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.
By definition there can't be "any truth" to a rumor about a prediction about future events. Yes numerous people have predicted a second leg down in real estate. Numerous people have also predicted the opposite. None of them are right yet, since 2010 hasn't started let alone finished.
As Govt cheese evaporates in first half of 2010, there will go another leg down in prices, unless there is a massive sudden rise of employment, which is remotely possible. The Nov new home sale data is the indication.
While third one is likely to go burst in late 2010, first 2 are expiring soon.
Some people say that the buyers are taking advantage of these programs. Some people say buyers are being taken advantage of these programs.
So funny that the same people of FED who didn't see in housing bubble (per their model of analysis it was all demand and supply and sub-prime is contained), are now selling the whole country to stop the burst.
A real estate crash in 2010 is very unlikely unless we have another major world event and even then, your money would not be safe anywhere because the value of the dollar would drop; period. I know many are going to say I am a real estate agent and I am trying to sell everyone but plain and simple, facts are facts. The way I tell my clients to do it is to look at it this way, we have 5% - 6% interest rates on 30 year loans, home prices at some of the lowest levels ever, and the government giving you $8,000 to buy a home; which can even be used toward your closing costs in desired. When on Earth do you think you are going to get a better deal?
Yeah they tell me that maybe prices will drop some more and I say so! First off it is NOT going to happen! If you think that you are going to get another 20%+ drop, you are on drugs. Even if your home drops 5% or 10% you are going to make up the difference in the mortgage rate savings. For example, most of these first time buyers are sub $300K and MOST are sub $250K. So lets go highest at $300,000. With a 10% drop, you would loose $30K in value. If you purchase at 5% versus 6%, you are still coming out up $38,000 after the life of the loan! People just have to think realistically and then decide if they are purchasing or not. Right now I tell my clients, if you have the money to purchase, there is never going to be a better time, and I am even following my own advice!
A real estate crash in 2010 is very unlikely unless we have another major world event and even then, your money would not be safe anywhere because the value of the dollar would drop; period. I know many are going to say I am a real estate agent and I am trying to sell everyone but plain and simple, facts are facts. The way I tell my clients to do it is to look at it this way, we have 5% - 6% interest rates on 30 year loans, home prices at some of the lowest levels ever, and the government giving you $8,000 to buy a home; which can even be used toward your closing costs in desired. When on Earth do you think you are going to get a better deal?
I have some simple economics questions for you:
(1) if the government pays everyone to buy a house (directly through credit, or indirectly, by manipulating borrowing rates), what happens to house prices ?
(2) let's assume that the government stops doing that (if they never stop doing that, the answer to your question would be, these incentives are here to stay). What happens to house prices when they stop doing that ?
(3) for extra credit, have you ever told anyone, "now is NOT a good time to buy" ? For example, what were you telling prospective buyers in 2006 ?
Quote:
most of these first time buyers are sub $300K and MOST are sub $250K. So lets go highest at $300,000. With a 10% drop, you would loose $30K in value.
Where can you find a house in the NY metro area that is sub 250K ?
Quote:
If you purchase at 5% versus 6%, you are still coming out up $38,000 after the life of the loan!
Are you assuming that rates have no effect on prices ? That's a wrong assumption. Historically, housing is more affordable when rates are higher.
Having stated that, I don't expect a 20% or so drop in prices. I think prices will stagnate for quite a while.
Of course things can possibly slow when incentives are not given but that was already mentioned by me. My argument is with the value being saved. Over the period of a loan, you are still coming out on top. Even if like you said rates are higher and prices are lower, you still end up paying more because prices from pre-2000 are never coming back. Everyone remembers the early 1990s with rates at 12%+. With the economy being where it is now, the best time to buy is now.
As for what I told people in 2006, I knew that this was coming and told many clients about the possible crash, and that was not even my job. Besides anyone who is looking for a home should know they are able to make their own decisions and not make a $250K+ decision based on what their agent says. That would be just foolish and I would like to think that my clients are not dumb and give them more credit than that.
Lastly, as for the $250K price range, that is my most popular client today. I am located in Central NJ and that is actually the most popular price range for all my transactions. Last month I moved three properties and they were $224K, $250K, and a rental worth $275K.
Lastly, as for the $250K price range, that is my most popular client today. I am located in Central NJ and that is actually the most popular price range for all my transactions. Last month I moved three properties and they were $224K, $250K, and a rental worth $275K.
(1) if the government pays everyone to buy a house (directly through credit, or indirectly, by manipulating borrowing rates), what happens to house prices ?
(2) let's assume that the government stops doing that (if they never stop doing that, the answer to your question would be, these incentives are here to stay). What happens to house prices when they stop doing that ?
(3) for extra credit, have you ever told anyone, "now is NOT a good time to buy" ? For example, what were you telling prospective buyers in 2006 ?
Where can you find a house in the NY metro area that is sub 250K ?
Are you assuming that rates have no effect on prices ? That's a wrong assumption. Historically, housing is more affordable when rates are higher.
Having stated that, I don't expect a 20% or so drop in prices. I think prices will stagnate for quite a while.
I dont disagree with anything you are saying, BUT, I think you are leaving out the wildcard. That being inflation. Are we going to keep it tame, as it has been so far, or will it run away from us like it did in the 80s? If we see run away inflation from all this deficit spending, stimulus spending, etc. housing prices may go up dramatically. On the flip side, if we see 20% interest rates to tame the inflation, we may see housing prices drop dramatically, or it could all equal itself out, which would be the goal. All I am trying to say, is we really have no idea what is going to happen in the housing market in the near future because we are still not out of this mess.
Here's another factor: People simply can't afford to buy houses in this area, even after recent drops. I still see 3/2 starter homes in decent towns (not even top-of-the-line towns) being listed at well over $400,000. How is a family with an $80,000 HHI going to afford that? Even $100,000 HHI would be a massive stretch. Not to mention the crazy taxes in most towns.
I'm looking for a house myself, and I'm hoping we have another drop. I don't see how people can keep getting these prices for their houses.
I dont disagree with anything you are saying, BUT, I think you are leaving out the wildcard. That being inflation. Are we going to keep it tame, as it has been so far, or will it run away from us like it did in the 80s? If we see run away inflation from all this deficit spending, stimulus spending, etc. housing prices may go up dramatically. On the flip side, if we see 20% interest rates to tame the inflation, we may see housing prices drop dramatically, or it could all equal itself out, which would be the goal. All I am trying to say, is we really have no idea what is going to happen in the housing market in the near future because we are still not out of this mess.
Inflation is the reason I don't think that nominal prices will drop substantially. I think we'll have mild inflation and that's going to drive a drop in real prices while nominal prices stay about flat.
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.