Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
It's amusing that I noticed this contradictory piece of information:
Home prices fell by about 35% on average from 2006 to 2012, according to the S&P/Case-Shiller index, and they’ve bounced back by about 25% since then. But the pace of growth is likely to slow in 2014. Many analysts expect modest price gains of 5% or so in 2014, but another downside surprise is distinctly possible. “There really is a worry we might see falling prices by 2015,” says Shiller.
Another bursting housing bubble — characterized by huge price declines — seems unlikely, because prices haven’t gotten nearly as out of whack as they did in 2006, when the last bust began.
So, if the peak of the prior bubble was 35% higher than the low point and we have bounced back by 25% and expect it to rise another 5% which brings us to within 5% of the 2006 peak price (acknowledged by the author as an "out of whack price" then how does this statement hold true:
seems unlikely, because prices haven’t gotten nearly as out of whack as they did in 2006
Is this author smoking crack? What he is essentially saying is that we've bounced back almost to 2006 prices but prices are nowhere near 2006 prices.. LOL!
It's amusing that I noticed this contradictory piece of information:
Home prices fell by about 35% on average from 2006 to 2012, according to the S&P/Case-Shiller index, and they’ve bounced back by about 25% since then. But the pace of growth is likely to slow in 2014. Many analysts expect modest price gains of 5% or so in 2014, but another downside surprise is distinctly possible. “There really is a worry we might see falling prices by 2015,” says Shiller.
Another bursting housing bubble — characterized by huge price declines — seems unlikely, because prices haven’t gotten nearly as out of whack as they did in 2006, when the last bust began.
So, if the peak of the prior bubble was 35% higher than the low point and we have bounced back by 25% and expect it to rise another 5% which brings us to within 5% of the 2006 peak price (acknowledged by the author as an "out of whack price" then how does this statement hold true:
seems unlikely, because prices haven’t gotten nearly as out of whack as they did in 2006
Is this author smoking crack? What he is essentially saying is that we've bounced back almost to 2006 prices but prices are nowhere near 2006 prices.. LOL!
They aren't back to 2006 prices after adjusting for inflation. There is no contradiction.
Americans are losing interest in a lot of things, not just home ownership. They are less interested in working hard, studying challenging subjects, upgrading their skills, pursue career training, bettering themselves, etc. They regard their failure as others' fault. What so many Americans are doing now is marginalizing themselves from the global economy and making it possible for people from other countries who are more hardworking to succeed there and here in the U.S.
If you can rent at a lower price and put the difference in better performing investments... then it does make sense. I've also seen examples in which the current job market doesn't provide the stability it once did.... people need to remain mobile in order to move around with the job market.
I've also seen examples in which the current job market doesn't provide the stability it once did.... people need to remain mobile in order to move around with the job market.
This is a major concern for younger folks like me. I have been looking at houses for the past 6 months. Actually, I started looking over a year ago. Thing is, I moved here 4 years ago. Who knows... Maybe I will have to move again? There is no job stability any longer. Sure, everyone and their brother talks about the financial advantages of home ownership. Cheap to buy, yes, but what happens when you've been unemployed for a year and all the jobs you are qualified for are being done somewhere else?
I finally broke down and placed a bid, but I would not be disappointed at all if it wasn't accepted. We've seen prices steadily moving up, yet there's also talk of who is doing the buying... And they aren't all traditional home owners. Many investment firms are getting into real estate, as investments elsewhere are overvalued and overbought. Money is finding a new home now, and with it comes the higher prices.
Say that a house cost $100,000 in 2006. We'll use round numbers to make the calculation easier. If the price fell by 35% between 2006 and 2012, then in 2012 that house cost $65,000. Then the price rose by 25%... that's 25% of $65,000, and NOT the original $100,000. So the new price is $81,250. Then prices are supposed to rise another 5%, reaching $85,312.50... which is still 14.7% below the 2006 peak. Meanwhile, assume 2% annual inflation. Since 2006 it's been 8 years, so general prices have risen by 17.2%. So that 2006 house, if it kept up with inflation, ought to cost $117,166... but instead it's worth only $85,312.50... so in inflation-adjusted terms, the house has declined in value by 27.2%.
Bottom line: if we believe that cited-article's numbers, houses are 27% cheaper today than at the 2006 peak. Those numbers COULD be wrong, but they are not self-contradictory.
Homesteading as a staple of our society is gone like a fart in the wind. I had a house...had to move a year and a half later for my first decent job. Luckily I bought a really cheap house so the transaction costs weren't as bad. I took advantage of the first time home buyer credit as part of the purchase that house, and with the military exemption I didn't have to repay the credit inside of the 3 year window normally required to hold the property, in order not to have to return the credit. The transaction costs ate the credit, instead of my entire down payment. I still lost a couple grand. Which is to say, I would have taken a bath if it hadn't been for the credit. Thank God that was single income financing and mortgage servicing as well. What a nightmare would it have been unloading that property while having to rely on my (ex)spouse's income in order to service my housing obligation. Eff that dual income "relationship mortgaging" noise.
That was in 2009-2010. Im now 32. I'm not going through that BS again just to "have a house". My labor circumstances are too unpredictable these days and begrudged/imposed landlordship sure as hell is not a proposition I wish to add to my daily life circumstances any time soon.
I don't know how other young people do it. Right now with a wife and baby, I can get away with cheap apartment living. I'll continue to do that until the kid needs a school, then we'll purchase the cheapest effing tract house we can find within the district we want. I'll put 10% down and finance to 30 years. Cheaper the better.
I have no intention on building a nest egg on real estate. I'm not putting more liquid than I have to either, on a house. Those things are unwanted boat anchors; albatrosses of daily life. Housing may be the icon of American Dream for many but to me a house is a liability. The biggest household expenditure of the prole is housing. What an American Nightmare. I value other things over housing. The extra disposable income saved on housing costs affords me my hobby and the ability to travel with the family without hawking every penny. It also keeps the monthly budget nice and flexible. It's incredibly liberating and rewarding. A cheap house meets the basic criteria of shelter in the same way one twice as expensive does, so undercutting housing is quite literally the recipe to allow my family to actually achieve the real American Dream: Freedom of choice without the economic duress of debt servicing in working life.
Boomers hate this Gen Y perspective, because it removes buyers from their necessary pool of suckers. If I'm unwilling to purchase my father's paper for the inflated values he needs in order to make black, then boomers take a paper wealth bath. Boomers need inflationary buyers. The only way they're gonna find that is with foreign investors, for the American youth no longer has the means to afford it. I personally welcome the price downgrade my generation will place on housing by necessity. Houses shouldn't cost what they do anyways, just like the unadjusted health care billing costs shouldn't cost what they currently do either. I recognize those are "intergenerational warfare" fighting words. Oh well. Time for the American Cost-of-Living Downgrade. I'm personally very much prepared financially for it. I don't need two car garage, 2600sq ft and granite countertops to have happiness in America. I DO need disposable income to travel, eat out, save for a rainy day and enjoy discretionary pursuits with my family, not to mention sock extra money for retirement. An extra 700-1000 dollars a month NOT spent on housing gets me just that.
We're all renters in life, really. Those who overestimate the concept of "ownership" in mortal life are really holding on too tightly anyways...
I was thinking of buying about 2years ago, but I still felt new at my hub and there felt like there was uncertainty. Well it turned out I was right, my parents needed a big loan, my car died (got a new one) and I started a new job 4 months ago. Sadly in my region, I have established a budget of roughly $250k-300k for a 1 bedroom condo and there are about 80 units total (meaning in existence) that meet my requirements in my entire city. I just have to hope one of those 80 is on sale, in my price range and available when I hope to buy next year.
For me The general idea of many of my peers around my age(20's) that I associate with goes something like this
"If I'm not getting married and having kids, what's the point of owning a home?"
and it makes sense...
If you have little obligations and expenses (family), young, and have a good income, you should go for building your assets as quickly as possible before you start to have a family. Unlike many people's thinking, I don't consider your primary house to be an asset as you need it to live. Person A buys a home. Person B rents an apartment cheap buys a home and rents out the home. Person B will be most likely be in a better position financially when obligations and expenses start to appear in life. You can substitute rental property with whatever investment of choice but from my observation, your primary home should be treated as an expense.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
What he is essentially saying is that we've bounced back almost to 2006 prices but prices are nowhere near 2006 prices.. LOL!
