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Posted by: Peter Coy on June 21, 2007
A new survey by Boston Consulting Group finds that 55% of Americans think their home would sell for more money now than it would have a year ago.
Wishful thinking. Prices nationally fell 1.4% from the first quarter of 2006 through the first quarter of 2007, according to the best measure of price trends, the Standard & Poor’s/Case-Shiller Home Price Index. The National Association of Realtors says that in April, sales prices of existing homes were down 0.8% from a year earlier. And the downtrend is continuing.
So sorry, folks, but most Americans could not in fact sell their house for more today than a year ago.
Then again, Wall Street buyers of subprime loans seem to be suffering from the same kind of wishful thinking about prices. Have you read about this? The big financial houses own billions upon billions of dollars worth of collateralized debt obligations that represent bets on the health of the subprime market. Those bets have gone sour, but the firms haven’t yet admitted it because they don’t want to be forced into writing down the value of their assets. If these highly sophisticated (and highly paid) Wall Street types can delude themselves into thinking that real estate is healthy—why not the average homeowner?
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.