rumours of realestate crash in 2010?

[Delphi]

If this happen, home price will head south in 2011. I would rather like to buy in normal buying environment where Govt is not trying to deny the free market rules.

Morgan Stanley Sees 5.5% Note as U.S. Faces Deficits (Update2) - Bloomberg.com

[smile116610]

Originally Posted by DodgeViper01

Of course things can possibly slow when incentives are not given but that was already mentioned by me. My argument is with the value being saved. Over the period of a loan, you are still coming out on top. Even if like you said rates are higher and prices are lower, you still end up paying more because prices from pre-2000 are never coming back. Everyone remembers the early 1990s with rates at 12%+. With the economy being where it is now, the best time to buy is now.

As for what I told people in 2006, I knew that this was coming and told many clients about the possible crash, and that was not even my job. Besides anyone who is looking for a home should know they are able to make their own decisions and not make a $250K+ decision based on what their agent says. That would be just foolish and I would like to think that my clients are not dumb and give them more credit than that.

Lastly, as for the $250K price range, that is my most popular client today. I am located in Central NJ and that is actually the most popular price range for all my transactions. Last month I moved three properties and they were $224K, $250K, and a rental worth $275K.

There are more advantages to paying higher rate than paying higher home prices.

I am going to list some based on your market of $250,000.

At interest rate of 5% for 30 years the payment will be
$1342/month

After 1 year principal paid will be about $3600 ($300 principal *12 months)

Interest paid (for tax ded.) will be about $12000 ($1000 interest * 12 months).

Now is I buy the same house for $200,000 becuase interest rate at historic level say 8%. ( I have not tried to get the monthly payment down to $1342, that will bring the home price further down).

At interest rate of 8% the payment will be
$1467/month

After 1 year principal paid will be about $1608 ($134 principal *12 months)

Interest paid (for tax ded.) will be about $16000($1333.33 interest * 12 months).

Eventhough my payment went by 125 dollars a month.
The buyer saved $50,000.
Higher tax deduction by $4000.00. Therefore more tax saving, as I am paying less income tax.

In my humble opinion it is easier to payoff $200,000 than $250,000. House will maintain it's price, rather a gamble buying at 5%.

Thanks.

[Zizza]

This is the biggest problem as I see it. I'm not a real estate expert, but as you can see, there are a lot of different types of loans set to reset in 2010 and especially 2011. You've heard about subprime, and now you're likely to hear about Alt-A and option adjustable rate mortgages. These were sold to shady, but not the shadiest homebuyers (who got the subprime loans).

I'm sure someone will want to make the argument that since interest rates are low, the resets won't be an issue. Well, haven't the rates been incredibly low for several years? Surely, that hasn't saved anything. A lot of these homebuyers have been paying low monthly teaser rates that would take them a century to pay off (obviously this is an inexact number) and that hardly make a dent in the principal. Soon they may have to pay a larger portion of the principal on a monthly basis.

Caveat: this chart is a couple of years old so it is possible that some of these homeowners have already defaulted. Still, from what we've seen, people like to stay in "their" houses as long as possible, and it is taking banks a long time to foreclose on homeowners, so my guess is that we could see another wave of declines in the works.