Real Estate Market / Inflation / Recession / Depression (Grand Junction: mortgage, debt, income)

[Sockeye]

Originally Posted by Bideshi

How can they make taxpayers bail out private business when they make bad decisions? Send me to the race track and let me bet on the horses. If I bet wrong, have the US taxpayer bail me out. What a huge crime being perpetrated on the american working public! It won't save the housing market anyway, only delay the inevitable a couple of months.

PERFECT analogy, Bideshi!!

[socalover]

Another possible boost for the housing market....

http://www.brookings.edu/reports/2008/0720_mountainmegas_sarzynski.aspx

Why does it seem there is a bit of an eagerness from some for a crash? Is it that there is enjoyment in seeing fellow citizens suffer? I read more than a prediction, I read a desire to see this happen. No surprise here but I recently purchased, I am hoping for the best, one of those "chumps" from California, imagine after suffering a loss in CA, so sad I am not wise enough as some to not buy at the peak in 2005. Well, I took my hit and with the "delay" of another hit in Colorado, I might be in for another one huh? Good luck on your predictions and getting in cheaper, hopefully I am here for the long haul and will ride the "kaboom" storm. My glass is half full with some wine and I am sleeping really well, thank you.

Originally Posted by jazzlover

Well, that depends on the spot. There are some serious issues developing in the real estate markets in some Colorado locales now. In many, many other areas of the state, sales prices have not declined significantly, but sales volume has dropped to near nothing. That is the classic sign of a market primed for a fall.

Fed intervention has "stuck the finger in the ****" temporarily, but there are bunch of resets coming later this year, and I fully expect the mortgage crisis to spill out of subprime and into the general market. Colorado has had a strong historical tendency to lag national trends by several months, and this may go that way, too. Had the feds not intervened earlier this year, and had they not basically just promised to bail out Fannie Mae and Freddie Mac, we would probably be in full-blown real estate depression already. As far as I am concerned, however, they have only delayed the inevitable--and saddled everybody, including savers and financially responsible people, with a yoke of inflation in commodities and necessities that likely will persist for years.

Remember, I was called "fruitcake" about a year ago on this forum when I predicted that the market wasn't going to just keep going up. I'm sure glad I listened to my own advice then, and eliminated any major exposure to the market. Compared to the "mortgaged-up" masses, I sleep just fine these days. It is just a little unnerving to wait for what is about to happen, though. Like Bugs Bunny said after he sends Elmer Fudd off with the bomb with the lit fuse, "It's the suspense that kills ya." Ka-boom.

[sterlinggirl]

Why does it seem there is a bit of an eagerness from some for a crash?

I'd welcome a quick crash just to get things back to a reasonable level. Houses at 3x income isn't too much to ask for.

[socalover]

It's not gonna correct to 33% of current values. What is reasonable? $150 per square foot? Looking at it on a global scale, the United States has some of the cheapest housing world wide and with this global economy, even if we can't afford to buy, foreign investors will jump in and buy.

[vfrpilot]

I'd welcome a quick crash just to get things back to a reasonable level. Houses at 3x income isn't too much to ask for.

There are 308 SFH listed on Realtor.com in COS below $125k. This is only on one site and I didn't include condos or townhomes. These homes would fall into your '3x income' category for an income around $40k. If you're making less should you really buy a home? I still think CO frontrange housing is reasonable given the location and opportunities. Maybe my perspective skewed coming from a very different market.

[CosmicWizard]

socalover wrote:

Why does it seem there is a bit of an eagerness from some for a crash? Is it that there is enjoyment in seeing fellow citizens suffer?

I think it's just human nature. Those who aspire to become homeowners are enjoying the falling home prices, while those of us ( mortgage payers ) who already own homes want to see home prices stay where they are, or go even higher. I don't think anyone enjoys seeing their fellow citizens suffer. The joy you see is the joy for the possibility of becomming a homeowner.

[downtownnola]

Originally Posted by NewAgeRedneck

socalover wrote:

Why does it seem there is a bit of an eagerness from some for a crash? Is it that there is enjoyment in seeing fellow citizens suffer?

I think it's just human nature. Those who aspire to become homeowners are enjoying the falling home prices, while those of us ( mortgage payers ) who already own homes want to see home prices stay where they are, or go even higher. I don't think anyone enjoys seeing their fellow citizens suffer. The joy you see is the joy for the possibility of becomming a homeowner.

You should go onto the Business & Investing forum. I'm telling you... that forum is doom and gloom central. I swear that half of the people on that board have this morbid desire to see our economy collapse.

[CosmicWizard]

downtownnola wrote:

You should go onto the Business & Investing forum. I'm telling you... that forum is doom and gloom central. I swear that half of the people on that board have this morbid desire to see our economy collapse.

I've seen it. I get depressed too easily reading the doom and gloom on that forum, so I tend to stay away from it. Even there, I don't get that anyone is taking satisfaction in someone elses suffering. In my mind, the doom and gloomers are maladjusted people who will not accept the way things are. They are stuck in the past ( the good ole days ) when things were more to their liking. I see them as misplaced ( in the sense of living in the wrong place and time ) dreamers, hoping things will revert back to the way they were. The current economic upheaval is giving them hope and keeping their dream alive!

[formercalifornian]

Interesting point, Redneck. Nostalgia will get ya' every time, but I think we tend to remember things as we wish they were, rather than the way they really were.

[Bob from down south]

Originally Posted by socalover

It's not gonna correct to 33% of current values. What is reasonable? $150 per square foot? Looking at it on a global scale, the United States has some of the cheapest housing world wide and with this global economy, even if we can't afford to buy, foreign investors will jump in and buy.

Maybe not in nominal terms, but in real, inflation-adjusted terms, we very probably will see a correction that deep in places like CA, FL and AZ.

What is reasonable? The answer to that question shouldn't be referenced in $ per sq ft, but in multiples of income. What feels cheap or expensive is probably based mostly recent recall of higher or lower prices...but what really drives the boat long-term is the wage inputs that allow people to pay their bills, and how that relates mathematically to the debt to be serviced.

Using the tried and true 28/36 front end and back end ratios, a person making $60K a year shouldn't have a house payment of more than $1400 a month, and no more than $1800 a month in total debt servicing. That allows for a 30-year mortgage of around $182K, depending on tax and insurance...and less if PMI is required due to a sub-20% down payment. We may be used to seeing people buy houses twice as expensive on this level of income, but it is not sustainable absent a crazily inflating bubble in prices. Hence the current devaluation spiral.