Ok, your house is sitting on the market..

[Sixpence]

and you wonder what action by the fed could help the housing market. A friend at work seems to think that if the fed says it is going to raise rates, that his house will sell because people will buy before the rates go up.

I am not so sure of this, I wonder if that happened that people who are stuck in adjustable rate mortgages and can't refinance will bail out before the rates go up and they lose their house anyway. Which I believe will hurt the market even more.

I think if they lower rates it will stabilize the market and people will be able to buy more house and buy before rates go back up.

What do you think?

[BigGun]

There is very little chance if any that the Fed will raise rates in the near term. The Bond market has all ready priced in that the Fed will lower rates in the near term, more than likely in Sept.

Housing is such a local thing. Some markets will go up, and some down, regardless of what the Fed does. Supply & Demand rule.

One thing for sure, if you are not a prime borrower, mortgages are going to be much harder to get. A lot of people got homes they couldn't begin to afford & will be stuck when their teaser rates adjust, and will not have an option but to give the house up.

[Rolex]

The recent Fed cash injection was done in such an unusual way that I don't think anyone can say for sure what the effects will be... even the Fed. It was the first time a repo using MBS has ever been done for so much money, not to mention the historical precedence of the Fed trying to affect an individual sector of the economy. That has always been a no-no. These are unchartered waters for the Fed with no historical reference.

That's why the discount rate was lowered in advance of the Sept 18th meeting - a "just in case it doesn't work" move. Lenders may pull back significantly. The stock market is not going to be relevant to what happens in mortgage lending, so upward moves the first of the week should not be taken as a sign things are improving. Some of the repos won't be due until the end of the month.

Credit tightening (or even hording) by lenders in the near term may have more impact on the market than small moves in interest rates on Sept 18th. Sub-prime loans were a way to expand the universe of loans since the market was already topped out for traditional, credit-worthy mortgages. The pendulum usually swings too far on these types of things. Look to the liquidity injection method to see that  there is a fundamental housing bubble that is going to be deflated, one way or the other.

(Added) I just realized that this will make no sense unless you know how the Fed temporarily injects liquidity. I don't think mass media has even discussed anything about the unusual method the Fed used in the last few weeks. If you don't know how it's done, just say so, and I'll explain it tomorrow. Or, someone else can. It's 1 am here and I have a long day tomorrow.

[Chairboy]

For one, the money injected was lent in one day contracts.  So most of that money has already been paid back by the banks, the fed's involvement was very short term.

[FrodeMk3]

Housing is such a local thing. Some markets will go up, and some down, regardless of what the Fed does. Supply & Demand rule.

That, Sixpence, I would believe to be the starting point for any housing sale. Interest rates and credit availability for any potential buyer would be another, but you will have to look at your area demographically, find out what price range is median for that particular neighborhood, Sq. footage, lot size, etc. Then, see how many other homes' like it are on the market.

Alot of areas(Such as California, where I live) have priced themselves right out of the market. Median incomes' for the area I live cannot support many of these mortgages. However, that might be different for your area.

[Chairboy]

Where I live in Oregon, the average time on market is up to about 6 months now.  Sobering, considering that this area is considered one of the healthier areas for real-estate.

[Hap]

Originally posted by Sixpence
and you wonder what action by the fed could help the housing market.

I'm surprised to not read posts by those who think the Federal Government's proper role bars them from "helping the housing market."

[FrodeMk3]

Originally posted by Chairboy
Where I live in Oregon, the average time on market is up to about 6 months now.  Sobering, considering that this area is considered one of the healthier areas for real-estate.

My parents' are actually living in Coos Bay, right now. They are retired, and looking to buy a place somewhere in that area (They got stuck renting for the moment.)

There's quite a few places for sale, but my dad's kinda picky. He wants at least an acre, more if possible, and a good well.

[storch]

the double whammy of high taxes and exhorbitantly high home insurance costs have all but stagnated the residential real estate market here in my beloved south florida.

it's not uncommon to hear of people paying twelve to fifteen thousand dollars per year between the two on the average home.

folks don't have a problem making the mortgage payments but the taxes need to be decreased significantly here.

way back when the state began taxing property they included an exemption which was the first $25,000 of the property's value was exempt from taxation provided it was the homestead of the owner, hence the homestead exemption rule.  it was a beautiful thing because the average home was selling for about $20,000 at the time.  it was a very progressive law, there is no state income tax in florida and the property tax was low thus the average citizen really paid little or no taxes.  the slack was picked up by commercial real estate and investors who had more than one home in their name.

as real estate values crept up and no adjustments were made to increase the homestead exemption to reflect the spirit of the rule there was now more money in the coffers so more government jobs were invented.  we now have bloated building departments with rediculous regulations and roaming packs of inspectors generating fines and what not for every imaginable offense.  that is just one governmental agency that I'm well aquainted with I'm sure others are just as bad.

with the average home in south florida now being valued at $400,000 (that would be your standard 3/2) the taxes for these homes are in the $10-12,000 range.

the other pitfall is that insurance is about $5-7000 for that home.

what happens is this (using my home as an example) our home was purchased for $168,000 so the taxes we pay on it are roughly $4800.  if I sold it for it's market value $900,000 the people who purchase it would pay somewhere in the neighborhood of $20,000 in taxes.  the next home I buy would pay roughly the same amount of taxes unless I purchased something markedly inferior and even then I would pay far more taxes than I do now.

the result is no one moves, they can't afford to.  furthermore no one buys new homes, they can't afford the full burden.  we have a stagnant real estate market.  the good news is people are remodelling in record numbers.

[Chairboy]

Originally posted by FrodeMk3
My parents' are actually living in Coos Bay, right now. They are retired, and looking to buy a place somewhere in that area (They got stuck renting for the moment.)

There's quite a few places for sale, but my dad's kinda picky. He wants at least an acre, more if possible, and a good well.

There are some great properties like that in the area, Oregon has good open spaces.  If they don't have a local agent, my wife can help, PM me if you want her info.  One of the biggest impediments to new buyers right now is the newly aggressive mortgagers.  Getting a loan means impeccable credit, good downpayment, and so on.  Kinda like I always imagined it would be, not the drunken sailor style popular just 3-4 years ago.

I'm just amazed that this whole mortgage crisis has snuck up on so much of the country.

[FX1]

In Austin we are not feeling the pinch like other areas of the country. With the AR mortgagees starting to turn we are seeing foreclosures going up.  

Our company had one of the best summers on record. This mortgage scare is coming at the worst possible time during the year. Our season will end in Sept and after that those house that are on the market will have a long winter before we start up the new year.

I personally sold homes to people that couldn't afford them. Many times at the closing table the title company would cut a check for $500-1000 to the buyers. New home builders were to worst with the 0 down 0 closing cost. They took complete advantage of the system.

[RedTop]

My house is fixing to go on the market. Not for any reason other than my Wife and I want to get closer to an area for a reason. Our mortgage is a fixed rate. No worries with what happens.

What makes it unique for us is that we have no time table what so ever. Our mortgage is very affordable for us. It's just a want to move. Not a have to because we got snookered into an ARM.

SO we may have to wait all winter , we may sell it fast. FX1 knows the area I am in very well. A house on our street sold in 20 days. The market anyalsis done for us by our realtor shows 41 days. Probably will change. Its all a guessing game.

1 thing about tho , if we do sell it fairly quick....I think the builders will be offering BIG deals on new homes setting on the ground. More incentives than you can shake a stick at to buy a new home.

We'll see tho.

[AKIron]

When selling a house pretty much all you can do is wait and see, or lower your price. I suggest you don't do the latter unless you don't get any serious interest for three months. Even then it all depends on your need to sell.

[BiGBMAW]

there is  more then.."wait and see"..and lower price

IF a realtor tells you that..they dotn deserve a dime

and Big Guns..CHECK SIX!!!!!!!!!!!!!!!!!!!!!

[AKIron]

Originally posted by BiGBMAW
there is  more then.."wait and see"..and lower price

IF a realtor tells you that..they dotn deserve a dime

and Big Guns..CHECK SIX!!!!!!!!!!!!!!!!!!!!!

There is more to selling a house than depending on realtors. I sold mine myself when a realtor couldn't and came out at least 5 grand ahead.