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Its not a buyers market everywhere at all - the media wants everyone to think that way. Now perhaps it is in your own market, thankfully not in mine. Not saying I am selling 3 homes a week, but it's steady and the homes are selling if they are reasonably priced.
Good luck with everything!!!
True. And it can be a seller's market and a buyer's market in the same area, or part of an area, depending on the price range.
By the way, last I heard, 96% of mortgages were being paid on time and were in no danger of foreclosure. The appraisal at the time of the original sale for $500,000+ WAS accurate market value at that time. It may be again - in fact, it seems to me that a lot of buyers are banking on that now, wanting to buy more expensive homes than they could otherwise afford in hopes that those homes will raise in value in future (which, given the cyclical nature of the market, is a reasonable thing to hope for).
By the way, when we are doing a comparative market analysis, we're now allowed to use foreclosures as comps (which can make it difficult in some neighborhoods, I grant you), specifically because they are below fair market value by nature. It's my understanding that appraisers are not allowed to do that, either, for the same reason.
So, if someone wanted to pay more than the asking price for a foreclosure but less than the fair market value as indicated by comps that are not foreclosures, chances are that it would appraise and that they'd still be getting a deal.
YMMV, of course, depending on your market - if there's nothing BUT foreclosures in your entire market, for example.
Yeah but ... what does the previous $580,000 sales price two years ago mean? Nothing ... especially since the person who borrowed on that amount defaulted. We all know about the liar loans, etc. Obviously that price had no relationship to real market value.
Besides ... a $275,000 mortgage is definitely getting way above market rents in the area which, to me, is overpriced.
$275,000 @ 6.5% comes to just under 1,400/mo if you put 20%down. While I understand you are not putting anything down, many do which is where monthly falls in line with rental prices. Even with 0 donw, paymetns are still under 1,800/mo- P&I. Can you really rent a home of that size for that little? In our area, you can't touch one like that for even double @2,800. Even with taxes and interest, you're looking at a monthly under 2,000 if you put even something down. So this to me seems very affordable.
the reason that prices are not adjusting quickly is because banks have been given the cash with which to wait out the crisis. under normal circumstances, banks saddled with hoa fees, property taxes, maintenance and utility costs from reo's would be forced to liquidate their inventory. when i say forced, i mean that the bank needs the cash. there is only one way to liquidate a position when you need cash and that is to auction without reserve.
this is where the $700 billion bailout comes in handy to banks. they can now afford to hold on to empty real estate in the hope they'll get more for it later. if you watch most of the market, you will notice that a high percentage of reo's aren't listed. essentially this gives anyone the impression that inventories are lower than what ther really are and therefore prices aren't coming down as quickly as they should.
what the banks and govt fail to understand is that people are now scared to put their necks out and are only prepared to pay well within what they can afford. add rising unemployment and tightening credit and that means that real estate needs to make a further adjustment down. this tactic of holding excess inventory a not allowing the market to set a price is just delaying the inevitable.
Obviously I cannot speak for the rest of the country or, even, the rest of California but ....I am now officially calling the bottom for the market in my area. After checking listings and looking at properties not only in my immediate area but the next town over ...
Every single house in my immediate neighborhood is now under contract or sold. Every single one of them. So we also looked at the next town over and ... after trying to look at 10 listings ... nearly every single one of those are under contract also.
There was only one property that wasn't under contract ... a short sale ... which totally blew us away because the property was brand new and in mint condition. It didn't even look like anybody had lived there. So, we put in an offer for that today. Short sales can suck in many ways but, at least I can avoid the bidding wars with this one.
Keep in mind that I'm talking about better quality properties that are listed in the $250K range. I'm not talking about trashed properties in bad neighborhoods.
But I am now totally convinced that the bottom is here ... at least in my neck of the woods.
By the way, last I heard, 96% of mortgages were being paid on time and were in no danger of foreclosure. exampl
skyrocketing unemployment and in some areas a high proportion of homes in negative equity. the only way that number will stay remotely near 96% is through mass government intervention.
If you live in Ground Zero of the housing crisis, places such as California, Las Vegas, or South Florida, it's very much a buyer's market.
Elsewhere, however, I get the feeling things have moderated. 10% of the inventory of new homes sold last month, and 10% the month before that. What's more developers just aren't building anything right now for 25% of them have gone out of business, and the remaining 75% can't find lending.
So, counterintuitive as this may seem, we'll probably start seeing a housing SHORTAGE within another 9 months in a good number of market (No, not all. No, not even most. But a sizable proportion where growth before the recession was not explosive and unemployment has remained stable compared to the rest of the country). After all, since construction ground to a standstill at the end of 2007, there are very few housing starts. And with an 18-24 month hiatus in the pipeline, that's going to mean that available inventory will keep shrinking with no new construction to help supplement inventory. So existing home prices and new home prices will actually begin to creep up again.
Yeah, I know it sounds crazy, but again this prediction is for select markets. I also was advising builders to stop building 3 years ago and they said I was crazy then, too. The ones that listened to me then are still in business.
If you live in Ground Zero of the housing crisis, places such as California, Las Vegas, or South Florida, it's very much a buyer's market.
Elsewhere, however, I get the feeling things have moderated. 10% of the inventory of new homes sold last month, and 10% the month before that. What's more developers just aren't building anything right now for 25% of them have gone out of business, and the remaining 75% can't find lending.
So, counterintuitive as this may seem, we'll probably start seeing a housing SHORTAGE within another 9 months in a good number of market (No, not all. No, not even most. But a sizable proportion where growth before the recession was not explosive and unemployment has remained stable compared to the rest of the country). After all, since construction ground to a standstill at the end of 2007, there are very few housing starts. And with an 18-24 month hiatus in the pipeline, that's going to mean that available inventory will keep shrinking with no new construction to help supplement inventory. So existing home prices and new home prices will actually begin to creep up again.
Yeah, I know it sounds crazy, but again this prediction is for select markets. I also was advising builders to stop building 3 years ago and they said I was crazy then, too. The ones that listened to me then are still in business.
i agree with you to a point but i think many people are going to move back in with their folks or vice versa. teens and young adults might put off moving out for a few more years. people will also share space for longer.
i agree with you to a point but i think many people are going to move back in with their folks or vice versa. teens and young adults might put off moving out for a few more years. people will also share space for longer.
Possibly so. But the picture that the media has depicted of foreclosures and new homes staying empty for years just isn't going to happen in most markets. I think there's going to be steady absorption that will sneak up on the marketplace. It bears watching, is all I'm saying.
The other thing to consider is that, while homes requiring a Jumbo mortgage are deader than a mackerel for the near future, the entry level home under $250K really hasn't disappeared as a market, and will probably be the first to come back.
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