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Not to get political but where's the incentive to purchase a home if the administration will not extend the 15% capital gains tax.
Can you imagine "needing" to move within 2 years after purchasing a home and having to pay 30% tax!???
Buisnesses seeing same flaw in system...just no incentive to own a business or hire employees anymore...especially with the new health care plan. Buisness owners will need to provide coverage to all employees otherwise get fined.
Thats "part" of my reasoning why real estate will "start" to comeback in 2012 or beyond.
P.S - the current tax break incentive goes for 1st time home buyers or to someone who been in the home over 5 years. How does that help stimulate buying? It should go to ALL buyers not just 1st time!
Not to get political but where's the incentive to purchase a home if the administration will not extend the 15% capital gains tax.
Can you imagine "needing" to move within 2 years after purchasing a home and having to pay 30% tax!???
Buisnesses seeing same flaw in system...just no incentive to own a business or hire employees anymore...especially with the new health care plan. Buisness owners will need to provide coverage to all employees otherwise get fined.
Thats "part" of my reasoning why real estate will "start" to comeback in 2012 or beyond.
P.S - the current tax break incentive goes for 1st time home buyers or to someone who been in the home over 5 years. How does that help stimulate buying? It should go to ALL buyers not just 1st time!
Snowman I think you are correct in the above post of yours and this one too
I currently own a home so what good is it going to do the economy or me in fact to get 6500 if I buy another house, they are making me sell this one. I buy a house I sell a house and scap up 6500 from the taxpayers.
If I could buy another and keep my house now I would buy in a minute.
3. What is driving the prices down are....sellers... each seller continues to lower and lower their prices and it affects the neighbors trying to sell so they in turn lower theirs... It sucks because it has to be done to unload it.
I don't believe the prices are being driven down by sellers but rather the lack of demand from buyers, the state of the economy, (the fear of job loss, people who have lost a lot of money last year, etc) and the fact that it's getting harder and harder to get a loan. I personally know of two realtors who have lost lots of clients who want to buy but they can't because they can't get a loan.
Now obviously, banks were too fast to give a loan 5 years ago. But now they've swung the other way and they are making it extremely hard for someone who otherwise is qualified to buy.
Then you have the fact that this is Connecticut and this state has a reputation for being expensive. So for every 10 people you have leaving the state heading down south or out west, how many people really move here to replace those people?
As far as sellers, as someone who just sold and lost their downpayment on the house, I say, if a person is serious about selling, they need to just suck it up and drop the price. I see way too many sellers who think it's still 2007 and are asking ridiculous prices on their house. If your house is sitting for a year with no offers, let me give you a tip....you are priced too high! It hurts and it sucks but that's how it is.
I look at Trulia.com and see example after example of delusional sellers. For example in northern Fairfield county like around Ridgefield, Trulia will break a house down by cost per square foot. Most homes that sell are anywhere from $200-280 a square foot. So you really have to roll your eyes when someone is listing a house for what breaks down to $450-500 a square foot. Are these people insane? Who is going to pay that?
And then you have the fact that there are many people sitting on their house right now waiting for the market to get better so they can list their home for sale. So when the market does start to improve, you are going to see a sudden increase on homes being listed. More inventory=lower prices. So as far as the market getting better, I think it really comes down to the economy, the lenders, an increase in buyers, and the sellers being realistic about their listing price. So is 2010 the year this all happens? I wouldn't hold my breath. I sympathize with sellers who are losing their shirts on their homes. I'm one of you. I also sympathize with buyers because homes are still too freakin' expensive.
From what I hear from realtors and read on other message boards, the small starter homes that are close to the cities still sell pretty quickly. The homes that are in the 500k and up range see a huge slowdown. It sucks for all of us.
Last edited by Yankeerose00; 11-10-2009 at 11:58 AM..
I sympathize with sellers who are losing their shirts on their homes. I'm one of you. I also sympathize with buyers because homes are still too freakin' expensive.
For some sellers who are in trouble because they lost their job 6+ months ago and can't find decent work, I do feel sympathy for them. But for the people that got caught up in the boom and bought above their means with no plan for affording their mortgage beyond the next payment or 2, I say tough @!$%. It blows my mind that people don't think longer term... yes, a 3-4% variable rate is great when you sign, but if you buy a home at your max budget with that rate, think what's going to happen when rates are 2x that amount. If you just expect your income to rise to make up for it - I'll take some of whatever you're smoking. I will concede that some people were intentionally misled by so-called predatory lenders, but for the most part people thought they were getting a free lunch and that the good times would continue to roll.
As for home prices being too expensive - that's for damn sure. I bought my house in early 2007, and we looked at more than 50 houses before finding one that was priced good enough. Looking back at the amount of work we had to put into it, I would have liked to save another 5-10%, but such is life. I plan on being there long-term, not using it as a short- to mid-term investment, so it doesn't matter if the market is tough for now. Several houses in my neighborhood in Fairfield (~1400 sq ft very outdated cape with less than 1/4 acre of land) were going for $500k+. Now, similar houses are selling for under $400k. So the market has definitely receded quite a bit. But there's a long way to go before anything in the area can really be considered affordable for most.
With all of the 3 and 5 year ARM's starting to reset, we are going to have yet another downturn in residential housing. People's rates are going to skyrocket, they won't be able to afford their homes, and they will start dumping them on the market. Couple that with the coming downturn in the commercial real estate market (many businesses closing due to lack of customers and lack of financing), and there's more financial gloom ahead.
For anyone needing to sell in the short term - good luck. If you can squeeze other areas of your budget, or even pick up a 2nd job to help, stick it out for a while.
Good points toddb. It's true that buyers are also to blame for the mess. What I don't get is how the supposed experts could not see this house of cards tumbling down. In all fairness, if the people doing the lending didn't see it as a risk, then we really can't expect the buyers to. We had a conventional loan, however, our mortgage company tried to talk us into getting an interest only loan or an ARM because, "Hey you can alway refinance in a year or two!" Suuuuuure. A year later our house was worth about 25k less. So I blame greed. Greed in the buyers and greed in the lenders.
We bought our house in Virginia back in 06 for two reasons. 1) We did not plan on ever moving back up north because even though jobs paid a bit more, the cost of homes was crazy expensive. But then all of that changed.
2) I kept reading over and over that the housing recession was over in Virginia and that prices were going back up. Virginia peaked back in 2005 and by 06, "they" were saying "now is the time to buy! Prices are going back up!" yeah.... I'll never believe the hype again.
When I actually see prices going back up and see homes still selling, then I will know that the market has gotten better. Until then, I will not buy a house. Nothing is worse than buying a house a then watching its value drop month by month. If a see a great deal in Fairfield county, I'll jump on it. But so far I'm not impressed. If we were going to stay around Hartford, I would be looking to buy sooner because to me, the homes are very affordable here. There are many towns that we could afford if we were staying around Hartford. But now that my husband will be working in NYC, we have to make the dreaded moving into Fairfield. That county has a long way to go for the homes to be even close to affordable. I just can't bring myself to pay 400k for some 1970's, grandma-inspired ranch.
Now obviously, banks were too fast to give a loan 5 years ago. But now they've swung the other way and they are making it extremely hard for someone who otherwise is qualified to buy.
I agree with most of your post. But in my opinion, the banks NEED to be this strict in their lending practices. I don't know this for sure, but I bet there's a fair case to be made they're still not strict enough in their lending standards.
Banks were stricter about lending back in the 1970s, when people had much more job/income stability than they do today. Lending standards have gotten progressively looser since the 1980s, while at the same time household incomes got more and more volatile.
When incomes are volatile, lending standards should be strict. It's best for borrowers and lenders alike....unless we're eager for another round of bank baliouts before the current round is even finished with.
We had a conventional loan, however, our mortgage company tried to talk us into getting an interest only loan or an ARM because, "Hey you can alway refinance in a year or two!" Suuuuuure. A year later our house was worth about 25k less. So I blame greed. Greed in the buyers and greed in the lenders.
This is exactly what happened to us...not that I'd call it "greed" but that is exactly what my mortgage broker said, "you can always refinance!"....umm yeah well back in 2003 maybe, but now that the value of our house has falled to a point where we no longer than 80% equity, not so easy. I refinanced so I could take quit my full-time job to take care of my newborn twins and work part-time. It was the right decision and thank goodness we were able to sell the house before we had to deal with the mortgage ballooning, but boy did we learn a lesson.
I agree with most of what people are saying. Unfortunately some of us have no choice but to take hits on our homes. I for one am not able to keep the house or rent it due to personal reasons. Has nothing to do with not having enough money to stay in it but some people have divorces or job relocations, etc. I am most likely going to go short sale again, but the problem comes back to the banks. The lawyers and banks are saying you need to be in distress in order to even get the bank to move on a potential buyer. Therefore you need to miss 2-3 payments, then the banks take another 2-3 months to look into your offer. It's absolutely a nightmare. Yes....we all learn from it and people can sit there and say suck it up and make ends meet...well....it's not always the case. It's very unfortunate the way the banks handle things. Granted there are plenty of people out there that took the road they shouldn't of and reached way beyond their means....
If a see a great deal in Fairfield county, I'll jump on it. But so far I'm not impressed. If we were going to stay around Hartford, I would be looking to buy sooner because to me, the homes are very affordable here. There are many towns that we could afford if we were staying around Hartford. But now that my husband will be working in NYC, we have to make the dreaded moving into Fairfield. That county has a long way to go for the homes to be even close to affordable. I just can't bring myself to pay 400k for some 1970's, grandma-inspired ranch.
Keep in mind that affordability is subjective. Fairfield County is a very wealthy area and despite the recent down turn it is still VERY desirable. I am not sure how long this will be the case but I don't think that you are going to see 50% reductions in home prices there.
I have friends who waited for price drops in the past and did not see them come for many years. In the mean time they rented and lost a lot of money. If they had bought when they were originally looking, they would still be way ahead of the game even with the current drop in prices.
Real estate should be considered a home first and not a short term. investment. People should have a sizable downpayment and be reasonably sure they can afford what they buy. Is it a risk? Yes but getting out of bed is a risk too. Sometimes you just have to just do it. Jay
Real estate should be considered a home first and not a short term. investment. People should have a sizable downpayment and be reasonably sure they can afford what they buy. Is it a risk? Yes but getting out of bed is a risk too. Sometimes you just have to just do it. Jay
I agree!
Who could possibly dread a move to Fairfield? It's a wonderful town filled with amenities.
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