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I LIKE the way people viewed homes in the 50's and 60's! My husband and I finally got a contract to sell his bachelor pad that we're living in right now and a house to live in for a decade or more and raise the children we hope to have in is exactly what we are looking for! However, we know that we are going into an area where we might not be able to afford the house that we'll want to stay in for that long. So, if it means buying something a little smaller and moving up we're prepared to do it... we are also looking for the best deal we can get but having just sold a house we aren't looking to lowball anyone either. We are looking for houses we can afford if we paid asking price, and if it's worth it we'll pay near asking price for a house if it means we get what we are searching for.
I agree SaraSatin. All this having to move every 2 to 3 years (not because of job changes or relocation, but just because we want bigger and better) and having to have the latest, trendiest look in a brand new house, has really helped fuel the building boom of the past several years. Builders were reacting to what the buyers wanted. Now we've got this huge oversupply of housing inventory, and a housing slump that's not easily remedied.
I agree that the way we viewed our houses in the 50's & 60's - as a permanent place to live and a long term investment - was really financially healthier. Housing prices were very stable by comparison to the past decade. And most working families were able to afford a home (on one salary, even) and it wasn't so much about "glitz" but about having a functional home that provided security for the family. I think it was awesome that my mom was able to be a stay-at-home mom, and that we only moved once while I was a kid. Now, most families have to have 2 incomes to afford a home, and even then it's a real struggle for first-time homebuyers to enter the housing market.
And, keep in mind, the price you sell for and the price you buy for parrellel each other. So if you're selling now and have to drop your price to get your home sold, chances are you'll get a bargain when you buy. And vice versa. If you make a bundle on the sale, you'll probably pay a premium price when you go to purchase. It's really the first-time homebuyer who gets hurt when prices climb. The only bright spot in this declining housing market is that maybe more first-time homebuyers will be able to purchase a home.
Sure it should by the very definition of the word.
"Investment:
An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.
Notes:
The building of a factory used to produce goods and the investment one makes by going to college or university are both examples of investments in the economic sense. In the financial sense investments include the purchase of bonds, stocks or real estate property"
I don't know what market you've been seeing but historically real estate does provide a ROI. Maybe not the same as a t-bill but you can't live in a t-bill and you can't leverage them as well either.
Jim, a home IS a financial investment. It does provide a ROI. No one is disputing that. What we are disputing is whether a home is a good or bad financial investment. Its not.
Again, if you look historically, homes on average have appreciated historically 3-4% YOY. Those are the facts. Basically the financial return is the same as T-Bills. Appreciation rates greater than that over the long term will put you in a bubble situation (small or large).
Check out exibit 5 on this study by fidelity/harvard....I don't make this up.
I agree SaraSatin. All this having to move every 2 to 3 years (not because of job changes or relocation, but just because we want bigger and better) and having to have the latest, trendiest look in a brand new house, has really helped fuel the building boom of the past several years. Builders were reacting to what the buyers wanted. Now we've got this huge oversupply of housing inventory, and a housing slump that's not easily remedied.
I agree that the way we viewed our houses in the 50's & 60's - as a permanent place to live and a long term investment - was really financially healthier. Housing prices were very stable by comparison to the past decade. And most working families were able to afford a home (on one salary, even) and it wasn't so much about "glitz" but about having a functional home that provided security for the family. I think it was awesome that my mom was able to be a stay-at-home mom, and that we only moved once while I was a kid. Now, most families have to have 2 incomes to afford a home, and even then it's a real struggle for first-time homebuyers to enter the housing market.
Those years were also the time when companies treated you like an employee for life, you had pensions,medical and everything else that went along with that mentality.
I think when employers started treating everyone like "temps" and "chattle" and you started seeing more mass layoffs and "downsizing" as well as frequent relo's is when you really started to see the shift to only staying in a house a few years. I think that once the public realized their traditional anchors to a place were gone and how easy it has been to just up and move the cycle started.
Again, if you look historically, homes on average have appreciated historically 3-4% YOY. Those are the facts. Basically the financial return is the same as T-Bills. Appreciation rates greater than that over the long term will put you in a bubble situation (small or large).
Agreed. People pay for homes with salaries. The housing market relies on first time buyers without trade-up equity. Basic economics REQUIRE the price of houses to track wage inflation closely. They cannot offer a greater return for any length of time.
And don't forget that the listed appreciation DOES NOT include the vast amounts of money people put into their homes in maintenance.
Why do all buyers or people in general think that because you're selling in this market you're in some type of distress and deserve to get lowball offers? Sorry, but I didn't buy in a bubble market. I bought a house I could afford, I have great credit and I put 20% down. I just happen to hate the area that I relocated to and I want to sell. Does this mean I deserve to be insulted and sometimes disrespected by buyers? My home is already priced below what it's worth and I will be taking a financial loss because I put 20% down and will get only half of that money back because I've priced it to sell in this sh@#$ market. My peace of mind is what's important to me right now and I'll chuck that $30K loss as the price I have to pay for my mistake of not thoroughly researching the area that I moved to. I hope all of those people pointing fingers and dancing around cheering about other people's misfortune and bad mistakes never have to face what most sellers are facing now.
Talk2u sellers were more than happy to run the price up 15% a year in some markets, no one was complaining then...this correction while bad for some is good in general, spending as large portion of your income on a mortgage payment for an over priced house is not good for the owner or the economy...this is long overdue, and will be sever because it was put off for so long...yes you lost some money on this home, but now you're a buyer, will you offer the next seller a premium if they are in the same situation?
Why do all buyers or people in general think that because you're selling in this market you're in some type of distress and deserve to get lowball offers? Sorry, but I didn't buy in a bubble market. I bought a house I could afford, I have great credit and I put 20% down. I just happen to hate the area that I relocated to and I want to sell. Does this mean I deserve to be insulted and sometimes disrespected by buyers? My home is already priced below what it's worth and I will be taking a financial loss because I put 20% down and will get only half of that money back because I've priced it to sell in this sh@#$ market. My peace of mind is what's important to me right now and I'll chuck that $30K loss as the price I have to pay for my mistake of not thoroughly researching the area that I moved to. I hope all of those people pointing fingers and dancing around cheering about other people's misfortune and bad mistakes never have to face what most sellers are facing now.
You can't really blame them for trying though, can you?
monkeyboy: I haven't sold my home, yet but when I do I'm not going to submit lowball offers to sellers just because I think I can. If I research the comps and the selling price seems right, I may ask for some closing help or something, but I wouldn't dare submit a low offer unless the house was overpriced to begin with.
I didn't run up anything...I only did what the market was dictating at the time being a seller during the boom. I sold two properties at the height of the market and I gave both of my buyers closing help when I didn't have to...I was going through bidding wars on both. I agree the market needs to be corrected and I'm not complaining about that. Hopefully, I will benefit when it comes time for me to buy. However, I certainly won't be buying with an attitude and an expectation that every seller must be in distress so I'm going to take advantage of them. The fact is people bought homes because they wanted to, not because they had to. Sellers during the boom shouldn't be blamed because they made a profit. I just want my house sold so if I have to dam#-near give it away in order to move on with my life...so be it. Just don't keep lumping me in the same category as people who bought houses they couldn't afford to begin with and are now losing them. That's all I'm saying.
I didn't run up anything...I only did what the market was dictating at the time being a seller during the boom. QUOTE]
Translation: "I hosed buyers at the peak and have no qualms about it. Now that I'm selling I want my cake and eat it too."
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