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Old 05-18-2014, 09:14 PM
 
18,464 posts, read 20,242,301 times
Reputation: 27041

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Quote:
Originally Posted by tommy64 View Post
The banks don't need anymore distressed properties on their books, that'd rather opt out of a lot of these deals than do 'em and have them default. That's why they're stingy, and god bless 'em for it.

Mr Normal Buyer will have to deal with the rental market until the mess is absorbed.

This is good for the market because it keeps people out who aren't financially solid enough to buy, and cash buyers are at least doing something to make the properties move.

My big question is how long will it take for the market to adjust to what the average wage earner can afford? Will they be locked into renting forever? What will household formation mean to the "Gen-Y" generation?

If the average person can't get financed to buy in this market, at these mortgage rates, when will they ever?
God bless them for it?
Banks waited. They had changed the normal process of foreclosure because otherwise they would been selling houses for pennies on the dollar. And you know what? That would be freaking great. High house prices are NOT GOOD. The few people who want high house prices have a self interest in that. Banks want high loans because it either wipes a bad loan or gets the buyer on the hook a long time, realtors like it because they get higher commissions, and governments like it because it means higher property taxes. People buy into the its your money take that equity and spend it mantra. Banks strung people along squeezing every last dime out of them with bs loan mods knowing full well that people will still,lose out. And those people who got a loan mod are still hurting.

Gen y can barely pay their student loans and moved in with mom and dad because they can't afford rent. Those people won't be buying anytime soon if ever. Forever renters could be the new name for those people.
Those people would be the normal first time buyers. But the prices are so high because of manipulation the first time buyer is not there. And since he is nit there the move up buyer isn't there either. Because both of them can't buy. Because they are all getting priced out.

Btw how long do you think the low rates will go on? We've been artificially holding them down for 5 years now. Indefinite QE like Japan? The fed is not the end all be all of keeping interest rates down. Wait and see what happens to the housing market if the interest rates start going up. Not too long ago we went up .5 % and the market responded by pretty much shutting down. Loan mod/origination hit a brick wall. And if you don't have loan mod/originations you don't have a healthy market.


This market will collapse. You can't have these inflated prices or the way try are climbing. I looked at this house two years ago. I missed it by a few days. 500k asking price. The house next door is now asking 850k. This is less than two years. NO house goes up in value that fast that much without market manipulation. And that's what we have now.
You can't sit there and say this is a normal market. Its so manipulated its a joke. You really think house prices will climb forever? Were already close to bubble prices in some areas.

That's why I'm waiting. Lots of people are waiting. Done. Were burned and will just rent. Let the LL have the headaches


20 million U.S. families could buy homes, but don

Last edited by Electrician4you; 05-18-2014 at 09:28 PM..
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Old 05-18-2014, 11:17 PM
GLS
 
1,985 posts, read 4,850,431 times
Reputation: 2408
Quote:
Originally Posted by anifani821 View Post
.....................How did we do it? We bought starter houses, fixer uppers or something old and small.

How many folks do you know who are willing to purchase the same types of properties we all bought when we were starting out?
I wish your posts were required reading for young home buyers! My wife LOVES watching HGTV, especially "House Hunters", and "Property Virgins". Every time I hear the prospective buyers say, "I have to have granite!" or "What no stainless steel appliances", I pour myself another scotch. Twenty two year olds with budgets of $300 to $400 thousand, complaining because their first house is only 2500 square feet, and doesn't have two sinks in their on-suite bathroom.

......and another thing. Where did the trend start that a couple simply HAD TO buy a
house BEFORE they got married???? Many of the people on these shows are getting ready to take out a HUGE mortgage and spend $50,000 on a wedding a month later.

I guess I shouldn't complain. My wife enjoys the show...and she buys me single malt scotch to watch it with her.
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Old 05-19-2014, 12:48 AM
 
Location: Pac. NW
2,022 posts, read 1,527,150 times
Reputation: 3601
Quote:
Originally Posted by Electrician4you View Post
God bless them for it?
Banks waited. They had changed the normal process of foreclosure because otherwise they would been selling houses for pennies on the dollar. And you know what? That would be freaking great. High house prices are NOT GOOD. The few people who want high house prices have a self interest in that. Banks want high loans because it either wipes a bad loan or gets the buyer on the hook a long time, realtors like it because they get higher commissions, and governments like it because it means higher property taxes. People buy into the its your money take that equity and spend it mantra. Banks strung people along squeezing every last dime out of them with bs loan mods knowing full well that people will still,lose out. And those people who got a loan mod are still hurting.

Gen y can barely pay their student loans and moved in with mom and dad because they can't afford rent. Those people won't be buying anytime soon if ever. Forever renters could be the new name for those people.
Those people would be the normal first time buyers. But the prices are so high because of manipulation the first time buyer is not there. And since he is nit there the move up buyer isn't there either. Because both of them can't buy. Because they are all getting priced out.

Btw how long do you think the low rates will go on? We've been artificially holding them down for 5 years now. Indefinite QE like Japan? The fed is not the end all be all of keeping interest rates down. Wait and see what happens to the housing market if the interest rates start going up. Not too long ago we went up .5 % and the market responded by pretty much shutting down. Loan mod/origination hit a brick wall. And if you don't have loan mod/originations you don't have a healthy market.


This market will collapse. You can't have these inflated prices or the way try are climbing. I looked at this house two years ago. I missed it by a few days. 500k asking price. The house next door is now asking 850k. This is less than two years. NO house goes up in value that fast that much without market manipulation. And that's what we have now.
You can't sit there and say this is a normal market. Its so manipulated its a joke. You really think house prices will climb forever? Were already close to bubble prices in some areas.

That's why I'm waiting. Lots of people are waiting. Done. Were burned and will just rent. Let the LL have the headaches


20 million U.S. families could buy homes, but don
I disagree that home prices are high or are manipulated in some way. Prices are still low. It's true that the best deals post-recession are gone, but we're a long way from the highs of '07-'08.

Prices have in fact soared in the last 2 years, but I attribute that to what the crash did to home values. I'd estimate that housing fell 50% or more from the high at that time, what we're seeing now is merely an upward correction. (The same thing happened to the stock market, but that's another discussion).

The problem is that no one can get financing, or the loan is disqualified over inspection issues or doesn't appraise.

Low rates will continue, as will QE. The Fed will continue to keep the ship from sinking - it has a duty to do what is necessary to protect our economy.

God Bless the banks for not loaning money for shaky deals. High lending standards are long overdue.

Do I think house prices will climb forever? I don't care if they do or don't. I'll either rent them out or sell them, depending on what the market tells me they're worth at any given time, although I would like to hold 'em forever - the tax bennies are great. And the low rates (ranging from 3.875% to 4%) are the best hedge against inflation anyone could possibly hope for.

If the market does collapse as you predict, that's fine. I'm prepared and know that if I make it through that storm I'll come out the other side stronger for it. It wasn't that long ago that people were panicking over the recession, but we seem to have gotten traction and are steadily but slowly pulling out of it, as we always have in this country.

Wouldn't you agree that in spite of the problems, we've come a long way in the last 5 years? To listen to the doom-sayers from the darkest hour of the recession you'd have thought that today we'd all be standing in bread lines.

Hopefully I'm not too naive for my own good, but I think there's more upside here than anything else.
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Old 05-19-2014, 03:10 AM
 
71,854 posts, read 71,919,037 times
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markets control where prices go ,not the fed. if the fed controlled where home prices went we wouldn't be in this mess. low rates would have pulled us out of this slump if it were true.

in fact rising rates mean the economy is doing better. best home appreciation has been in the 6-7% mortgage interest range. that is when most are back to work and the economy is humming.

Last edited by mathjak107; 05-19-2014 at 04:16 AM..
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Old 05-19-2014, 05:08 AM
 
Location: in the miseries
3,302 posts, read 3,585,481 times
Reputation: 3810
Quote:
Originally Posted by anifani821 View Post
What amount of a mortgage is it that you think the "average wage earner" can afford? If a person is paying $900-1000 in rent, then they can afford the payments on a $150-170K house (of course, variances on HO insurance and taxes, but that would be the approx. range @ 5% rate).

First time homebuyers can qualify for all sorts of special loans . . . and so don't necessarily need to have that $30-35K (20%) downpayment.

How did we do it? We bought starter houses, fixer uppers or something old and small.

How many folks do you know who are willing to purchase the same types of properties we all bought when we were starting out?
Very few.
Our parents couldn't really help us either except for sweat equity.
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Old 05-19-2014, 05:47 AM
 
790 posts, read 1,011,405 times
Reputation: 1020
Quote:
Originally Posted by mathjak107 View Post
markets control where prices go ,not the fed.
This is wrong on so many levels. The Fed artificially dictates the markets because they keep interest rates low. Since interest rates are so low, older folks are finding other ways to invest their money (stocks, real estate, etc) so yes the Fed has directly moved the markets.

If savings rates were higher more retirees would be using their cash for CDs and other "safe" instruments, but since interest rates are not dictated by free markets anymore..well you get it right?
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Old 05-19-2014, 06:00 AM
 
71,854 posts, read 71,919,037 times
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you need a better understanding about what moves markets and what controls interest rates on the longer end.

hint ,it is not totally the fed. another hint ,look up why the inverted yield curve happened right before the down turn.

in a 100 trillion dollar debt market the fed buying even 85 billion a month is peeing in the ocean if the worlds investors disagree on the direction of rates.

the fed controls short term rates and hopes that signals to the worlds investors what path they would like them to follow. as the inverted yield curve proved before the downturn if investors see it differently investors win.

financial markets are just about where they were 14 years ago and in fact on an inflation adjusted basis are well behind. low interest rates did little to inflate a thing.

record corporate profits brought us back to these levels we saw 14 years ago.

since the fed announced the tapering and started buying less bonds, they have actually been the years best performers as interest rates fell again despite the tapering..

Last edited by mathjak107; 05-19-2014 at 06:38 AM..
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Old 05-19-2014, 06:01 AM
 
Location: Near a river
16,042 posts, read 19,001,270 times
Reputation: 15649
Quote:
Originally Posted by Electrician4you View Post
God bless them for it?

Those people would be the normal first time buyers. But the prices are so high because of manipulation the first time buyer is not there. And since he is not there the move up buyer isn't there either. Because both of them can't buy. Because they are all getting priced out.

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I can't speak for other areas, but in mine this is true. In addition, those younger folks who can buy tend to have lots more money to start off with than previous generations did, and they may not want the types of homes we settled for initially (small ranches). Many well-to-do younger buyers also don't want the types of homes we have now (such as big traditional colonial-style).

On another note, the huge wave of boomers will be unloading very expensive homes in the next several to ten years, creating market glut, so prices will come down on these. Boomers waiting too long to sell may take a hit b/c of this glut.

I also note that around here there are many boomers and elders who live rural on (now) very expensive properties. They tended to get these homes in their 30s when they were in the workforce and transportation (gas) was cheap. (Here most decent paying jobs were and are in education and health, and private practice professions, so living in a metro wasn't necessary.) I wonder how they will fare in selling their homes to go into condos, 55+, assisted living, etc. Will there be a market for them, the one they hope for?
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Old 05-19-2014, 06:14 AM
 
29,818 posts, read 34,907,142 times
Reputation: 11735
Quote:
Originally Posted by The b8nk View Post
This is wrong on so many levels. The Fed artificially dictates the markets because they keep interest rates low. Since interest rates are so low, older folks are finding other ways to invest their money (stocks, real estate, etc) so yes the Fed has directly moved the markets.

If savings rates were higher more retirees would be using their cash for CDs and other "safe" instruments, but since interest rates are not dictated by free markets anymore..well you get it right?
Please consider the current treasury interest rate trend which is mystifying many people. As the Fed is cutting treasury purchases interest rates are remaining low and in some cases dropping. Much of the discussion centers around the fact that Fed purchases had shut out other buyers and with government needing to borrow less there is less paper to be purchased. Normal interest may be lower than many thought and as MathJak is saying perhaps the market is saying rates should be about where they are. The concern is that the treasury market may be saying a recession is coming. Perhaps as Rick Santelli often says there has been so many attempts at market manipulation we don't know what normal rates are. He is starting to note that with the drop in Fed purchases perhaps the norm isn't as high as thought.
Only time will tell but conventional wisdom instead of market analysis can cost us all money.
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Old 05-19-2014, 06:24 AM
 
29,818 posts, read 34,907,142 times
Reputation: 11735
Quote:
Originally Posted by newenglandgirl View Post
I can't speak for other areas, but in mine this is true. In addition, those younger folks who can buy tend to have lots more money to start off with than previous generations did, and they may not want the types of homes we settled for initially (small ranches). Many well-to-do younger buyers also don't want the types of homes we have now (such as big traditional colonial-style).

On another note, the huge wave of boomers will be unloading very expensive homes in the next several to ten years, creating market glut, so prices will come down on these. Boomers waiting too long to sell may take a hit b/c of this glut.

I also note that around here there are many boomers and elders who live rural on (now) very expensive properties. They tended to get these homes in their 30s when they were in the workforce and transportation (gas) was cheap. (Here most decent paying jobs were and are in education and health, and private practice professions, so living in a metro wasn't necessary.) I wonder how they will fare in selling their homes to go into condos, 55+, assisted living, etc. Will there be a market for them, the one they hope for?
Sure they will have little problem selling as they are probably all equity if not darn close to it. It is the folks who purchased 7-10 years ago and are underwater who have the challenge. Also those who consumed the equity in their home via equity loans. They still got their money out but don't have it to use now. If your home has a current value of 400K and you have it fully paid for you could sell it at half price and still walk away with 200K. In many areas high priced housing has recovered and prices are back at or close to pre recession levels if not higher. Our old house dropped over 100K after we sold it but has come back in price. As always it is location, location, location. High income, high demand areas are in many cases still that and if it is based on the local economy and salary structure it will maintain that and draw the appropriate folks to the area. Just consider Northern Virginia which is seeing a housing cost and construction boom and folks lined up to buy. Not older folks but younger affluent well educated folks in their twenties and thirties. Folks with in demand degrees and minimum student debt (for multiple reasons). Many posters in this forum could sell their homes for the local market price because it is debt free and the believed value of the home is mostly funny money (appreciation on paper). I will also send you a private note.
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