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We have lived through housing declines in the past few decades and I do not remember a single downturn that has gotten so much media attention as this one. I really think the media fuels the panic and puts ideas into younger buyers to simply walk because your home is worth less than you owe. Like a drum beat, the oil crisis (yes we have had those before) and housing slumps, we are becoming hysterical by the minute.
We have lived through housing declines in the past few decades and I do not remember a single downturn that has gotten so much media attention as this one. I really think the media fuels the panic and puts ideas into younger buyers to simply walk because your home is worth less than you owe. Like a drum beat, the oil crisis (yes we have had those before) and housing slumps, we are becoming hysterical by the minute.
With all the people walking away because of the value vs bal, then here is another thought how many people should walk away from their autos? Maybe they would if they didn't have to - WALK-
Yeah, it is kind of interesting. This is hardly the first time there's been a bubble that popped. I bought a condo in 1988 that dropped in value by 50% - I wound up holding onto it for 10 years before I was able to sell it for $2K more than I bought it for. When I was house-hunting in 1998 there were a few houses I looked at where the homeowners were upside down. One in particular owed $120K on a house worth $92-94K. They later walked away from the house. Another couple on my street did the same. I guess it just wasn't talked about as much then.
Oh well, glad I'm in a market that's holding steady - my current house is still worth 15% more than I paid for it in October 2006.
It is "media hysteria" and yet ANOTHER reason why I HATE to consider "heavily marketed" developments...
Maybe I rail against the "mega developers" too much but they are MOST susceptible to this kind of mass "stinkin' thinkin' ".
They spend millions on newspaper ads, radio buys, TV time, billboards and their buyers thus are the horde of people that respond to media madness. Once one lemming in their development decided to walk away from a home they very well can afford because their 'on paper' position is upside down the whole damned development can fall off a cliff into the abyss of bottomless devaluation.
More sane buyers might instead buy in areas that are much more stable, where the homes were not all built within a few weeks of each other and the families have roots that go back to a time before iPods. If their "on paper" position is upside down this does not matter as they don't simply "need a place to park" but they WANT a mature community that they are attached to.
I was just at the home center last night. Prices on building supplies have not fallen to a price below where they were four years ago. Wages for tradespeople have not had any sudden collapse. The US has not suddenly annexed a whole new land area. Population is not declining.
When people pull their heads out of their collective behinds they might just realize that well built houses, in desirable areas, priced to accurately reflect all the materials and features that make them worth living in provide a lot of value.
The spike in prices that drove prices up was not a good thing, and neither is a massive dive in prices. When more sane people are the norm and more crazy people stay the heck out of the housing market everyone will be better off.
I was just about to post the same link when I saw this.
I think what makes this go around different than other cyclical downturns is that it is not limited to the usual geographical suspects and that the preceeding boom was fueled by unprecidented speculation on the part of buyers, lenders and investors, a full circle of entitlement and greed.
Relocation companies know better than anyone, just how challenging it is for a homeowner to break even on a resale of any property bought within the last 3-4 years in most areas.
Case- Shiller uses the same data that NAR has available to it. Case-Shiller get's paid for their interpretation while NAR has to tow the politically correct side of the fence and loses credibility.
Despite the hard core evidence, most sellers persist in believing that they determine the market value of their property and their home is different and somehow imune to market conditions
It's kind of interesting to watch some people take their homes off the market, believing that things will improve in 6-12 months, as in the market will instantly recover and return to previous highs. If only.......
Reality is that most markets will flatline at rock bottom, wherever and whenever that is, until all the aged inventory is flushed out of the system. In my area, with an almost non-existant foreclosure rate, generally and broadly speaking, that's about 30 months from whenever, assuming no new inventory comes to market, not a realistic assumption.
Having said this, I am not a doom and gloomer. We all have to live somewhere. Heck, breaking even usually means living rent -free. How fabulous is this. This is a great time to buy in stable areas, when the goal is to put down some roots and/or if corporate relo is backing your move.
Yeah, it is kind of interesting. This is hardly the first time there's been a bubble that popped. I bought a condo in 1988 that dropped in value by 50% - I wound up holding onto it for 10 years before I was able to sell it for $2K more than I bought it for. When I was house-hunting in 1998 there were a few houses I looked at where the homeowners were upside down. One in particular owed $120K on a house worth $92-94K. They later walked away from the house. Another couple on my street did the same. I guess it just wasn't talked about as much then.
Oh well, glad I'm in a market that's holding steady - my current house is still worth 15% more than I paid for it in October 2006.
Unfortunately, the triangle are is hurting very badly now, and the deniers that claimed we're bulletproof are starting to understand this. The effects just took a little longer to play out. Sales are down 27% from last year. YoY inventory is up over 30%. The equity refugees aren't coming down nearly as much as they were. Many new people I know personally who are arriving are choosing to rent for the near to mid term. I also know people leaving the triangle area. Nearly all realtors my girlfriend and I know personally are hurting very badly from a lack of buyer interest. I've made it clear that I don't want to own a home now for some time, ergo my decision to sell and sit on the sidelines for next few years.
We're just late to the "party", but will likely be staying longer after the cleaning crew arrives.
The housing boom started well before 2004.... why would it stop correcting when it hasn't reached to "appropriate" levels... by my calculations.. home prices are still overvalued by as much as 100k... I don't see a problem here... why should it stop at overinflated prices? Because people bought them at ridiculous levels?
Unfortunately, the triangle are is hurting very badly now, and the deniers that claimed we're bulletproof are starting to understand this. The effects just took a little longer to play out. Sales are down 27% from last year. YoY inventory is up over 30%. The equity refugees aren't coming down nearly as much as they were. Many new people I know personally who are arriving are choosing to rent for the near to mid term. I also know people leaving the triangle area. Nearly all realtors my girlfriend and I know personally are hurting very badly from a lack of buyer interest. I've made it clear that I don't want to own a home now for some time, ergo my decision to sell and sit on the sidelines for next few years.
We're just late to the "party", but will likely be staying longer after the cleaning crew arrives.
Sorry, it's not hurting "very badly" in my price range. I can't say whether it will be hurting next year ("late to the party"), but I'm not going to stress over it. I've found a nice reasonably priced house in a desirable neighborhood that I'm going to love living in. Houses there are going under contract in less than a week if they are updated and priced appropriately (and sometimes when they are priced on the high side!). The most expensive house for sale in my current subdivision ($250K) just went under contract when there were others of the same exact model priced up to $15K lower. Honestly, I should just stop reading all this doom & gloom stuff - I've been through the highs and lows of the real estate market and come out okay. I'll never rent again, no matter what the market is doing, but I understand why people choose to do so. To each his own!
Last edited by adlnc07; 06-24-2008 at 10:55 AM..
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It is "media hysteria" and yet ANOTHER reason why I HATE to consider "heavily marketed" developments...
