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Old 03-06-2008, 11:35 AM
 
Location: Halfway between Number 4 Privet Drive and Forks, WA
1,516 posts, read 4,127,667 times
Reputation: 650

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After reading that article from CNN (Home Equity dips below 50%), it got me thinking and wondering about the state our country is in with the housing mess...and the fact I'm a thirty something and never been witness to anything like this in history...

I do not proclaim to be a doom and gloomer, although my husband accuses me of it, but I like to consider myself a realist and I don't like looking at things with rose colored glasses, either, but...

With the steep declines in house prices, and the fact it will affect everyone (even those not trying to sell), what do you think the Americans will do that aren't having to sell? What I mean by that, is one day they wake up and realize the home they spent $400k on is now worth $200k. They've lost their down payments, all equity, etc, etc. Do you think these people will stay in a dwindling asset or do you think they'll walk away? What would be their incentives to stay (other than not ruining their credit and having a roof over their heads?)

I mean, when their neighbors identical house gets foreclosed and joe blow buys it for 1/3 of what they paid for their own, how will that start affecting these high end subdivisions and other residents there?

It scares me to think of people taking the easy way out, but I'm afraid alot of people just don't care and don't think much about the responsibilities they've taken on in homeownership.

My mind is somewhere off on a tangent today and then it snowballs and keeps on going with these crazy thoughts...
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Old 03-06-2008, 12:25 PM
 
Location: Wouldn't you like to know?
9,113 posts, read 15,302,942 times
Reputation: 3661
Quote:
Originally Posted by leavingbyron View Post
After reading that article from CNN (Home Equity dips below 50%), it got me thinking and wondering about the state our country is in with the housing mess...and the fact I'm a thirty something and never been witness to anything like this in history...

I do not proclaim to be a doom and gloomer, although my husband accuses me of it, but I like to consider myself a realist and I don't like looking at things with rose colored glasses, either, but...

With the steep declines in house prices, and the fact it will affect everyone (even those not trying to sell), what do you think the Americans will do that aren't having to sell? What I mean by that, is one day they wake up and realize the home they spent $400k on is now worth $200k. They've lost their down payments, all equity, etc, etc. Do you think these people will stay in a dwindling asset or do you think they'll walk away? What would be their incentives to stay (other than not ruining their credit and having a roof over their heads?)

I mean, when their neighbors identical house gets foreclosed and joe blow buys it for 1/3 of what they paid for their own, how will that start affecting these high end subdivisions and other residents there?

It scares me to think of people taking the easy way out, but I'm afraid alot of people just don't care and don't think much about the responsibilities they've taken on in homeownership.

My mind is somewhere off on a tangent today and then it snowballs and keeps on going with these crazy thoughts...
lb, I wonder that also, but since I don't plan to move for at least 10 years I'm not too concerned to be honest w/you. I realize that if I do move in the short term, I will take a big hit when you factor commissions and closing costs.


I'm a bear right now on short term RE, however I do realize that some day things will start to stabilize around the country. Its inevitable. What worries me more than home prices (they will continue to go down), is INTEREST RATES. This is the scary part. They've been at historical lows for the past several years. God forbid they go up to 8-9%. It will just make things waaay more ugly than they are now.

just my 2 sense...
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Old 03-06-2008, 01:34 PM
 
Location: Arizona
180 posts, read 580,638 times
Reputation: 46
Quote:
Originally Posted by leavingbyron View Post
...Do you think these people will stay in a dwindling asset or do you think they'll walk away? What would be their incentives to stay (other than not ruining their credit and having a roof over their heads?)...
Most people will stay. However more people will consider walking away. The more that do the more problem gets worse. Unfortuantly you only need 1 in 10 to walk away to have a negative impact on the neighborhood.

The biggest issue is how the affects jobs. It already hurts construction jobs, but as it starts to impact consumer spending and overall jobs that will be the big issue. If everyone feels like they are poor or could be poor very easily they won't spend money. That in turns slows down the economy and cuts jobs. Combine low house values, low or non-existant equity and the inability to sell in a reasonble time and this could get very nasty.


If the jobs hold out the damage will be long term, but manageble.
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Old 03-06-2008, 03:54 PM
 
339 posts, read 1,350,547 times
Reputation: 239
When thinking about what is going on and what will happen, I think there are so many factors at play right now that one could write a thick book just to try and explain the big picture of what is happening.

Regardless of what happens in the more immediate future, there is a possibility we will see a major shift in American living. I tend to see the logic in some of the articles I've read that say McMansions will be a passing fad with utility costs and gas getting more expensive. With this we may see a shift to more urban living closer to jobs. Also people, whether suburban or urban, will probably learn to live in smaller spaces. However, this shift would take a long time to play out. Personally, I think it will be interesting to see how the typical American lives 20 years from now.

Whatever does happen, there may be a possibility that the 20-, 30-, and some 40-somethings may learn a very hard lesson about what some of the older generations knew about cutting back expenses and saving to buy rather than buying on credit. With any luck maybe people will be able to start seeing through the mass consumer advertising and make better financial decisions that are in their best interest rather than in the best interest of the greedy credit companies.
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Old 03-06-2008, 05:04 PM
 
Location: Houston, Texas
469 posts, read 1,322,295 times
Reputation: 295
Quote:
Originally Posted by leavingbyron View Post
After reading that article from CNN (Home Equity dips below 50%), it got me thinking and wondering about the state our country is in with the housing mess...and the fact I'm a thirty something and never been witness to anything like this in history...

I do not proclaim to be a doom and gloomer, although my husband accuses me of it, but I like to consider myself a realist and I don't like looking at things with rose colored glasses, either, but...

With the steep declines in house prices, and the fact it will affect everyone (even those not trying to sell), what do you think the Americans will do that aren't having to sell? What I mean by that, is one day they wake up and realize the home they spent $400k on is now worth $200k. They've lost their down payments, all equity, etc, etc. Do you think these people will stay in a dwindling asset or do you think they'll walk away? What would be their incentives to stay (other than not ruining their credit and having a roof over their heads?)

I mean, when their neighbors identical house gets foreclosed and joe blow buys it for 1/3 of what they paid for their own, how will that start affecting these high end subdivisions and other residents there?

It scares me to think of people taking the easy way out, but I'm afraid alot of people just don't care and don't think much about the responsibilities they've taken on in homeownership.

My mind is somewhere off on a tangent today and then it snowballs and keeps on going with these crazy thoughts...
1. First of all only a few isolated spots have real estate that has gone done even close to 50%.
2. Second many parts of the country have not had a decline in prices at all, a substantial number have increase in prices, and two had nearly double digit gains through 2007.
3. When we finish working through the foreclosures over the next nine months things will stabilize. You will not see housing just plummet people have to have a place to live.
4. I have never seen a home sell even at auction for less than 60% of its as is value.
5. You are a doom and gloomer. It is bad right now and it will get worse until october. You will see things stabilize in the second quarter of 2009.
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Old 03-06-2008, 05:38 PM
 
947 posts, read 2,783,140 times
Reputation: 721
Quote:
Originally Posted by jaindow View Post
When thinking about what is going on and what will happen, I think there are so many factors at play right now that one could write a thick book just to try and explain the big picture of what is happening.

Regardless of what happens in the more immediate future, there is a possibility we will see a major shift in American living. I tend to see the logic in some of the articles I've read that say McMansions will be a passing fad with utility costs and gas getting more expensive. With this we may see a shift to more urban living closer to jobs. Also people, whether suburban or urban, will probably learn to live in smaller spaces. However, this shift would take a long time to play out. Personally, I think it will be interesting to see how the typical American lives 20 years from now.

Whatever does happen, there may be a possibility that the 20-, 30-, and some 40-somethings may learn a very hard lesson about what some of the older generations knew about cutting back expenses and saving to buy rather than buying on credit. With any luck maybe people will be able to start seeing through the mass consumer advertising and make better financial decisions that are in their best interest rather than in the best interest of the greedy credit companies.
I was thinking along the same lines but didn't know how to write it. Well put.
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Old 03-06-2008, 06:52 PM
 
Location: Wouldn't you like to know?
9,113 posts, read 15,302,942 times
Reputation: 3661
Quote:
Originally Posted by Jamesww View Post
2. Second many parts of the country have not had a decline in prices at all, a substantial number have increase in prices, and two had nearly double digit gains through 2007..
Nonsense. Who are you? Larry Yun talking to the mortgage industry?


Cumberland, West Virginia w/a population of 45 doesn't count....



Quote:
Originally Posted by Jamesww View Post
3. When we finish working through the foreclosures over the next nine months things will stabilize. You will not see housing just plummet people have to have a place to live...
Funny you don't mention who's going to erase all that record amounts of inventory around the country. Oh yeah, its all that "pent up demand" that Dick and Larry constantly hang their hat on....News flash, you need to be qualified to buy. Many today are having a difficult time of it.

Just because the major wave of sub-primes will reset by the end of '08 doesn't mean we will be out of the woods in terms of foreclosures..


Quote:
Originally Posted by Jamesww View Post
4. I have never seen a home sell even at auction for less than 60% of its as is value...
I can give you some examples from California....

Quote:
Originally Posted by Jamesww View Post
5. You are a doom and gloomer. It is bad right now and it will get worse until october. You will see things stabilize in the second quarter of 2009.
Labeling people "doom and gloomers" is a classic defense of people who don't have an argument to the data put forth. Its more about being realistic which some people can't or have major difficulty grasping. Hey, I give you credit at least, Dick and Larry think things will notably be better the 2nd half of '08....
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Old 03-06-2008, 07:22 PM
 
Location: Halfway between Number 4 Privet Drive and Forks, WA
1,516 posts, read 4,127,667 times
Reputation: 650
Quote:
You are a doom and gloomer. It is bad right now and it will get worse until october. You will see things stabilize in the second quarter of 2009.
No, I promise you, I am not a doomer, not even close. Am trying to be optimistic about the market, there's got to be a silver lining in this cloud for the average American homeowner, not just the investors...
I have a house to sell, afterall....

And I think you were too quick to call me that, but I did enjoy your positive speculation about the market and where it's going.

I appreciate everyones thoughts on it, so thanks ya'll for replying!
(And special thanks to you, CJ...)
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Old 03-06-2008, 07:52 PM
 
25,832 posts, read 49,727,953 times
Reputation: 19286
I think we will look back and remember this as the greatest buyer's market in years...

My neighbor bought his home in 1933 and it was Bank Owned then... He told me there were several Bank Owned homes on every block and all he had to do was pick one out... He said, all the bank was looking for was someone with a job to start making payments...

Back then, it seems if you had a job, you were OK... Unlike today where many people loosing their homes have good jobs but are in over their heads.

Anyway, the SF Bay Area still has hot spots with multiple offers being made. These are upper end neighborhoods with the BEST public schools...

I can also show you block after block of new Central Valley subdivisions with many if not 100's of Bank Owned Property...

Oakland Flat Lands has many Bank Owned Homes... not too many in the Oakland Hills though.

I guess it still comes down to Location, Location, Location.
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Old 03-06-2008, 10:16 PM
 
Location: Raleigh, NC
9,043 posts, read 11,327,015 times
Reputation: 1383
There are going to be massive mortgage write downs.

Nothing the government does will prevent housing prices from falling nationwide, although they are going to make a good run at trying. The only solution is to inflate the money supply so much that your house is still worth $300K, but it takes $3-5K to fill your fridge.

I've got skin in the game myself, and I feel like a sucker for putting money down as I won't have as much of an incentive to request a mortgage writedown when my property value falls by 30-50% in the supposedly invincible Raleigh area.
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