Wait at least one more year before purchasing house!

[mikec34]

Originally Posted by TerryTurtle27

Every year they push the bottom of the market out another year. Much more pain ahead for Phoenix in the coming year. If you don't want to lose 100% of your 20% down payment, don't buy in the year ahead.

Money magazine real estate: Home price forecasts and housing data for Phoenix - Money Magazine on CNNMoney.com

Except that there's a an 8k credit one can get if they buy this year, assuming one meets the criteria. And, if people buy a house to make it a home and not an investment they can sell off in 3 years, then it doesn't matter if your house balloons +/-500%. Unless, of course, you do investments in the real estate market and have plenty of capital to gamble with. The average joe should instead buy somewhere they want to live and raise their family at. Still, one should try and gauge the market, but as one waits for prices to fall, interest rates may go up....yadda yadda.

If you buy now and prices defalte 20%, you wouldn't actually lose 100% of 20%. Your payment to the bank would stay the same. Only when and IF you sell would you lose that money provided things dropped 20%. But we don't want anymore hosue flipper sin AZ anyways! And we don't want anymore Americans that don't know WTF an ammorization schedule/table is to keep selling every 3-4 years either. We don't want to continue lining the pockets of banks while Americans own nothing and the banks own everything...

[markas214]

Originally Posted by mikec34

But we don't want anymore hosue flipper sin AZ anyways! ...

House flipper sin! Typo but funny. I wonder how many Hail Marys a Catholic house flip sinner must to say for absolution.

[azjack]

"If you buy now and prices defalte 20%, you wouldn't actually lose 100% of 20%. Your payment to the bank would stay the same. Only when and IF you sell would you lose that money provided things dropped 20%. But we don't want anymore hosue flipper sin AZ anyways! And we don't want anymore Americans that don't know WTF an ammorization schedule/table is to keep selling every 3-4 years either."

Of course, sometimes during those three or four years, stuff happens like marriage, divorce, death, transfer, job loss, or other positive/negative events. That is when expediency matters, and being underwater is a major inconvenience. If one is dead, it probably matters little. But having to turn down a great promotion or live with your estranged spouse because of an underwater house is a real pickle of a situation. When prices stop rapidly spiraling downward, that is the point for smart end users to pick up a house that they can afford to put twenty percent down on with a loan less than three times annual income.

[mikec34]

Originally Posted by markas214

House flipper sin! Typo but funny. I wonder how many Hail Marys a Catholic house flip sinner must to say for absolution.

[mikec34]

Originally Posted by azjack

Of course, sometimes during those three or four years, stuff happens like marriage, divorce, death, transfer, job loss, or other positive/negative events. That is when expediency matters, and being underwater is a major inconvenience. If one is dead, it probably matters little. But having to turn down a great promotion or live with your estranged spouse because of an underwater house is a real pickle of a situation. When prices stop rapidly spiraling downward, that is the point for smart end users to pick up a house that they can afford to put twenty percent down on with a loan less than three times annual income.

Absolutely. Housing can go downward or stay relatively flat any time, though, so those risks are always there and should always be fully understood before borrowing so much debt from a bank. These risks can be somewhat mitigated with careful planning and responsible borrowing. It's just a frustrating time for a lot of people right now...and it just plain sucks.

[Captain Bill]

Originally Posted by mikec34

Absolutely. Housing can go downward or stay relatively flat any time, though, so those risks are always there and should always be fully understood before borrowing so much debt from a bank. These risks can be somewhat mitigated with careful planning and responsible borrowing. It's just a frustrating time for a lot of people right now...and it just plain sucks.

Life's a ***** ----- And Then You Die

I just had to do that. You're absolutely correct in your assessment. We could hit the bottom and head up, and another disaster strikes, so that prices go down again. Everything is a risk, and risks should always be measured against the reward.

[Captain Bill]

I see two very distinct markets. One is the distressed market, which consist of bank owned homes, and pre-foreclosure short sales. Many of the distressed homes have been vandalized and even gutted, so they have lost a tremendous amount of value. That may artificially lower the median price in an area or a price range.

The other is the regular market consisting of the arms length homes that are not in foreclosure or a bank owned.

If an arms length home becomes forced to move, or forced to sell for some other reason, then that person will have to compete with the distressed market in order to sell today. That may change as the supply continues to decline and the demand continues to increase.

However, if they are in no rush to sell then there is no reason for them to lower the price by very much.

Looking at the average instead of median price, or following prices in a zip code in a given range such as 300-400 or 400-500 etc may reveal that there has been more of a decline in these home values.

While it may happen, it doesn't necessary follow that every price range will come down as much as the prices in the lower range.

During the past few months I've helped several buyers buy homes in the 350k range in Gilbert and Mesa. We found that it was difficult to find the home meeting the criteria, and it was not unusual to find one meeting the criteria that was already under contract.

If anyone is planning on buying in that, or a higher range, I would suggest not taking my word for what is happening, but to get out and look now to get a street wise feel for the market at this time. Then you may experience what others, who are trying to buy now, are experiencing. Then when you are ready to buy, you'll know what to expect.

One client was looking for a home in the 250k range, and out of a list of 7, there were 2 that were a perfect fit. They both went pending before the client could see the homes.

[markas214]

Originally Posted by Captain Bill

I see two very distinct markets. .

I'm curious. Do you have an idea of how many listings are actually non-distressed, owner occupied and bought pre-boom? From what I see they make up a low percentage and are priced at least 50% higher than distressed or bank owned.

[Axiom]

Originally Posted by Captain Bill

I just received this email discussing the new HUD incentive programs. Haven't digested it yet but thought I'd post it here for discussion purposes.

A HUD home is a 1 to 4 unit residential unit that HUD has taken back through foreclosure on an FHA insured mortgage. The home did not sell at the Trustee Sale so HUD becomes the property owner and places it up for sale.

Anyone can buy a HUD home if you have the cash or can qualify for a loan.

HUD Homes are first offered to buyers using the home as their primary residence.

After the priority period for primary residence buyers, they are available to all buyers, including investors.

“The Department of Housing and Urban Development ("HUD") has a new buyer's incentive program which recently went into effect allowing home buyers to purchase a HUD homewith only a $100 down payment under certain circumstances.(Guidelines attached above)

The $100 down payment HUD program allows people to buy homes in which they plan to live, using an FHA loan. The government is waiving their standard down payment requirements in order to sell their HUGE inventory of foreclosed properties.

Closing costs, homeowners insurance, property taxes, and even repairs can all be financed using this special federal purchase-money loan program. The loan amount may go up to 110% of the homes "as is" appraised value. The appraisal is provided by HUD, which is another benefit of this program. The buyer doesn't have to pay for an appraisal, so there's virtually no chance the appraisal will be challenged in underwriting. So again the only amount needed to buy a new home is a $100 down payment!

HUD has also initiated a special $1,000 sales allowance paid at closing to owner occupant purchasers on full price HUD homes. The government currently has a large inventory of homes available qualifying for this special, limited time program, in cities all over Arizona - Phoenix, Scottsdale, Tempe, Gilbert, Glendale, Chandler, etc.

FHA 30-year fixed interest rates are at an all time low. First-time home buyers (individuals not owning a primary residence within the previous 3 years) are able to receive an $8,000 tax credit on their taxes! To qualify for this credit in 2009, buyersneed to close on the home before December 1st 2009!!!

Honestly, this scares the bee-gee-bees out of me.

I hope this fabulous new "buy a house with only $100 down" government program is at least requiring sensible DTI levels and verifiable income numbers.

Of course I think people should have some skin in the game when they're making what is likely the largest purchase of their lives. I also think creative affordability products actually made homes less affordable. So take my comments with that frame of reference in mind.

From what I can tell the loan program with the lowest rates of default, even when prices decline, is a standard 30-year conventionally amortizing loan with at least 20% downpayment and conservative debt-to-income ratios.

Unfortunately far too many people don't seem to care about the long term consequences of their financial decisions. They're too busy focusing on what they can have in the here and now. I point to interest only financing deals and rampant HELOC abuse as just a couple of examples.

I worked at a new car dealership for awhile and I was amazed at how many people had no clue what their final cost was going to be, how long the loan terms were, or even how much they were overpaying... as long as they could somehow make that monthly payment number. Seems the same has also been true in RE.

I hope this program doesn't enable people to buy houses without really having a sense of financial ownership and responsibility. I fear it will.

I think people are more likely to have that sense of responsibility if money they scrimped and saved for, or even begged and borrowed to come up with, is involved in the form of a downpayment... as long as they can't extract it all, and more.

[KCfromNC]

Originally Posted by Axiom

Honestly, this scares the bee-gee-bees out of me.

I hope this fabulous new "buy a house with only $100 down" government program is at least requiring sensible DTI levels and verifiable income numbers.

Why worry? The FHA has shown remarkable judgment in the loans it's made so far ...

FHA program strained by record loan defaults - The Boston Globe

WASHINGTON - Federal Housing Administration mortgage-insurance programs are at risk as record home-loan defaults erode the government agency's reserves, the inspector general of the Housing and Urban Development Department said.

The agency has never been under more strain, as other sources for lenders to finance and insure mortgages have dried up and as policy makers create new FHA programs for riskier borrowers, Kenneth Donohue told a Senate Budget Committee panel on housing yesterday.