Home prices - Check out todays paper (short sale, real estate)

[caliguy92832]

I was looking at this mornings Register, the Tuesday May 20 one, and under Marketplace is has home sale info for every zip code in OC. Where I live, the 92832 zip code, in April - 8 houses were sold for a median price of $435,000. But thats 25% lower compared to last year.

[Donn2390]

Are you moving soon? If you're not selling, you house hasn't depreciated any. There are always up and down cycles. Today we're in a down cycle, in a couple of years we will be in an up cycle. The only people affected are those people who are selling. If you are in a position that you have to sell, it's not a good time for you, but if you don't need to sell, hang on, the market will be back. Nothing to get too excited about.

[Humanoid]

the market will be back.

The market of the last 5 years won't be back any time soon.

Anyhow, housing down cycles usually last at least 5 years, but can last much longer. The down cycle in the 90's was 6 years.

When the collapse in the housing market is finished, it will take a very long time for prices to go back to those seen in the peak of the housing bubble (2005~2006 prices).

[Donn2390]

Originally Posted by Humanoid

The market of the last 5 years won't be back any time soon.

Anyhow, housing down cycles usually last at least 5 years, but can last much longer. The down cycle in the 90's was 6 years.

When the collapse in the housing market is finished, it will take a very long time for prices to go back to those seen in the peak of the housing bubble (2005~2006 prices).

and I repeat..... If you're not planning on selling, it doesn't matter. I purchased a new home in YL in '89, and then watched the value plummet in the 90's. I owed more than the house was worth for several years. I wasn't worried, because I had no plans on going any where. When I finally sold it 16 years later, I walked away with over half a mil profit. You will never lose money on California RE, unless you are forced to move during a down cycle.

[kturbe]

Make sure to understand what Median home prices mean. It means they take all the sales and the median is the middle price point between the high price and the low price. Since a limited number of people could qualify for the higher priced homes, of course the low end homes are what is selling.

Now that FHA has increased the loan amount we will see more loans at higher levels getting approved.

[Soccersupporter]

Originally Posted by kturbe

Make sure to understand what Median home prices mean. It means they take all the sales and the median is the middle price point between the high price and the low price. Since a limited number of people could qualify for the higher priced homes, of course the low end homes are what is selling.

Now that FHA has increased the loan amount we will see more loans at higher levels getting approved.

That median price usually includes condos, townhomes, patio homes, etc. In CA that can make a big difference. In CA a condo is always an option for first time home buyers. In many other states it is really only a last resort option.

[EscapeCalifornia]

Originally Posted by Soccersupporter

That median price usually includes condos, townhomes, patio homes, etc. In CA that can make a big difference. In CA a condo is always an option for first time home buyers. In many other states it is really only a last resort option.

The median also includes a lot of garbage that isn't habitable unless you're an illegal. In OC, anyone who cares for their safety and their property doesn't look at anything below the median for the most part.

[CA4Now]

Originally Posted by Donn2390

You will never lose money on California RE, unless you are forced to move during a down cycle.

However, not everyone always knows when a down cycle is occurring. Often it looks like a temporary decline or just a stabilizing of prices.

I do agree with the poster who said that we won't see a market like the last five years any time soon.

[Humanoid]

and I repeat..... If you're not planning on selling, it doesn't matter. I purchased a new home in YL in '89, and then watched the value plummet in the 90's. I owed more than the house was worth for several years. I wasn't worried, because I had no plans on going any where. When I finally sold it 16 years later, I walked away with over half a mil profit.

So you sold at a good time, not everyone can do this. In fact most can't. In the real world people have to sale their houses all the time and if the down market is prolonged then many people will be effected. But people that bought years ago aren't effected as much, if they didn't cash out they are unlikely to be underwater even after the housing market bottoms. But many people are going to realize a loss in some fashion or another, for example:

- Anybody that took out HELOCs or cashed out even amounts that seemed modest compared to their house's current "value" will not be able to move up as they are either underwater or have little equity. I've seen many families that bought 10 years ago when their families were small and now want to move up to a bigger place but can't. Likewise for people that live in neighborhoods that have gone down hill.

The people that are going to be effected the most are people that bought a home at bubble prices. This housing bubble was much greater than the previous one and will take much longer for prices to return to their bubble prices. Even if these people don't sell until the price is back up, they will realize a loss each month when they pay their mortgage.

[Axiom]

Originally Posted by Donn2390

You will never lose money on California RE, unless you are forced to move during a down cycle.

2. Or you bought at the height of the bubble.
Even if things stabilize and/or start to appreciate again tomorrow, plenty of folks are still going to lose money (even if the market is not declining) or they are going to be trapped for what could be a very long time waiting to not lose money on California RE

3. Or you overextended to get into an obscenely overpriced house, ala standard operating procedure in CA, because... hey, you better get in now or be priced out forever; after all, you'll never lose money on CA real estate. Even if you can't legitimately afford it now, appreciation will bail you out. California RE is special you know.

4. Or you bought within accepted DTI ratios, with 20% down, etc. but got lured into the HELOC cycle.
I saw a house just the other day purchased in 1999 for just over $200,000 that is now listed at half a million dollars... as a short sale.


Granted, none of the above are astute financial moves as far as I'm concerned. But I'm sure they all bought into the "You will never lose money on California RE, unless you are forced to move during a down cycle" bit.

Wasn't the old rule of thumb that you would probably be OK as long as you planned to hold onto a house for 3 years? Then I started seeing 5 years, or even 10 years.

I'm thinking folks who bought in many parts of CA in the last couple of years had better plan on at least 10 years, and that's assuming they bought conservatively enough to be able to hold on that long.
Looked at the income vs. housing price numbers lately?