Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
How many times have we seen that question asked on this forum? Has the housing market bottomed. Then you get the usual "its coming or its here", well my friends I am going to let you in on a secret. We are no where near the bottom. Home prices are still to darn high. Home prices need to be in line with traditional income to home price ratios. Which in the 70s was 2 to 2.5 times annual income. This means if you make 45,000 dollars then you could afford a $90,000 to $112,500. Then in the 80s/90s that went up to 3 to 3.5 times annual income. So if you made $45,000 per year then you could afford a home that was $135,000 to $157,500. How do we apply this to the housing market? Well you look in a given area and you figure out the median household income for that given area. Then you apply the 3 to 3.5 times annual income ratio to get your home price. You will have to do research to find out incomes for a given area but the info is out there.
So why do I bring this up? Well the fine people at Miami Herald did a piece today titled "South Florida Homes out of reach for many, study finds (http://www.miamiherald.com/news/southflorida/story/1038069.html - broken link)"
People are still losing jobs, they are now forecasting double digit unemployment numbers by years end. Never mind the real unemployment numbers are in double digits already. Add to this the fact subprime was not the real catastrophe. The real catastrophe will be when prime and near prime alt a loans start resetting, which begins this year and will continue on until 2014. Just to give you a idea of how much larger the prime and near prime loan issue is as compared to sub prime here is a figure. The amount of prime and near prime Alt A loans out there are anywhere from double to triple the amount of outstanding sub prime loans.
To further illustrate just how much trouble the housing market is still in add to this the large inventory of homes and condos still out there. It is amusing to hear the media talk up up how home sales are up. Well yeah, those are for distressed homes (short sales and foreclosures) not existing homes. And even those distressed homes are not true indicators because a lot of that is retarded investors who will most likely find themsleves in a pickle before this is all said and done. When you read stuff like that remember one thing, month over month numbers mean little to nothing because of variances and other anomolys which can not be accounted for. what you want to look for is long term trends which is year over year. So if you hear them saying ohhhh home sales are up from last month, you laugh at that and ask them or research if they are up year over year. Same goes for jobless claims and anything else they may try to through at you. So save your money, and wait for it, its coming, but it isn't here yet.
Unemployment will be one of the last things to get better. Companies have to be able to get back on their feet and know that they need employees before they can start hiring. So even if the economy is starting to see the light, the unemployment rates could still stay high. The longer the media puts fear out there, the longer people will be scared to spend, some 70% I believe of our economy is consumer driven. And if people don't spend, people will lose their jobs. I personally don't see the housing dropping much more than it has already. Housing prices in South Florida are going to stay higher like California will stay higher. We will never see the house prices of pre 2000 or 2006 prices again. It will be someplace in between where it will stay for a long time.
On the other hand, I just spoke to a neighbor that believe just like Wildstyle, that we will see probably two more dips, the first one being this past winter. I think this is very likely, as from what I heard, there are usually 3 dips in the market before things get better.
Unemployment will be one of the last things to get better. Companies have to be able to get back on their feet and know that they need employees before they can start hiring. So even if the economy is starting to see the light, the unemployment rates could still stay high. The longer the media puts fear out there, the longer people will be scared to spend, some 70% I believe of our economy is consumer driven. And if people don't spend, people will lose their jobs. I personally don't see the housing dropping much more than it has already. Housing prices in South Florida are going to stay higher like California will stay higher. We will never see the house prices of pre 2000 or 2006 prices again. It will be someplace in between where it will stay for a long time.
On the other hand, I just spoke to a neighbor that believe just like Wildstyle, that we will see probably two more dips, the first one being this past winter. I think this is very likely, as from what I heard, there are usually 3 dips in the market before things get better.
Three dips in the market before things get better? What does that even mean? What we are seeing now has never, ever happened on a national or international scale so any comparison you may attempt to make are apples and oranges to the current event. Yes consumer spending is 70% of the U.S. economy however the problem you are having is in understanding how the U.S. economy works. See since the 70s incomes have not kept up with inflation and people have used credit cards to keep up. Well they are now maxed out, credit is shrinking and they no longer have the ability to spend beyond their means. So unless the govt decided to forgive all consumer debt over night you will not see any bounce back in consumer spending (well ignoring anomalies such as income tax or stimulus checks). As for companies hiring, well we are a service based economy which was spurred on via consumer spending. This consumer spending was in turn spurred on by the availability of cheap and easy credit. Well that’s gone now as well, so how do you expect anything to get better? It took us 3 decades to get to this point and I am sorry to inform you of this but it is going to take a heck of a lot longer than 2.5 yrs to correct 30 yrs of mismanagement, just not going to happen. Historical facts are on my side here and historical facts say home prices have always and will betide to income to home price ratios as mentioned in my original post. I am not speaking from wishful thinking or pessimism; just facts on how economics work. California right now is also seeing huge declines in home prices with NO end in sight. The only reason cali home prices could be so high was again because of cheap and easy credit and that my friend is over. The sooner people get it through their skulls that the F.I.R.E. economy is dead and there will be a new way of doing things, the better off we will be. I should add, we will see a false rally. That happens when you dump trillions of printed up dollars onto the economy. But that’s when we see the real fun begin (a devalued dollar and outrageous inflation). Just to add on a little more to Florida home prices, people are leaving the state not moving in. Can't keep prices high on something when there is no one there to buy it. It’s called the law of supply and demand.
Everyone has their own opinion, but based on what i see in the market.... there are a lot more buyers in the market now compared to last couple of years. Aggressively priced foreclosures are getting multiple offers with first 3 days of listing and they often go ABOVE ASKING price. The over all volume has also gone up big time in the South Florida market. So while, I don't see the prices going up yet... we have certainly seen a slowdown in the downward move.
Plus don't forgot, we won't know we have hit the bottom until we can clearly see it the rear view mirror..... which would probably 6 - 12 months after the bottom has 'actually' hit.
Plus don't forgot, we won't know we have hit the bottom until we can clearly see it the rear view mirror..... which would probably 6 - 12 months after the bottom has 'actually' hit.
Three dips in the market before things get better? What does that even mean? What we are seeing now has never, ever happened on a national or international scale so any comparison you may attempt to make are apples and oranges to the current event. Yes consumer spending is 70% of the U.S. economy however the problem you are having is in understanding how the U.S. economy works. See since the 70s incomes have not kept up with inflation and people have used credit cards to keep up. Well they are now maxed out, credit is shrinking and they no longer have the ability to spend beyond their means. So unless the govt decided to forgive all consumer debt over night you will not see any bounce back in consumer spending (well ignoring anomalies such as income tax or stimulus checks). As for companies hiring, well we are a service based economy which was spurred on via consumer spending. This consumer spending was in turn spurred on by the availability of cheap and easy credit. Well that’s gone now as well, so how do you expect anything
to get better? It took us 3 decades to get to this point and I am sorry to inform you of this but it is going to take a heck of a lot longer than 2.5 yrs to correct 30 yrs of mismanagement, just not going to happen. Historical facts are on my side here and historical facts say home prices have always and will betide to income to home price ratios as mentioned in my original post. I am not speaking from wishful thinking or pessimism; just facts on how economics work. California right now is also seeing huge declines in home prices with NO end in sight. The only reason cali home prices could be so high was again because of cheap and easy credit and that my friend is over. The sooner people get it through their skulls that the F.I.R.E. economy is dead and there will be a new way of doing things, the better off we will be. I should add, we will see a false rally. That happens when you dump trillions of printed up dollars onto the economy. But that’s when we see the real fun begin (a devalued dollar and outrageous inflation). Just to add on a little more to Florida home prices, people are leaving the state not moving in. Can't keep prices high on something when there is no one there to buy it. It’s called the law of supply and demand.
i agree with you people are leaving south florida everyday, CRAIGSLIST IS THE PROOF IN PUDDING, almost everyone that are selling items are moving out of state
i agree with you people are leaving south florida everyday, CRAIGSLIST IS THE PROOF IN PUDDING, almost everyone that are selling items are moving out of state
I wouldn't put my faith in craigslist personally but I do agree with you.
The bottom is nowhere close to being in sight, housing prices will have to dip another 25% to 50% before you can even think of stability right now in the market. Personally, we have no real infrastructure so I doubt any real surge in home buying will last more than a month or two.
Even if people start scooping up homes again you'll mostly have flippers trying to make a living again off buying and selling back and that's a part of the problem in the first place.
South Florida will be in a slump until stability sets in, until then you'll continue to see these issues arise.
Three dips in the market before things get better? What does that even mean? What we are seeing now has never, ever happened on a national or international scale so any comparison you may attempt to make are apples and oranges to the current event. Yes consumer spending is 70% of the U.S. economy however the problem you are having is in understanding how the U.S. economy works. See since the 70s incomes have not kept up with inflation and people have used credit cards to keep up. Well they are now maxed out, credit is shrinking and they no longer have the ability to spend beyond their means. So unless the govt decided to forgive all consumer debt over night you will not see any bounce back in consumer spending (well ignoring anomalies such as income tax or stimulus checks).
I understand how the US economy works, FYI. We will see consumer spending as soon as people start to get jobs. Our society has changed, yes some have been scared enough to do like their parents or grandparents, and are going to start saving. But there are plenty of people that will have learned nothing about saving and spend beyond your means. And once they get a job will be right back to spending money.
Quote:
Originally Posted by Wild Style
As for companies hiring, well we are a service based economy which was spurred on via consumer spending. This consumer spending was in turn spurred on by the availability of cheap and easy credit. Well that’s gone now as well, so how do you expect anything to get better? It took us 3 decades to get to this point and I am sorry to inform you of this but it is going to take a heck of a lot longer than 2.5 yrs to correct 30 yrs of mismanagement, just not going to happen.
I totally agree its going to take much longer than 2.5 years, but it will not take 30 years. People and corporations have gotten to used to having things, and I am sorry, our generation isn't like my parents or grandparents generation. And this blip isn't going to change a whole generation like it did in the early 1900s.
Quote:
Originally Posted by Wild Style
Three dips in the market before things get better? What does that even mean?
If you look at the markets during the 2002 recession after the bubble and all the way back to the depression. There were three spikes supposibly in these bad market times. From what people have told me we just went through our first dip, and going up the spike right now, they believe we will drop one more time, then rise again and then drop again and then rise to stable markets. This is what I have heard from people in the markets. Will the next to dips be as bad, I don't know, i didn't ask what historically were the second and third dips as bad as the initial dip. Is this going to be our future, I hope not, I hope we are starting to stabilize. The longer we all stay pessimistic, the longer will stay in this recession. But if people start saying we are coming out of it, we can come out of it.
Quote:
Originally Posted by Wild Style
he only reason cali home prices could be so high was again because of cheap and easy credit and that my friend is over.
Demand also plays a role in prices, if California wasn't a place so many people wanted to live, it would be much cheaper. But California will always be a place many people will want to live and prices will stay higher than the rest of the country because of demand. Miami will always has a build build build faze, then 10 years goes by and things settle down, then we build build build again. So building will probably slow for the next 10 years but after that it will be back. History shows that.
Bush's dream was for every American to become a homeowner. Not ever person in this country should be a homeowner. Many people should just be renters, there is nothing wrong with renting, in some instances its a better situation.
Everyone has their own opinion, but based on what i see in the market.... there are a lot more buyers in the market now compared to last couple of years. Aggressively priced foreclosures are getting multiple offers with first 3 days of listing and they often go ABOVE ASKING price. The over all volume has also gone up big time in the South Florida market. So while, I don't see the prices going up yet... we have certainly seen a slowdown in the downward move.
Plus don't forgot, we won't know we have hit the bottom until we can clearly see it the rear view mirror..... which would probably 6 - 12 months after the bottom has 'actually' hit.
Just my 2 cents!
I don't deal with opinions, they mean nothing. I deal with historical facts. A lot more buyers in the market? Ummm no, not at all. As you stated foreclosures are selling and are extremely discounted prices while none distressed homes are sitting there with no one even looking into them. That in no way shows a healthy market. Also, there was a study of who are buying a lot of these homes and condos. They said 60% of them are investors, not your average joe. That sir is a problem.
I understand how the US economy works, FYI. We will see consumer spending as soon as people start to get jobs. Our society has changed, yes some have been scared enough to do like their parents or grandparents, and are going to start saving. But there are plenty of people that will have learned nothing about saving and spend beyond your means. And once they get a job will be right back to spending money.
I totally agree its going to take much longer than 2.5 years, but it will not take 30 years. People and corporations have gotten to used to having things, and I am sorry, our generation isn't like my parents or grandparents generation. And this blip isn't going to change a whole generation like it did in the early 1900s.
If you look at the markets during the 2002 recession after the bubble and all the way back to the depression. There were three spikes supposibly in these bad market times. From what people have told me we just went through our first dip, and going up the spike right now, they believe we will drop one more time, then rise again and then drop again and then rise to stable markets. This is what I have heard from people in the markets. Will the next to dips be as bad, I don't know, i didn't ask what historically were the second and third dips as bad as the initial dip. Is this going to be our future, I hope not, I hope we are starting to stabilize. The longer we all stay pessimistic, the longer will stay in this recession. But if people start saying we are coming out of it, we can come out of it.
Demand also plays a role in prices, if California wasn't a place so many people wanted to live, it would be much cheaper. But California will always be a place many people will want to live and prices will stay higher than the rest of the country because of demand. Miami will always has a build build build faze, then 10 years goes by and things settle down, then we build build build again. So building will probably slow for the next 10 years but after that it will be back. History shows that.
Bush's dream was for every American to become a homeowner. Not ever person in this country should be a homeowner. Many people should just be renters, there is nothing wrong with renting, in some instances its a better situation.
I will leave you with the same words I left someone in the NYC forum with last year. He kept going on and on about how NYC real estate will never fall (even though it fell in the 80s during the SNL death spiral). Time will make you a believer.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
