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Location: Concrete jungle where dreams are made of.
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I'm seriously starting to think my fiance and I will have no choice but to rent when we get married. I really want to buy a place, like a co-op in eastern Queens, but these high down payments are hard for anyone in their mid 20s. I hope we won't have to rent and waste our money that way.
I don't think you will see that severe of a drop, but a 10% or 20% drop is probable. I mean how could home values double in just eight years since 2000. Did family house hold incomes double in the same time period? Was there little or no inflation?
Typical appreciation is about 3% or 4% a year. Given those numbers, a home on Long Island, since 2000, should have only gone up in value by about 24% to 32%. Thus a $200,000 home in 2000 should be worth $250,000 to $270,000 now.
Work out the numbers for your home based on 2000 valuation and multiply by 24% to 32% to get an expected true value for your property. I think it might be prudent to expect home values to sink for another couple of years until such a market equilibrium is reached.
Although Congress and the Federal Reserve is trying deperately to induce to inflation. So the opposite might happen and home values might soar, but it won't matter because income will lag. The bailout strategy is to buy out the bad debts and then inflate away the debts by paying of todays debts with cheaper dollars in the future.
However, if you don't plan on selling in the next few years what difference does it make. Your home is a place to live and shouldn't be used as a debit card. Just keep paying down your mortgage and make needed home improvements.
This whole situation has got me depressed because our government has been revealed to be so corrupt and inept. We are on the march towards oblivion.
Me too.
The grim reality is that our houses didnt double in value.Our dollars buying power was diminshed by 50% under the GWB, trickle down, pee on my head and tell me its raining, economic plan.
Its a sad state of affairs when we envy the Canadian dollar.
Whats next the Peso?
We're screwed, but I still say Eastern Brookhaven was a steal in 2000.
I doubt we'll see those levels again based on the $$$ who took up residence here over the last 8 years.
You are right about the dollar...Question for you.
Quote:
Originally Posted by Crookhaven
Me too.
The grim reality is that our houses didnt double in value.Our dollars buying power was diminshed by 50% under the GWB, trickle down, pee on my head and tell me its raining, economic plan.
Its a sad state of affairs when we envy the Canadian dollar.
Whats next the Peso?
We're screwed, but I still say Eastern Brookhaven was a steal in 2000.
I doubt we'll see those levels again based on the $$$ who took up residence here over the last 8 years.
crooks
You are certainly right about the dollar losing its value. After 9/11 the FED pumped out free money like crazy to stem panic in the market, but the result has been the housing bubble and its crash and of course the devaluation of our monopoly paper fed notes.
Here is the dilema:
Choice A: do nothing and risk a total financial collapse - or at least that is what we are told. Perhaps the solvent banks would just buy up the crappy ones for pennies on the dollar. The dead beats will lose their homes, but the market would correct itself.
Choice B: Congress works out its bailout and pumps $700 billion into the system to buy up bad loans. The problem may or may not be solved, but one thing is for sure, the dollar will lose even more value and inflation soars. Expect to pay $10.00 a gallon for imported oil. Plus, we as taxpayers will now have to either pay more in taxes or the government will cut spending in waysd that will actually affect our lives in very undesirable ways.
It appears we are in Check-Mate.
Either way were crewed, but I'd rather go with Choice A because at least the
wealthy elite gets effed as well.
Oh...Here is my Question, can you afford your home today on your current salary with 20% to put down?
Example: If your home is valued at $400,000 today you would need $80,000 to put down and carry a mortgage of $320,000 @ 6% equals a monthly payment of $2560/month. If you add in typical LI property taxes of about $8000/year and home owners insurance the monthly bill goes up to at least $3400/month.
Don't forget you still have to heat that house and keep the lights on.
This whole situation has got me depressed because our government has been revealed to be so corrupt and inept. We are on the march towards oblivion.
It sure is frightening.
Guess you saw the debate. One guy is talking about greed on Wall Street and the other is saying he's going to push early childhood education. Can we redo the primaries to see if we can get two competent people running for President rather than Tweedle Dee and Tweedle Dumber?
You are certainly right about the dollar losing its value. After 9/11 the FED pumped out free money like crazy to stem panic in the market, but the result has been the housing bubble and its crash and of course the devaluation of our monopoly paper fed notes.
Here is the dilema:
Choice A: do nothing and risk a total financial collapse - or at least that is what we are told. Perhaps the solvent banks would just buy up the crappy ones for pennies on the dollar. The dead beats will lose their homes, but the market would correct itself.
Choice B: Congress works out its bailout and pumps $700 billion into the system to buy up bad loans. The problem may or may not be solved, but one thing is for sure, the dollar will lose even more value and inflation soars. Expect to pay $10.00 a gallon for imported oil. Plus, we as taxpayers will now have to either pay more in taxes or the government will cut spending in waysd that will actually affect our lives in very undesirable ways.
It appears we are in Check-Mate.
Either way were crewed, but I'd rather go with Choice A because at least the
wealthy elite gets effed as well.
Oh...Here is my Question, can you afford your home today on your current salary with 20% to put down?
Example: If your home is valued at $400,000 today you would need $80,000 to put down and carry a mortgage of $320,000 @ 6% equals a monthly payment of $2560/month. If you add in typical LI property taxes of about $8000/year and home owners insurance the monthly bill goes up to at least $3400/month.
Don't forget you still have to heat that house and keep the lights on.
Absolutely not....we rolled change to get in the door.
What I'd be in favor of would de a 90 day forbearance on first home Mortgages, I beleive we could catch our breath if given the opportunity.
e
We cant keep diluting the dollar.
Next stop... peso.
I respect your Libertarian ideals but to do nothing at this point would be suicide.
Its sad because we set a horrible precedent that is guaranteed to repeat itself.There is nothing more offensive than corporate welfare.
The Invisible hand of unregulated capitalism has once again fisted the middle class.
Were effed.
As for the local Real Estate market, were deadlocked till Wall Street moves again.
Absolutely not....we rolled change to get in the door.
What I'd be in favor of would de a 90 day forbearance on first home Mortgages, I beleive we could catch our breath if given the opportunity.
e
We cant keep diluting the dollar.
Next stop... peso.
I respect your Libertarian ideals but to do nothing at this point would be suicide.
Its sad because we set a horrible precedent that is guaranteed to repeat itself.There is nothing more offensive than corporate welfare.
The Invisible hand of unregulated capitalism has once again fisted the middle class.
Were effed.
As for the local Real Estate market, were deadlocked till Wall Street moves again.
crooks
I wouldn't be able to afford my home either and that is my whole point. Home prices will have to adjust to the reality of stagnant household incomes. Home devaluation will have to happen or everyone will have to get huge raises. Which one do you think will happen?
When I first bought my home the general rule of thumb was a home shouldn't be more than two-and-half to three times your gross income. I actually followed that advice but at a 2:1 ration. So I'm still in a very good position even with slumping prices. But who would buy my overly inflated home? If the average family on LI brings in anywhere from $75,000 to $120,000/year than average home prices should be around $225,000 to $360,000. So prices should drop even more.
But prices are far higher than that. Why are prices high? because of artificial inflation from the FEDERAL RESERVE which has lowered interest rates - not necessarily a terrible thing until you realize that they are just increasing the money supply which devalues the dollar. However, devaluation of the dollar is only part of the problem. Easy Credit is the other problem. The banks (WAMU for example) allowed people to buy homes with no money down, poor credit histories and low incomes. Thus, demand outstripped supply causing home values to go up - but artificially.
Now everything is heading the opposite direction - DEFLATION. The whole bailout is meant to forestall deflation and try to prop up prices. The big question is will it work?
History say no. It was tried by Hoover and FDR during the Great Depression and did not work. In fact such policies actually extended the depression. The market is saying that deflation has to occur.
If a 200k house was worth 200k in 2000 when a buck was still a buck.
Then a 400k house is worth 200k in 2008 when a buck is worth 50 cents.
As for Eastern Brookhaven, in 2000 you could buy a house for 100k when the same home was 200k just 10 miles west.
Subsequently that 100k home rose to 400k at its top.
I think the bottom is somewhere near 300k so I dont agree with the close to the city analogy. It was a steal out here in 2000. I think this area will hang on to more of it gains than Nassau due to Long Islands Eastward shift and how undervalued it was less than 10 years ago.
As for Eastern Brookhaven, in 2000 you could buy a house for 100k when the same home was 200k just 10 miles west.
Eastern Brookhaven was a steal in the late 90s. I remember homes in Rocky Point, Shirley, etc... for under $100,000 then. Manorville was just starting to develop and brand new homes were under $200,000 there. Miller Place, Mt. Sinai, Center Moriches were all very affordable then as well.
My only fear for eastern Brookhaven would be commuting costs for those who need to get to NYC for work. With fuel prices on the rise, long distance commuting becomes less viable and thus demand for homes further away from the jobs in NYC goes down. Hence home values in eastern Brookhaven will adjust to that reality.
There are other forces at work that may effect home prices in eastern Brookhaven as well, but a combination of energy prices and market correction will cause the main impact.
On the plus side - eastern Brookhaven, and Brookhaven in general, does have more newer homes built in the last ten years. Thus, newer construction 4 bedroom 2 bath colonials can still be bought for under $500,000 in many areas of eastern Brookhaven.
Those are the type of homes that Long Islanders want, but without the commute and the high taxes. I think that is why so many Long Islanders like North Carolina and Pennsylvania. They see those same homes in PA and NC for only $250,000 with a tax bill of about $2,000/year. Not to mention short commutes.
Choice A: do nothing and risk a total financial collapse - or at least that is what we are told. Perhaps the solvent banks would just buy up the crappy ones for pennies on the dollar. The dead beats will lose their homes, but the market would correct itself.
It may sound harsh but I would rather see this scenario as well, rather than the government coming in like Nanny Warbucks to save the day every time. IMO what the housing industry really needs in order to shake things out is some tough love.
Apparantly the current economy still isn't enough to jolt many (most?) sellers on LI out of their housing-bubble delusion as to what their homes are worth in today's market. It makes me wonder what it WILL take, and IMO 'choice A' has the best chance. Here's a good example:
Two weeks ago we went to an open house in the north part of Dix Hills that's listed for $599,999. It turned out that the topography of the house (which wasn't visible at all in the listing photos) was an instant deal killer: It had a very steep driveway and almost no backyard either, because the slope continued on upward. The property was about .6 acre but because of the topography I'd say less than half of it was truly usable. The house itself was attractive but we couldn't take more than a very quick look because there were scented candles and air fresheners throughout the house that made it smell worse than the candle dept in Linens-n-Things. My SO and I both have severe allergies and so we had to get out of there fast but we agreed that the house looked in very nice condition.
However we liked what we saw of the surrounding area, and so when we saw an open house yesterday for the same model house in the same neighborhood we went to check it out. The listing had only one photo, of the exterior, but said that the house had 'many recent updates'. The listing price was the same, $599,999. The property was a bit under 1/2 acre but was noted as 'flat' so that sounded promising. Well, we walked in and were appalled at the condition of the house. The 'recent update' was that they'd replaced the kitchen counter (only) and put a new roof on (according to the agent, just two days before). Otherwise the house was entirely in VERY poorly kept original condition from the 1970s, and dirty to boot. Yet these sellers, or their agent, had priced this disaster the same as the house 2 blocks away that is in far better condition throughout, and clearly with multiple updates. (The amount of usable property was about the same on both, because this second one was a widely flared pie shape having most of the property on the sides and almost no rear.) Our buyer agent who was with us at the time was appalled also, said in her opinion that house was barely even worth 500K, and that to market it the way they are doing is simply a waste of everyone's time. We agreed.
As long as sellers think that they can ask numbers like these for houses like these, prices on LI will not come down appreciably. I'm not saying that every house for sale in LI is still overpriced for today's economy, but far to many are. And IMO it's going to take a severe shakeout of everything connected to the housing market to bring such people out of the 80s and 90s and into reality. Not just a box of band-aids proffered by the government.
Oh...Here is my Question, can you afford your home today on your current salary with 20% to put down?
Example: If your home is valued at $400,000 today you would need $80,000 to put down and carry a mortgage of $320,000 @ 6% equals a monthly payment of $2560/month. If you add in typical LI property taxes of about $8000/year and home owners insurance the monthly bill goes up to at least $3400/month.
Don't forget you still have to heat that house and keep the lights on.
Actually a 320K loan (at 30 years) and 6% would be just over $1900/month, not $2560.
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You are right about the dollar...Question for you.
