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Wanna be a Knife Catcher? Buy Now!User Forum Topic
Submitted by CAwireman on May 9, 2011 - 9:33am
Good article, though it is using Zillow data... http://www.dailyfinance.com/2011/05/09/h... Worth a read, thought not a big surprise it supports a particular premise.... "If you're looking to score a great deal on that cute little home, it turns out you may want to wait a little longer to buy -- like until next year: U.S. home values dropped 3% in the first quarter, their sharpest quarter-over-quarter decline since the dark days of late 2008, according to the Zillow Home Value Index report released Monday. "Based on those results, as well as increases in foreclosures and underwater mortgages, Zillow revised its forecast for when U.S. home values will bottom out. The real estate tracking service now expects home values won't begin to recover until 2012 -- at the earliest -- instead of later this year. " "Home value declines are currently equal to those we experienced during the darkest days of the housing recession. With accelerating declines during the first quarter, it is unreasonable to expect home values to return to stability by the end of 2011," said Zillow chief economist Stan Humphries in a statement. "We did expect substantial payback from the homebuyer tax credits, which buoyed the housing market last year, but underlying demand post-tax credit, as well as rising foreclosures and high negative equity rates, make it almost certain that we won't see a bottom in home values until 2012 or later." "This means prospective home buyers should beware: If they buy now, they stand a good chance of catching a falling knife by the blade, rather than making a smart deal."
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Thanks HiggyBaby for the article.
My hands are all bleeding. But I'm too naive and I'm just happy I bought a house and can't wait to live in it. I want my kid to have good memories with the place she'll grow up in.
I hope I'm doing the right thing. Oh yes, it is -- for me any way.
blah blah blah
I suspect that Zillow is at least as knowledgeable as NAR.
Nationally, Zillow is probably right.
Buying a house for the family to nest is one thing.
Buying an investment is something else. I'm not a Donald Trump fan, but I do believe in the Art of the Deal. There's a lot of personal satisfaction in catching a great deal at the very bottom (whenever that is). Time will tell...
And cue the next round of programs...
Right now, late Spring 2011 could be among the best times to buy (in many parts of San Diego) considering the combination of price, interest rates, and rental trends for something to hold long-term. The potential downside risk is conderably less than any other time in the past 15 years, in my opinion.
"We see something close to stability at these much-reduced home prices in the medium to lower part of the housing market."
-- Warren Buffett, May 2, 2009, at the Berkshire Hathaway
Why does knife catching always mean damage? What if you catch it by the handle ?
"We see something close to stability at these much-reduced home prices in the medium to lower part of the housing market."
-- Warren Buffett, May 2, 2009, at the Berkshire Hathaway
I am not sure if you agree with me, agree with Warren, agree with both, or agree with neither. Please elaborate.
General statements like this, while might have some validity don't apply to every situation. Case in point, my wife and I bought a house (being sold under duress) a year and a half ago, completely remodeled it. At the time of the remodel, people in the construction industry were desperate for work so we paid significantly less for the remodel than in 2006 or even today. We are now sitting on a significant amount of equity based on comps within the past 3 months in our area and have a thirty year loan at 4.1%. Much lower than anything you will see in the foreseeable future. For us we wanted to find a place in a good school district for our future kids, and maybe even build some equity. Not to mention that tax benefit that we see....although we still are getting whacked by AMT.
There are opportunities in every market.
I agree that the originator should delay looking for houses until late 2012.
In the meantime, I will hunt for good deals. I believe real estate is a very 'local' thing. One can not merely look at it from a nation-wide statistical point of view.
http://www.nytimes.com/2011/05/11/busine...
What's the effect of potential decline in conforming limit from $697,500 to $546,250 in San Diego Market?
While I am generally in agreement, it is somewhat disquieting for me to hear that Doug Kass has turned bearish http://www.cnbc.com/id/42978467
While I am generally in agreement, it is somewhat disquieting for me to hear that Doug Kass has turned bearish http://www.cnbc.com/id/42978467
What I find interesting is that he's only expecting another 5%-10% decline in housing and yet he thinks that this will have a big impact on the stock market. Housing prices have already fallen by ~10% in this recent double-dip and yet the stock market has roared ahead (much to my amazement, I might add). So, while I agree that a 5%-10% further decline in housing prices may well be in the cards... I'm not sure that it follows that the stock market will follow downward... although it would be nice to think so.
What's the effect of potential decline in conforming limit from $697,500 to $546,250 in San Diego Market?
I agree with this. A FNMA/FDMC conforming limit should NOT be routinely funding luxury properties. That is not its purpose. Perfectly decent houses for families and everyone else are available in SD County for far less than $546,250. Besides, a maximum conforming loan amount of $546,250 will facilitate a purchase of $682,812 with the standard 20% downpayment. This is more than adequate to fund a mainstream purchase of a moderate to mid-upper-tier property in a very nice area.
The NY Times article uses Monterey/Carmel, CA as an example of what will happen to the housing market when their conforming limit is reduced to $483,000. This new limit is MUCH lower because Salinas and surrounds (farming communites) are included in this housing area, dragging the sold comps down.
In the article, an older home in Monterey is pictured as currently listed for $820K. A flight attendant who recently purchased a house in Monterey is quoted as saying he recently bought there using a low-downpayment program and would not be able to buy there under the proposed new conforming limit. I wonder why a flight attendant would want to live so far from a major airport?
Last time I looked (a few mos ago), Monterey was a "retirement town" and had a nearby Navy installation "Pt. Mugu," but little other industry and jobs. The Navy provides housing for its families stationed there. Persons who purchase in Monterey/Carmel would likely be retired and even have access to private planes. I don't understand why its residents feel entitled to have the conforming limit remain at $729K. Why should the rest of the taxpayers bail out Fannie/Freddie when they are making RE loan guarantees to persons who voluntarily purchase in resort communities and other upper-tier communities?
I would be interested to know the percentage of property purchases in Monterey/Carmel which are all-cash sales.
I believe the military installation you are referring to was once called "Fort Ord " that has been closed since 1994. Could you be referring to the DLI in Monterey?
Point Mugu is in ventura County, about 300 miles from Monterey.
17 mile drive is among the nicest bicycle ride routes you can take in the USA and it's in Monterey. Ultimately pointless of course, but beautiful beyond description.
You are correct. The only base left in Monterey is the Naval Postgraduate School. My bad.
This is what I'm trying to drive home here, scaredy. Spotted deer running on the beach and matching spotted seals make this a tourist area. This is one of the jewels of CA. It is NOT a middle-class or working-class family area (that FNMA and FDMC backed mortgages are in place to assist) and never will be.
OTOH, Fannie/Freddie is in place to assist homebuyers in Salinas :=) A $483K conforming limit is more than adequate for this purpose.
Since many piggs are part of the FIRE industries it comes as no surprise so many are pooh-poohing the article and notion that real estate still has a ways to fall. It's local, it's this, it's that, bla bla bla.
Makes perfect sense to me: at some point market forces will overpower gov't intervention and find true equilibrium.
Makes perfect sense to me: at some point market forces will overpower gov't intervention and find true equilibrium.
paramount, it's very simple. Your (bolded) statement is correct with a caveat. "Market forces" are comprised of human buyers and they are different in different locations. Some "market forces" are far more dependent on "gov't intervention" than others. Those are ARE dependent on "gov't intervention" will have to offer less in the markets they shop in if the government lowers their loan limit that they will guarantee or pulls out entirely. The markets they DON'T shop in (because they can't possibly qualify to buy in them) will not be affected by less government intervention.
scaredy, it's time to load up your bike AND golf clubs and head north again.
You couldn't be more wrong - everything affects everything else. No market is completely immune.
Makes perfect sense to me: at some point market forces will overpower gov't intervention and find true equilibrium.
I agree market forces and fundamentals will ultimately govern. Unfortunately, this article doesn;t look at those. They point to recent declines and near-term projhections based on price data, plus Zillow forecast speculation. I see nothing in the article or in Zillow's methodlogy that relates price forecast to fundamentals.
I just noticed this:
"...it is unreasonable to expect home values to return to stability by the end of 2011," said Zillow chief economist Stan Humphries in a statement.
Stan Humphries ????
Really ?
I still think the Chargers' run to the Super Bowl in '94-'95 behind his leadership at QB was on of the finest moments in SD sports history, but does that make him qualified to be an expert on home prices ?