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Old 01-31-2009, 04:52 AM
 
112 posts, read 353,042 times
Reputation: 46

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I posted this on another forum, but wanted to get some input on this board. a little background...we sold our house over the summer (we bought preconstruction in the mid 90's, never took money out, so we did pretty well) and we are keeping our eyes open for a great deal. We think prices are nowhere near the bottom, though, so we are renting.

----------------------------------------------------

My DH and I have our eye on a house that we saw in mid September with an eviction notice on the front door. We have not walked inside it, but have looked in all the windows (needs lots of work, but is ok it seems) and we know this is the particular neighborhood we would really like to be in. It is STILL not on the MLS. It is going on 5 months now!

We had our agent track down the bank and submit a formal offer (with a low price) with right to inspect, of course. Anyway, my hubby sent me this article just yesterday, I think it explains a lot!
Flood of foreclosures: It's worse than you think - Jan. 23, 2009


Do you think the banks are trying to hold onto a lot of debt to get a bigger bailout? Or are they simply swamped and can't keep up? Or do they know if they put everything on the market at once, housing prices will crash all at once? I am looking forward to everyone's insight and opinions on this. thanks!
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Old 01-31-2009, 07:18 AM
 
397 posts, read 734,418 times
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I'm not sure I understand the logic from this quote: "[Excess] inventory is the biggest problem in housing these days, and it leads to lower housing prices, which leads to more foreclosures."
I would think that lower housing prices would/should result in more people being able to afford to buy a house (esp. first timers). Maybe I should have paid more attention in Economics class!
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Old 02-02-2009, 08:22 AM
 
1,134 posts, read 2,469,010 times
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Quote:
Originally Posted by SadieLu View Post
I'm not sure I understand the logic from this quote: "[Excess] inventory is the biggest problem in housing these days, and it leads to lower housing prices, which leads to more foreclosures."
I would think that lower housing prices would/should result in more people being able to afford to buy a house (esp. first timers). Maybe I should have paid more attention in Economics class!
Falling home value is an incentive for a near-default homeowner to just give up the ghost and stop paying.

Think of it this way: you've been struggling to make ends meet and have paid down 20k in principle, only to find out that your home value has fallen by 50K+. This is especially true for people who are paying PMI and were expecting to have it removed after earning 20% equity.

Combine that with the fact that no one buys a good whose value is falling, and the lack of job security as of late - its UGLY.

IMO, buyers won't really come back to the market until prices stabilize. Even where I live, prices haven't fluctuated as wildly as nationally, but there is a TON of inventory and very few sales - everyone knows prices need to fall further, but homeowners are upside down or faced with losing a lot or all of the equity they had earned - making them very reluctant to reduce.
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Old 02-02-2009, 08:57 AM
 
28,383 posts, read 67,903,744 times
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Just because there is a lot of inventory does NOT automatically mean prices will fall. Unlike many consumer goods that are generally consumed and have some perishable nature, existing homes are pretty much the ultimate "durable good" -- 99% as useful today as after sitting on the shelf indefinitely. If the owners can manage the "carry costs" of taxes, interest and upkeep (and only a SMALL percentage of homes available are foreclosures, though they are dominating sales in some places...) there will not be huge price cuts.

Lack of buyers who trust that they are "buying at the bottom" and sellers who would rather "wait it out than give it away" is the reason for high inventory.
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Old 02-02-2009, 09:02 AM
 
Location: Land of Free Johnson-Weld-2016
6,474 posts, read 13,403,963 times
Reputation: 6404
Quote:
Originally Posted by dirtymartini View Post
I posted this on another forum, but wanted to get some input on this board. a little background...we sold our house over the summer (we bought preconstruction in the mid 90's, never took money out, so we did pretty well) and we are keeping our eyes open for a great deal. We think prices are nowhere near the bottom, though, so we are renting.

----------------------------------------------------

My DH and I have our eye on a house that we saw in mid September with an eviction notice on the front door. We have not walked inside it, but have looked in all the windows (needs lots of work, but is ok it seems) and we know this is the particular neighborhood we would really like to be in. It is STILL not on the MLS. It is going on 5 months now!
...
Do you think the banks are trying to hold onto a lot of debt to get a bigger bailout? Or are they simply swamped and can't keep up? Or do they know if they put everything on the market at once, housing prices will crash all at once? I am looking forward to everyone's insight and opinions on this. thanks!
I think that your presumption may be correct. We're currently renting as well AND somewhat keeping our eyes peeled for the great deals that should have materialized months ago. The banks have a lot of houses, and there is no way in tarnation they will get the "value" of those houses back. IMO,

I tried several months ago to take a look at some REO/Foreclosures, but the banks did not want to sell for my asking prices. There are also lots of big, new single-family houses with NO occupants in my state, but the builders are NOT cutting the prices. I wonder if that's because they got bailout money? Based on personal experience, the bank's ARE cutting prices on their inventory, but not enough. And yes, some places I saw were NOT on the MLS and they are NOT on RealtyTrac, either.

I spoke to at least one bank in my area, and the guy told me they would have a huge loss if they sold the houses for less. This seems to be a big issue with houses that were sold during the "Bubble" and subsequently foreclosed upon. I saw prices in my area go up 300% in a couple of years. No kidding. So even a 50% discount doesn't make much of a dent. Sadly, it seems the banks don't want to (or they cannot) discount for more than that.

I also notice that the new houses that are stitting still have enormous pricetags although most buyers can't afford them. For instance one area builder offered 3.99% on new homes, so I visited their website. The single-family houses cost like 800K. "WTF?", said I. Maybe in Maryland, I'm some dirt-poor anomaly.

I was reading posts by another user who also used to live in MD. I think the person posted that he/she knows ppl who make 20K per month. We do have a lot of Dr's, Lawyers and ppl who are just plain ole rich in MD, so maybe the builders will sell the houses. Most of the ppl I know make way less, though. I also have DR. and Lawyer friends, but they're mostly residents and they make less than I do! Plus they have more debt. I have heard they can earn upwards of 200K per year, though, so I guess they will eventually earn what I consider a lot of money. I'm sure the Obama universal healthcare will fix those salaries, though.


I was a diehard "prices must fall" person, but I see that prices have not fallen very much and I'm not sure if they ever will. Maybe this is God's way of encouraging me to leave the country...
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Old 02-02-2009, 09:20 AM
 
Location: Charlotte, NC
973 posts, read 2,906,029 times
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I was told by a bank representative that one reason some bank-owned properties aren't lowering their prices is because the bank owns several properties in the same neighborhood and they are trying to keep home values stable.
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