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Thread summary:

Experts finally admit severity of home mortgage crisis in America, prices falling faster than post war housing bust, seeking opinions on declining home prices

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Old 06-13-2008, 11:33 PM
 
Location: America
6,993 posts, read 17,322,782 times
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Remember when everyone was like 6% to 10% drop in home prices max? Well now they say another 50%. This goof in the report says "this is the most they have seen and the fastest they have seen in any previous bubble". Well ahh no kidding, prices have run up faster and higher than annual income than any previous time. The correction MUST be drastic to make up for the drastic increase in prices. Hope these home owners trying to sell, get it now. The game is over.

Quote:
Indeed, prices are falling faster and further than in any other post-war housing bust. During the bust in Austin, Tex., which started in 1986 and is one of the worst on record, prices fell 25%, according to Local Market Monitor, a financial data provider. And that cycle took four years to bottom out.
link

This next quote goes out to all those on the forum who stated the 2.5 to 3.5 times annual income for homes formula, cheers lol

Quote:
This correction was inevitable, in Youngblood's opinion; home price gains had simply out-paced income by far too much to be sustained. Historically, home prices have averaged about four times wages. Whenever homes got significantly more expensive, people could not afford to buy and home prices fell back
Correction mister reporter, its 2.5 to 3.5 times annual income NOT 4 times.
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Old 06-14-2008, 12:03 AM
 
8,726 posts, read 7,374,082 times
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Again, I feel no sorrow for any of them. It is a stupid thought that one should buy a home as an investment, not as a home, a shelter for your family.

It really should not at all matter how much your home is worth, you are paying on it whether it is now worth 1 million dollars or 1 dollar. Kind of like my car, I don't care if it is worth zero as I am not interested in selling, just driving it.

When I buy my house, I am looking at a price range and what I want out of it, if after I buy it the value drops 50%, I could care less.

I bought a house in Florida a few years ago as an investment only. I never lived in it and heck, never even saw it except for pics. I bought a foreclosed house purely for profit reasons, I was not using it as my primary residence so no danger of getting booted from my home. I sold it in 2005 right before the drop as I luckily (along with many others) predicted the drop happening and I made a hefty profit off of it.
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Old 06-14-2008, 04:34 AM
 
Location: Sitting on a bar stool. Guinness in hand.
4,428 posts, read 6,490,376 times
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Default sux

Look in my home state of MA. a lot of people who bought before 2000 had their home values grow about 200 - 300% in 5 years. I think a 50% hair cut is not that big of a deal. Now for those who bought after 2003 of refinanced to the hilt. Well...........................sucks.
In the end I'm happy. Because I and some other that felt dismayed at the time of the boom that we could never afford to live in our hometowns again. Are hopeful that we can return soon to put down our root in the place we came from.
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Old 06-14-2008, 05:20 AM
 
Location: Los Angeles Area
3,306 posts, read 4,139,527 times
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Quote:
a lot of people who bought before 2000 had their home values grow about 200 - 300% in 5 years.
Prices in 2000 were already inflated, when all is said and done the prices should go back down to the prices seen in the late 90's (adjusted for inflation). Although, I wouldn't be surprised if they went down to the actual prices in the late 90's as wages haven't increased that much since then.

Its going to be interested when all the option-arms reset from 2003~2006. Since most of these people (I believe 70%) have been paying the min payment, they are going to reset sooner then previously thought (Since they hit the 110 or 115% cap). In fact they are just starting to reset in large numbers now, but it takes months for this stuff to get on the market after they default.

Its sort of funny. Most of the sales activity is in low end homes that have dropped already 40~50% in areas where subprimes were heavily used. In these markets 2/3 of sales are bank owned! Where as sales in the higher end markets are very slow and the drops haven't been as dramatic. Most of the stress here has been due to the problems in mortgage backed securities....next year when the prime ARM starts reseting in large numbers the high end is going to fall just like the low end. Get your popcorn.

I remember about 12~18 months ago telling some people (in California) that their house was going to be worth at least half of the current price in a few years. They just sort of laughed at it...now when I talk about it you can sense they are worried.
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Old 06-14-2008, 07:16 AM
 
Location: America
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^^

I think NYC is going to take a beating. That place is going to get VERY ugly.
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Old 06-14-2008, 07:19 AM
 
Location: Heartland Florida
9,324 posts, read 26,683,109 times
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Quote:
Originally Posted by Wild Style View Post
^^

I think NYC is going to take a beating. That place is going to get VERY ugly.
I tend to think it will be like that movie with Charles Bronson, "Death Wish".
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Old 06-14-2008, 07:47 AM
 
Location: Sitting on a bar stool. Guinness in hand.
4,428 posts, read 6,490,376 times
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Quote:
Originally Posted by Wild Style View Post
^^

I think NYC is going to take a beating. That place is going to get VERY ugly.
I don't know. Maybe the Bronx, Queens, and Staten Island will big hit. But I'm not too negitive on Manhatten and certain parts of Brooklyn. This is because of forgien investment into those areas. People for some reason still believe NYC is the only place to be. But we will have to see how bad the ecomomy get and see how many on wallstreet and the surrounding areas lose their jobs.

Wild I know your from the area and I you like it here. But to be honest I'm forced to live in Northern NJ currently and go into NYC a bit and I just don't get it the excitement about living here. Maybe I can understand people that are born and raise here wanting to be here. But everybody else???????? I don't know.
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Old 06-14-2008, 08:04 AM
 
Location: America
6,993 posts, read 17,322,782 times
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Quote:
Originally Posted by baystater View Post
I don't know. Maybe the Bronx, Queens, and Staten Island will big hit. But I'm not too negitive on Manhatten and certain parts of Brooklyn. This is because of forgien investment into those areas. People for some reason still believe NYC is the only place to be. But we will have to see how bad the ecomomy get and see how many on wallstreet and the surrounding areas lose their jobs.

Wild I know your from the area and I you like it here. But to be honest I'm forced to live in Northern NJ currently and go into NYC a bit and I just don't get it the excitement about living here. Maybe I can understand people that are born and raise here wanting to be here. But everybody else???????? I don't know.
Not sure how old you are. I am in my 30s, and I remember the same thing happened in the 80/90s. The whole damn city went up in smokes (price wise). Check this out link

I am going to tell you what I think is going to happen in NYC. Wall Street = death kneel in another year or so. 30% of the population of NYC is employed by Wall Street or work with a job that is some how connected with it. When that happens, all those out of towners who wont be able to find jobs will go back to live with mom and dad. You mark my words on that one.

Bloomberg said that in 2007 population didn't grow nor did it fall. He said it didn't fall because of birth rates. That means, working adults are leaving. As for Brooklyn, sales are way down and foreclosures are up. You wait until those Alt-A loans (the prime adjustable rate mortgages) reset. They will be resetting starting this year all the way to 2014. With sales down and foreclosures soon to be even higher, what do you think is going to happen? Its going to be brutal. A lot of people, with good credit, bought more house than they can afford. You just have to look at the average income in Brooklyn to know these people can't afford 500,000 brownstones in Bed Stuy (just saying that makes me laugh). NYC is not immune and that includes Manhattan and Bklyn.

As for why people want to live there. Some people just like urban living. Granted I am from the place but I have lived in many cities. Many of them suburbs and I just prefer the city.

Quote:
Originally Posted by tallrick View Post
I tend to think it will be like that movie with Charles Bronson, "Death Wish".
I was home last month. Some Hassidic kid was beaten so bad he didn't even remember his own name. This took place in Crown Heights. I think they got him for 15 dollars and a bicycle :S. Korean dry cleaner was also murdered and car was stolen. They said murders for this year are higher than the numbers for last year at the same time. As the economy gets worse its gonna get ugly. But this is true of many places. You are seeing crime in Ft. Lauderdale in places you don't normally see it in.
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Old 06-14-2008, 08:06 AM
 
Location: Humboldt Park, Chicago
2,686 posts, read 7,850,959 times
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Default bottom forecast?

I keep pushing my housing price bottom forecast date back. Currently, I see prices hitting bottom in early 2010.

I think some on here have alterior motives for prices to fall even further as some have noted that they have been priced out of places they would like to buy into.

I have an incentive for prices to fall further so I can buy investment properties (2-4 flats in Chicago) for less. However, I already have 2 investment properties so drops in price hurt me too. Basically, because of this I don't have an agenda.
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Old 06-14-2008, 08:12 AM
 
Location: America
6,993 posts, read 17,322,782 times
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Quote:
Originally Posted by Humboldt1 View Post
I keep pushing my housing price bottom forecast date back. Currently, I see prices hitting bottom in early 2010.

I think some on here have alterior motives for prices to fall even further as some have noted that they have been priced out of places they would like to buy into.

I have an incentive for prices to fall further so I can buy investment properties (2-4 flats in Chicago) for less. However, I already have 2 investment properties so drops in price hurt me too. Basically, because of this I don't have an agenda.
Agendas on this forum doesn't mean anything. Not like we can go out and make any of this happen.

As for home prices, and investing, you have to do research. My wife is from Chicago too. At one point she wanted to move over there and buy a "grey stone" I think you guys call them. I told her not now, because I knew prices were unsustainable. I am economics major but we never learned about historic home prices in any of my courses. That came from research.

Prices will return to 2.5 to 3.5 annual income, it is what it is. As for your other investment properties. If you are renting them, and making enough to cover your debts and bring in some profit then "
don't worry, be happy"

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