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While the article seems reasonable with sound logic, do not be chasing the bottom based on articles like this. If housing can go down 20% in one year, it can also come up 20% sometime in the future.
it may not be such a good idea to wait much longer as its my best guess mortgage rates will rise big time way before that...
the second the fed stops artificialy manipulating the MBS market those rates will soar to match the rise in bond rates they usually track so close.
remember a 1% rise on a 400,000 mortgage is the same monthly cost as if the home shot up 10% to 440,000.00 and thats what you had to borrow.
its not that home prices will rise so fast its the mortgage rates that can.
that in itself can put price pressure on homes as those that were waiting realize that they may get less and less house for the money as rates rise....
so even a cash buyer may end up paying more unexpectedly
While the article seems reasonable with sound logic, do not be chasing the bottom based on articles like this. If housing can go down 20% in one year, it can also come up 20% sometime in the future.
With interest rates at 5% and under, when would you predict it to come back up? Certainly not when the govt finally pushes rates back up to 6%. If people can't afford a house at 5%, they certainly can't afford it with a price increase and an interest rate increase at the same time..therefore, prices are not going back up significantly any time soon. Who will be buying these appreciating houses?
Barring another run on sub-prime loans in our lifetime, the housing market is not going to rebound until employment rebounds in the country. And that will happen...when?
it may not be such a good idea to wait much longer as its my best guess mortgage rates will rise big time way before that...
the second the fed stops artificialy manipulating the MBS market those rates will soar to match the rise in bond rates they usually track so close.
remember a 1% rise on a 400,000 mortgage is the same monthly cost as if the home shot up 10% to 440,000.00 and thats what you had to borrow.
its not that home prices will rise so fast its the mortgage rates that can.
that in itself can put price pressure on homes as those that were waiting realize that they may get less and less house for the money as rates rise....
so even a cash buyer may end up paying more unexpectedly
The problem is that no one will be paying 400K for that 400K house if interest rates go up 1%. The buyer will have to take 360K or most likely won't get an offer, an appraisal, etc.
Some people on this site still think it's 2006. We can raise the price of a house to whatever we want, and since the banks give out money to anyone, we'll get that price!!!!
Those days are over people. Pricing will be determined by what people can afford and what banks are willing to lend, barring another reversion to the 2002-2007 lending practices. Again, when will that happen?
its as silly to assume that housing prices will fall if rates rise slightly from here. its as silly as thinking housing prices should soar because historically we are at the lowest rates ever... its so much more complex..
want to see a sobering awakening.. google mortgage rates vs housing appreciation ... more ofton then not rising rates had greater home appreciation periods then falling rates historically.. with mortgage rates historically around an average of 7% they are far below the norm.
rates tend to rise because they are indicative of a growing economy or potentially growing economy...
in fact the opposite tends to happen, as rates rise the old we better buy now before it costs us even more syndrome pops up.
that tends to push home prices higher, especially the lower end. as someone may have to buy less home then previously.
there are quite a few folks out there who are on the fence about buying but if its going to cost them more and more they just may scramble to buy.
no one knows whats next but anyone who rules out anything playing out other then the way they see it most likly will be fooled.
its as silly to assume that housing prices will fall if rates rise slightly from here. its as silly as thinking housing prices should soar because historically we are at the lowest rates ever... its so much more complex..
want to see a sobering awakening.. google mortgage rates vs housing appreciation ... more ofton then not rising rates had greater home appreciation periods then falling rates historically.. with mortgage rates historically around an average of 7% they are far below the norm.
rates tend to r ise because they are indicative of a growing economy or potentially growing economy...
I think we are in a whole new ballgame and what has been going on in the past will not necessarily translate into the same for the future.
Growing economy used to include growing employment opportunities.
The current "growing economy" means the wallets are growing at the top for the investor class and nothing much is growing for the wage earning taxpayer (on whose spending most of this economy is based).
if we only knew.... we seen some of the most amazing unbelievable events this year. we saw the markets go from the great depression is coming mentality to rising over 100% for some funds from the low.
it was just amazing... i was down in march about 30% on my portfolio and i actually broke a new high last week..
anyone who thinks they can predict whats next is probley going to be wrong
its as silly to assume that housing prices will fall if rates rise slightly from here. its as silly as thinking housing prices should soar because historically we are at the lowest rates ever... its so much more complex..
want to see a sobering awakening.. google mortgage rates vs housing appreciation ... more ofton then not rising rates had greater home appreciation periods then falling rates historically.. with mortgage rates historically around an average of 7% they are far below the norm.
rates tend to rise because they are indicative of a growing economy or potentially growing economy...
in fact the opposite tends to happen, as rates rise the old we better buy now before it costs us even more syndrome pops up.
that tends to push home prices higher, especially the lower end. as someone may have to buy less home then previously.
there are quite a few folks out there who are on the fence about buying but if its going to cost them more and more they just may scramble to buy.
no one knows whats next but anyone who rules out anything playing out other then the way they see it most likly will be fooled.
So you'll see more competition in the lower end, and everything over 450K or so simply won't sell. Again, you can't WISH for a house to sell, and a buyer can't simply make wild offers of 550-600K on average homes when most people aren't getting paid enough to sustain a mortgage that high.
The buyer saying "I want to get in now" bids 400K on a house but the bank shoots them down. the house doesn't sell. Now, unless the seller wants to lower the price, the house sits there. Those who have to sell have no choice but to accept lower bids. It's not just about supply and demand, it's about what someone is willing to lend a buyer...a lot of people want to pretend that isn't part of the equation and that we're talking about Tickle Me Elmo Dolls or something. It ISN'T just about supply and demand.
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