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Old 05-18-2018, 09:10 AM
 
10,291 posts, read 6,565,131 times
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Quote:
Originally Posted by MinivanDriver View Post
I'm not one to say "This time is different." But it is really important to realize what is driving this surge as opposed to the last one. What was driving the last spike in prices was speculation based on easy credit.

Meanwhile, what is driving this spike in prices is lack of inventory.
Last time it was loans given to people who's income would not qualify them to make payments on a mortgage. Wall street was selling these bad loans as secure investments. When people stopped paying and defaulted that was the start of the beginning. The Obama administration put in the Dodd Frank act that puts in regulations to financial institutions. It's annoying to the consumer too because if you deposited $100 the bank wants to know where that money is coming from as well as a $10 rebate check if you are applying for a mortgage.

trump wants looser rules that will make a housing crash more likely to happen http://thehill.com/policy/finance/36...frank-overhaul

It's not people buying houses or paying too much that causes a housing crash. It's banks lending money to people who will foreclose on those loans or wall street selling risky loans as secure.

There are also other reasons. building has started up again in many areas. If you overpaid in an area with a lot of land still available to build and you paid $400K for 25 year old home and they can build new ones for $300k that will cause prices to drop in an area.

Places like Manhattan and LA and San Francisco where people want to live and there in not much building going on or room to build will always bounce back as it has and increased, and always be the first to bounce back and not lose that much in the first place.

The bubble bursts when excessive risk-taking becomes pervasive throughout the housing system. This happens while the supply of housing is still increasing. In other words, demand decreases while supply increases, resulting in a fall in prices. https://www.investopedia.com/article...ing_bubble.asp

Last edited by LifeIsGood01; 05-18-2018 at 09:18 AM..
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Old 05-18-2018, 10:58 AM
 
Location: The Berk in Denver, CO USA
13,178 posts, read 18,835,447 times
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Quote:
Originally Posted by RosemaryT View Post
Are prices going to drop off a cliff soon?
Yes.
The problem is: when is soon?
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Old 05-18-2018, 11:51 AM
 
10,291 posts, read 6,565,131 times
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Quote:
Originally Posted by davebarnes View Post
Yes.
The problem is: when is soon?
In terms of the Universe soon is 1000 years.
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Old 05-18-2018, 11:59 AM
 
218 posts, read 70,482 times
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Off a cliff? Not likely, though not impossible, either. Qualification requirements make sense once again. Perhaps a bit too rigorous if my current experience is typical.

Six weeks ago we purchases a house for cash as a primary residence. We are making some substantial modifications and I decided to apply for a HELOC. The amount requested was roughly a quarter of the purchase price. We were quickly "approved" after a credit check (that's another story) and began complying with the bank's requirements.

Five weeks into this we've supplied two "final" requests and now hear it will be several days before final approval. Fortunately we have the means to proceed without the bank's money.

I can't imagine what they'd require if we wanted a purchase mortgage of 80 or 90%!

I'm wondering what will be requested once we have our "final" approval. It never ends.
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Old 05-18-2018, 12:03 PM
 
10,291 posts, read 6,565,131 times
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Quote:
Originally Posted by SFSGood View Post
Off a cliff? Not likely, though not impossible, either. Qualification requirements make sense once again. Perhaps a bit too rigorous if my current experience is typical.

Six weeks ago we purchases a house for cash as a primary residence. We are making some substantial modifications and I decided to apply for a HELOC. The amount requested was roughly a quarter of the purchase price. We were quickly "approved" after a credit check (that's another story) and began complying with the bank's requirements.

Five weeks into this we've supplied two "final" requests and now hear it will be several days before final approval. Fortunately we have the means to proceed without the bank's money.

I can't imagine what they'd require if we wanted a purchase mortgage of 80 or 90%!

I'm wondering what will be requested once we have our "final" approval. It never ends.
People who say lending has loosened up are just imagining things that they have not gone thru. No one is getting approved to buy a $300K home working a minimum wage job. Or the I heard from a friend who heard from a friend that loans are given out like lollipops at the bank. Next time America has to put these crooked CEOs in jail when they start committing fraud that hurts the economy and people's property value and stop bailing them out because they have nothing to lose.
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Old 05-18-2018, 12:32 PM
 
Location: California
1,134 posts, read 967,736 times
Reputation: 2060
People donít undersyand the supply/demand dynamic. Someone was talking about people wanting upgraded houses. Thatís fiction. The biggest shortage is in starter homes.

I recently walked my area on a weekend and there were 3 house for sale in a 10 block radius encompssing hundreds of houses.

People are just not selling, builders are not building. The people are not bidding up because they are hysterical. They are bidding up because there is no other houses for sale and the alternative is renting.

Of course, this is not going to last forever.
But being too early is the same as being wrong.

I have been hearing the bubble talk since 2013. Meanwhile, my house is up 35% on assessed value since then. As a result, I was able to refi at 3.375% fixed 30 year. If I had listened back then, I would have missed out on good rates and some paper equity that, although worthless, is better than a paper loss

People always anchor to the last crash. You realize the last crash was the exception in magnitude, not the rule. The chances of you buying prime CA real estate for $300k in 3 years are tiny
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Old 05-18-2018, 12:57 PM
 
126 posts, read 41,826 times
Reputation: 302
Quote:
Originally Posted by LifeIsGood01 View Post
People who say lending has loosened up are just imagining things that they have not gone thru. No one is getting approved to buy a $300K home working a minimum wage job. Or the I heard from a friend who heard from a friend that loans are given out like lollipops at the bank. Next time America has to put these crooked CEOs in jail when they start committing fraud that hurts the economy and people's property value and stop bailing them out because they have nothing to lose.
Lending HAS loosened up, whether you want to admit that fact or not. Itís a warning sign.
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Old 05-18-2018, 01:04 PM
Status: "It's winter!" (set 12 hours ago)
 
7,911 posts, read 10,200,903 times
Reputation: 11514
Quote:
Originally Posted by BoBromhal View Post
this is completely wrong. I don't know a single state that doesn't have some period of time for a Buyer to walk away, whether they get earnest money or not.

And in many places, an asking price might be a little LOW, in order to generate additional interest.
No, not at all, to generate a bidding war, which the Sellers Agents loves. The house gets overvalued. Bidding wars are psychological warfare, plain and simple.

Last edited by Nanny Goat; 05-18-2018 at 01:13 PM..
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Old 05-18-2018, 02:28 PM
 
Location: Cary, NC
31,693 posts, read 55,531,149 times
Reputation: 30271
Quote:
Originally Posted by Nanny Goat View Post
No, not at all, to generate a bidding war, which the Sellers Agents loves. The house gets overvalued. Bidding wars are psychological warfare, plain and simple.
There is no such thing as a bidding war.
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Old 05-18-2018, 03:03 PM
 
Location: California
1,134 posts, read 967,736 times
Reputation: 2060
Quote:
Originally Posted by MikeJaquish View Post
There is no such thing as a bidding war.
Can you elaborate?
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