Aces High Bulletin Board
General Forums => The O' Club => Topic started by: Chairboy on November 27, 2007, 03:39:01 PM
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The housing value crisis is getting bad.
(http://hallert.net/images/a_history_of_home_values.png)
The dropping value of the dollar, the skyrocketing price of real-estate... things are not super duper right now. The sub-prime market isn't the problem, it's just the first symptom. Buckle down, folks, and hang on.
NOTE: Adjusted for inflation, and the bottom of the scale is 60K, not zero.
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Was I the only one who thought 2-4 years ago that buying a POS 1300 SqFt house for $500,000 in California or else were was the dumbest idea in the world?
Seriously the market got inflated and like all inflated items they tend to pop. Too many people saw $$$ instead of caution signs.
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it's the "investment buyers" (speculators), house flippers, and people that fell for the equity loan thing that will get burned, people that bought a house they could afford just to live in will still have a house to live in even if the price drops.
I'm looking to pick up a nice condo at a discount price.
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Houses != ATMs.
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house prices are CRAZYYYYY the same souse that i remember selling for 30K 25 years ago recently was put on the market for 180K!!! There is NO DAMNED WAY it will ever be 'worth' that. It might sell for that but thats only because of easy loans and a "I want it no matter what we have to pay for it' attitude.
credit should not be granted until someone hits their mid-30s!
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It's rather reminiscent of the dot com bubble in 99.
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florida goes through this every 15-20 years, boom an bust, boom an bust.
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I've lost over 100k in equity on my house in CA. I can't give that **** away.
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Originally posted by midnight Target
I've lost over 100k in equity on my house in CA. I can't give that **** away.
If you can afford to keep it another few years, you'll make it back. CA home values will most likely keep going up, because the real demand on the land will keep going up while the price of building materials is skyrocketing.
If you're buying top of the market or obvious boom properties (like 2000 sq ft houses in silicon valley that went for $3 mil back in 2000) then yea you're an idiot, but other "normal" houses in CA are going to go up in value.
The key of course is to never ever ever buy a house with the understanding that you MUST sell it in the near future (inside 5 years) to keep from going bankrupt. If you buy a house and the payments plus expenses (taxes, maintenance, etc) fit within your cash flow, then you're pretty much protected from property value downturns because even if your house loses it's resale value *this year*, you can keep making payments on it until the value goes back up. There are very few places in CA where that is not true.
My parents bought "overpriced" houses in San Diego 25 and 15 years ago, and although the value of the houses have fluctuated by up to 50%, over time there is a very clear upward trend. Yea if they'd been forced to sell because they were retards and couldn't afford some goofy interest only variable rate loan, then there were periods of up to a few years where they'd been in trouble. But they bought within their cash flow and kept the houses for a long time. Guess what - one house is STILL valued at 4x the purchase price and the other one is a whopping 8x the purchase price after 25 years. That's not too shabby...
The trick is not over-extending with the original purchase. Never buy a house you can't afford to keep through market downturns.
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Originally posted by Mr No Name
house prices are CRAZYYYYY the same souse that i remember selling for 30K 25 years ago recently was put on the market for 180K!!! There is NO DAMNED WAY it will ever be 'worth' that. It might sell for that but thats only because of easy loans and a "I want it no matter what we have to pay for it' attitude.
credit should not be granted until someone hits their mid-30s!
Exactly. The problem here are the people. They are going for larger and larger houses that they don't need paying for it with major mortgages. With more and more people buying up the big realty POS McMansions faster than they can build them, it leads to a false inflated price.
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Of course houses are only worth what people are willing and able to pay for them.
Well, unless you're the guberment, then they're worth whatever they can milk you for in property taxes.
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Originally posted by AKIron
Of course houses are only worth what people are willing and able to pay for them.
Well, unless you're the guberment, then they're worth whatever they can milk you for in property taxes.
Another valid point showing the government's full on willingness to falsely appraise properties at more value to get more property tax from them.
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No matter WHAT the economy does, the media spins it as bad news. (Thankfully this will be over when Hillary assumes presidency) A few years ago...prices were high, and there were endless stories about poor shmucks who could NEVER afford the 'American dream'....so....lending rules were relaxed to allow afore-mentioned shmucks to buy houses, and NOW they are defaulting en mass, because they were too @#@#$$#$@#ing stupid to understand what happens to a floating mortgage when the rate goes up. :mad:
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Originally posted by bj229r
No matter WHAT the economy does, the media spins it as bad news. (Thankfully this will be over when Hillary assumes presidency) A few years ago...prices were high, and there were endless stories about poor shmucks who could NEVER afford the 'American dream'....so....lending rules were relaxed to allow afore-mentioned shmucks to buy houses, and NOW they are defaulting en mass, because they were too @#@#$$#$@#ing stupid to understand what happens to a floating mortgage when the rate goes up. :mad:
Much as I hate admitting it, Hillary does have the media (except Fox) in her camp and "news" will be rosey if the unimaginable happens and she wins the presidency.
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Originally posted by midnight Target
I've lost over 100k in equity on my house in CA. I can't give that **** away.
I've lost over $6k in my stock portfolio for calendar 2007, despite having what are considered quite conservative investments.
I have now taken most of my money out of the market. I think that the recession that so many are predicting has already begun.
I am not at all optimistic about 2008. Too many negative economic factors are all coming together at once. The world is also becoming less and less stable.
A full blown conventional war between Russia and NATO in the Balkans is a real possibility for next year.
And with the United States military all bogged down in the Middle East, the nations of Western Europe would then have to take on Russia's military all on their own.
SIG 220
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Originally posted by AKIron
Much as I hate admitting it, Hillary does have the media (except Fox) in her camp and "news" will be rosey if the unimaginable happens and she wins the presidency.
Case in point: CBS main anchor, Katie Couric, FLEW TO NEW HAMPSHIRE to ask Hillary these important questions:
COURIC: I asked her about the new, more aggressive tone of her campaign.
[Hillary Clinton: "I have absorbed a lot of attacks" and "hardly a day goes by when I'm not attacked."]
COURIC: It was announced today that Oprah Winfrey will be campaigning with Senator Obama in three key states -- Iowa, New Hampshire and South Carolina. How do you feel about that?
["I think it's great..."]
COURIC: But are you concerned that this will give him a big boost?
["No..."]
COURIC: If it's not you, how disappointed will you be?
["Well, it will be me..."]
COURIC: I know that you're confident it's going to be you, but there is a possibility it won't be. And clearly you have considered that possibility.
["No I haven't."]
COURIC: So you never even consider the possibility?
["I don't."]
Can you imagine what her tone would have been with Mitt Romney or Fred Thompson?
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Was listening to Hannity and Colmes a half hour ago and heard Alan say that some poll has Clinton and Obama tied at 29%. This may not be clinched for Clinton as I believed.
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Its things like that and people listening to the so-called brains of the market like Jim Cramer who keep saying that the FED should drop interest rates a full point that are going to keep pushing our money into the toilet. Instead of creating a super weak currency by dropping interest rates I think they should tack on about 2 points in the interest rate to slow things down and create money that is worth a little bit. We are headed towards a huge change in currency valuation now that the Euro was around 1.50 USD today. The housing market is not the cure for our financial woes.
Originally posted by Chairboy
The dropping value of the dollar, the skyrocketing price of real-estate... things are not super duper right now. The sub-prime market isn't the problem, it's just the first symptom. Buckle down, folks, and hang on.
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And Dhabi buys 7.5 billion of Citi-Bank paper at 11%...Citi is paying above junk bond rates...go figure.
shamus
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Originally posted by john9001
it's the "investment buyers" (speculators), house flippers, that will get burned,
I used to flip houses... quit when the interest rates started creeping up enough to eat into quick profits....
Additionally, the trends were easy to see. Anyone that got burned was just too silly to stop dancing and found themselves without a chair when the music stopped.
As for the economy, I personally suspect that we are just seeing the tip of the iceberg,,, that we are in for a significant recession. I'm out of the market, besides some undeveloped land and gold.
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Originally posted by john9001
it's the "investment buyers" (speculators), house flippers, and people that fell for the equity loan thing that will get burned, people that bought a house they could afford just to live in will still have a house to live in even if the price drops.
I'm looking to pick up a nice condo at a discount price.
And will also be the ones still able to sell at a profit because they kept it long term.
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I'm thinking the problem is going to be bigger than a momentary housing value burp. My concern is that this is the latest sign of an upcoming big time recession. If that's the case, then picking up some condos 'for a song' might not be practical in a couple years if all the consumables pricing goes out the window because of the lowered value of the dollar.
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Well I'm confused.
When home values are high, the headlines are "Prices so high, first time homebuyers find it difficult to buy homes"
So then Congress insists that banks grant loans to borrowers it know can't afford the mortgage payments.
Now we have this "mortgage crisis" because...surprise! Those folks CANT afford a home after all. So the banks take a huge hit dealing with defaults and foreclosures.
Yet..now that the home prices are low, "Prices so low, most elderly are concerned about the lowering values of their homes for retirement".
So you can't seem to win this sort of news story. If its high value, its bad. If its low value, its bad.
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People in general borrow too much money for everything including homes.
You should only borrow half the purchase money or less, and be able to handle tripple the interest you signed up for when you bought. If you cant handle that then get a lesser home.
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mother bought her small 2 bed 1 bath home in the mountains of NC about 8 years ago for around 70,000. It was recently valued at over 160,000!!!!
At this rate I'll never be able to move back to where I grew up!! what a jip.
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LePaul is right, the news is always bad.
high dollar=US will lose exports,jobs.
low dollar= US is heading for recession. job losses.
high house prices=runaway housing prices. unaffordable housing.
low house prices=housing market collapsing, foreclosures rampant.
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I don't much care.. I am on prop 13 so my taxes stay stable.. My house is almost paid off so if it is worth $700,000 I will have to pay almost that for the place I move too.
If it is worth $300,000 then the place I move to will be worth about that too.
lazs
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Originally posted by john9001
LePaul is right, the news is always bad.
Well there's something i dont see everyday :)
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Have to say I am with Lazs on this one .
My home is where I live and plan on living till I die or can't take care of myself anymore .
It's not a "investment" to me it's HOME . We in Michigan have something like Prop13 here also . If I don't sell then I am caped at the old rate plus some . Good for long term home owners .
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Not seen any neg returns in our Mutual Funds yet , was high in June and got even higher just a few weeks ago . Yes it's went down again , how far will it go , who knows .
I got 8 years yet just till retirement , then how long yet to live ? Donno but figure a few more good years . Better to stay in then market time . Market timers have to be "right" twice , very hard to do .
Ever hear of this ? Someone picks up a bunch of grapes , he gets it 7" high or so , then "shakes" the bunch and then gets it 10" high and so on .
Might be we are seeing some shakeing going on .
One last thing to give some thought on , if your hearing it's bad time to be in stocks etc from the media , more than likely the BIG boys are buying what your selling , so to speak . They sell into strength and buy into weakness .
Got to have alot of buyers to sell out on the top as they have LOTS to sell ( then it won't drive the price down much )
Same with their buying ( got to have alot of bad news to offset their buying or it will drive up the price )
Most always better to buy when they are crying about how bad it is on radio or TV .
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yep.. if you get a 20 or thirty year loan you stay 20 or 30 years or.. you keep trading up until you retire and then you sell the place for a bunch of money and move to where you would like to live and buy a home free and clear.
You can move to the places that are not desirable because there is no work because... you ain't gonna work in any case. you are gonna play.
Ain't America wonderful? to think.. an old ex drug addict criminal can do these things here.... brings a tear to your eye eh?
lazs
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house prices are CRAZYYYYY the same souse that i remember selling for 30K 25 years ago recently was put on the market for 180K!!! There is NO DAMNED WAY it will ever be 'worth' that. It might sell for that but thats only because of easy loans and a "I want it no matter what we have to pay for it' attitude.
You've clearly never heard of the concept of the 'time value of money'. Enlighten yourself and look it up.
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Originally posted by Dowding
You've clearly never heard of the concept of the 'time value of money'. Enlighten yourself and look it up.
is that what they call inflation now?
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Originally posted by Nilsen
People in general borrow too much money for everything including homes.
You should only borrow half the purchase money or less, and be able to handle tripple the interest you signed up for when you bought. If you cant handle that then get a lesser home.
LMAO try that in Jersey and the only thing you will ever be able to afford is a cardboard box.
14 years ago I put 10% down. got in a fannie mae program for 1st time home buyers.
It was perfect timing. House prices were low. and interest rates were on the decline.
I got in at something like 6% fixed give ro take a pecent.
Have siince refinanced from the 30 year to 15 years of which I have 7 left to go.
I paid 127K for my 3 bedroom ranch.
About 15k cheaper then the other homes in my area because it needed some work of which I did most of myself.
During the recent boom I could have sold it for almost 400K.
But with the decline these homes are only going for a mere 325-350 now.
The real key is the interest. I would always advise a fixed rate mortgage.
everyone I know that got screwed. Screwed themselves with the adjustable rate.
The REAL killer in this state is the property taxes. which keep going up and up.
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It's the same here at the moment partially in response to the sub prime market getting into trouble in the US. The sub prime lenders here are foreclosing all the poor saps who went in over their heads. House prices here were crazy but that is beginning to level off. Apparently only 10% of houses for sale here are actually being sold. Part of the problem is that owners still believe they're worth the inflated prices they were getting a year ago. My wife and I were looking at house here recently, a nice four bedroom semi needing modernisation overlooking Galway bay. The vendor wants 425,000 Euro, that's 621,000 American greenbacks. He'll be lucky to get 400,000 Euro. We wouldn't pay more than 350k.
My wife and I see this dip in the market as a golden opportunity to buy the house we want to 'live in'. Sometime early next year will be the moment. We'll keep the one we have now and probably rent it to some Polish migrants or someone who had their house repossessed ;) There would be no point in trying to sell it now anyway. That will cover the mortgage and generate a little income. My wife already has another house which she rents as well. So between us we will own three houses, two of which will be offsetting the mortgage on the third. We both see it as a long term investment. As the saying goes; 'Every cloud has a silver lining' or should that be gold. Our mortgage advisor was practically rubbing his hands together in glee. He already owns several houses and sees his chance to grab a few more.
Sometimes I think these recessions are managed:noid so that people with cash can buy low only to sell high later.