that addresses the short sale and its advantages to homeowners. Which camp do you sleep in? Hasty walk or graceful exit?
A worrisome article for many, particularly the Baby Boom generation of which I am a part, came from the Pittsburgh Post-Gazette which warns “Home Equity No Guarantee for Retirement Years.” My parents were smart and sold their home years ago, buying down into a smaller home in an over-55 community and investing the balance. We had hoped to do the same, and for those of us that bought in the Bay Area ten or more years ago, we may still have a chance, but in Central California or in other states, that may not be the case. One cannot rely on something that has become as fickle as the stock market to carry them though their “golden” years.
This week’s “expert” chimes in with opinion on “How Bad Is The Mortgage Crisis Going to Get?” Over at Fortune magazine, Jia Lynn Yang interviews ecnoomist Paul Krugman, who—among other things—had this to say about how far home prices will fall: “My preferred metric is the ratio of home prices to rental rates. By that measure, average home prices nationally got way too high. We’ll probably basically retrace all that. So that’s about a 25% decline in overall home prices. Only a fraction of that’s happened so far. Of course, it varies a lot. In places like Houston or Atlanta, where home prices have not risen much compared with underlying rents, the decline will be relatively small. In places like Miami or Los Angeles, you could be looking at 40% or 50% declines.”
On a local level, Tom Abate wrote for the SF Chron, “Fear and Doubt Spread in Silicon Valley.” Confidence is shaken in our neck of the woods, causing VCs to rethink investments in local talent. While they should be applauded for their unusual restraint, the area could sure use the infusion of cash right about now.
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