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When you say that, do you mean they will go up, but only very slowly from today's levels like 1-3% appreciation in the next 2-3 years.
And I do not intend to buy a house and flip it make money. I basically want to pay cash for a house to live in that I can call my own home with the peace of mind of having a roof over my head while being mortgage and rent free.
I have about $110K in savings and plan to have more in the next 2-3 years. I basically just want to ensure it does not lose much purchasing power in relation to home prices between now and the time when I am ready to buy a house.
In that case, you're perfectly fine (ish). I was thinking you were intending to flip a house, my misjudgment.
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Now I would buy a house as an investment if there was a reasonable threat of significant appreciation in the next 2-3 years. It would not be for the purpose of selling it later for a profit, but for the purpose of locking in the price and renting it out so that way in case homne prices went up a lot, I would already be locked in and oculd move into that house later or sell it and get the more money that would be needed to pay for another more expensive house if such a situation of significant appreciation were to occur.
I hope I do not have to do what I said above due to the hassles with tenants and having to pay property taxes before I am ready to move out, but would do it or seriously look into it if there was a serious threat of significant appreciation in home prices.
And I would consider any appreciation over 5% per year to be significant. What would be your definition of significant increases in home prices.
Oh yes I'd agree (I'm a bit scatterbrained and was looking at month-to-month rather than year-to-year). But anyway, 5% per year would be quite significant and I'm not really sure it would go that high without intervention. At the moment, prices in Detroit are down almost 7% from last year. If they were to go past a 5% increase, I would think there would be primarily a large influx of jobs, and at the foreseeable moment, that doesn't seem too likely (though not impossible).
So I wouldn't hold your breath over it but I'd keep an eye on any news that would greatly affect Detroit's local/regional economy (so far it's just small tech businesses starting up with a sloooowly growing healthcare industry but nothing really more major than that).
If you want to buy a house for a good investment - look in the Royal Oak/Clawson area (14/Crooks) - there are a number of condos available for sale in the 20-50K range. See below.
Then you can rent this out to someone for $800/month - easy rent for a Royal Oak address for someone with less than perfect credit. Your rent would be 10K a year. In 3 years - you'd have this condo paid off completely and the rest is free cash flow.
Coworkers have told me most inner ring suburbs from St Clair Shoes to Warren to Royal Oak have condos like this for sale (and you don't have to worry about upkeep like a regular house) and after a nominal time frame - its all cash in your pocket.
Condominium for Sale - 2405 Torquay Ave, Royal Oak, MI 48073 - MLS ID 31045080 - CENTURY 21 Town & Country (http://www.century21town-country.com/Property/MI/48073/Royal_Oak/2405_TORQUAY_AVE - broken link)
Beware of purchasing condominiums anticipating being able to rent it out in the future. My condo HOA (far as I know pretty standard in this matter) makes mention of a maximum percentage of the units being available for rental...FHA doesn't do mortgages in complexes with too high a rental percentage, I've heard. In my complex there have been people renting out their units under the radar with mixed success, until the HOA finds out.
I believe we have hit a price floor in this market. Prices may be up a small bit in most of Oakland County, but I haven't noticed it anywhere else. I personally hope to high heaven that prices don't go up, ever. I don't care if they fall even more. I have no hope of ever selling for even half of what I paid, even at 3% appreciation a year, so what the heck, keep the prices depressed, my SEV will stay tens of thousands less than replacement value, and then my property taxes stay laughably low...$1100 or so a year on a $31K SEV. I'd rather keep the depressed housing market- I'm not worried about equity as I figure I'm going to spend at least half the thirty-year term underwater, so I quit worrying.
Having a mortgage is not a bad thing, especially with rates at all-time lows. Saving your cash and building a well diversified portfolio of stocks, etc. can earn you a far better return on your money. You really want the majority of your cash tied up in an illiquid asset?
Prices are going nowhere fast. Tons of foreclosures still to come. Tons of shadow inventory if we get even a modest rise in prices. And all those home sales figures from '07-'10 were just revised down roughly 15%. Oops.
It depends on the area you plan to buy in, but in general I think they prices will stay pretty flat in most areas. I bought a house in Oakland county in late 09', I like to keep an eye on Real estate values, and my house is worth about the same that I paid for it, there has been very little change in 2 years in this area.
I agree with those who recommend not buying the house totally in cash, you will probably qualify for a low interest rate, there are tax benefits to a mortgage, and it makes sense to keep some of your money invested where it can grow.
What is your opinion on this. Does this have the potential to cause significant home price increases in the next 2 years? Or will this have no affect. And how long will it take at this pace for them to clear all of those, and how many of them will be in SE Michigan
And also, what is the foreclosure situation in Southeastern Michigan? Is there still a big backlog of foreclosures to come onto the market? And how long will it take to clear the foreclosure pipeline? Will it take at least another couple of years? And will this new government FHA thing significantly speed up the process of clearing the foreclosure pipeline here in the Metro Detroit area?
Because the longer it will take to clear the foreclosure pipeline, the more comfort I can take in not having to worry about home prices going up much if at all in the next 2 years here in Metro Detroit.
"Larger investors want to be able to get real scale in any government program, in the range of 50, 100, 500 properties per deal, or $1 billion-plus in assets, say officials close to the plan. That's why the government is looking to test a combination of different approaches. Fannie Mae did a $50 million sale last June, but that was on the small side. Officials are evaluating at what larger asset sales beyond that would look like."
Sounds to me like the makings of a "Sub-prime Foreclosure Crisis". No, the government didn't learn its lesson when it pushed for the securitization of mortgages. Now it must create another bubble with bundled foreclosures. Never ceases to amaze me but..."The government is not the solution to our problems; the government is the problem."
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What is your opinion on this.
Second only in dumbness to the governments contribution to the mortgage crisis.
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Does this have the potential to cause significant home price increases in the next 2 years?
Yes, and it will then postpone, prolong, and aggravate the housing price correction.
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Or will this have no affect. And how long will it take at this pace for them to clear all of those,
Depends on how much the government pushes it.
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and how many of them will be in SE Michigan
A proportional amount...and thus the harmful effects will also be greater.
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And also, what is the foreclosure situation in Southeastern Michigan?
Pretty bad. Among the worst in the country.
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Is there still a big backlog of foreclosures to come onto the market?
Yes.
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And how long will it take to clear the foreclosure pipeline?
Depends on the political push. If this is seen as a way of "fulfilling the American Dream" and Barney Frank and Chris Dodd get involved, it won't take long.
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Will it take at least another couple of years?
Probably. That will mean that it has become extensive and will result in the worst possible scenario possible. We can expect no less from our government.
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And will this new government FHA thing significantly speed up the process of clearing the foreclosure pipeline here in the Metro Detroit area?
If it is successful (according to the government). The sooner the government can produce another bubble, the better (for them). Once these foreclosures have been securitized and the profits have been made by the co-conspirators on Wall Street, the plug will be pulled and all these foreclosed properties will be back on the market again...to await the next round of government induced bubbles. Let's see, we can securitize dilapidated abandoned homes into "housing rehabilitation" Fannie Mae bonds.
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Because the longer it will take to clear the foreclosure pipeline, the more comfort I can take in not having to worry about home prices going up much if at all in the next 2 years here in Metro Detroit.
I think there is a fairly simple, in theory, way of moving home prices back up in most areas. Impose smart growth restrictions to contain urban sprawl. In other words, make an area land locked to new development and force builders to build in a limited area. What that will due is limit the supply of land for building, which, in theory, should push up the value and price for existing land, due to scarcity. The most expensive areas in the country tend to be those areas where there is not much room to build due to natural boundaries. Prices never really shot up as much in places where developers could could simply build further out and create more sprawl, like in Texas, Georgia and other states. Once you restrict the supply of land that you can build on, the law of supply and demand will make prices rise.....in theory. However, such urban planning or "Central planning" goes against free market forces.....and all the free marketers will be against it (not that I am not free market from time to time).
I think there is a fairly simple, in theory, way of moving home prices back up in most areas. Impose smart growth restrictions to contain urban sprawl. In other words, make an area land locked to new development and force builders to build in a limited area. What that will due is limit the supply of land for building, which, in theory, should push up the value and price for existing land, due to scarcity. The most expensive areas in the country tend to be those areas where there is not much room to build due to natural boundaries. Prices never really shot up as much in places where developers could could simply build further out and create more sprawl, like in Texas, Georgia and other states. Once you restrict the supply of land that you can build on, the law of supply and demand will make prices rise.....in theory. However, such urban planning or "Central planning" goes against free market forces.....and all the free marketers will be against it (not that I am not free market from time to time).
If this were done, I predict that what would happen is property would appreciate considerably near the periphery, benefiting those already owning property there. People would still not want to live in the inner city and would leave, which would further decrease property values. In between, you would have a moderate increase in price which would make it unaffordable for inner city people who want to relocate there.
The real solution would be to make it unprofitable for people living in the middle ring of suburbs to sell their homes and move to the periphery. To do that, you would have to decrease the demand for housing in those areas. And to do that you would have to prevent people from moving there from the inner city. However, such urban planning or "Central planning" goes against social justice forces.....and all the community activists will be against it (and so would I as a proponent of free markets).
Lansing joins Toledo in going after the casino business.
Plans call for $245M casino in downtown Lansing
"The 125,000-square-foot casino would offer up to 3,000 slot machines and 48 gambling tables. Bernero said he hopes construction could start in 12-24 months, and he estimates it would take 14-18 months. "
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