Are we approaching a bottom in housing? (4%, mortgage, price)

[tickyul]

Originally Posted by user_id

This is how realtors think of it, namely "there are no buyers". But economically that isn't the answer, instead its "there are no buyers at current prices". Lower the prices and you'll find your buyers....

The anemic pace of sales in real estate right now is due to all the price fixing that the government has attempted, that is there is a supply/demand imbalance at current prices because the market isn't being allowed to clear.

Long-term this is all rather destructive, retiring boomers think they have more wealth than they really do, younger generations are being forced (when they actually purchase) to transfer wealth to older cohorts, etc.

This nails it

The correction in the housing market was halted by Big Brother doing their best to stop a natural and healthy decline in VERY OVERINFLATED housing prices.

I am one of those potential buyers........lower the prices and I will buy.

[mathjak107]

there are areas that have fallen as much as 65- 70% and there are few buyers . in port st lucie florida my cousin paid 320k to have a house built.

at 120k there are still no buyers.

in fact many banks in florida are offering 2 homes for the price of one and there are few buyers.
the banks cant insure them or if they can manage to get insurance the cost of insurance is so high they just want to unload them.

like i said its not just about price. close to free isnt even bringing buyers out in any great numbers . there is just to many other factors at work cutting demand and desire to buy a home so making a general statement like drop the price more than likely wont do a thing.

it reminds me of a managment seminar i went to and we had to rate what we thought were important about a job in order of what we thought counted the most.

we all had salary number 1..... it actually turned out that once the basic needs of food and shelter were covered salary fell drastically on the list and number 1 was recognition for a job well done.


any way getting back to the topic the point is we all go "lower the prices" but the real reason there are few buyers is far deeper than price and just dropping the price has buyers wanting a new lower price from that point. like saying i want a raise and you get the raise and 2 weeks later its not even a motivating factor anymore or solved the real issues of why you dont like your job.

[wawaweewa]

It's not that prices are still way overinflated. Many people would buy but they will not qualify for
Loans or they can't front the downpayment. Many folks who can afford houses a these prices are simply insolvent or too debt laden themselves.

[mathjak107]

The issues we had when we sold the last central park apartment in early 2010 was the bank pre-approved the buyers.

When it came time to close the banks didnt have enough money to loan so they would triage the money.

We had 2 banks approve them and give it to buyers of single family homes where the risk to them was less than with co-ops, where they are actually second mortgage holders .

Finally the 3rd bank gave them the money

[k374]

well, homes in Orange County, California are being swept up in droves and prices are also going up... we could be seeing a small rally here. I've noticed most of the listings are pending or sold and i've heard there is a buyer frenzy now with multiple bids. Prices are still high though, i'm guessing most of these loans are FHA since the average property price is $350,000 and a 20% down on a non-FHA loan means bringing close to $80,000 to the table...I doubt people have $80,000 + 8 months expenses ($110,000-120,000 just lying around).

[DSOs]

Originally Posted by tickyul

This nails it

The correction in the housing market was halted by Big Brother doing their best to stop a natural and healthy decline in VERY OVERINFLATED housing prices.

I am one of those potential buyers........lower the prices and I will buy.

This is it in a nutshell. Why would I want to buy a house that's overinflated in price via underwater homeowner, squatters, DEBT, Bank solvency issues, etcetera?

It doesn't matter how much prices already came down; the underwater homeowner, squatters, DEBT, Bank solvency issues, etcetera are artificially inflating Real Estate prices.

If little to no downpayments continue (status quo) buying a house will be like buying a new car; it's easy to buy, but will depreciate faster & have questionable resale value (neglect via no skin in the game/who cares mentality).

[wawaweewa]

Originally Posted by DSOs

This is it in a nutshell. Why would I want to buy a house that's overinflated in price via underwater homeowner, squatters, DEBT, Bank solvency issues, etcetera?

It doesn't matter how much prices already came down; the underwater homeowner, squatters, DEBT, Bank solvency issues, etcetera are artificially inflating Real Estate prices.

If little to no downpayments continue (status quo) buying a house will be like buying a new car; it's easy to buy, but will depreciate faster & have questionable resale value (neglect via no skin in the game/who cares mentality).

Many areas prices are not over inflated anymore. There have been huge drops in the preceding years.

NYC is probably the strongest urban market and prices here (Brooklyn) have dropped about 30% since 2007. That's a huge drop for any market, let alone the strongest market. Other parts of the nation have experienced 50%+.

[eskercurve]

Locally to Seattle and the area, there's a funky market going on now.

There's bidding wars and price inflation, and other signs of a bubble market in the desirable areas of Seattle city proper.

Then in the suburbs there's the houses that languish because they're either a) poor / out of vogue designs, b) poorly maintained or c) far away from amenities or bus lines that go to them. But in the suburbs, houses that are hot or priced right are snapped up immediately.

I think what's happening it's a bipolar market. There's a lot of sellers who don't put their houses on the market because they're afraid of taking a huge loss, and combined with the sellers with cold houses that depress houses with new houses being constructed still, prices are being depressed in the suburbs (and some of the houses that languish are still priced ridiculously high).

In the city though, it's location location location. A shortage of sellers combined with a growing population and being "cool" neighborhoods with good schools means you'll always have price wars.

So I think the city will start seeing prices increase, but the suburbs will still have a ways to go.

[DSOs]

^^Notice eskercurve’s use of the words bubble, bipolar, & funky to describe the Seattle area (no offense intended). How can a homeowner be reasonably sure of a desirable area when The BANKS/99%/Economy are on thin ice?

There’s too much crony-inflation:

• The BANKS need to keep housing prices inflated to maintain legitimacy/solvency.

• The homeowner needs to keep housing inflated for investment/solvency reasons.

• The real estate industry needs housing prices inflated for commissions & continued commissions via the next sale in the neighborhood.

• The States/Counties need to keep housing prices inflated for tax collection/area desirability reasons.

• The FEDERAL Gov’t needs inflated housing prices so they don’t have to bail EVERYBODY out.

A lot of money is being diluted/wasted/burned to keep the natural course of events from occurring! It’s a sad situation; the Gov’t/Banks/People can’t even take a healthy correction hit without being destroyed financially!

[eskercurve]

I read with and concur with much of the rest of the thread.

I do think a shift in values has happened with my generation (I just turned 30). We don't see houses as piggy banks or safe investments. We see them as a commodity, and a flawed, high cost, high maintenance, high headache, and illiquid type too.

Houses have all the MAJOR pitfalls listed here:

1. was worth 3-5x your annual salary, which means you will need to take on a mountain of debt to take it,
2. and at the same time say that you have to constantly fix it, worry about gas leaks and explosions, Chinese drywall, poor construction, and other hidden gremlins that can appear after only many years of inhabitance, and other headaches of maintenance;
3. without constant work, the value will plummet and will be "behind the times" when you do go to sell it, meaning when you do sell it it's in the best state it's been in years, perhaps decades, and you'll never get to enjoy it
4. others who don't care about maintaining their property and/or developments will cause massive drops in the home value anyway
5. having to shell out even more money in a great area with good schools and bus lines, amenities, etc.

Among others. If I tried to sell someone anything other than a home, 100% of people would tell me to go take a hike.


On the other hand, current tax laws are skewed towards home ownership, and then there's the "I want a house/land" mentality.



I admit falling into the latter camp. Reason: I HATE OTHER RENTERS!


The pitfalls of renting are:

1. Rents ALWAYS go up unless the right economic mix happens, which is once every 40-80 years
2. The landlord / corporation does not care about you: you are a number, a sack of money
3. Other renters have no sense of responsibility and have no respect for common areas, amenities, or other renters (when was the last time you drove near an apartment and had a "home" feeling? Unless you live in NYC, I doubt ever)
4. You're still doomed to pay through the nose for other things you may want/need

The biggest reason for me is obviously 2 and 3. My upstairs neighbor is an elephant of a man. People let their dogs poop all over the place. Other people have zero concept of what it means to turn off the gas to the grill, or how to clean it. Weights were stolen out of the workout room. And instead of addressing all these issues, they instead decide to renovate the common area and remove parking to get extra storage room to milk the residents of more money. Greeeeeeat, NOT!


So for me, personally, I'd much rather own a home.



Some would rather rent. That's fine, more power to them.


But I do agree more people would rather put up with renting than buying now, and I don't see that changing anytime soon.


At least that holds in the cities. No so sure about heavily suburban areas, like St. Louis Co. or Indianapolis, or other medium sized cities.