AsiaN,
I absoulty agree with you that things pencil out ALOT better if you have 20% down, plus I didnt say PITI, I said total payment, including taxes and PMI and insurance. Joe Buyer is much more likey to get a loan at 6% with 20%down, but I was going low since everyone on here has perfect credit and cant understand why anyone else would have to pay more in interest than the absoulute quoted minimum. Alot of people dont qualify for that great low interest rate, and I bet alot of them are the type of people who want to buy in MM. It wouldnt suprise me if a number of people are trying to buy right now in the 7% range, cause that is what they qualify for, especially in a declining market.
I was trying to use a case where someone was a first time buyer trying to extend themselves just a little to get their first place. I used 5% because most people today dont want to save, or can’t, and that is really the lowest I can imagine any lender is willing to even look at. Houses are priced at the margin. Those who can afford to move up will, our own Jimmyle here can atest to that.
We can ask SDR or SD_R or even HLS, but I have a feeling that alot of people are still trying to get somewhere with as little down as possible. MM is one of the hardest hit areas, with a population that is more sensitive to economic matters than most of the near by areas. When this forclosure thing is over, there are alot of people who will want to buy, but have some serious dings to their credit, which will raise interest rates and down payments that they probably dont have.
So sure, I know there are alot of people who have 50k to spend and good credit and can buy now and be happy. But these people are sound investers/owners, and see no benifit of purchasing when the market is falling. Will it fall some more, you bet. Last time I looked inventory was at something like 11 months inventory and the nicest houses in the area are still overpriced by ALOT. Add in that something like 35% of listings are advertising their distress (so the actual number is higher), nearly half the market will be must sells. So as nicer houses in the area come down in price, people will trade up and the lowest houses in the market will have to come down more.
Maybe the truth will be somewhere inbetween my 250’s and your 320’s, but I am still betting on mid 200’s. Rent multipliers put it in the low 200’s even assuming no fall in rents. March (next month) 2001 prices (pre bubble)was a median of 265k and everyone here seems to think 2001 prices were the last sane prices. 2001 was a recession, but one that followed the longest expansion of the economy in US history, and included nearly no inflation and falling interest rates. This time around we have stagnant growth in wages for the past 5 years, higher debt levels, increasing inflation, and atleast currently, increaseing rates. I just dont see what will support this area above 125X multiplier +20%. That is 250k ish.
Plus, there are 10 or so houses, not condos, priced at 350k or less currently. If 320k is the bottom like you suggest, we sure are close to the bottom now. I dont think we are.
