How is much should I offer for this house in Saddle Brook?

[Lusitan]

Originally Posted by JG183

believe it or not, I agree with you 100% on that sentiment.

thing is, there are a great many qualified, responsible people out there who want to buy a house, and are being scared into delaying it.

and, they are miserable where they are living presently.

I don't want to bail out anyone, but housing is now, inextricably, an integral part of the US economy... as soon as housing stabilizes, everything else will fall into place.

to hope for a continued fall in housing is to hope for a continuation & deepening of the recession.

there will no longer be any sub-prime, or zero-down mortgages, forget it. they've been beaten out of the system.

Well, then perhaps our disagreement comes down to who is a "qualified buyer". The banks' definition of "qualified" means jack at this point - it's clear they have no idea how to decide if someone is qualified or not.

My definition of qualified buyer:
- has 20% to put down on a house
- not buying anything above 3x (or max 4x) annual income
- mortgage + taxes + homeowners insurance will be less than 28% monthly income
- total debt payments (house, car, student loans, credit cards) will be less than 36% monthly income
- has a solid emergency fund of 6 to 12 months living expenses built up (that will not be used to purchase the house)

Many people will say this is "unattainable." It's not unattainable, but it is difficult, I'll grant that. What makes it difficult is that house prices are way out of whack with people's incomes, especially in this area. House prices are coming down, and prospective buyers should be enlightened of that fact, and encouraged to save up to meet the above definition of "qualified buyer" so that they will be able to purchase a good house at a fair price once house values stop sinking.

It's a win-win situation -- the buyers exercise a little patience, save up money to meet the true old-fashioned standards for "qualified", and as they are doing so prices are falling so that they will meet their goal sooner than the could ever expect.

That's what a 25% drop in home prices in 1 year will do for you; and we may see more significant drops in 2010 and 2011 the way things are going.

[sholden]

Originally Posted by JG183

believe it or not, I agree with you 100% on that sentiment.

thing is, there are a great many qualified, responsible people out there who want to buy a house, and are being scared into delaying it.

and, they are miserable where they are living presently.

I don't want to bail out anyone, but housing is now, inextricably, an integral part of the US economy... as soon as housing stabilizes, everything else will fall into place.

to hope for a continued fall in housing is to hope for a continuation & deepening of the recession.

there will no longer be any sub-prime, or zero-down mortgages, forget it. they've been beaten out of the system.

The problems are much deeper than just overpriced housing. So even when housing prices return to normal levels the US economy is still in trouble.

It wasn't really overpriced houses that were the problem, the real problem was that people consumed their "equity". By taking out HELOCs and blowing the cash on consumption. A significant percentage of consumption was hence sustained by housing prices increasing (not just being high, they needed to increase). That consumption is toast and will not return even when housing prices stabilize.

Since the US economy is a house of cards built upon consumption it will need to find a new lower level - so lower living standards for us all.

There's a really simple way to "stabalise" house prices. Drop the prices to 1998 levels and those buyers will snap them up. But we're destined to have a long drop since no one wants to do that. Of course inflation is another way.