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Property Value Downturn  
User currently offlineAllstarflyer From , joined Dec 1969, posts, RR:
Posted (8 years 1 month 3 weeks 5 days 6 hours ago) and read 992 times:

http://news.yahoo.com/s/csm/20061103/ts_csm/amidhouse_1

I was just reading this and I'm not surprised one bit. I wondered how the hype had such a crescendo, especially in VA (where I lived last year working for now-defunct DH  thumbsdown  ) . As I was moving away, there were people having problems selling property (and with such inflated prices in Northern VA, I'm not surprised), but here in the Midwest, I figured prices would be somewhere near the bottom of the charts (compared among urban areas). Well, they are low, and some of them can't even sell. I saw one last week on realtor.com - in my subdivision - that was selling for 10k less than for what I bought mine just a few months ago  crazy  - and I bought on the low end!  grumpy 

Anybody else having this kind of difficulty? What are some of your thoughts on the course of the housing market?

-R

17 replies: All unread, jump to last
 
User currently offlineAndesSMF From , joined Dec 1969, posts, RR:
Reply 1, posted (8 years 1 month 3 weeks 5 days 6 hours ago) and read 990 times:

Its called the housing bubble. It essentially popped here in Cali. last year, and things have gone downhill fast since then. Saw a house that was sold for 585K last year be listed at 489K right now.

For additional fun, try googling 'The Estates at Lincoln Crossing' for what happened here in SMF.


User currently offlineDtwclipper From , joined Dec 1969, posts, RR:
Reply 2, posted (8 years 1 month 3 weeks 5 days 6 hours ago) and read 986 times:

Oh don't get me started!

There are 7 homes in our sub (101 in total) that are for sale....at reduced rates, and below what people have paid for them. These houses were built between '95 and '99 and would sell between 500K and 700K...now it's anyone's guess. We've lost any profit we could have made, but I have no plans on moving.

Yes, I'm in the Detroit 'burbs and we have been hit very hard. Although I live in a good "zip code" it doesn't matter now.

I feel bad for my neighbor who just lost her job at Ford and may be forced to sell in order to relocate, that could be a disaster for her.


User currently offline102IAHexpress From United States of America, joined Feb 2005, 1156 posts, RR: 3
Reply 3, posted (8 years 1 month 3 weeks 5 days 5 hours ago) and read 969 times:

Quoting Allstarflyer (Thread starter):
Anybody else having this kind of difficulty?

Not here.
Houston is bucking the real estate trend.

http://www.usatoday.com/money/econom...ing/2006-10-30-close-houston_x.htm


User currently offlineB757300 From United States of America, joined Dec 2000, 4114 posts, RR: 22
Reply 4, posted (8 years 1 month 3 weeks 5 days 5 hours ago) and read 960 times:

Housing prices have been going up and up for years. A correction was inevitable.


"There is no victory at bargain basement prices."
User currently offlineUALPHLCS From , joined Dec 1969, posts, RR:
Reply 5, posted (8 years 1 month 3 weeks 5 days 4 hours ago) and read 950 times:

I know that some places like Metro Washington, and California in particular will probably be hit badly. But I gotta say this isn't the National problem the Media is making it out ot be. I know because I just sold my house in Southern New Jersey, bought it for 129,900 sold it for 187,000 which is 2000 over my asking price.

I am looking for a place in NY State, around Orange Co. and while the prices have gotten soft and I can under bid, however, I just had a house snapped up before I could make a bid and there are tons of accepted offers on houses I wanted to look at with my Realtor.

I know, I'm just one person my story may not be typical. On the other hand it goes to show that some regions are not cooling off at all some the "Bubble" isn't popping so much as getting a bit soft.

But to hear the Media tell it the entire market everywhere is crashing to earth like a rock.


User currently offlineAndesSMF From , joined Dec 1969, posts, RR:
Reply 6, posted (8 years 1 month 3 weeks 5 days 4 hours ago) and read 946 times:

Quoting UALPHLCS (Reply 5):
But to hear the Media tell it the entire market everywhere is crashing to earth like a rock.

Sorry, but I am sort of on the other side of the coin on the issue. While I am not a complete bear, there are too many indications that what happened in a National level was nothing short of irrational.

One really bad problem, that is worse in more bubbly areas, was the prevalence of interest only or option interest loans. These are loans where you only pay the interest (no principal) or part of the interest (you keep adding to the amount owed on loan). You have trillions of loans out there that will reset soon to a higher payment, but the banks and mortgage companies never qualified the people for the higher amount that the loan can reset too. There are also many cases where the person used their house as an ATM, and now due to these loans, they owe more on their house than its worse.

But to me, being in construction, the biggest problem that occurred and that has yet to be completely quantified, is the amount of speculation that happened. You all should know what 'flipping' a house is. Or an equity locust, the person who pulled money out of their house to 'invest' in a low price area, i.e. Houston now.

Well, there are now estimating that in the last few years, up to 30% of the houses bought nationally were for these investment purposes. And builders, in their attempt to satisfy this phantom demand (people were speculating just to get equity on their investment for a quick sale) overbuilt so completely, that there is not enough people in the US to fill all the houses already built and in the pipeline.


User currently offlineUALPHLCS From , joined Dec 1969, posts, RR:
Reply 7, posted (8 years 1 month 3 weeks 4 days 19 hours ago) and read 917 times:

Quoting AndesSMF (Reply 6):
One really bad problem, that is worse in more bubbly areas, was the prevalence of interest only or option interest loans. These are loans where you only pay the interest (no principal) or part of the interest (you keep adding to the amount owed on loan). You have trillions of loans out there that will reset soon to a higher payment, but the banks and mortgage companies never qualified the people for the higher amount that the loan can reset too. There are also many cases where the person used their house as an ATM, and now due to these loans, they owe more on their house than its worse.

Granted. I know that a number of areas, The Bay Area, San Diego, Parts of NY the Washington Metro Area, were affected by this in a huge way and the bubble has popped. But there are VAST areas of the country where the real estate boom was more reasonable. I stand, like many, many others to reap the benefits of the burst bubble. There are just as many people out there who were smart and took advantage of the market and will take advantage of the downturn as well.

In my opinion the Media is reporting this downturn as a whole, when real estate, in particular, is really a mosaic. Pieces of the mosaic have come loose and fallen out. But the vast majority is intact.


User currently offlineAndesSMF From , joined Dec 1969, posts, RR:
Reply 8, posted (8 years 1 month 3 weeks 4 days 6 hours ago) and read 888 times:

Quoting UALPHLCS (Reply 7):
In my opinion the Media is reporting this downturn as a whole, when real estate, in particular, is really a mosaic. Pieces of the mosaic have come loose and fallen out. But the vast majority is intact.

The problem and the reason of why you have to take this as a whole are twofold. One: there were many people in the bubble areas who attempted to reap the advantages of their high prices by purchasing 'investment' properties in cheaper areas, thereby creating many mini-booms throughout.

Another was that the ease of obtaining mortgages and different mortgage products were not a localized phenomenom, but nationwide. Even if you didnt attempt to sell your house, there were plenty of people who withdrew money from their house by using an exotic loan. Once the original terms of those loans resets, and the payments go up, and attempt to refinance the loan will then hit the wall of the person owing more on the house than the worth of the house.


User currently offlineUALPHLCS From , joined Dec 1969, posts, RR:
Reply 9, posted (8 years 1 month 3 weeks 4 days 6 hours ago) and read 881 times:

Quoting AndesSMF (Reply 8):
One: there were many people in the bubble areas who attempted to reap the advantages of their high prices by purchasing 'investment' properties in cheaper areas, thereby creating many mini-booms throughout.

Another was that the ease of obtaining mortgages and different mortgage products were not a localized phenomenom, but nationwide.

I agree with that.

However, the REPORTING of it is written, in my opinion, in a way that exaserbates the problem leading more people into a herd mentality when they think that EVERYONE is affected when in general; is still regional issue.


User currently offlineAndesSMF From , joined Dec 1969, posts, RR:
Reply 10, posted (8 years 1 month 3 weeks 4 days 5 hours ago) and read 875 times:

Quoting UALPHLCS (Reply 9):
However, the REPORTING of it is written, in my opinion, in a way that exaserbates the problem

I would have to disagree. I told a friend about a year ago that the bubble had popped, this was about July. My in-laws were looking for a house at the beginning of the year, and were able to lower the asking price by quite a bit. While the prices of houses were going down, noticed by personal experience, the media was touting that the prices were still going UP.

They have finally caught up to the reporting of the bubble popping, a year after the first signs appeared. The extent of the actual real estate problem has not even been fully understood by many, including me, because none of the relevant figures are available.

They have now come up with a number of 40% of the houses in SMF sold last year were for 'investment' purposes. The builders here in SMF were building as if those 40% investors were actual buyers (there is a whole different issue of mortgages for investment housing as oppossed to house occupied by owner). The actual housing demand as opposed to the apparent housing demand were completely out of whack, in many places. So if there was never a housing shortage, there was no real reasons for the prices to have shot up, and those prices will slowly creep down to the level that is sustained by the actual financial capabilities of the local population, whatever that number may be.


User currently offlineUALPHLCS From , joined Dec 1969, posts, RR:
Reply 11, posted (8 years 1 month 3 weeks 4 days 5 hours ago) and read 872 times:

Quoting AndesSMF (Reply 10):
I told a friend about a year ago that the bubble had popped, this was about July. My in-laws were looking for a house at the beginning of the year, and were able to lower the asking price by quite a bit.

I'll admit my experience with paying close attentino to the housing market bagan in July whe I got my new job. I kept hearing how soft the market was how the bubble had burst.

Meantime I sold my house in a month, and I'm getting houses in NY emailed to me with accepted offers before I can even look at them.

Even my realtors say that the market isn't as dire as is reported. They certainly know better than I.


User currently offlineAllstarflyer From , joined Dec 1969, posts, RR:
Reply 12, posted (8 years 1 month 3 weeks 4 days 5 hours ago) and read 871 times:

By the way, that same property I mentioned finding for 10k less than mine (which is an identical property, basically), has just had another 6k lopped off it. That's within the past day or so. Yeah, it's a bursting bubble, I'm convinced.

-R


User currently offlineAndesSMF From , joined Dec 1969, posts, RR:
Reply 13, posted (8 years 1 month 3 weeks 4 days 5 hours ago) and read 869 times:

Quoting UALPHLCS (Reply 11):
Even my realtors say that the market isn't as dire as is reported. They certainly know better than I.

Depends on the realtor. I was burned to the tune of about 20K by a realtor my uncle knew, in 1994. I have no trust in them at all.

I dont want to sound like I know everything, but I have talked to those in our family who are realtors, and they are clueless.

If you are going to buy a house, my suggestion is to wait till at least September 2007. With all the adjustable mortgage resets coming, and the end of the housing summer season, the picture should be much clearer then as to where the market is really heading.


User currently offlineArtieFufkin From United States of America, joined May 2006, 704 posts, RR: 0
Reply 14, posted (8 years 1 month 3 weeks 3 days 16 hours ago) and read 856 times:

I have 8 separate properties. None located on the Coast. The heartland did not see the rise that you did, hence there is not much downside. But let me stress how important locality is. One property was just rural land. This has doubled recently. 5 properties I have are in some of the best suburbs/school districts in the State. These have done fairly well. The only dogs I have are two properties in declining neighborhoods. My point being. What part of Miami or Ft Lauderdale, or San Francisco can make the difference between night and day.

User currently offlineAllstarflyer From , joined Dec 1969, posts, RR:
Reply 15, posted (8 years 1 month 3 weeks 3 days 12 hours ago) and read 843 times:

Quoting AndesSMF (Reply 13):
Depends on the realtor. I was burned to the tune of about 20K by a realtor my uncle knew, in 1994. I have no trust in them at all.

That stinks - is there anyone in your family that does realty work? Two members of my family have been licensed realtors - I'm sure it helps to have that on your side (I didn't have much opportunity to make use of their experience when I was buying/selling).

-R


User currently offlineAndesSMF From , joined Dec 1969, posts, RR:
Reply 16, posted (8 years 1 month 3 weeks 3 days 12 hours ago) and read 835 times:

Quoting Allstarflyer (Reply 15):
Two members of my family have been licensed realtors - I'm sure it helps to have that on your side

We do, they have been pretty useless however, with my wife and I doing a lot of the legwork required. We had difficulty selling our house in 2003 (long story). I had been reading enough to see that prices were going up. We told our realtor to up the asking price, which she reluctantly did. We got our asking price. That is one example.

I have personal knowledge from friends were their realtor was pushing for a higher price (20K over what my friends wanted) right after the bubble popped. They followed the realtor suggestions, who had failed to time the market, and ended up with selling price of 20K below what they originally wanted, or 40K below what the realtor priced the house at.

We should all remember that for any real estate transaction, all parties involved, except the buyer, benefit from a higher selling price. This includes the additional tax revenue to governments. This is why for the most part, the bubble kept feeding into itself to the monster it is now. There has got to be a way to remove the incentive for so many to push for higher housing prices.


User currently offlineLowrider From United States of America, joined Jun 2004, 3220 posts, RR: 10
Reply 17, posted (8 years 1 month 3 weeks 3 days 11 hours ago) and read 827 times:

Quoting B757300 (Reply 4):
Housing prices have been going up and up for years. A correction was inevitable.

Agreed, I just hope that by the time we hit bottom, I can get into a position to pick up some property and make some money when things start to heat up again.



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