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Isn't putting down 3.5% and depending on government involvement through guarantees eerily similar to what got us into this whole mess in the first place? Did anybody learn anything at all? You put 3.5% down and the market turns just a little south in your area and guess what? More upside down homeowners in financial prison. Put down 20% or just rent...
i agree. but this is why FHA loans aren't as easy to get as they were before. They also don't make much sense for a lot of borrowers right now anyways.
Quote:
Originally Posted by Marc Paolella
If the job situation and general confidence are restored sufficiently, then prices can go up despite higher interest rates. Now if interest rates suddenly jump to 10%, all bets are off, but a gentle rise to 7% is not going to kill the housing market if the economic recovery picks up enough steam.
Of course that can only ultimately happen if we have a pro-business, pro-individual, anti-collectivist, anti-socialist government. Which means you-know-who and everyone like him has to go in the next election...
I've been on the market for a house for a good while now. And all I have heard ad nauseum is that it is a buyer's market. Well, someone didn't get this message over to the sellers. I don't think it is a buyer's market but rather I think there exists a stalemate between buyers and sellers. I think there are two main categories of people:
1) People who refuse to accept the realities of the economic climate/real estate market. I think these people bought their homes when prices were low (80s, 90s) and didn't put much into their homes. While perhaps their homes are clean and well maintained, stepping foot inside is like stepping foot inside a 1985 model home. Now the home is outdated, older, and a bit more worn. However, they cling onto the thought that they can "make a ton" when selling their home and that Jane down the street, who sold her house 6 years ago, doubled her money, so why shouldn't they? They paid $200 K and now want $400 K for a home they put nothing into because others got that 5,6,7 years ago.
2) People that overpaid for their homes or bought their homes during the prime of the real estate boom and as a result, they have a severely overpriced listing price. They might have paid $500K for their home in 2005 and are now looking to begrudingingly sell for $460K, not realizing a fair market value in today's market might suggest a listing of $380K.
Thoughts?
I did not read any other responses before responding. I just had to click "Quote" and respond.
Brother, you said a mouthful! I call it Real Estate Math. Buy it for $350K, invest $50-$75K and it will be worth $350K. Whiskey-Tango-Foxtrot.
Some of the houses I have seen were exactly as you have described.
The market is defined by what a seller is willing to sell for and what a buyer is willing to buy for. This is what drives me crazy when people discuss real estate! If a person bought their house in 2006 and you want that particular house you HAVE to pay more for it. If you don't want to pay more...go find another house, there are plenty out there!!
If you're in the market to buy and can wait, I can assure you, WAIT. Been saying this for over 2 years now. I mean don't exactly try and time the falling knife, if you are ready and willing to stay for the next 15-20 years then, do it. Applying this to the local area (North and Central Jersey).
If all of the things you describe happen (rising taxes, interest rates, COL, etc.), yeah, actual house prices may go down, but it's not going to be any easier to afford one. So I guess you're right in that maybe it is best to wait, but who knows how long is a good time to wait, because if all of those things do happen, people may be waiting for awhile...but then again I guess that's better than jumping in and buying a house you may not be able to afford a couple years down the road
The market is defined by what a seller is willing to sell for and what a buyer is willing to buy for. This is what drives me crazy when people discuss real estate! If a person bought their house in 2006 and you want that particular house you HAVE to pay more for it. If you don't want to pay more...go find another house, there are plenty out there!!
You forgont one main thing...
If that person wants to sell their house that they bought in 2006, THEY ARE GOING TO HAVE TO TAKE A LOSS!
Look at homes that go on the market, don't sell, de-list, and than a few months later, bammo...back on the market with the same over-priced listing!
No one is entitled to get a house at a certain price just because that's what they think it should be priced at.
the folks i bought from sold me their house that they bought in around 2005/06 for around what they paid for it. they also did about $80,000-$100,000 in improvements while they lived there. but...they also took advantage of the down market and bought something in mendham. it's all relative and people need to remember that. if you're selling your house to buy another house...you're buying that other house at a discount. the only time this becomes a problem is if you're upside down on your mortgage, which is your own fault. you took a risk with a low down payment or a HELOC that you spent, and that risk blew up in your face. it happens.
there's no rush to buy a house, but if someone finds one they can afford, it's a good time. even if prices go lower, interest rates aren't going lower, only higher. most people can say that with relative certainty at this point, even though we all know nothing is certain.
No one is entitled to get a house at a certain price just because that's what they think it should be priced at.
i remember the house i wanted most the lady actually was looking for a price and wouldnt budge because apparently she wanted to move to nyc and thats what she needed for what she was looking for.
its a shame i didnt get my pick because of her silliness. it would have been more work than the house i ended up with so i guess it worked out alright. oh and the lady who sold it to me, sold it for 94k less than she paid in 2005.
the folks i bought from sold me their house that they bought in around 2005/06 for around what they paid for it. they also did about $80,000-$100,000 in improvements while they lived there. but...they also took advantage of the down market and bought something in mendham. it's all relative and people need to remember that. if you're selling your house to buy another house...you're buying that other house at a discount. the only time this becomes a problem is if you're upside down on your mortgage, which is your own fault. you took a risk with a low down payment or a HELOC that you spent, and that risk blew up in your face. it happens.
there's no rush to buy a house, but if someone finds one they can afford, it's a good time. even if prices go lower, interest rates aren't going lower, only higher. most people can say that with relative certainty at this point, even though we all know nothing is certain.
that's not necessarily the case in all situations. there are people who bought homes they could afford, with 20% down. through a need to relocate, or whatever - they could easily be underwater if their home decreased over 20%, which is not out of the realm of possibility nearly everywhere!
that's not necessarily the case in all situations. there are people who bought homes they could afford, with 20% down. through a need to relocate, or whatever - they could easily be underwater if their home decreased over 20%, which is not out of the realm of possibility nearly everywhere!
i think 20% declines in NJ are pretty rare, unless they literally bought at the peak, and now need to relocate near the bottom, whenever that was or is. but if someone bought a home and need to relocate in less than 5 years, they should have considered that possibility when they decided to buy.
i'm sorry, but i have little sympathy. i'm no expert on real estate by any means, but i was walking around in 2005 and 2006 and asking how people were able to afford homes at these prices with the incomes most people in the area have. it was completely illogical to me then. when i purchased my home, i ended up with a home that was approximately the same cost as my rent. i also considered the fact that if i got laid off, my wife can pick up extra shifts in her job. it would not be fun, but we'd easily be able to cover the mortgage payment far past our emergency fund running dry.
if someone bought a home they could afford, made payments weekly or biweekly instead of monthly, and the house dropped 20%...they would still have equity in the home.
by a house you can afford on less income than you currently take, and you shouldn't encounter this problem.
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So True!
