Housing Market Bust

[Xavier434]

Originally posted by: Vic
Finally, the biggest losers here and the biggest fault (if fault is necessary) belongs to those buyers who were most greedy. There was an irrational expectation that home values would continue to appreciate at a rapid rate forever. In the last couple years, a large percentage of people buying homes were talking about nothing but the profits they were going to make. Many would refuse to take fixed rates even if their loan officers tried to talk them into it.

I agree with that. A lot of people out there thought they could go out and buy a second property in places like California and South Florida thinking that the values could only go up and that it was practically free money. Big mistake. The guys who had enough cash to pay for that property monthly are suffering but they will be ok. The people who don't have money and were relying on the mortgage and taxes to stay low are getting screwed. They either relied too heavily on renting out the house or can no longer afford the mortgage payments. Those who were renting their houses cannot get a tenant willing to pay the price it costs to cover the mortgage payments, taxes, and insurance and the owner cannot afford to make up for the difference even if they do lower the cost of rent to something that is competitive.

 

[IGBT]

..are the properties really under valued?? or are they finally comming back to true value reality?? property flippers have done enormous damage to fundamental values.

 

[JeffreyLebowski]

You know a simple way for the mortgage companies to keep from people defaulting on their loans when the ARM is up, is just leave everyones ARM at the intro level or up it by .5% or whatever the difference would have been if they went with a conventional loan at the begining and stop being so damned greedy. They want the borrow to foot the bill because they made loans that they knoew would come back and bite them in the ass.

 

[Xavier434]

Originally posted by: IGBT
..are the properties really under valued?? or are they finally comming back to true value reality?? property flippers have done enormous damage to fundamental values.

This is true on a case by case basis. However, I'd say that property flippers have really tried hard to abuse the system and raise the appraised value of properties to numbers beyond what a lot of people are willing to pay. My guess is that the figures that the appraisers are coming up with for a lot of properties will go down some in about year. It may not be drastically lower, but probably noticable. Competition alone once the bubble bursts will ensure that I think.

 

[Trey22]

I live in CA. I hate the housing market. I make an above-average salary and still can't afford to buy anything other than house w/ wheels.

Sheesh, there was an 800sq ft house in Palo Alto that went for 7 figures. That's just sick.

I laugh at all everyone who said, 1)there is no bubble and 2)if there is, it won't burst.

 

[Xavier434]

Originally posted by: Trey22
I live in CA. I hate the housing market. I make an above-average salary and still can't afford to buy anything other than house w/ wheels.

Sheesh, there was an 800sq ft house in Palo Alto that went for 7 figures. That's just sick.

I laugh at all everyone who said, 1)there is no bubble and 2)if there is, it won't burst.

Anyone who believes there is no bubble is simply wrong. I can understand why they might believe that is the case though. They probably do not live in places like Cali or South Florida where the prices have grown out of control to the point of disbelief in the past 2 years alone. The bottom line is that no one is buying in these places which means something must change. When it does begin to change, everyone who needs to sell must follow through with the change in order to be competitive. Then you got yourself a good old fashioned real estate price war. This will be followed by the banks adjusting their rates and loans. Thus, the bubble will have burst.

 

[Slew Foot]

Originally posted by: JS80
if you bought in 2005 you are up like 20-40% in CA so selling 10-20% "below current market" they are still up a boat and will not result in a short sale.

Not necessarily. Houses in San Diego and the Central Valley are around 20-40% DOWN from that point.

 

[Vic]

Originally posted by: Slew Foot

Originally posted by: JS80
if you bought in 2005 you are up like 20-40% in CA so selling 10-20% "below current market" they are still up a boat and will not result in a short sale.

Not necessarily. Houses in San Diego and the Central Valley are around 20-40% DOWN from that point.

Links to back up this claim?

 

[IGBT]

Originally posted by: Xavier434

Originally posted by: IGBT
..are the properties really under valued?? or are they finally comming back to true value reality?? property flippers have done enormous damage to fundamental values.

This is true on a case by case basis. However, I'd say that property flippers have really tried hard to abuse the system and raise the appraised value of properties to numbers beyond what a lot of people are willing to pay. My guess is that the figures that the appraisers are coming up with for a lot of properties will go down some in about year. It may not be drastically lower, but probably noticable. Competition alone once the bubble bursts will ensure that I think.

..property flippers also drive up property taxes. the vast majority of home buyers simply want a roof over their head and shouldn't be victimized by real estate grifters with deep pockets and a bucket of paint.

 

[PingSpike]

Originally posted by: IGBT

Originally posted by: Xavier434

Originally posted by: IGBT
..are the properties really under valued?? or are they finally comming back to true value reality?? property flippers have done enormous damage to fundamental values.

This is true on a case by case basis. However, I'd say that property flippers have really tried hard to abuse the system and raise the appraised value of properties to numbers beyond what a lot of people are willing to pay. My guess is that the figures that the appraisers are coming up with for a lot of properties will go down some in about year. It may not be drastically lower, but probably noticable. Competition alone once the bubble bursts will ensure that I think.

..property flippers also drive up property taxes. the vast majority of home buyers simply want a roof over their head and shouldn't be victimized by real estate grifters with deep pockets and a bucket of paint.

Who needs deep pockets when you've got a 0% down interest only 50 year mortgage!

 

[dullard]

Originally posted by: Vic

Originally posted by: Slew Foot
Not necessarily. Houses in San Diego and the Central Valley are around 20-40% DOWN from that point.

Links to back up this claim?

I'd like to see that claim verified as well. Median selling prices in San Diego metro area: peak was $613.1K, recent low was $579.8K. That is less than a 6% drop. Also note how prices have creaped back UP since that low.

 

[Henrythewound]

Idiot people buying what they can't afford by lying on their apps and idiot lenders wanting to earn a quick buck by not investigating the borrower properly is what caused this. People are idiots. I am a homeowner and have a low fixed rate. Every time a creditor called with some "amazing" refi offer I told them my rate and they simply said "have a nice day" because they cant touch it.

 

[Slew Foot]

http://flippersintrouble.blogspot.com/

The Sacramento area and the central Valley are the same. I haven't checked SD in a few months but it was running similar last I ran them. Selling prices aren't really true indicators for pricing as a whole, especially now with subprimers out of the game, medians are artificially higher since people who are more qualified tend to purchase more expensive homes.

My personal rental, sold for 450K in 2005, current asking, $340K.

 

[dullard]

Originally posted by: Slew Foot
Selling prices aren't really true indicators for pricing as a whole, especially now with subprimers out of the game, medians are artificially higher since people who are more qualified tend to purchase more expensive homes.

A dozen homes out of hundreds of thousands isn't a true indicator for pricing as a whole either. The median is far more accurate than that crap you keep linking.

Yes, some people paid too much for a house. But that doesn't mean that housing prices are falling. Your link could have happened anywhere at anytime even in a rising market.

 

[yuppiejr]

This is a natural and inevitable adjustment in the market - the financially unsound and those who took the risk of offering them mortgages are being flushed out of the market which will temporarily suppress home values as supply greatly outpaces demand. Eventually the market will come back around and the smart buyers who see it coming and invest in property BEFORE they start to appreciate in value at a pace faster than other investment vehicles will reap the benefits. The risk averse get rich quick geeks will once again sweep in at the very end when properties are at the top of their value, invest in a bunch of "flip" houses and get their clocks cleaned when the market adjusts itself again.

Every person who signed up for a mortgage did so of their own free will, if they get stuck because they made poor financial decisions with the money they saved in an ARM, a second mortgage or any other sort of risky loan it's entirely their fault and those individuals should deal with the consequences. I find it ironic that certain politicians scream at lenders to provide options to people who aren't credit worthy but turn around and punish the lenders for "predatory" lending to high risk borrowers.

The idea that some neo-socialist politicians are proposing a bail-out makes my blood boil... Reward the financially foolish by giving them a free house and let the rest of the taxpayers foot the bill just to win a few votes? Unreal...

 

[Xavier434]

Originally posted by: yuppiejr
The idea that some neo-socialist politicians are proposing a bail-out makes my blood boil... Reward the financially foolish by giving them a free house and let the rest of the taxpayers foot the bill just to win a few votes? Unreal...

What are these proposed bail-outs you are referring to? I'd like to read about this.

 

[Vic]

Originally posted by: Slew Foot
http://flippersintrouble.blogspot.com/

The Sacramento area and the central Valley are the same. I haven't checked SD in a few months but it was running similar last I ran them. Selling prices aren't really true indicators for pricing as a whole, especially now with subprimers out of the game, medians are artificially higher since people who are more qualified tend to purchase more expensive homes.

My personal rental, sold for 450K in 2005, current asking, $340K.

Oh great, anecdote and more FUD from you. :roll:


You're approaching McOwen level, pal. I just think you should know. Assuming that the "subprimers" were all buying cheaper homes is just ignorantly assinine of the actual market. Subprime loans were frequently used to buy more expensive homes. Fannie caps its loan amounts to $419k and Alt-A/Jumbo was/is much more restrictive. OTOH, lower-tier purchases are most frequently done with conforming and government programs, which have remained virtually unchanged throughout all this, and the lowest tiers remain the strongest parts of the market whereas the higher ends have practically ground to a halt.

Here's a tip: stick to your profession, because the more you post about this, the more you expose how you don't know jack about mine. I'll return the favor by not posting FUD about your profession.

 

[Slew Foot]

Originally posted by: dullard

Originally posted by: Slew Foot
Selling prices aren't really true indicators for pricing as a whole, especially now with subprimers out of the game, medians are artificially higher since people who are more qualified tend to purchase more expensive homes.

A dozen homes out of hundreds of thousands isn't a true indicator for pricing as a whole either. The median is far more accurate than that crap you keep linking.

Yes, some people paid too much for a house. But that doesn't mean that housing prices are falling. Your link could have happened anywhere at anytime even in a rising market.

Show me anyone in the area who's trying to sell a house for 6% off the 2005 price, and Ill show you an empty open house.


In this case, EVERYONE in the CV paid too much in the last 2+ years.

 

[ElFenix]

Originally posted by: Turin39789
More importantly, I'm going to be a first time home buyer, probably in two years, should I try to buy sooner/nowish or just wait until it's a good time for me?

in louisville? did you guys go through a boom at all? in houston we didn't go through much boom so i doubt much is changing on the housing market. same steady small increase in value (in the areas that increase, many don't simply because there is so much cheap flat land around here). if you can already afford a house and your area didn't go through much boom you might as well get in.

Originally posted by: dullard

Unfortunately most ARM buyers do the exact opposite. They use them to buy a house that they cannot afford, and they don't invest the ARM savings.

just like most people who lease cars.



discussion of so-called bubble on NYT

 

[yuppiejr]

Originally posted by: Xavier434

Originally posted by: yuppiejr
The idea that some neo-socialist politicians are proposing a bail-out makes my blood boil... Reward the financially foolish by giving them a free house and let the rest of the taxpayers foot the bill just to win a few votes? Unreal...

What are these proposed bail-outs you are referring to? I'd like to read about this.

Right from the snake's mouth:

http://www.npr.org/templates/s...y.php?storyId=12555904

Clinton, Schumer and Dodd are the big 3 - just hit google with "mortgage bail-out news" and/or add any of the last names and you'll find plenty to read...

 

[Slew Foot]

Originally posted by: Vic

Originally posted by: Slew Foot
http://flippersintrouble.blogspot.com/

The Sacramento area and the central Valley are the same. I haven't checked SD in a few months but it was running similar last I ran them. Selling prices aren't really true indicators for pricing as a whole, especially now with subprimers out of the game, medians are artificially higher since people who are more qualified tend to purchase more expensive homes.

My personal rental, sold for 450K in 2005, current asking, $340K.

Oh great, anecdote and more FUD from you. :roll:


You're approaching McOwen level, pal. I just think you should know. Assuming that the "subprimers" were all buying cheaper homes is just ignorantly assinine of the actual market. Subprime loans were frequently used to buy more expensive homes. Fannie caps its loan amounts to $419k and Alt-A/Jumbo was/is much more restrictive. OTOH, lower-tier purchases are most frequently done with conforming and government programs, which have remained virtually unchanged throughout all this, and the lowest tiers remain the strongest parts of the market whereas the higher ends have practically ground to a halt.

Here's a tip: stick to your profession, because the more you post about this, the more you expose how you don't know jack about mine. I'll return the favor by not posting FUD about your profession.

Ironically, the opposite is true in the area so stop pretending you know the CA market. The expensive stuff still sells recently well, while the cheap stuff is stuck. Houses in the 2+ mill range sell in a week, while throngs of 300-600K sit for months-years in the suburbs where the flippers battle the developers chasing the market down for buyers that are few and far between. My prediction is for the upper end in CA is to collapse, with jumbo rates rising steadily.

For the most part during the boom, you couldnt even find a house in CA for under 419K, unless you had a pile of equity, there wasnt anything sold that was Fannie Mae conforming.

 

[vi edit]

Originally posted by: Slew Foot

Originally posted by: dullard

Originally posted by: Slew Foot
Selling prices aren't really true indicators for pricing as a whole, especially now with subprimers out of the game, medians are artificially higher since people who are more qualified tend to purchase more expensive homes.

A dozen homes out of hundreds of thousands isn't a true indicator for pricing as a whole either. The median is far more accurate than that crap you keep linking.

Yes, some people paid too much for a house. But that doesn't mean that housing prices are falling. Your link could have happened anywhere at anytime even in a rising market.

Show me anyone in the area who's trying to sell a house for 6% off the 2005 price, and Ill show you an empty open house.


In this case, EVERYONE in the CV paid too much in the last 2+ years.

You play the stock market enough. You of all people should know that the stocks that rise the fastest fall the hardest.

Same thing for real estate. Areas that had ridiculous appreciation over the last 5 years are due for the hardest correction.

 

[Demon-Xanth]

Regarding takeing longer loans:
$100k, 8% interest
10 year: 1213.28/mo
15 year: 955.65/mo
20 year: 836.44/mo
25 year: 771.82/mo
30 year: 733.76/mo
40 year: 695.31/mo
50 year: 679.27/mo

The difference between a 30 and a 50 year isn't much. You'd only get 8% more money than you would with the 30 year for the same payment. Kind of a losing deal if you ask me. Once you hit 30 years, things level out quite a bit.

 

[vi edit]

Originally posted by: Demon-Xanth
Regarding takeing longer loans:
$100k, 8% interest
10 year: 1213.28/mo
15 year: 955.65/mo
20 year: 836.44/mo
25 year: 771.82/mo
30 year: 733.76/mo
40 year: 695.31/mo
50 year: 679.27/mo

The difference between a 30 and a 50 year isn't much. You'd only get 8% more money than you would with the 30 year for the same payment. Kind of a losing deal if you ask me. Once you hit 30 years, things level out quite a bit.

How many people in CA have only a 100k mortgage?

Do it on a more realistic figure like 300k and you are looking at:
10 year: 3639.83
15 year: 2866.96
20 year: 2509.32
30 year: 2201.29
50 year: 2037.82

That's a $1600 a month swing.

 

[Slew Foot]

Originally posted by: vi_edit

Originally posted by: Slew Foot

Originally posted by: dullard

Originally posted by: Slew Foot
Selling prices aren't really true indicators for pricing as a whole, especially now with subprimers out of the game, medians are artificially higher since people who are more qualified tend to purchase more expensive homes.

A dozen homes out of hundreds of thousands isn't a true indicator for pricing as a whole either. The median is far more accurate than that crap you keep linking.

Yes, some people paid too much for a house. But that doesn't mean that housing prices are falling. Your link could have happened anywhere at anytime even in a rising market.

Show me anyone in the area who's trying to sell a house for 6% off the 2005 price, and Ill show you an empty open house.


In this case, EVERYONE in the CV paid too much in the last 2+ years.

You play the stock market enough. You of all people should know that the stocks that rise the fastest fall the hardest.

Same thing for real estate. Areas that had ridiculous appreciation over the last 5 years are due for the hardest correction.

Thats exactly what Ive been saying, but for some reason, people dont believe me.