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In the last 5 years, it is estimated that home prices have risen 75% while incomes have only risen about 15%. How is that sustainable? If everytime you go into buy bread it is 10 cents more than last time, eventually you will substitute or do without. With a looming recession, incomes are uncertain to receeding, banks are only lending to the most credit worthy people, and prices are already historically high, there are signs of inflation or even worse stagflation. I think it will get worse or stay the same for a while before it gets better. The sub prime fiasco raised home prices by propping up the middle. If a home home in Mastic is worth $300,000, by comparison that same home in Huntington is worth $500,000. If the average Joe in Mastic can no longer get that sub prime ARM and Mastic values drop, so will Huntington values even if the people in Huntington can afford the higher values. The very top end will not be affected, mind you - they are recession proof - but everything in the middle will be. This housing price increase was built on an influx of money propping up the low / middle. That money is gone and not coming back, Wall Street is already on to the next scam that will make them billions for years before it blows up in their faces and they get a government bailout. In terms of real estate, they will laon as they had in the past and the market will return to it's average 3% appreciation as it was before. What goes up, must come down - and down hit hard and always hurts.
ABSOLUTELY!! I know this happening to a few people. They just dont have the $70,000 - $90,000 for a down payment. Just last year you could get away with 5-10% down. That is whats going to drive the market down further!
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Originally Posted by GigiBowman
the problem is not prices of homes...it's that no one can get a mortgage.....at least the people with cash but not so great credit who a few months ago were able to get 110% mortgages......those days are gone. And even people with good credit are getting a hard time....
housing is not really down, EXCEPT for people that JUST BOUGHT,, if you look at a BASIC house from let's say Esat meadow,, that house was 215k in 1998, is now at nealry 400k, yes at the PEAK (2005) it was at 450k but as far as a 10 year look, it is still up nearly 100%.
No, housing prices indeed "really are" down. Just because something rose in price before it declined, doesn't mean it didn't decline.
The price of houses is down from what it had been. This has nothing to do with when any individual bought a home. Look at a chart -- housing prices had risen steadily and are now declining. This means prices are down. Current value is not buying-time dependent. Down is down.
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this price ADJUSTMENT is just that,, an adjustment from the SKYROCKET prices of 98-2005,,, remember , for the most part a "house" is a LONG TERM INVESTMENT
if you bought at the peak in 2005,, you wait,,,,by 2015 your 'value' will be way UP
What I find interesting is that anyone looking to buy is given the advice not to look at market trends or to try to time the market. But the many people who bought, according to this post and others, between 1998 and 2005-7, simply timed the market wrong, that the price isn't down; it's "adjusted."
There was a dramatic increase in housing prices. Prices went up. Now there has been a decrease in price. If I were to sell my house tomorrow I'd be out A LOT of cash that I put down and into the house, because i bought at the peak of the market. My home price is down. According to your post, if I wait until 2015, the price really won't be down. Well, if anyone waits on anything perhaps it will come back up, but many people have bought many investments (stocks, real estate, anything) that decline in price. Many people with investments no longer worth their initial value don't have the luxury, for whatever reason, to wait until X or Y year for the price to come back up. Therefore, they will take a loss if they sell. You'd need to have blinders on not to see that housing prices have gone down and not everyone who bought a house between 1998 and 2005 is going to stay in it until 2015.
So I was talking with my good friend and Realtor on Long Island last week. She said that the market is dead, that most of the houses in the active inventory have been there since last year and that those who are considering selling are reluctant to accept the new price reality. Her opinion was that the expected adjustment hadn't happened yet because sellers won't blink and buyers aren't going to put money down until the prices adjust.
So for Tom and the other real estate folks out there I wonder what they're seeing.
And for those who don't believe that the prices can drop that dramatically that quickly I have to ask why you think that. I mean, they climbed that dramatically that quickly a few years ago. Are the laws of real estate physics different based on the direction the market is heading?
So I was talking with my good friend and Realtor on Long Island last week. She said that the market is dead, that most of the houses in the active inventory have been there since last year and that those who are considering selling are reluctant to accept the new price reality. Her opinion was that the expected adjustment hadn't happened yet because sellers won't blink and buyers aren't going to put money down until the prices adjust.
So for Tom and the other real estate folks out there I wonder what they're seeing.
And for those who don't believe that the prices can drop that dramatically that quickly I have to ask why you think that. I mean, they climbed that dramatically that quickly a few years ago. Are the laws of real estate physics different based on the direction the market is heading?
Things are picking up abit on doing inspections.....not rocking and rolling but its OK.
Prices should not drop as quickly as they rised,why? When prices were going up, banks were giving money freely so people were scooping it up. On the decline, that "paper money" is held by sellers who are more reluctant to part with it.
One of my sisters and her husband wanted to trade up to a better house on LI. She fell in love with one that was in the low $800's. They got approved for the mortgage, had 20% down payment money, etc. However, when the mortgage company appraised the house they appraised it at almost $200k lower than what my sister offered on it. My sister had another appraiser go and look at the house and got almost the same result. Now my sister could have bought the house I guess if she came up with another $200k. She loved the house, but not that much. The sellers would not sell it for what it appraised at and took it off the market. They had been planning to trade up to another house on LI too.
Interesting story. Just another example of whats driving the market down. Looks like the banks are the biggets culprits all around!
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Originally Posted by I_Love_LI_but
One of my sisters and her husband wanted to trade up to a better house on LI. She fell in love with one that was in the low $800's. They got approved for the mortgage, had 20% down payment money, etc. However, when the mortgage company appraised the house they appraised it at almost $200k lower than what my sister offered on it. My sister had another appraiser go and look at the house and got almost the same result. Now my sister could have bought the house I guess if she came up with another $200k. She loved the house, but not that much. The sellers would not sell it for what it appraised at and took it off the market. They had been planning to trade up to another house on LI too.
One of my sisters and her husband wanted to trade up to a better house on LI. She fell in love with one that was in the low $800's. They got approved for the mortgage, had 20% down payment money, etc. However, when the mortgage company appraised the house they appraised it at almost $200k lower than what my sister offered on it. My sister had another appraiser go and look at the house and got almost the same result. Now my sister could have bought the house I guess if she came up with another $200k. She loved the house, but not that much. The sellers would not sell it for what it appraised at and took it off the market. They had been planning to trade up to another house on LI too.
So the question needs to be asked, what will the sellers do next? Will they hold out until the market settles across the boards or will they sell their house for what the market says it's worth?
And of course the real issue is what about those people who are soon-to-be sellers who are desperately hanging on either because of rising costs or resetting ARM's? I've stated in many threads within this forum that the circumstances that transpired prior to our leaving Long Island are way more common than what people think. I still know several families who are facing worsening financial conditions and haven't tried to sell out of the market because of their sudden loss of equity. From my cheap seats, being an amateur real estate student I still think that's the real echo boom of this economy. Once the people who are holding out and hoping for a market turn around are forced to sell at current market value it will likely accelerate worsening conditions for a while.
Interesting story. Just another example of whats driving the market down. Looks like the banks are the biggets culprits all around!
The lenders are definitely the ones to blame. If they'd used tried and true formulas during the past six years this mess would've been avoided.
I mean, how can you borrow more than double your annual income? How can someone who makes $125k per year afford to buy a house selling for $500k or more?
Of course you can make the argument that the buyer's should have been more responsible but when confronted with a decision of going too deep into debt versus providing for your family most people will take the house and worry about the details later.
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