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.
There are at least seven houses listed that are under $2000 per month and that were built after 2003. Average rental for these seven houses: $1,737 per month (and many are offering additional incentives to move in). It's not like there are a bunch of houses that were built after 2003 on that list where the owners are asking for higher rents.
That is only one property manager. Those rents are representative of what this market is dictating. Believe me, those owners would take more if they could get it. Heck, they are even giving incentives to get people in these houses.
JimKing has a cool method of figuring out how much the house is worth, JK stated, "Compare rental rates for comparable houses and multiply by 120-150." His recommendation was to buy at the lower end (x 120).
Using this method, if a house, on average is renting for $1737 per month, the average worth of those homes would be between $208,440 and $260,500.
ITs not bursting because of you. People are not stupid beyond this forum They not believe everything they read here. You are a circle of jerks trying to purchase at scam prices and adding negative perception on RE consumer / investors.
Your bitterness makes you sound like someone who bought at the end of the housing boom and may be witnessing the negative equity that some of those people are currently experiencing.
Maybe you're a realtor who hasn't made many sales lately???
Did you believe David Lereah when he said the housing market hit the "bottom" on on 5/26/06, 9/26/06, 10/25/06, 12/28/06, 1/25/07, 2/7/07 and 2/15/07. Lawrence Yun said the same thing on 12/21/06, 2/15/07, 5/25/07 and 6/1/07.
Who's giving the negative perception? The NAR has consistently lied about the housing market as it plummets. Who's at fault for the negativity?
I can understand you being upset if that's the case, but please leave the name calling out of the conversation.
NEW YORK _ The U.S. economy should expand modestly in coming months as a healthy job market continues to trump weakness in housing prices, a gauge of future business activity showed on Thursday.
The Conference Board said its index of leading economic indicators rose a higher-than-expected 0.3 percent in May, boosted by rising stock prices, higher consumer expectations and the availability of jobs.
Economists said that jobs should continue to be plentiful, despite an unexpected surge in jobless claims last week.
The Labor Department reported Thursday that unemployment claims totaled 324,000 last week, up 10,000 from the previous week, to the highest level since mid-April.
The report, designed to forecast economic activity over the next three to six months, tracks 10 economic indicators.
The advancing contributors in May, starting with the largest, were weekly unemployment insurance claims, stock prices, building permits, consumer expectations and vendor performance.
The negative contributors, beginning with the largest, were real money supply, average weekly manufacturing hours and interest rate spread.
With the latest report, the cumulative change in the index over the past six months has gone up 0.3 percent.
Wall Street is fairly confident that falling home prices and rising mortgage defaults won't damage the broader economy. Treasury Secretary Henry Paulson said Wednesday the housing slump is nearing an end and that the losses so far have been contained.
But if mortgage rates keep rising, fewer people will want to buy homes and fewer homeowners will be able to refinance. If that happens, the residential real estate market's troubles could snowball and dampen consumer spending.
The Federal Reserve's Open Market Committee, which sets short-term interest rates, meets next week and is widely expected to leave rates unchanged as they have been for about a year.
A pickup in the economy has raised worries about rising inflation, however.
Stocks slipped on Thursday, after the Philadelphia Federal Reserve's report on manufacturing activity in its region jumped a stronger-than-expected 18 in June, up from 4.2 in May.
In midday trading, the Dow Jones industrial average fell moderately, declining 36.66, or 0.27 percent, to 13,452.76 after dropping 146 points Wednesday on a surge in bond yields.
Broader stock indicators moved sideways. The Standard & Poor's 500 index fell 1.71, or 0.11 percent, to 1,511.13 and the Nasdaq composite index advanced 1.48, or 0.06 percent, to 2,601.44.
On Tuesday, the Commerce Department said construction of new homes fell in May as the nation's homebuilders were battered by the crisis in subprime lending and rising mortgage rates. Industry sentiment about the housing market fell in June to the lowest point in more than 16 years.
Secondary effects from the housing downturn like layoffs and restrained consumer spending could also start surfacing, said Aaron Smith, an economist with Moody's Economy.com. But the overall drag on the economy from the housing industry should decline in coming months, he said.
"Building permits cannot continue declining at the pace they have," Smith said.
Do you really think the stock market can go substantially higher on hot air and a sea of money? Do you really believe this LBO-takeover boom can last indefinitely? The prices being paid for companies is idiotic and unsustainable. We predict once this bubble breaks stocks will fall, banks will loose large amounts of money, a number of hedge funds will fail and some private equity funds will fold.
A recession and falling stock and bond prices will create more unemployment to go along with that created by the real estate and construction industry bust. Services will be cut and taxes will retreat very little if at all. Consumer spending as a percentage of GDP will drop from 70 to 64.5, the long-term mean. Debt financed consumption will be all but over.
We broke the story on the Carlyle memo that said what we have been saying, and that is, that the use of credit will start to slide in a year or so, perhaps 1-1/2 years. It will take at least 1 to 1-1/2 years for inflation to work its way through the system, thus we are looking at two to three years before depression. Inflation should peak in 1-1/2 to 2-1/4 years. All those highly leveraged junk bonds will also collapse along the way.
The average American, deep in debt, will get decimated. The former 30 hot real estate areas will see 30% to 60% equity losses. Those on pensions, public and private, will get 50 cents on the dollar. Social Security could get cut in half. Cheap credit is over, that is what the higher rates of the past two weeks are telling us.
China is using dollars to access natural resources worldwide and to purchase influence. They now control US policy. The alternative is either to let the bottom fall out and leave the Chinese stranded or have a war.
America’s way of life will change dramatically for the worse. The 1930s will appear attractive.
The housing bubble marches on. Builder Standard Pacific said new orders in April and May fell 16% due to prolonged weakness in the Florida and Arizona markets. Cancellations were 28% versus 35% yoy. After this peak-selling season, which included further price cuts, it looks like cancellations are going to worsen again.That means additional price cuts until next March.
In the first quarter Reston Homes reported a $12.3 million charge for abandoning projects, up from a $7.2 million charge yoy. Homebuyer traffic fell 11% and prices fell 16%.
At Countrywide, subprime loans fell 43% and pending foreclosures as a percentage of unpaid principal rose to 0.9% from 0.45% yoy and 0.85% in April. They funded $2.3 billion pay option loans for May versus $6.6 billion yoy.
This housing slump is not going to go away anytime soon as we predicted. Wall Street, government and the real estate and building industry are finally realizing this correction is going to be expensive and last a long time. A long time to Wall Street is by the end of 2007. They are either fools or liars.
There is a giant glut of homes and condos. The building industry never thought things would turn out this way. There are at least 2.2 million vacant single-family homes and condos for sale nationwide. That is one million over the norm.
New federal guidelines on underwriting low-initial-payment mortgages to people with flawed credit calls for lenders to take into account the highest possible monthly payments or their ability to repay loans at higher levels. Of those who got loans at a fixed rate last year for two years that after that term switch to market rates, about 1/3rd of them wouldn’t qualify now. The bottom line is lenders will make 50% fewer subprime hybrid adjustable-rate mortgages as a result of the new criteria.
Wall Street says the market downturn could linger for years but doesn’t pose a major risk to the overall economy. They must think we are terribly dumb. In fact, the situation in the home building industry is that CEO’s totally refuse to give interviews.
WASHINGTON — The major slump in the housing market is nearing an end and should not have a significant impact on the overall economy, Treasury Secretary Henry Paulson said Wednesday.
Paulson refused to comment specifically on the market impact of troubles confronting two large Bear Stearns hedge funds that invested heavily in subprime mortgages — loans made to borrowers with spotty credit histories.
"We have had a major housing correction in this country," Paulson said in an interview with a small group of reporters at the Treasury Department. "I do believe we are at or near the bottom."
Paulson: Housing slump likely near end | Chron.com - Houston Chronicle (broken link)
That brings up an interesting point, regarding the age of the house.
From your experience Mike, how long would it take, on average (I think it's between 3-5% per year) for a $150k house to double in value? Let's assume the house has an existing in-ground pool, fenced in yard, not on a cul-de-sac, and not on any waterfront. Let's also assume the only changes done to this house was basic upkeeping, eg new or newer pool pump, A/C, etc. and the house is in a good neighborhood with good schools.
Would the age of the house matter in how quickly it takes to double in price?
Would a newer house appreciate quicker than an older one?
How long, in your opinion, would it normally take a house to double in price?
The age of the house should not matter too much in how long it takes to double in price. This is because in any certain area the appreciation rate will generally be the same for all the homes in that area.
Of course the sale prices will differ between old and new.
There are too many factors to really say how quickly a home should double in price.
Based on 5% a year I believe it would work out to about 12 years or so.
But you need to factor in, interest rates, unemployment levels, transient flow (I know this is a plumbing term, but I think of it as where homebuyers are moving from and to and how quickly they are moving). These factors helped the run up we had and that is why we doubled so quickly.
If we look at Shillers graph you can see where we had the big run up after WWII and a slight dip afterwards and then stabilization. The prices did not come down to anywhere near where they started. It is those same babies that were born in that boom that will enable this boom not to continue the way it had been going but to hold level with some regional losses of 10-15% but also some areas with no losses.
I do not see the prices shooting back up but I also do not see massive price drops either. I see it getting back to a normal market in the next year or so with modest appreciation after that.
The age of the house should not matter too much in how long it takes to double in price. This is because in any certain area the appreciation rate will generally be the same for all the homes in that area.
Of course the sale prices will differ between old and new.
There are too many factors to really say how quickly a home should double in price.
Based on 5% a year I believe it would work out to about 12 years or so.
But you need to factor in, interest rates, unemployment levels, transient flow (I know this is a plumbing term, but I think of it as where homebuyers are moving from and to and how quickly they are moving). These factors helped the run up we had and that is why we doubled so quickly.
If we look at Shillers graph you can see where we had the big run up after WWII and a slight dip afterwards and then stabilization. The prices did not come down to anywhere near where they started. It is those same babies that were born in that boom that will enable this boom not to continue the way it had been going but to hold level with some regional losses of 10-15% but also some areas with no losses.
I do not see the prices shooting back up but I also do not see massive price drops either. I see it getting back to a normal market in the next year or so with modest appreciation after that.
Where, on Shiller's graph, do you see the home prices one year from today?
Shiller's graph also alludes to "Two gains in recent decades were followed by returns to levels consistent since the late 1950's. Since 1997, the index has risen about 83 percent."
I honestly don't expect a return to the levels that were consistently existent before the slump, but I do sense a significant change in the next year or two.
My prediction: After most people have tried to sell their homes unsuccessfully over the summer, the prices will drop even more, because not many people will be in the market to buy a home around Christmas time, when money is tight and sales are traditionally low to begin with.
I may be wrong. I might not be wrong. Time will tell.
A year from now I see the prices right where they are now.
Some areas have come down 10% or more already, some will come down more and others will show some gains but I do not see a huge drop or gain over the next year.
I do however see the number of sales going up up bit from where we are now but not to the levels from 1 1/2-2 years ago.
The thing is you believe everyone is still wanting to sell their home. I believe with the probable major decrease in property taxes and further decreases in insurance costs alot of those people with homes on the market will take them off the market and stay for a little while longer.
This will decrease the supply somewhat which will help prop the market up.
A year from now I see the prices right where they are now.
Some areas have come down 10% or more already, some will come down more and others will show some gains but I do not see a huge drop or gain over the next year.
I do however see the number of sales going up up bit from where we are now but not to the levels from 1 1/2-2 years ago.
The thing is you believe everyone is still wanting to sell their home. I believe with the probable major decrease in property taxes and further decreases in insurance costs alot of those people with homes on the market will take them off the market and stay for a little while longer.
This will decrease the supply somewhat which will help prop the market up.
I have another question for you, Mike.
If equity is the difference between the market value of your home versus what's against your home, then what monetary number is used to determine one's equity? Would that be the Just Market Value?
The reason I ask this is because many houses are being sold for a price significantly over Just Market Value. If I bought a house for $250k that has a JMV of $205k, would I immediately have a negative equity on a 30 year loan with no money down or would that house have a new market value based on the buying price?
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.
Mixed Messages??? OK...I'm gullible...
