Confused with the current market

[CricketOnTheHearth]

Hi, 4S:

I have a number of comments.

I have been watching those very same areas for a number of years, because I want to eventually buy in there too. According to Zillow, prices have dropped ~20-30% from the (bubble) peak overall. But a reality check– they are still about 2X the inflation-adjusted equivalent of the 1996 bottom. RB/RPQ/CMR are what we Piggs are calling a “sticky” area. As jameswenn pointed out, owners here are (currently) in a better position to sit tight if they can’t sell at the price they want.

Remember that normally there is a late spring/summer bump in housing markets, as people want to move over summer vacation. Winter things tend to slow down; I’d keep an eye out and look for cheaper stuff this winter (I know I am).

Also, there has been a ton of government (and bank?) intervention in this market. No wonder you are confused with it. You may have heard of “shadow inventory”; that is those houses & condos whose owners have defaulted on their mortgages, or gone even further in the foreclosure process, but the properties have not come out the other end to become REOs and be for sale (“foreclosure sales”). These properties have backlogged because of foreclosure moratoriums, HAMP and other “loan mod” schemes, and maybe just the banks just sitting back and waiting to see if the gov’t(s) can somehow “fix it” before they go ahead with the foreclosures.

However, a Bank of America spokeswoman (unnamed) recently said basically that they are fed up with waiting and they are going to be “pulling the ripcord” on a lot of these in-process properties between now and December. So I’m watching to see if we start seeing these properties too.

Just in my cursory Zillowing around in the area you name, I’ve noticed a fairly high number of places that were bought in 2005, 2006 timeframe (= right at the peak). Depending what kind of mortgage those people had, those properties may be vulnerable to foreclosure.

Finally, take everything that realtors, especially spokesmen for the National Association of Realtors, say with a grain of salt the size of a Rubik’s cube. What realtors get out of home sales is a % commission, and sad to say this becomes motivation for too many of them to urge you to buy no matter what. Sometimes the worse ones seem like a line of Indians flapping blankets trying to get the buffalo to run off the cliff: “You better buy now, prices will never be this low again!” etc. My advice is don’t be a buffalo.

That said, our own (here on this forum) sdrealtor and SD Realtor seem to be pretty level-headed sources of advice.

Most of all, Read this piece of timeless advice from Temeculaguy.

[SD Realtor]

4S the areas of town you are looking in are in a real run right now. I can imagine your frustration as I have a few people looking for homes in those exact areas and have been just stymied looking.

I do not have anything new to bring to the table with regards to the commentary. Simply stated, in “THESE” particular areas the bounce has occurred and it may be a good idea to sit tight for a year or two and see what happens. Agreed that it is all being propped up so to speak but even when homes go to trustee sale in these particular areas I see them getting swarmed on.

Hopefully that will change. I think the best chance you will see for that to happen is a rapid rise in interest rates.

[SD Realtor]

4S the areas of town you are looking in are in a real run right now. I can imagine your frustration as I have a few people looking for homes in those exact areas and have been just stymied looking.

I do not have anything new to bring to the table with regards to the commentary. Simply stated, in “THESE” particular areas the bounce has occurred and it may be a good idea to sit tight for a year or two and see what happens. Agreed that it is all being propped up so to speak but even when homes go to trustee sale in these particular areas I see them getting swarmed on.

Hopefully that will change. I think the best chance you will see for that to happen is a rapid rise in interest rates.

[SD Realtor]

4S the areas of town you are looking in are in a real run right now. I can imagine your frustration as I have a few people looking for homes in those exact areas and have been just stymied looking.

I do not have anything new to bring to the table with regards to the commentary. Simply stated, in “THESE” particular areas the bounce has occurred and it may be a good idea to sit tight for a year or two and see what happens. Agreed that it is all being propped up so to speak but even when homes go to trustee sale in these particular areas I see them getting swarmed on.

Hopefully that will change. I think the best chance you will see for that to happen is a rapid rise in interest rates.

[SD Realtor]

4S the areas of town you are looking in are in a real run right now. I can imagine your frustration as I have a few people looking for homes in those exact areas and have been just stymied looking.

I do not have anything new to bring to the table with regards to the commentary. Simply stated, in “THESE” particular areas the bounce has occurred and it may be a good idea to sit tight for a year or two and see what happens. Agreed that it is all being propped up so to speak but even when homes go to trustee sale in these particular areas I see them getting swarmed on.

Hopefully that will change. I think the best chance you will see for that to happen is a rapid rise in interest rates.

[SD Realtor]

4S the areas of town you are looking in are in a real run right now. I can imagine your frustration as I have a few people looking for homes in those exact areas and have been just stymied looking.

I do not have anything new to bring to the table with regards to the commentary. Simply stated, in “THESE” particular areas the bounce has occurred and it may be a good idea to sit tight for a year or two and see what happens. Agreed that it is all being propped up so to speak but even when homes go to trustee sale in these particular areas I see them getting swarmed on.

Hopefully that will change. I think the best chance you will see for that to happen is a rapid rise in interest rates.

[smshorttimer]

[quote=SD Realtor]

Hopefully that will change. I think the best chance you will see for that to happen is a rapid rise in interest rates.[/quote]

So your total payment might be the same, but you’ll pay a little less on property taxes and get some more deductible interest?

[smshorttimer]

[quote=SD Realtor]

Hopefully that will change. I think the best chance you will see for that to happen is a rapid rise in interest rates.[/quote]

So your total payment might be the same, but you’ll pay a little less on property taxes and get some more deductible interest?

[smshorttimer]

[quote=SD Realtor]

Hopefully that will change. I think the best chance you will see for that to happen is a rapid rise in interest rates.[/quote]

So your total payment might be the same, but you’ll pay a little less on property taxes and get some more deductible interest?

[smshorttimer]

[quote=SD Realtor]

Hopefully that will change. I think the best chance you will see for that to happen is a rapid rise in interest rates.[/quote]

So your total payment might be the same, but you’ll pay a little less on property taxes and get some more deductible interest?

[smshorttimer]

[quote=SD Realtor]

Hopefully that will change. I think the best chance you will see for that to happen is a rapid rise in interest rates.[/quote]

So your total payment might be the same, but you’ll pay a little less on property taxes and get some more deductible interest?

[an]

[quote=smshorttimer]
So your total payment might be the same, but you’ll pay a little less on property taxes and get some more deductible interest?[/quote]
A $600k house w/ 20% down @ 5.5% will cost you $501,139.39 in interest and $262881 in taxes over 30 years.
If rates goes up to 7.5% and price drop to $500k to keep at the same monthly payment, you’re looking at $606,868.89 in interest and $219067.62 in taxes over 30 years.
You can calculate how much more in interest you have to pay after tax deduction but before tax deduction, you’re paying $105k more in interest and $43k less in taxes over 30 years.

[an]

[quote=smshorttimer]
So your total payment might be the same, but you’ll pay a little less on property taxes and get some more deductible interest?[/quote]
A $600k house w/ 20% down @ 5.5% will cost you $501,139.39 in interest and $262881 in taxes over 30 years.
If rates goes up to 7.5% and price drop to $500k to keep at the same monthly payment, you’re looking at $606,868.89 in interest and $219067.62 in taxes over 30 years.
You can calculate how much more in interest you have to pay after tax deduction but before tax deduction, you’re paying $105k more in interest and $43k less in taxes over 30 years.

[an]

[quote=smshorttimer]
So your total payment might be the same, but you’ll pay a little less on property taxes and get some more deductible interest?[/quote]
A $600k house w/ 20% down @ 5.5% will cost you $501,139.39 in interest and $262881 in taxes over 30 years.
If rates goes up to 7.5% and price drop to $500k to keep at the same monthly payment, you’re looking at $606,868.89 in interest and $219067.62 in taxes over 30 years.
You can calculate how much more in interest you have to pay after tax deduction but before tax deduction, you’re paying $105k more in interest and $43k less in taxes over 30 years.

[an]

[quote=smshorttimer]
So your total payment might be the same, but you’ll pay a little less on property taxes and get some more deductible interest?[/quote]
A $600k house w/ 20% down @ 5.5% will cost you $501,139.39 in interest and $262881 in taxes over 30 years.
If rates goes up to 7.5% and price drop to $500k to keep at the same monthly payment, you’re looking at $606,868.89 in interest and $219067.62 in taxes over 30 years.
You can calculate how much more in interest you have to pay after tax deduction but before tax deduction, you’re paying $105k more in interest and $43k less in taxes over 30 years.

[Author]

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