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Well, you can put your fingers in your ears and say "lalala...I'm not listening." If you really think it will help.
And you can take chicken little's advice then, build your bomb shelter and buy up all the canned goods you can!
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Originally Posted by scone
This is the BIG hidden assumption-- somehow a vast thundering herd of investors will ride to the rescue to save the day. Where they are going to come from, with Europe, Japan, and China all simultaneously slowing down, or in outright recession, is never stated.
To the OP: google 'global recession' and start reading the economic blogs discussing this. And take a look at The Economist for this week. Forewarned is forearmed.
Well I'll admit it is an assumption, anyone speaking about the future of things is assuming many things, even you and those google economic "blogs" your talking about . All I know is that investors go where the money is, if they start being able to make money on rental housing, THE MONEY APPEARS! Doesn't matter where it comes from but it finds its way.
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It doesn't take a disaster to cause rents to go down. Say a significant number of properties can be owned for less than rent. Some people buy them to live in them, but also some investors buy them to rent them out (obvious choice since they are cash flow positive). That increases the supply of rental houses on the market, driving down rents since supply exceeds demand.
This can continue to drive prices and rents down in lockstep until the outstanding supply of houses for sale returns to normal levels.
Your right it doesn't, that's why I've said all along the OP needs local help to figure things out. However I think things have more to do with overall housing supply. That's what broke the back of the bubble here in orlando, there were a gazzillion builders building anywhere they could find land and made more housing than there were people living in the area. It's cliche' but true, "people will always need a place to live", and if the normal american is given a choice to buy or rent for the same price they will almost always go for purchasing, and if not an investor will buy it for a little less and happily rent it to someone. The only time that really gets out of whack is with the recent over supply of homes. I don't know about the OP's area, but here, builders have cut building by 90% I'd like to say, and we have a positive population influx. Rents dropped a little over the past 2 years, but not much, and they are certainly not dropping anymore here at least.
ANYWAY, OP, tell us what you decide. You can muck around on these forums for eons, but until you get local info, or at least put your 220K offer in on that foreclosure to see if you can even get it for a good price, this is all academic.
The point you should buy at is the point you feel most comfortable buying. If you buy today your home may be worth less next year, but are you selling it next year? If you wait until you are certain home prices aren't going to fall any further, then be prepared to not have all of these foreclosures and sellers galore, you'll be competing with many other buyers at that time because if you are sure, everyone else will be too!
This makes so much sense. We want to buy a home now in another state but won't be living in it for 3 years. It will be a home we will always live in, so even though we are told by the real estate agent "it hasn't hit bottom yet", we don't want to miss it. If we buy it and it falls further, well we were not going to sell it anyways, so we got it 40,000 then it orginally was listed at. Thanks for your comment.
Hopefully in your calculations you've also included the VA required funding fee of up to 3.3% of the loan amount. If you can't pay it up front, it will be rolled into your mortgage thereby increasing your monthly payment.
Good point. I forgot about that ... thanks for the heads up.
On the other hand you don't have PMI with VA loans so, hopefully, it makes up for the difference.
I'll crunch the numbers again with my mortgage broker.
And you can take chicken little's advice then, build your bomb shelter and buy up all the canned goods you can!
This situation has been compared to a neutron bomb, since it leaves the buildings standing and wipes out people.
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Well I'll admit it is an assumption, anyone speaking about the future of things is assuming many things, even you and those google economic "blogs" your talking about .
Um, yeah, like The Economist, the Wall Street Journal, The Financial Times, Bloomberg, and the major city dailies-- all of whom quote the best of the blogs, especially Calculated Risk and Housing Wire.
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All I know is that investors go where the money is, if they start being able to make money on rental housing, THE MONEY APPEARS! Doesn't matter where it comes from but it finds its way.
Yes, my son, for many moons, thundering herds of investors have appeared at the time of the equinox, we must make sacrifice to ensure a good hunt for mortgage money...
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if the normal american is given a choice to buy or rent for the same price they will almost always go for purchasing, and if not an investor will buy it for a little less and happily rent it to someone.
And right now even the magic herds of investors aren't buying, so that should tell you something...
Um, yeah, like The Economist, the Wall Street Journal, The Financial Times, Bloomberg, and the major city dailies-- all of whom quote the best of the blogs, especially Calculated Risk and Housing Wire.
Yep all of them don't have a crystal ball either and are making their assumtions like the rest of us.
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Originally Posted by scone
Yes, my son, for many moons, thundering herds of investors have appeared at the time of the equinox, we must make sacrifice to ensure a good hunt for mortgage money...
LOL, who shall we sacrifice?
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Originally Posted by scone
And right now even the magic herds of investors aren't buying, so that should tell you something...
Maybe not in your neck of the woods, I see PLENTY in the market buying property up all around here.
In theory, the problem is this time around the credit markets are collapsing too. If investors can't get loans then that greatly reduces any sort of bottom investors can create. Cash investors are by far the minority.
Anyhow, with a decent down payment buying when PITI <= rent isn't so bad even if prices continue to decline a bit. Perhaps you could get it cheaper if you waited, but at least you are unlikely to be underwater. But with no or little down you are gambling on not having to move in the next 7~10 years. Using a 20/year fixed would make it less risky as you would be paying off the principle faster. I personally, don't understand why anybody takes out a 30/year mortgage regardless of market conditions, but I'm not fond of giving away money in the form of interest payments.
Also, 100% financing is evil. If you can't save for a down payment you shouldn't be buying a house. Spending tax dollars to make housing less affordable...lovely idea.
In my neck of the woods (San Francisco area), rents have gone up as fast as prices have gone down. But you'd be getting ahead of yourself if you thought you could base a purchase on that, because right now renting is the most financially stable option with values on the decline and credit being so hard to come by, so of course demand for rental properties is going to be huge. Once the market settles down you'll see the rental market calm down as well.
Without reading all the responses to the OP you are buying at the foreclosure price so you are getting ~80k equity based on the market value of the house. Even if the market value of 300k fell further you'd probably still end up buying the house for 220K from the bank.
If the market value were 250K and you are getting in at 220K then I'd be wary.
I'd buy if you really like the place and if you think you'll be there for at least 5 years.
Once the OP buys the house at $220K, they have a house with a market value of $220K. The selling price is kind of the definition of market value, after all. Don't fall for the "instant equity" line - if there really was instant equity, some smart investor would buy it and flip it in a week.
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And Tinkerbell's their agent...
