These House Prices are Still Ridiculous!

[scottzilla]

Originally Posted by I_Love_LI_but

Where have you seen a $100,000 difference like that? Around here it takes way, way, way too long to foreclose compared to anywhere else and people who don't pay their mortgage (and by extension their neighbors' relative home values) are insulated for years. I know of one couple who hadn't paid their mortgage for three solid years and finally the bank threw them out. I saw in the Post yesterday that Victoria Gotti owes $650K on her home in Old Westbury and hasn't paid a cent in two years and the bank is now finally getting somewhere in court against her. Plus the price of a foreclosure is not the huge bargain it may be in Cali (example: something that was previously sold for $1.3 million, was foreclosed on, and now is $350,000). When you are looking to buy a foreclosed home on the courthouse steps on LI the upset price is usually almost as expensive as what it would be sold for if it were not a foreclosure.

I am currently considering a foreclosed home for 280K sitting right next to a house listed for $490k. They were both built in 2006. Mind you, the 490K listing is a tad high but not by much.
My point remains that foreclosures will start to deflate the market value buy setting median values artificially low.
I spoke to a lawyer who told me it's taking at least 18 months to get to foreclosure.

[Burb]

I can't disagree with anyone's reasoning that a further collapse is eminent. the writing is on the wall. I'm not being an optimist by stating that real estate is and will continue to be flat, quite the opposite.

The fed's bet that injecting all of this "new" paper money into the interbank market will not cause major inflation because it will not reach the hands of the consumer is risky. If it does devalue the dollar significantly the housing bubble will be th least of our worries. When a loaf of bread is $10, a movie costs $30 and a Honda is $100K, that $550K raised ranch you bought in 2005 would now not be such a bad deal but life would be miserable.

[Jrprofess]

Originally Posted by I_Love_LI_but

Where have you seen a $100,000 difference like that? Around here it takes way, way, way too long to foreclose compared to anywhere else and people who don't pay their mortgage (and by extension their neighbors' relative home values) are insulated for years. I know of one couple who hadn't paid their mortgage for three solid years and finally the bank threw them out. I saw in the Post yesterday that Victoria Gotti owes $650K on her home in Old Westbury and hasn't paid a cent in two years and the bank is now finally getting somewhere in court against her. Plus the price of a foreclosure is not the huge bargain it may be in Cali (example: something that was previously sold for $1.3 million, was foreclosed on, and now is $350,000). When you are looking to buy a foreclosed home on the courthouse steps on LI the upset price is usually almost as expensive as what it would be sold for if it were not a foreclosure.

Foreclosures on LI will not have the same pricing pressure impact as other parts of the country. LI has a very mature housing stock. Vegas, AZ, FL, and Cali (e.g. Stockton) sprung up these tracts of houses during the boom with the thought that you "drive until you qualify". Islanders are going to either pull their home back off the market, or stubbornly wait, and wait, and wait while prices drift somewhat lower holding on until it bounces back. It will be a long wait, but they will. There are zero areas in LI that are 130+ house developments that are 2/3's empty resulting in 100K or less short sale investors and foreclosure hunters. This area will never see that kind of sharp pressure. There is pricing pressure of course, but it is far more measured and will always run up against the notion that LI housing has always been expensive, so 350k for a slightly renovated cape in Massapequa will feel like a bargain, even if historical norms mean it should be 265.

[scottzilla]

Originally Posted by Jrprofess

Foreclosures on LI will not have the same pricing pressure impact as other parts of the country. LI has a very mature housing stock. Vegas, AZ, FL, and Cali (e.g. Stockton) sprung up these tracts of houses during the boom with the thought that you "drive until you qualify". Islanders are going to either pull their home back off the market, or stubbornly wait, and wait, and wait while prices drift somewhat lower holding on until it bounces back. It will be a long wait, but they will. There are zero areas in LI that are 130+ house developments that are 2/3's empty resulting in 100K or less short sale investors and foreclosure hunters. This area will never see that kind of sharp pressure. There is pricing pressure of course, but it is far more measured and will always run up against the notion that LI housing has always been expensive, so 350k for a slightly renovated cape in Massapequa will feel like a bargain, even if historical norms mean it should be 265.

Good post. I agree those who are not upside down in their house will pull it off the market rather than sell for what they perceive to be a loss.

[djdairyp]

Housing Crash Continues, Bubble Pops

Great site if you want to read someones opinion about the bubble collapse. Sort of like the libubble site. Makes some very strong, logical and valid arguments about how and why things will happen. Also has good daily, all housing market, related links for each day.

[I_Love_LI_but]

Originally Posted by scottzilla

I am currently considering a foreclosed home for 280K sitting right next to a house listed for $490k. They were both built in 2006. Mind you, the 490K listing is a tad high but not by much.
My point remains that foreclosures will start to deflate the market value buy setting median values artificially low.
I spoke to a lawyer who told me it's taking at least 18 months to get to foreclosure.

Do you know what each home sold for in 2006?

What percentage of homes are actually in foreclosure/projected to be in foreclosure right now on LI? Although the percentage rate itself has gone up a lot compared to the past, I think the actual number is still very low. Absent foreclosure and short sale rates being 30% and up of total home sales, I don't think it will cause home prices to be "artifically low," especially because we can argue that it has been and still is "artificially high" (when compared to median incomes and affordability).

Your lawyer is correct about this area. That is the typical rate of time if all goes well for the mortgage holder, but often it is longer. Almost everywhere else in the country, foreclosure starts much quicker (between 3 and 6 months of missed payments).

[I_Love_LI_but]

Originally Posted by scottzilla

Good post. I agree those who are not upside down in their house will pull it off the market rather than sell for what they perceive to be a loss.

Of course! If you can stay in the house a long time that is the best option.

[I_Love_LI_but]

Originally Posted by Jrprofess

Foreclosures on LI will not have the same pricing pressure impact as other parts of the country. LI has a very mature housing stock. Vegas, AZ, FL, and Cali (e.g. Stockton) sprung up these tracts of houses during the boom with the thought that you "drive until you qualify". Islanders are going to either pull their home back off the market, or stubbornly wait, and wait, and wait while prices drift somewhat lower holding on until it bounces back. It will be a long wait, but they will. There are zero areas in LI that are 130+ house developments that are 2/3's empty resulting in 100K or less short sale investors and foreclosure hunters. This area will never see that kind of sharp pressure. There is pricing pressure of course, but it is far more measured and will always run up against the notion that LI housing has always been expensive, so 350k for a slightly renovated cape in Massapequa will feel like a bargain, even if historical norms mean it should be 265.

True. We just didn't have the land for the ever-widening concentric circles of (now failing) "exurbs" ringing the cities that they do, so LI'ers are in much better shape in this respect.

[I_Love_LI_but]

Originally Posted by djdairyp

Housing Crash Continues, Bubble Pops

Great site if you want to read someones opinion about the bubble collapse. Sort of like the libubble site. Makes some very strong, logical and valid arguments about how and why things will happen. Also has good daily, all housing market, related links for each day.

TY for the link (but I'm almost afraid to look) ...

[I_Love_LI_but]

Originally Posted by Burb

I can't disagree with anyone's reasoning that a further collapse is eminent. the writing is on the wall. I'm not being an optimist by stating that real estate is and will continue to be flat, quite the opposite.

I don't look forward to a collapse. I think a correction to at least somewhere near historical levels would actually improve the real estate market as it would bring new life (first time buyers) in and then more trade-ups would take place (well, hopefully trade-ups rather than fleeing the area for Mecca, NC).

Originally Posted by Burb

The fed's bet that injecting all of this "new" paper money into the interbank market will not cause major inflation because it will not reach the hands of the consumer is risky.

See, I thought the reasoning behind this was to allow the banks more liquidity and free up credit to the consumers' hands to keep the economy going. (Which is not happening, as we can read right on this board of well-qualified individuals who are having their lines of credit cut.)

Originally Posted by Burb

If it does devalue the dollar significantly the housing bubble will be th least of our worries. When a loaf of bread is $10, a movie costs $30 and a Honda is $100K, that $550K raised ranch you bought in 2005 would now not be such a bad deal but life would be miserable.

Crazy inflation like this has happened, in the past and more recently, in other parts of the world and I found it horrible just reading about it, never mind living it.