The impending Seattle housing market collapse. (section 8, renting, credit card)

[Heiwos]

It's tough to be fiscally conservative with an ARM. You can plan to move or refinance, but the ability to do that, esp. with an ARM, depends on what happens to your house value. Just ask all the people stuck with their resetting ARMs now (at least until taxpayers bail them out).

[texastrigirl]

Which is why I clarified...when used just so you can eek by and afford a bigger house...not the best choice. You have to be ready to pay the consequences if the interest rate rises. Just pointing out that ARMs are not a bad tool when utilized properly...like anything else.

[Heiwos]

That is true. I should be happy that lots of other people got ARMs, because I'll be able to re-buy a house real cheap when many of them foreclose due to their rates jacking up. Unless they get bailed out.

[pirate_lafitte]

Maybe buying a foreclosed house might be a good idea. It might restart things.

[MissingAll4Seasons]

OK - just a little word about "bailouts". Try to remember that these homeowners are taxpayers, too. Which means that they've paid into the system just like everyone else, and seen their dollars spent on things maybe they didn't agree with or personally need just like everyone else. Also try to remember that just because someone got an ARM doesn't mean that they were fiscally irresponsible or grubbing for a house that was beyond their means, many of them had very viable reasons for getting them and had planned for the eventuality of a rate increase and were still well within reasonable value:loan margins... now they've lost their jobs or taken a cut in pay or hours due to the economic crisis in the country, their property values have plummeted (not just failed to increase), and they can barely make the current payment much less a higher one.

I'd personally rather see my tax dollars "bailout" a family than bailout a bank, utility company or automobile manufacturer!

[texastrigirl]

Unless they have a sub-prime loan, their ARM probably won't be getting jacked up anytime soon since interest rates are so low. Their adjustment should be small. If you are buying in areas with lots of sub-prime loans, you probably stand a good chance of a deal.

[pirate_lafitte]

How far does anyone think house prices will fall before people begin buying houses again?

[Jennibc]

Originally Posted by pirate_lafitte

How far does anyone think house prices will fall before people begin buying houses again?

People ARE buying houses just not at the rate that they were in the past. Demand is lower because people with iffy credit and flippers are no longer in the market. Lower demand = lower prices. How low is going to depend on a lot of things like location and interest rates and whether people buy into the hysteria that we are headed for a great depression.

People with good credit and a stable income are getting loans. Honestly, I think the media has blown everything way out of proportion in terms of the direness of the situation. When we were doing the roof on our house, our realtor asked if we were planning to take a loan out. We said yes and he said don't be so sure a bank will make you a second right now, they are much harder to get. Of course we got our second, just like we got a loan for a car when we applied for that. Some people asked us "are they even giving auto loans out anymore?" YES, if your credit is good and you have a high enough income. This idea that the banks are not making loans is just crazy. About 25 years ago, they didn't give credit cards out to college students with no income. My guess is we are getting back to those days again. It used to be that there were no bidding wars on houses - we are getting back to those days too. But in our old neighborhood, houses are still selling... they just don't go in a day or two at 30K higher that asking.

[eskercurve]

I agree with Jennibc. People with good credit are still getting loans and banks these days are going back to the fiscal conservatism of requiring income sustainable to the level of loan you want. Just like our grandparents had to. I think this is much more responsible ... if you think about it.

Personally I would not buy yet. I hold that Seattle's local economy lags behind that of other Western USA regions (especially So Cal) that if you want to try to hit the bottom, then you must keep waiting.

Though on the flip side, I believe interest rates are going to go through the roof so ... take your pick of bad news.

[Ira500]

How far does anyone think house prices will fall before people begin buying houses again?


There are several things going on. One is that people are waiting until they think we've hit bottom before they attempt to buy, and another is that credit is much tighter, and folks who previously would have been approved for mortgages aren't getting approved now ( a stark contrast to a couple of years ago when they'd give you a home loan if you had a pulse.).
My guess is that we'll hit bottom somewhere between September '09 and July '10, and that prices should stay flat after that for a couple of years...So I don't think we'll see a lot of buying for a couple of years, but it's not like nobody is buying now. Certain areas in Seattle ( Capitol Hill, Queen Anne, Wallingford, Ballard, etc) have seen only slight declines in both sales and price.