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"Heh... Going to be lots of sour faces at the Monday Morning Meeting at real estate offices next week."
This isn't new news - this was in the pipeline for a long time. The FHA limits were much lower during the runup in prices, as an aside, and clearly that didn't stop anyone. Plenty of buyers hungry for AAA-rated mortgages right now. Actually, in our area at least (lower Westchester), the amount of people that pay cash for their homes is astounding.
On a side note, we were decades-old holdouts in the market until recently. Did we buy at the bottom? Nope. Is it cheaper than renting? Probably not in the short-run. But for us at least, not only were we welcomed into the neighborhood with such open arms in a way that we NEVER, ever were over more than 4 houses as renters (honestly I feel like neighbors never really get invested in knowing the renters since they are likely transient) but we're just plain happier being in full control of everything. We were always at the whim of other people before - for us at least the feeling of knowing we never have to move unless we choose to, that we can fix or change whatever and whenever, etc. is worth it. So if and when you can afford someplace, don't obsess over timing the market. Eventually, buying is almost always a better bet over the long term, but I don't think we will see bubble prices or double-digit appreciation again anytime soon.
We have owned 3 homes and miss how nice it feels, yes. Went thru a mold incident in a CT rental house while renting between home sale and hunting for another. Long story short, relocated to NC to find good housing fast. Doing great financially, just don't want any more down payment than necessary going down the toilet to further plummeting values in a still declining market. BUT life must go on. Our needs are quite unique which has also made it more difficult (home business office plus art studio). It's easy to stay in NC in this new constr. rental but our hearts are in CT. Optimistic we may find something in CT this coming year. Glad you found something, and in a great neighborhood where you were welcomed :-)
Last edited by itscolduphere; 09-27-2011 at 06:31 PM..
Reason: welcomed does not contain a "v" - silly me.
if anyone on this forum knows the answer they won't be on this forum in the first place.
It is also meaningless to talk about housing rebound without talking about a specific location. Riverside and Old Greenwich is doing pretty well these days.
any guesses on when the housing market will pick up again? My guess is the market will start picking up after(if) we get a new president in office, so we are looking at spring and summer of 2013 at the earliest.
IMHO, it has to do with the basic ratio of income vs. costs. Fixed housing costs should be no more than 2-1/2 - 3 times your gross income, according to the old underwriting rules, which look like they're coming back.
Median income in CT is around $60K. So, if you're a median income single person, your house should cost between $150 and $180K, in which range principal, interest (at 4.5%) and taxes (at $4K) and PMI (at 0.5%) should be between $1100 and $1200 a month. This is without a down payment.
I remember when I was making $60K. $1200 a month would have eaten up most of two weeks' worth of take home, and had I been a single person, that would have made me gag. I still would have had to pay electric, heating oil, and somehow scrape together the money for a car, gasoline and insurance to keep that job. But, back then, you could actually buy a house in Fairfield County for $150-$180K. And back then, I could be pretty certain that if I couldn't make ends meet, I could find another job that paid better to jump to.
It really is different now. Very few people have stable median income, and it would be a real exception to find a house in that price range in Fairfield. EZ credit allowed used house salesmen of all stripes to flog up prices, people figured they'd be stupid not to buy since it all kept going up. It was mass delusion, where buyers for the most part were fleeced and the salespeople saw money fall from the trees.
Now, so many people have lost their jobs, and with them, their savings in an attempt to hang on until things get better. This is nationwide. As for the young people, they never had a chance to save anything to begin with. And, in an area with a surplus of young people and a dearth of jobs, they are really in a squeeze, savings-wise.
So, this 'housing recovery' of which you speak - it is unlikely, your standard for comparison was based on mass delusion fueled by greed. People's personal economic fundamentals will not support a re-occurrence. Plus, the politicos are slowly dismantling the underpinnings for EZ-credit that even made it possible in the first place to flog the price of a $150K house into the stratosphere.
When the NY Federal Reserve Chairman says the economy is going to be "sluggish" for "many years", as he did a week ago, it is time to consider the possibility that this may be the new normal. The Fed has every reason to keep blowing smoke, and none at all to promote gloom and doom.
Re another poster's comment, about housing prices retaining their bubbly character in So Cal: actually, So California has been tanking. Down 35% since 2008, and not 'recovering' any time soon. For the same reason - job scarcity and median income that will not support a 'recovery'.
That's my conclusion, based on my reading of the facts, and I'm sticking to it. If I had different facts, I'd have arrived at a different conclusion. The next bubble will happen after this generation of young people, who have witnessed the current one, die off.
except those numbers do not jive with the housing explosion that happened from 2000 to 2007. Unemployment was around 5% then, salaries were about the same, yet housing was being sold like crazy. Now we have unemployment at 9%, and housing has stalled. Salaries are basically the same as they were in 2007. I don't think a mere 4% change in unemployment is the cause of the market slump. And, I do not think the "ratio" is the reason for the bad real estate market. I think it has more to do with the government pushing home ownership and the natural boom bust cycle, and we are simply currently in a bust, and hopefully around spring and and summer of 2013, if we get a business friendly administration, the market will turn around, because people will be more interested in investing their money, rather than sitting on it in this unfriendly climate. IF the government stays out of the business of pushing home ownership, hopefully the NEXT boom and bust will be much smaller and less traumatic.
Quote:
Originally Posted by jane_sm1th73
IMHO, it has to do with the basic ratio of income vs. costs. Fixed housing costs should be no more than 2-1/2 - 3 times your gross income, according to the old underwriting rules, which look like they're coming back.
Median income in CT is around $60K. So, if you're a median income single person, your house should cost between $150 and $180K, in which range principal, interest (at 4.5%) and taxes (at $4K) and PMI (at 0.5%) should be between $1100 and $1200 a month. This is without a down payment.
I remember when I was making $60K. $1200 a month would have eaten up most of two weeks' worth of take home, and had I been a single person, that would have made me gag. I still would have had to pay electric, heating oil, and somehow scrape together the money for a car, gasoline and insurance to keep that job. But, back then, you could actually buy a house in Fairfield County for $150-$180K. And back then, I could be pretty certain that if I couldn't make ends meet, I could find another job that paid better to jump to.
It really is different now. Very few people have stable median income, and it would be a real exception to find a house in that price range in Fairfield. EZ credit allowed used house salesmen of all stripes to flog up prices, people figured they'd be stupid not to buy since it all kept going up. It was mass delusion, where buyers for the most part were fleeced and the salespeople saw money fall from the trees.
Now, so many people have lost their jobs, and with them, their savings in an attempt to hang on until things get better. This is nationwide. As for the young people, they never had a chance to save anything to begin with. And, in an area with a surplus of young people and a dearth of jobs, they are really in a squeeze, savings-wise.
So, this 'housing recovery' of which you speak - it is unlikely, your standard for comparison was based on mass delusion fueled by greed. People's personal economic fundamentals will not support a re-occurrence. Plus, the politicos are slowly dismantling the underpinnings for EZ-credit that even made it possible in the first place to flog the price of a $150K house into the stratosphere.
When the NY Federal Reserve Chairman says the economy is going to be "sluggish" for "many years", as he did a week ago, it is time to consider the possibility that this may be the new normal. The Fed has every reason to keep blowing smoke, and none at all to promote gloom and doom.
Re another poster's comment, about housing prices retaining their bubbly character in So Cal: actually, So California has been tanking. Down 35% since 2008, and not 'recovering' any time soon. For the same reason - job scarcity and median income that will not support a 'recovery'.
That's my conclusion, based on my reading of the facts, and I'm sticking to it. If I had different facts, I'd have arrived at a different conclusion. The next bubble will happen after this generation of young people, who have witnessed the current one, die off.
"Re another poster's comment, about housing prices retaining their bubbly character in So Cal: actually, So California has been tanking. Down 35% since 2008, and not 'recovering' any time soon.
Just to clarify, I said prime So Cal...places near the coast and near job centers and such. I lived there for decades until last year, so I know a thing or two about the market. The exurbs (Bakersfield, Palmdale, etc.) and even places in San Diego (because there are and always have been few jobs there) are what tanked. Places in LA with decent schools like Pacific Palisades, Manhattan Beach, Santa Monica and such really haven't dropped more than 15% max, if that. It's the same kind of market as OG & Riverside - people will always pay a huge premium for a good commute and schools. For that reason, I always say buy into the best neighborhood that you can afford. Can you get a bigger house in North Stamford vs. Greenwich? Certainly. But over time, you will always have a better return on the Greenwich house.
IMHO, it has to do with the basic ratio of income vs. costs. Fixed housing costs should be no more than 2-1/2 - 3 times your gross income, according to the old underwriting rules, which look like they're coming back.
Median income in CT is around $60K. So, if you're a median income single person, your house should cost between $150 and $180K, in which range principal, interest (at 4.5%) and taxes (at $4K) and PMI (at 0.5%) should be between $1100 and $1200 a month. This is without a down payment.
I remember when I was making $60K. $1200 a month would have eaten up most of two weeks' worth of take home, and had I been a single person, that would have made me gag. I still would have had to pay electric, heating oil, and somehow scrape together the money for a car, gasoline and insurance to keep that job. But, back then, you could actually buy a house in Fairfield County for $150-$180K. And back then, I could be pretty certain that if I couldn't make ends meet, I could find another job that paid better to jump to.
It really is different now. Very few people have stable median income, and it would be a real exception to find a house in that price range in Fairfield. EZ credit allowed used house salesmen of all stripes to flog up prices, people figured they'd be stupid not to buy since it all kept going up. It was mass delusion, where buyers for the most part were fleeced and the salespeople saw money fall from the trees.
Now, so many people have lost their jobs, and with them, their savings in an attempt to hang on until things get better. This is nationwide. As for the young people, they never had a chance to save anything to begin with. And, in an area with a surplus of young people and a dearth of jobs, they are really in a squeeze, savings-wise.
So, this 'housing recovery' of which you speak - it is unlikely, your standard for comparison was based on mass delusion fueled by greed. People's personal economic fundamentals will not support a re-occurrence. Plus, the politicos are slowly dismantling the underpinnings for EZ-credit that even made it possible in the first place to flog the price of a $150K house into the stratosphere.
When the NY Federal Reserve Chairman says the economy is going to be "sluggish" for "many years", as he did a week ago, it is time to consider the possibility that this may be the new normal. The Fed has every reason to keep blowing smoke, and none at all to promote gloom and doom.
Re another poster's comment, about housing prices retaining their bubbly character in So Cal: actually, So California has been tanking. Down 35% since 2008, and not 'recovering' any time soon. For the same reason - job scarcity and median income that will not support a 'recovery'.
That's my conclusion, based on my reading of the facts, and I'm sticking to it. If I had different facts, I'd have arrived at a different conclusion. The next bubble will happen after this generation of young people, who have witnessed the current one, die off.
Correction: Median household income in CT is approximately $67K, not $60K.
Well, Forget the 25-100% appreciation increases... We'll be lucky to get 10-15% eventually.
I expect 1-3% appreciations starting 2013...even if a republican is in office it will take time for all the new ways to subside.
Real estate has been a decade trend since the 70s... seems like every 8-12yrs we enter a booming phase and a drop off phase. 80s had a boom. 90s had a surge. Mid 2000s had a boom.
The next surge in prices might not ever come or it might be be in 10 years. Too many restrictions in place.
This chart compares the stock market to inflation to home prices since 1963. I read somewhere that when the stock market does poorly real estate does good..I have yet to believe that.
Don't ever underestimate the result of the awful lending practices.
When lenders are underwriting $300k mortgages to people who have no credit or proof of income, the house of cards was always on the verge of coming down.
It was such a pure case of musical chairs, it's absurd. People just hoped the'd get in and make their piece of the pie before the music stopped..
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