Homes keep dropping (Detroit, Lansing, Ann Arbor: property taxes, housing, income)

[mileslong3]

CNN just had a piece on Michigan, the reporter was standing in front of a home in detroit that sold for 680 thousand, it was forclosed on and is offered at 420 thousand. Man Can you imagin what the people who are not selling think? Their dollar is dropping and their homes are dropping. Sucks to be a home owner in michigan.

[magellan]

Originally Posted by mileslong3

CNN just had a piece on Michigan, the reporter was standing in front of a home in detroit that sold for 680 thousand, it was forclosed on and is offered at 420 thousand. Man Can you imagin what the people who are not selling think? Their dollar is dropping and their homes are dropping. Sucks to be a home owner in michigan.

Only if you are trying to sell, which is a very small percentage of the population. Otherwise, it's just a number.

[Bydand]

Originally Posted by mileslong3

CNN just had a piece on Michigan, the reporter was standing in front of a home in detroit that sold for 680 thousand, it was forclosed on and is offered at 420 thousand. Man Can you imagin what the people who are not selling think? Their dollar is dropping and their homes are dropping. Sucks to be a home owner in michigan.

Depends on the homeowner. If you overpaid for a house just to be in the "right" neighborhood, then yeah it sucks for you. But it would suck in Michigan, Montana, California, pick any state right now. Those who have no intention of running for the hills at the latest cry of the doomsayers, couldn't care less.

What is the rest of the story behind the house they were standing in front of? That is the real story, the guy paid 680,000; what did it appraise at really, what was the real value of the house when he paid that much? Doubt it was close to the 680K figure.

[FERRETI]

Originally Posted by magellan

Only if you are trying to sell, which is a very small percentage of the population. Otherwise, it's just a number.

Magellan we live here not in another republic.The percentage of population trying to sell is not low at all.I would say roughly 20% and up are trying to sell.

[FERRETI]

Originally Posted by mileslong3

CNN just had a piece on Michigan, the reporter was standing in front of a home in detroit that sold for 680 thousand, it was forclosed on and is offered at 420 thousand. Man Can you imagin what the people who are not selling think? Their dollar is dropping and their homes are dropping. Sucks to be a home owner in michigan.

This is the trap man.We know none wants to stay here a second more because of the joblesness,but 77% of michiganders are homeowners.However i hope this is not true,but my neighbour sold her house and did not lose a lot like what you are saying here.I guess high priced houses are suffering the most.She sold her house at 175k and if i sell mine which is better than hers at 185 i am a lucky man.Yup you be lucky to get out of housing market now.It might go up one day without a warning,but i made my mind about it.

[magellan]

Originally Posted by FERRETI

Magellan we live here not in another republic.The percentage of population trying to sell is not low at all.I would say roughly 20% and up are trying to sell.

Maybe in certain neighborhoods, but not overrall. Just go down your street and count houses, and then count how many are for sale. In our entire neighborhood of about 180 homes, I've counted exactly 8 homes for sale since last Summer. All but two have sold now.

Or find out how many homes are listed for sale in your area's MLS system, and then how many total homes there are. It's probably less than 10%. And even then, some of those might be people just moving to another home in their area (upsizing or downsizing). You can go by how you "feel" on the issue, or you can actually look at facts. You can't base anything on a CNN piece. Do you think they would pick a homeowner who only got 5% less than asking price? Of course not. That doesn't sell.

Think of it like owning a stock, except you get to live in it. It doesn't matter where the value is over the short term, it only matters where the value is when you NEED to sell. If you base that selling date on fear and emotions, someone else (like me) who has no emotional investment will take advantage of it and rob you blind.

[michiganbob]

Originally Posted by magellan

Maybe in certain neighborhoods, but not overrall. Just go down your street and count houses, and then count how many are for sale. In our entire neighborhood of about 180 homes, I've counted exactly 8 homes for sale since last Summer. All but two have sold now.

Or find out how many homes are listed for sale in your area's MLS system, and then how many total homes there are. It's probably less than 10%. And even then, some of those might be people just moving to another home in their area (upsizing or downsizing). You can go by how you "feel" on the issue, or you can actually look at facts. You can't base anything on a CNN piece. Do you think they would pick a homeowner who only got 5% less than asking price? Of course not. That doesn't sell.

Think of it like owning a stock, except you get to live in it. It doesn't matter where the value is over the short term, it only matters where the value is when you NEED to sell. If you base that selling date on fear and emotions, someone else (like me) who has no emotional investment will take advantage of it and rob you blind.

The price that other people are selling their houses for DOES matter, even if you are not selling yours. The original example of the $680K house selling for $420K is probably not the best example for Michigan, but that's CNN for you.

However, I can give you a real life example from the Lansing area (realizing things are always much better in GR): house was originally listed for $177,000 after the previous owners got a divorce and husband lost his job. Could not sell it all of 2006 and it went into foreclosure (their price was set based on what they owed the bank) and was put back on the market for $140,000 in spring of last year and kept dropping month after month until it was sold for $114,000 in October 2007. So what? That now means that if someone else puts a house up for sale in that neighborhood, the comps will show that at least one sold at that bargain basement price. Might cause you to drop your asking price.

Second, the new owners will argue that the house is over valued for tax purposes and will likely eventually get their property taxes reduced. Good for them, not so good for Lansing when you multiply that hundreds of time. Less money for schools, roads, cops, etc. Third: other people in the neighborhood who want to get a home equity loan will find out that they may no longer have an equity after the bank does an appraisal . . . which is based on the recent sales. Others will not be able to refinance out of high rate loans because they owe more now than the house is worth. More houses go on the market, and more go into foreclosure, furthering the spiral downward. So yes, it is "all on paper" but that loss in paper value has a rippling effect on a community and it is happening in real time in Lansing, Detroit and other cities in Michigan. Not EVERY city, but my guess would be most.

Yes, you should keep emotion out of the equation, but that is not always possible for someone who has lost their job or who has an ARM resetting to a monthly price they cannot afford. I'm not sure if the 20% for sale mark is correct, but I do know that there are more houses out there than people in a lot of parts of Michigan with builders still building and residents still leaving.

Supply and demand are not on our side right now.

[malamute]

What would be hard is paying for a $400,000 house even if you are able to pay and have a solid job, knowing it's now only worth $250,000.

Since manufacturing isn't likely to ever come back, and high tech is leaving fast, there is no base to the economy anymore and nothing that you can base the future on.

[magellan]

Originally Posted by michiganbob

The price that other people are selling their houses for DOES matter, even if you are not selling yours. The original example of the $680K house selling for $420K is probably not the best example for Michigan, but that's CNN for you.

However, I can give you a real life example from the Lansing area (realizing things are always much better in GR): house was originally listed for $177,000 after the previous owners got a divorce and husband lost his job. Could not sell it all of 2006 and it went into foreclosure (their price was set based on what they owed the bank) and was put back on the market for $140,000 in spring of last year and kept dropping month after month until it was sold for $114,000 in October 2007. So what? That now means that if someone else puts a house up for sale in that neighborhood, the comps will show that at least one sold at that bargain basement price. Second, the new owners will argue that the house is over valued for tax purposes and will likely eventually get their property taxes reduced. Good for them, not so good for Lansing when you multiply that hundreds of time. Less money for schools, roads, cops, etc. Third: other people in the neighborhood who want to get a home equity loan will find out that they may no longer have an equity after the bank does an appraisal . . . which is based on the recent sales. Others will not be able to refinance out of high rate loans because they owe more now than the house is worth. More houses go on the market, and more go into foreclosure, furthering the spiral downward. So yes, it is "all on paper" but that loss in paper value has a rippling effect on a community and it is happening in real time in Lansing, Detroit and other cities in Michigan. Not EVERY city, but my guess would be most.

Yes, you should keep emotion out of the equation, but that is not always possible for someone who has lost their job or who has an ARM resetting to a monthly price they cannot afford. I'm not sure if the 20% for sale mark is correct, but I do know that there are more houses out there than people in a lot of parts of Michigan with builders still building and residents still leaving.

Supply and demand are not on our side right now.

1) You use an example of someone "selling". Of course, if you HAVE to sell in a down market it's not good, but that's the exception not the rule. That's my whole point. 2) If you are in an ARM and looking to refinance but can't because comps have gone down in value, that again is an exception to the rule. Most people are not in ARM's, and those that are took those risks when they signed up for it. They should have bought within their means. 3) Most people will not have their assessed/taxable value changed, even if their "perceived" property value has gone down 4) I don't believe in doing home equity loans for anything, especially if you are in a precarious employment situation. That's one way the U.S. got into this mess in the first place, by people using their home equity as an ATM machine.

And in case you missed it, Lansing's employment growth is on the rebound:

Lansing-East Lansing, MI Economy at a Glance

Even doing better than the so-called poster child of Ann Arbor. But I'm sure the Lansing State Journal has buried that story.

[Coldjensens]

It is difficult. We took out a loan in 2006 to restore a very old house. the loan was for about 2/3 the appraised value of the house when the project was competed. Our construction loan expired (time wise), but we could not get a permanent mortgage because the appraised value dropped so much that the LTv is too high. We put hundreds of thousands of dollars or out won money into the project and on paper, that is all gone. In one year, three or four years of our income simply evaporated.