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I also find it ironic that the much touted argument "prices must return to affordability levels" is mysteriously left out of these posts...
Like I said before, the doom is not all about affordability. There's something else fueling these type buyers once you scratch the surface
Did it occur to you that "these type buyers" might actually be more than one "type" ?
Highly depends on the location and history of the house and neighborhood. Why, because there are houses in the "ghetto" that are/have experienced this price change. Would 167k be a bargain for a poor condition, poor location house? There must be a reason it only sold for this price ("insider" deal, poor condition, bad location, etc...).
Lots of inventory that needs to be offloaded quickly, and few buyers. Because it's an auction, there's no holding out for better prices on the part of sellers -- it's a liquidation sale.
I am not, but it just seems others are hoping and praying real estate won't keep declining without employment to stop plummetting and wages to stop declining. While all those house loans, MBS, CDS, etc did cause this mess, a rise in house prices (or even it flatlining) won't fix this mess.
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Similarly rising house prices signify easy availability of financing, solid employment, confidence in the future.
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I have no idea why you feel our currency is "housing backed", as there is really no direct tie between the value of one and the other.
It's called the money multiplier. There is a base money supply which can then be increased through bank loans. So during the bubble, the money supply was increased by all the loans given to individuals/investors. This is why the house prices went up so high. It was because of the increase in the money supply (or we can call it the availability of credit).
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The "money supply" is not really set by the same kinds of banks that lend to home owners, nor are mortgage rates set through any direct action of the US central bank...
True, but lower the Fed Funds Rate to say uhh .25% and what do we get? Very low mortgage rates.
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Stimulus checks were rather ineffective in helping to turn the economy last spring, but they were popular with certain segments. Not sure those voices have many listening to 'em now.
$600 dollars won't do much, nor will $8/week. But get rid of Obama's nonsense spending for useless special interest garbage and just do this:
4 Trillion divided by all the American households and you get $40,000. And there ya go, economy stimulated.
Originally Posted by middle-aged mom The culture who feel entitled to paying no more than 20% of peak are seeking what they feel is their due and it most certainly reeks of emotional revenge.
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Originally Posted by sheenie2000
Yet again, ignoring the fact. The fact is prices have declined in many areas, many neighborhoods, many specific houses have droppped MORE than 20% and yes even in Charlotte where supposedly there was no bubble. It has NOTHING to do with entitlement. It's stating a fact that yes a person CAN pruchase a home MORE than 20% off of peak price in many many areas.
Let's try this again.....there are people who expect to pay 80 % less than peak, regardless of area.
I am probably one of these "unrealistic" buyers. I've been shopping for a condo - condo market has been hit really badly in the area I am shopping in. I'm expecting to pay 50% less than peak!
Deals I have personally witnessed:
- 2BR/2BA condo on 18th story highrise - sold for $500K in 2007, sold for $183K March '09
- 2BR/2BA condo on 21st story highrise - sold for $400K in 2005, sold for $160K Feb '09
There are also new condos available from the developers for 50% of the original asking price. Auctions are becoming more and more popular as that is turning into the best way to unload properties. In the past 3 months, 4 condo buildings have had auctions to try to move their inventory.
I am probably one of these "unrealistic" buyers. I've been shopping for a condo - condo market has been hit really badly in the area I am shopping in. I'm expecting to pay 50% less than peak!
Deals I have personally witnessed:
- 2BR/2BA condo on 18th story highrise - sold for $500K in 2007, sold for $183K March '09
- 2BR/2BA condo on 21st story highrise - sold for $400K in 2005, sold for $160K Feb '09
There are also new condos available from the developers for 50% of the original asking price. Auctions are becoming more and more popular as that is turning into the best way to unload properties. In the past 3 months, 4 condo buildings have had auctions to try to move their inventory.
I don't think you are unrealistic. I think you want to get what you pay for. A good home that isn't overpriced.
As a buyer in ANY market, I feel I deserve the most bang for my buck. This hasn't changed for today's economy. However, due to the current inventory, we were able to do something we weren't able to do before - skip the "starter co-op" and go right to "home we would live in till hopefully retirement." There's no point for people to buy starter homes these days (for those saying that FTHB need to stop feeling entitled to larger homes) - why? It's a good possibility that it won't sell for much a few years down the road, if not less - we'd be setting ourselves up for failure.
A 4BR home in one of the best neighborhoods in my town has a wide range of prices - well under 200k, to well above 500k. We're choosing the responsible route, and going with the low end - again, a smart financial move on our part, and also because the market has changed from the bubble years - why should we spend 300k+ on a home which is identical in size, age and upgrades as one that is well under 200k? We'd be pretty stupid to do so, if we weigh all our pro's and con's as equal.
So yes, I expect to get what I consider to be "a deal" on our home - and we are. The inventory is out there - we didn't scheme to put it there. It isn't my fault that owner-occupied homes are priced at "300k FIRM FSBO" when the exact same house down the block is almost half the price. There is no hidden agenda, no emotional revenge - it's called common sense. We would have done this in the bubble years if even the "starter co-ops" were reasonably priced - but they weren't.
Originally Posted by middle-aged mom The culture who feel entitled to paying no more than 20% of peak are seeking what they feel is their due and it most certainly reeks of emotional revenge.
Let's try this again.....there are people who expect to pay 80 % less than peak, regardless of area.
There are several posters on this board who try to justify bubble. In contrast, even the likes of "Pismo Clam" stops short of this in the subject line:
As a buyer in ANY market, I feel I deserve the most bang for my buck. This hasn't changed for today's economy. However, due to the current inventory, we were able to do something we weren't able to do before - skip the "starter co-op" and go right to "home we would live in till hopefully retirement." There's no point for people to buy starter homes these days (for those saying that FTHB need to stop feeling entitled to larger homes) - why? It's a good possibility that it won't sell for much a few years down the road, if not less - we'd be setting ourselves up for failure.
A 4BR home in one of the best neighborhoods in my town has a wide range of prices - well under 200k, to well above 500k. We're choosing the responsible route, and going with the low end - again, a smart financial move on our part, and also because the market has changed from the bubble years - why should we spend 300k+ on a home which is identical in size, age and upgrades as one that is well under 200k? We'd be pretty stupid to do so, if we weigh all our pro's and con's as equal.
So yes, I expect to get what I consider to be "a deal" on our home - and we are. The inventory is out there - we didn't scheme to put it there. It isn't my fault that owner-occupied homes are priced at "300k FIRM FSBO" when the exact same house down the block is almost half the price. There is no hidden agenda, no emotional revenge - it's called common sense. We would have done this in the bubble years if even the "starter co-ops" were reasonably priced - but they weren't.
If your market truly has the EXACT same house down the block for half then you are correct to take the more affordable house. Some very wacky pricing must exist in your neck of the woods.
Near my home there is not too much of that. Generally the homes that are priced higher are MUCH newer, larger, with more features / amenities, and often in different school district. Literally homes that face each on opposite side of a border street can be worth hundreds of thousands more / less if one is the more desirable school district...
Such pricing difference are not due to any bubble effect, but merely the historic level of success that students are likely to experience in one school district vs the other.
There is something related to this that may be tied to bubble pricing: there were a rush of newbie developer / flipper types that bought in the section served by the less desirable school BUT PAID PRICES more inline with the desirable school. A large number of these developers have since defaulted / been foreclosed, as the educated buyers would not pay the exorbitant asking prices that were unsupportable in the less desirable area.
Have no idea if that sort of thing is in effect in your market (I sorta doubt it, as folks tell me that SC had a different kind of education system than IL), but ANYTHING like that can also result in large price difference between nearby homes that otherwise are identical. The jurisdiction / tax issues in Illinois are something that most experienced real estate agents / local appraisers are well acquainted with, but too many lenders and "remote office" types are clueless about this. Makes doing short sales and similar "bank approval" transactions a royal pain...
I am following you, except when you say younger generations "do not fully consider" these issues.
Are you saying that these extra costs of our generation should have a positive or negative impact on the cost of housing?
I think you need to go back to the " new deal" for that.
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No experience with your market...
