Real Estate Market / Inflation / Recession / Depression (Colorado Springs: relocation, income, assessment)

[LBear]

Originally Posted by sterlinggirl

People can't afford 5X their income for housing.....

If you reduce square footage and premium finishes until it gets down to 3X income, then people will be able to qualify for a mortgage to buy it.

2,400 sq.ft is the average size of a home today. Back in the 1950's it was 1,200 sq.ft., but that same home today will have a VERY hard time selling, and most likely be worth a lot less than $240K.

People who make $30K a year want new & nice homes to be priced at $150K or less.

Most people have kids and unlike the housing of the 50's-70's, most parents don't want all 3 of their kids sleeping in the same bedroom and everyone sharing the same bathroom.

Most homes back then had a 1 car garage. Good luck trying to sell that in today's market. Most people want a MINIMUM 2.5 car garage but 3 car garages are mostly sought.

Times change, society changes and so does the housing market & prices. $240K median is not outrageous for a major metropolitan area. While the housing market is suffering right now, it will come back, if it doesn't than get ready for a collapse and depression of the USA.

I would jump on the housing deals within the next year or two, as it will turn and prices will begin to appreciate. If your holding your breath for some type of insane pricing to come about, you will pass-out...

[Bob from down south]

Originally Posted by Pettrix

People who make $30K a year want new & nice homes to be priced at $150K or less.

Times change, society changes and so does the housing market & prices. $240K median is not outrageous for a major metropolitan area. While the housing market is suffering right now, it will come back, if it doesn't than get ready for a collapse and depression of the USA.

$240K not outrageous? 'splain to us please how an earner of a median income of $45K in a major metropolitan area brings $55K (well over a year's salary) to the deal for down payment/closing and then swings a $192K mortgage? The payment (PITI) for that loan is around 50% of his take home pay. What bank is going to take that kind of risk now?

Times are changing, all right. Time for people to recalibrate their expectations. We've gotten used to seeing blue collar workers buying quarter-million dollar houses when it's simply not economically sustainable. One has to do the math. Appreciation much above inflation eventually puts houses out of reach for potential new entrants. It's just not sustainable long term.

The housing market is not going to be able to repeat the kinds of gains so many are used to seeing until this generation ages out of the population and a new generation dooms itself to repeat these same mistakes, maybe 80-100 years from now. Until then, our generations are going to be constrained by the real limitations of incomes and the swollen public, corporate, and private debt levels that must be drawn down.

As you suggest, collapse and depression are indeed possible as a means to that end. Either way, today's median income earner is not going to see a $240K house as affordable. The stuntman loans needed to make that happen are no longer either available or supportable.

Originally Posted by Pettrix

I would jump on the housing deals within the next year or two, as it will turn and prices will begin to appreciate. If your holding your breath for some type of insane pricing to come about, you will pass-out...

The realtor spin machine was telling people just 6 months ago that a 15% drop in prices was just never going to be possible. We're well on our way to 15% now, and the guys I trust, like Schiller, say that peak-to-trough drops of 30% can be expected. More in some areas.

Caveat emptor. Good things are coming to those who wait.

[jazzlover]

Originally Posted by Pettrix

2,400 sq.ft is the average size of a home today. Back in the 1950's it was 1,200 sq.ft., but that same home today will have a VERY hard time selling, and most likely be worth a lot less than $240K.

People who make $30K a year want new & nice homes to be priced at $150K or less.

Most people have kids and unlike the housing of the 50's-70's, most parents don't want all 3 of their kids sleeping in the same bedroom and everyone sharing the same bathroom.

Most homes back then had a 1 car garage. Good luck trying to sell that in today's market. Most people want a MINIMUM 2.5 car garage but 3 car garages are mostly sought.

Times change, society changes and so does the housing market & prices. $240K median is not outrageous for a major metropolitan area. While the housing market is suffering right now, it will come back, if it doesn't than get ready for a collapse and depression of the USA.

I would jump on the housing deals within the next year or two, as it will turn and prices will begin to appreciate. If your holding your breath for some type of insane pricing to come about, you will pass-out...

What people "want" and what they can truly afford are two very different things. Truth is, the "average" American is living in more house than he or she can afford, owns more vehicles and is driving them more than there is going to be gasoline or money availabe to operate them, and is betting on a pension--either from Social Security or a private source--that is going to be much more limited than what they expected. Worst of all, they and their government are shouldering a debt that is going to be very difficult to repay. Sadly, I no longer believe a gut-wrenching economic wreck in this country is avoidable--the only question is who and how many will survive the carnage ahead. The real estate mess is not the only problem in the US economy--in fact, it is only a symptom of a much more basic dysfunction of overconsumption and overborrowing. We ARE headed for another "Great Depression." I hope we can survive this one--we're not near as tough as we used to be.

[Bideshi]

Bob and Jazzlover: you guys speak the hard truth. I am well above median income and a quarter mil for a roof over me and the wife is absurd. We will buy no more than 150K and the difference will go earning interest to pay part of our health insurance costs. Like many (most?) Americans I assumed all would be well at the end of my working life, but the more I really look into it, the more daunting it becomes. At the moment, I couldn't justify buying even at 150K because it's still cheaper to rent. Things are going to look very different a year from now after the pride has been squeezed out of a lot of over-priced houses.

[LBear]

Originally Posted by Bob from down south

$240K not outrageous? 'splain to us please how an earner of a median income of $45K in a major metropolitan area brings $55K (well over a year's salary) to the deal for down payment/closing and then swings a $192K mortgage? The payment (PITI) for that loan is around 50% of his take home pay. What bank is going to take that kind of risk now?

If you truly are from Chile, then I hesitate in answering your posts, as your agenda is questionable. I don't know if you are a closet socialist. You have had presidents who were Marxist and members of Chile's Socialist Party.

So, to you, bashing and laughing at America's current capitalistic market problems, may be your agenda here. As of now, I don't really know...

I ask you, are you from Chile, and if so, do you believe open market capitalism is the best system? Also, are you a Socialist or part of any Communist party?

Once you answer those questions, I can respond to your posts....

[LBear]

Originally Posted by jazzlover

What people "want" and what they can truly afford are two very different things. Truth is, the "average" American is living in more house than he or she can afford, owns more vehicles and is driving them more than there is going to be gasoline or money availabe

We ARE headed for another "Great Depression." I hope we can survive this one--we're not near as tough as we used to be.

Only time will tell. But I do say this. Some people, either the doomsdayers or optimists, will have to eat their words in the end. If there is a great crash, then the optimists should step up and say they were all wrong, and ask for an apology from everyone.

If the doomsdayers are wrong, then they will have to do the same.

Only one will be right in the end.

[sterlinggirl]

Originally Posted by Bob from down south

Forbes says it's the seventh best place to sell a house--but make sure you sell it soon, seeing as how you're losing over $40 a day in equity while your name stays on the deed...

That's ok Bob....the dollar has historically been a very stable currency and its strength should easily offset any temporary weakness in housing. The men in suits told me so.

Can you imagine what would happen if the public figured out how much value their homes really lost last year?

Lets see.....gold up 50%, houses down 10%.....200K went to 180K, but relative to gold that's actually 120K.

[livecontent]

Originally Posted by jazzlover

What people "want" and what they can truly afford are two very different things. Truth is, the "average" American is living in more house than he or she can afford, owns more vehicles and is driving them more than there is going to be gasoline or money availabe to operate them, and is betting on a pension--either from Social Security or a private source--that is going to be much more limited than what they expected. Worst of all, they and their government are shouldering a debt that is going to be very difficult to repay. Sadly, I no longer believe a gut-wrenching economic wreck in this country is avoidable--the only question is who and how many will survive the carnage ahead. The real estate mess is not the only problem in the US economy--in fact, it is only a symptom of a much more basic dysfunction of overconsumption and overborrowing. We ARE headed for another "Great Depression." I hope we can survive this one--we're not near as tough as we used to be.

Well, Jazzlover, this is a post that I agree. I do believe we are going into a severe financial depression and I agree that the main cause is "overconsumption and overborrowing". However, I welcome the depression; I think it is necessary and the only way to, maybe not stop, but slow overconsumption and teach a good lesson to many people.

I think the drop in home value is a very good thing as the homes were overvalued by the manipulation of greedy bankers and real estate people, so they can all make more money.

We need to go back to thrift and learn to save. The economic stimulus package is marketed to tell people to spend to "save" the economy but the real message should be to increase savings.

We are constantly told that our economy can function better if we spend and spend and there is no other way--that is the fraud of Capitalism.

I have no debt. I have a house but no mortgage and never had a second or third mortgage. I have no credit card balances and I have multiple credit cards and I never paid any credit card interest. I have a car but no car payments.

I live on Social Security and I save money every month---this was what I was taught by my parents, who are very thrifty and have the same lifestyle. I suffered a severe illness and consequently a disability--I survived. However, I get no extra help or funds because I have too much in savings. So, as a thrifty person, I am penalized. So, be it. My misery and pain loves company--so if others suffer and cannot pay their debts--It will be a welcomed event.

I want gasoline to increase more. I want gasoline to go so high that it really hurts and stimulates the productions of very small fuel efficient cars; increases the use of public transportation. I do not care as I used only 6 gallons of gas in the last month. If it cause food prices to rise further--I can live on less because I live on very little now--I will turn my yard into a big "victory garden", a victory over overconsumption.

I buy no CDs. I rent no movies. I have not gone to a "moving picture show" in 7 years because I do not want to subsidize overpaid celebrities. I do not eat in restaurants; I cook all my meals; I shop for bargains, close-outs, and eat modest foods, little meat, more legumes, fruits and vegetables.

And if the situations get real bad--I will cancel my ISP, Junk my car, reduce my spending even further and I will still live content because I can live on even less. If I lose my savings, investments, social security, house--I will survive because I can; I expect very little out of life and with little I can still live content, or, with nothing, die content, as long as I know that many people are being taught a good lesson that will serve the country for the future.

Now I get less money every month, on interest bearing security and CDs, because the government is reducing interest on money--to stimulate more buying, spending, borrowing--a way to stimulate the economy??? However, people who save modestly, only in banks, get less money---so is that right, penalize the thrifty and reward the extravagance of spending.???

When I get my stimulus payment--I will consciously not spend the money but save it. In addition, I will triple the amount and save that in a long term security. I refuse to spend. I will save. I will save. and I will save. This is what we should all do, buy nothing but essentials, save as much as we can--hurt those who rely on our frivolous spending.

Some of you are going to think that I am a "Jew". I am not, but I consider being a "Jew" a compliment. I grew up and worked with these wonderful people and others who suffered and knew how to save. So, when, the Great Depression II comes, it will create more great people, that I knew when I was young; it will forge a new generation of strong Americans and I will sit back, have a good laugh, and livecontent..

[Bob from down south]

Originally Posted by Pettrix

If you truly are from Chile, then I hesitate in answering your posts, as your agenda is questionable. I don't know if you are a closet socialist. You have had presidents who were Marxist and members of Chile's Socialist Party.

I am an American working in Chile, and I am retiring to Colorado in the very near future. I have also worked extensively in Europe and Asia. As an American I have had Presidents who were idiots and interventionists in the internal affairs of other sovereign nations. At least Chile's Marxists and Socialists keep to themselves. I am also a registered Republican.

Originally Posted by Pettrix

So, to you, bashing and laughing at America's current capitalistic market problems, may be your agenda here. As of now, I don't really know...

My "agenda," if you can call it that, is one of an angry U.S. citizen that cannot believe the depth of the financial irresponsibility running throughout the mainstream populace of my country. As a rather experienced resident of the world at large, I have perhaps a unique perspective on where Americans are on the world economic scale. The poorest of Americans is still wealthy on the larger world stage. That we would cry ourselves to sleep over our losses of fictitious bubble capital while still fully expecting to live in houses with three car garages and driving multiple cars to fill them is so insanely ludicrous it's hard to express the words.

Originally Posted by Pettrix

...do you believe open market capitalism is the best system? Also, are you a Socialist or part of any Communist party?

Open market capitalism? Yes, I believe that works. But not unregulated, no-holds-barred open market capitalism. The lack of controls is what allows the rich and powerful to prey upon those with less, and to move towards a world where they would own and control everything. Laws like Glass Steagall and the Sherman Anti-Trust Act came about as a result of the demonstrated excesses of the robber baron capitalists that reigned during the early 20th Century...Rockefeller, Flagler, et al. We've all but repealed Glass-Steagall, to our detriment, and failed to regulate the so-called shadow banking system as it put its tentacles into a banking system watched over by a Fed and FDIC that were, giving them the benefit of the doubt, asleep at the wheel. And now the loud and obnoxious proponents of "open market capitalism" have their hats in hand and their hands out insisting that we bail them out with public money because they say it's somehow in our best interest that they succeed in enriching themselves.

Some of the people responsible for this mess should fear a crowd of angry citizens appearing at their door.

[Bideshi]

Originally Posted by Pettrix

, will have to eat their words in the end. If there is a great crash, then the optimists should step up and say they were all wrong, and ask for an apology from everyone.



.

If there is a great crash everyone will be too busy scrambling to survive to worry about apologies. Such niceties are for better times.