The real estate arguement irony.... (housing, condos, prices, properties)

[gasgangrene]

would anyone not by a car if they wanted one simply because you thought it may not go up in value or you could buy it next year or the year after cheaper? of course most of us would buy it now...... so why do we play games with our home?

Uh...maybe because my car costs $20,000 and my home costs $500,000?

If the value of my car drops 50%, who cares? At worst I'm out $10K, but realistically, I'm never going to sell it because I can drive it until it falls apart, and it can go with me if I move.

On the other hand, if the value of my $500,000 home drops 50% and I am forced to sell because of a new job, then my life savings dissappears in a puff of smoke. Hey, I agree with the rest of your post, but making the wrong decision when buying a home in a rapidly falling market can have seriously bad consequences.

[mathjak107]

Originally Posted by gasgangrene

Uh...maybe because my car costs $20,000 and my home costs $500,000?

If the value of my car drops 50%, who cares? At worst I'm out $10K, but realistically, I'm never going to sell it because I can drive it until it falls apart, and it can go with me if I move.

On the other hand, if the value of my $500,000 home drops 50% and I am forced to sell because of a new job, then my life savings dissappears in a puff of smoke. Hey, I agree with the rest of your post, but making the wrong decision when buying a home in a rapidly falling market can have seriously bad consequences.

if your home fell 50% your next home will be considerably less too.... if your worried about having to sell at a bad time then maybe a homes not for you...there may never be a right time for you

you risk waiting and waiting for the bell to ring and by the time it does you may pay way more, or you can risk buying cheaper and early.... my money says risk buying cheaper and maybe early before the bottom but good luck identifyintg the bottom

[le roi]

Originally Posted by mathjak107

simple question, would anyone not by a car if they wanted one simply because you thought it may not go up in value or you could buy it next year or the year after cheaper? of course most of us would buy it now...... so why do we play games with our home?

You're right, that is a simple question. The answer is that I don't have to borrow a few hundred thousand dollars to buy a car, and also, there are fewer alternatives to buying a car, since renting a car is not cost-effective.

[mathjak107]

See above answere , it still applys....

markets are extremely efficiant and always turn around long before the first signs of a turn around are even visible... in the equity markets turn arounds usually are 6 months ahead of the first signs things are getting better... typically by the time the signs show the juciest and easiest gains are gone..... in the housing market you can spend tens of thousands more by waiting until you can go aaahhhhh now it looks good

ITS ALL YOUR CHOICE

[le roi]

Originally Posted by mathjak107

See above answere , it still applys....

Your answer that if I have to sell my home for a 50% loss, therefore all homes will sell for a 50% loss?

I guess that works reasonably well if I'm only planning on moving around my neighborhood.

markets are extremely efficiant and always turn around long before the first signs of a turn around are even visible...in the equity markets turn arounds usually are 6 months ahead of the first signs things are getting better...

If equity markets are so efficient, why did they react so slowly to the looming insolvency of AIG, Fannie, and Freddie?

And if you think real estate markets are efficient, I just don't know what to tell you. Houses are highly leveraged and illiquid.

in the housing market you can spend tens of thousands more by waiting until you can go aaahhhhh now it looks good

Sure. You can also end up spending far less by waiting. It just depends on the market conditions, doesn't it?

[mathjak107]

yes markets are efficiant, its the companies that lied and mistated the numbers... but ill tell you this that drop from june to october was incredibly efficiant once the real numbers came out.....

you can what if yourself to death about making the buy, but tons of data show typically as humans we do the reverse , we wait to long and buy higher and sell lower , for me i would take the shot and buy before things go up....

things may never go up though but if you want a house get a house....

you need to do what lets you sleep at night

we all envision like this sudden rise and someone kind of rings a bell and says okay now buy but it rarely looks like that.... the confusion never ends..... is it a blip the rise? is it for real? ill wait? ill buy?


I jumped in last year and bought a 2nd home, it probley dropped but you know what? im loooooving every second of being there,.....

[KCfromNC]

Originally Posted by rubber_factory

Your answer that if I have to sell my home for a 50% loss, therefore all homes will sell for a 50% loss?

I guess that works reasonably well if I'm only planning on moving around my neighborhood.

Yep, agree, with one additional point - you have to pay in cash. If you put anything less than 50% down, you'd be underwater at the sale of the first house and have nothing left to buy the next one.

[KCfromNC]

Originally Posted by chet everett

Completely agree. I have seen none of the "cheer leaders of doom" say they want to get a fixer upper or some modest starter home at a great price and hang on to it for a extended period and ride that up in value. All I've seen is an argument that "the bubble pushed everything too high". Well YEAH, and the collapse has taken out most of the that NOW.

Until the collapse has taken out all of the bubble excess, not just most, there's no reason to get anxious. The way bubbles crashed in the past, the low point was a bit below what you'd expect normal prices to be as the market over corrects in both directions.

This is primarily a window into the loss of confidence that has pushed buyers to the sidelines

Nothing wrong with a loss of confidence if there's good reasons to be less than optimistic about the market.

For example, this is a good sign prices have more to fall :

but in some places rentals are cheaper and nicer.

[mathjak107]

i suggest anyone looking to make a crucial financial decision to read jason zweigs book your money your brain...

it features an in depth look at making financial decisions using real people with money on the line and then places many of them in mri's and brain scans to see what we do as humans

ill cut to the chase, human nature is we hate to loose money more than we like making it. we as humans tend to do exactly the wrong things at the wrong time... we paralyze ourselves with fear when we should be buying and we buy when we should be taking money off the table...

when theres blood in the streets and the word real estate or stocks make you want to vomit is the time you should be buying.. when it looks like we are headed to hell in a hand basket thats the time... normally our reaction is lets wait and we dont act. we normally wait until we see things go up. by that time its to late or we are now at a higher level than had we done it earlier...

so heres what i want you to think about ... if your waiting to buy a house whats the magic sign your waiting for thats your all clear?

odds are if its the real estate market stabilizing its stabilizing because we are well into a economic recovery already and homes are selling...

so heres the risks of waiting: if economic activity picks up you can almost bet interest rates may too, so you may get a higher rate.. home prices will have started to increase, your chance of negotiating becomes less as things stabilize, lets not forget your paying rent and not amortizing your mortgage , the better deals and homes may be already gone and worst of all your not enjoying your house.... to me thats the biggest deal about waiting... last year i myself made the decision to buy and you know what i dont regret it for a second... its not an investment its a place to live, its a place to enjoy..... if the market drops 10% more so what, im not selling it anytime soon and if i thought i might have had to id never have bought in the first place....... enjoy your house, pay a fair market price and enjoy your life,,,,everything else is secondary

[KCfromNC]

Originally Posted by mathjak107

so heres what i want you to think about ... if your waiting to buy a house whats the magic sign your waiting for thats your all clear?

Stabilization of sales and a return of inventory back to normal levels, for one thing. And a return to historical levels of affordability and cost versus renting. And people finally capitulating on how good an investment real estate is. A "death of real estate investments" cover on Time magazine would be a nice touch.

so heres the risks of waiting: if economic activity picks up you can almost bet interest rates may too, so you may get a higher rate.

If you could accurately predict mortgage rates you wouldn't be here. You'd be happily retired siting on a beach some where lighting cigars with hundred dollar bills.

home prices will have started to increase, your chance of negotiating becomes less as things stabilize,

If house prices have stabilized back at normal levels, there's less need to negotiate because they'd already be in line with incomes, rents and so on.

lets not forget your paying rent and not amortizing your mortgage

You do basically 0 of this the first few years of owning a house anyway. To be more accurate, you should have said "lets not forget you're paying rent and not paying interest, taxes, and insurance - neither of which you ever see again".

the better deals and homes may be already gone and worst of all your not enjoying your house....

You can enjoy a house that you rent instead of own. It's especially enjoyable to rent a house for less than it would cost to own.

if the market drops 10% more so what, im not selling it anytime soon and if i thought i might have had to id never have bought in the first place....... enjoy your house, pay a fair market price and enjoy your life,,,,everything else is secondary

As others have mentioned, how do you determine a fair market price for a commodity that's in the middle of correcting from bubble euphoria back to a normal market?