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I have money, they have a house for sale. I want a house and they presumably want my money. I have made cash offers of 160k on houses listed at 180k and had the realtor refuse to even forward the offer. The simple fact is, they did the sellor a great disservice. There are many, many unsold units listed at 180k and very, very few potential buyers with 160k in their hand. I can wait. Next year the offer would be 140k most likely, but I will have found what I'm looking for by then at my price and their house will still be unsold. The new market reality sucks, but it's here.
I have money, they have a house for sale. I want a house and they presumably want my money. I have made cash offers of 160k on houses listed at 180k and had the realtor refuse to even forward the offer. The simple fact is, they did the sellor a great disservice. There are many, many unsold units listed at 180k and very, very few potential buyers with 160k in their hand. I can wait. Next year the offer would be 140k most likely, but I will have found what I'm looking for by then at my price and their house will still be unsold. The new market reality sucks, but it's here.
Yeah, and it will be a case of 'shoulda woulda coulda' for the sellers.
What still baffles me is the fundamentals of this issue are not any more complicated to understand than pets.com stock with a valuation of $200/share based on no earnings back in late 1999.
People can explain until they're blue in the face how homes are a good investment, how they're better than renting, how real estate is regional, or how the market is bottoming and how prices can't go lower. They won't believe there are any other possibilities until something dramatic happens.
I mean, is a healthy housing market one in which the FHA buys 80% of new mortgages through MBS vehicles? And one where OVER 20% of their total portfolio, to the buyers who are supposedly getting 'great deals' and who are better qualifed based on tighter underwriting guidelines are delinquent on their mortgages?
And, what's even more frustrating, is the complacency towards the banks and financial institutions which created this whole mess, fattening themselves the first go around by taking money given them to create this Ponzi scheme, only to then take even more money from the middle class vis a vis the many ongoing financial bailouts.
Home prices will go lower. Either your seller will capitulate next year and take the 140k, or maybe they'll wait 5 years and sell for 200k when the dollar is worth 10-20% less than it is today, meaning they waited longer to sell for the same amount. If they're very lucky, some uninformed buyer who only reads the headlines will believe what they HEAR and not what they SEE will buy the property, and maybe the sellers get their ask or close to it.
The sellers who aren't underwater, IMO, are the ones at a real advantage. They perceive being able to wait out the market as a luxury, but for most, it will only mean they are forced to take less when the time comes when they MUST sell.
In the All Real Estate Is Local file, I live in the part of Florida that didn't get massive, massive speculation 04-07, unemployment is in the 6% range, and the Air Force is in the process of moving 2500-3000 net positions into the area.
The short sales and REOs are drying up, price drops are slowing (-4% YTY when a lot of Florida metros are -20%+ still) and the people who don't absolutely have to sell now are perfectly happy to wait for another year to try to get their price. And they'll probably get it then. The Air Force owns about 95% of the land in the part of the county where people want to live, and that land is now 90% built out. I don't see a return to boom prices anytime soon, but as long as the F-35s are still headed down here and the VA is still underwriting loans, then I don't see prices falling that much more because of the local structural issues.
This whole, homes are worth more / homes are worth less / timing the market thing is irrelevant flack.
I'm in a fairly fluid situation with housing. Having bought and sold more than once every three years. People warn me about the market, tell me not to buy and not to sell. It really is irrelevant.
If I own a 3,000 sq foot home and the market goes down 30%
Then when I sell that home, I get 30% less cash. But the home I buy is likewise 30% less cash. So I get the same home.
If I own a 3,000 sq foot home and the market doubles. Then when I sell that home, I get 100% more, but the home I buy is likewise 100% more.
It makes no difference what the market does.
The only time it impacts me is when I cash out.
And since I intend to own until the day I die, it impacts me even less when I cash out.
Who gives a FargleMuffin (there I go again) what the market does?
This whole, homes are worth more / homes are worth less / timing the market thing is irrelevant flack.
I'm in a fairly fluid situation with housing. Having bought and sold more than once every three years. People warn me about the market, tell me not to buy and not to sell. It really is irrelevant.
If I own a 3,000 sq foot home and the market goes down 30%
Then when I sell that home, I get 30% less cash. But the home I buy is likewise 30% less cash. So I get the same home.
If I own a 3,000 sq foot home and the market doubles. Then when I sell that home, I get 100% more, but the home I buy is likewise 100% more.
It makes no difference what the market does.
The only time it impacts me is when I cash out.
And since I intend to own until the day I die, it impacts me even less when I cash out.
Who gives a FargleMuffin (there I go again) what the market does?
That is true if you have no mortgage.
However, let's do the math and apply to the current housing predicament.
You bought a 3000 sq ft starter house for 100k in 2006, and put down 20k, and took out a mortgage for the other 80k.
Market goes down 30% in 3 years, but you're still ready to buy a new home. You've saved up 20% for the home you want to buy, which was $130k 3 years ago but is now listed for 91k. So you scrape together 18.2k to put down to qualify for a decent 30 year mortgage.
You sell for 70k. Now, you need to bring 10k + your closing costs to the table, plus buyers want you to pay their closing costs as well. Let's say another 7k. You only have 2k in equity after 3 years based on a 30 year amortization schedule. So you have to pay 17k at closing. After closing costs, you have 3.2k left over.
You are short 15k you need to buy your next place, assuming the seller of that property will pay your closing costs as you had to do for the buyers of your home.
I understand this is probably not YOUR situation, but it is the reality for MOST people, especially where I live.
In fact, for MOST, it's probably worse, because in 2006 they did not put 20% down on their home. They put down anywhere from 0% to 10%, AND took out either an ARM or some sort of loan with a teaser rate.
Also, for every person like you who purchased a home between 1989-2000 who made 100% or more, keep in mind someone had to buy that property from you and was probably left holding the bag when prices declined.
buyers want you to pay their closing costs as well.
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for MOST, it's probably worse, because in 2006 they did not put 20% down on their home.
uhhhh, I'm thinking not.
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keep in mind someone had to buy that property from you and was probably left holding the bag when prices declined.
That's my point, it doesn't make any difference if rices declined.
I may be wrong, but I think the majority of us live within our means and don't all have 80% plus mortgages.
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but it is the reality for MOST people
MOST is a pretty strong word.
I'll still stick to my gut that the majority of people are reasonable when they get a mortgage. Sure lots of people overextended themselves, and that makes news. People like me don't make news.
Over the long haul housing prices go up.
And it's an investment you live in. Unlike stock in blue chips.
Yep GM made the news; but the far majority of the stocks didn't and may be in tough times, but will live to see the boom that inevitably follows every bust.
In the long run, these cycles make no difference.
But then, in the long run, we are all dead.
Show me an example of how housing prices have gone down over the last 25 years.
Yeah, its a roller coaster, but the only ones hurt are the people trying to get off, mid ride.
Show me an example of how housing prices have gone down over the last 25 years.
Houston, TX.
Prices are over 10% below where they were in 1984 in real dollars. Using the FHFA's price index, in 2q 1984 the index was at 103.48, or about 215 in 2009 dollars. The most recent 2q 2009 index is at 191.
And that was buying a couple years after the peak of their local bubble. Overpaying for a house is forever.
This whole, homes are worth more / homes are worth less / timing the market thing is irrelevant flack.
I'm in a fairly fluid situation with housing. Having bought and sold more than once every three years. People warn me about the market, tell me not to buy and not to sell. It really is irrelevant.
If I own a 3,000 sq foot home and the market goes down 30%
Then when I sell that home, I get 30% less cash. But the home I buy is likewise 30% less cash. So I get the same home.
If I own a 3,000 sq foot home and the market doubles. Then when I sell that home, I get 100% more, but the home I buy is likewise 100% more.
It makes no difference what the market does.
The only time it impacts me is when I cash out.
And since I intend to own until the day I die, it impacts me even less when I cash out.
Who gives a FargleMuffin (there I go again) what the market does?
Someone in your shoes shouldn't care what the market does. Any losses you incur will be out of existing equity. You're on the merry-go-round already, you've seen the boom days.
I'm not on the merry-go-round yet. If I buy a house and it loses 30%, it screws up my life pretty badly.
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Originally Posted by Tenzo
Show me an example of how housing prices have gone down over the last 25 years.
Well no kidding, take a look at what mortgage rates have done over the last 25 years.
Then the best (unsolicited) advice I would give is get on the merry go round at a level that is comfortable and financialy reponsible for you.
I got on in 1989. Was paying $1,200 in rent, so I bought a place at $40,000. That is a pretty safe bet.
I'll give you my example, but I already admit it is not typical.
1989 Bought a place for $40,000
1995 Fixed it up and sold it for $86,000
1995 bought a place for $127,000
Got married to wife who had a place she bought for $179,000
2002 Fixed it up and sold it for $450,000
2002 Sold hers for $320,000
2002 combined equity and bought a place at $650,000 (no mortgage)
2008 (June) Sold place for $749,000
That's a lot of cash. But it's not real money.
Now, admittedly my timing worked out right.
On the other hand I sold the last place when the market sucked.
But if I had continued to pay rent, I would have payed out $288,000 in rent.
So, I'm over $1M for buying and not renting.
And I've weathered out the largest boom and the largest bust.
No matter how dire your predictions, I'm pretty sure I will be able to get my original $40,000 back.
In the mean time, my wife and dog have enjoyed a nice home.
Friend bought his house in 1998 for 155,000...
2005 his house was worth $500,000 +
Right now his new assessment is $440,000....3 years into the decline.
There is definitely something wrong with this picture....
In 7 years his home should of only appreciated maybe $100,000...
No, it appreciated $350,000
And here we are and his value has only dropped $60,0000...
No middle class person gets a raise this huge, nor should houses have raised this huge
Something is definitely wrong with this picture here in NJ
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