- This topic has 35 replies, 6 voices, and was last updated 14 years, 11 months ago by sdrealtor.
-
AuthorPosts
-
December 16, 2009 at 8:35 PM #495378December 16, 2009 at 9:40 PM #495727briansd1Guest
I think that house prices are now dependent on monthly payments that people can afford, rather than selling prices.
Consumers are detached from sale prices and more concerned about the monthly payments. That’s how everything is marketed these days. Consumers are maxed out on the best of everything they can afford based on monthly payments.
Compared to two decades ago, there are now more luxury cars on the road, not because people make more money, but because they can easily lease cars for monthly payments they can service.
I believe that house prices will stagnate because significant down-payments will be required again as the banking industry gets back to health.
We are in an usual period now because the government is actually encouraging banks to continue to make stupid loans just in order to get credit flowing and business activity going.
It will be interesting to watch as the Fed and the Feds scale back stimulus programs.
http://www.washingtonpost.com/wp-dyn/content/article/2009/12/16/AR2009121600255.html?hpid=topnewsDecember 16, 2009 at 9:40 PM #495485briansd1GuestI think that house prices are now dependent on monthly payments that people can afford, rather than selling prices.
Consumers are detached from sale prices and more concerned about the monthly payments. That’s how everything is marketed these days. Consumers are maxed out on the best of everything they can afford based on monthly payments.
Compared to two decades ago, there are now more luxury cars on the road, not because people make more money, but because they can easily lease cars for monthly payments they can service.
I believe that house prices will stagnate because significant down-payments will be required again as the banking industry gets back to health.
We are in an usual period now because the government is actually encouraging banks to continue to make stupid loans just in order to get credit flowing and business activity going.
It will be interesting to watch as the Fed and the Feds scale back stimulus programs.
http://www.washingtonpost.com/wp-dyn/content/article/2009/12/16/AR2009121600255.html?hpid=topnewsDecember 16, 2009 at 9:40 PM #495398briansd1GuestI think that house prices are now dependent on monthly payments that people can afford, rather than selling prices.
Consumers are detached from sale prices and more concerned about the monthly payments. That’s how everything is marketed these days. Consumers are maxed out on the best of everything they can afford based on monthly payments.
Compared to two decades ago, there are now more luxury cars on the road, not because people make more money, but because they can easily lease cars for monthly payments they can service.
I believe that house prices will stagnate because significant down-payments will be required again as the banking industry gets back to health.
We are in an usual period now because the government is actually encouraging banks to continue to make stupid loans just in order to get credit flowing and business activity going.
It will be interesting to watch as the Fed and the Feds scale back stimulus programs.
http://www.washingtonpost.com/wp-dyn/content/article/2009/12/16/AR2009121600255.html?hpid=topnewsDecember 16, 2009 at 9:40 PM #495015briansd1GuestI think that house prices are now dependent on monthly payments that people can afford, rather than selling prices.
Consumers are detached from sale prices and more concerned about the monthly payments. That’s how everything is marketed these days. Consumers are maxed out on the best of everything they can afford based on monthly payments.
Compared to two decades ago, there are now more luxury cars on the road, not because people make more money, but because they can easily lease cars for monthly payments they can service.
I believe that house prices will stagnate because significant down-payments will be required again as the banking industry gets back to health.
We are in an usual period now because the government is actually encouraging banks to continue to make stupid loans just in order to get credit flowing and business activity going.
It will be interesting to watch as the Fed and the Feds scale back stimulus programs.
http://www.washingtonpost.com/wp-dyn/content/article/2009/12/16/AR2009121600255.html?hpid=topnewsDecember 16, 2009 at 9:40 PM #494858briansd1GuestI think that house prices are now dependent on monthly payments that people can afford, rather than selling prices.
Consumers are detached from sale prices and more concerned about the monthly payments. That’s how everything is marketed these days. Consumers are maxed out on the best of everything they can afford based on monthly payments.
Compared to two decades ago, there are now more luxury cars on the road, not because people make more money, but because they can easily lease cars for monthly payments they can service.
I believe that house prices will stagnate because significant down-payments will be required again as the banking industry gets back to health.
We are in an usual period now because the government is actually encouraging banks to continue to make stupid loans just in order to get credit flowing and business activity going.
It will be interesting to watch as the Fed and the Feds scale back stimulus programs.
http://www.washingtonpost.com/wp-dyn/content/article/2009/12/16/AR2009121600255.html?hpid=topnewsDecember 16, 2009 at 11:54 PM #495418analystParticipant[quote=davelj][quote=ucodegen]Yes, the interest rates and house prices move in opposite directions.[/quote]
This is actually not borne out by the facts. If you go back and look at the late-70s and early-80s, when rates increased dramatically, housing prices increased at a very high rate as well. If rates are moving up, it’s probably because of inflation. And if inflation rears its ugly head, there’s a good chance that it will show up in rents, and thus housing prices. Of course, the “next time could be different.”[/quote]
As an active participant in the real estate market at the time, I can tell you that the conditions described by davelj (high inflation, rising interest rates, rising real estate prices) did exist in the early to mid-1970’s, triggered by Nixon’s ending of the right to redeem dollars for U. S. Government gold. Dollar holders went looking for places to put their dollars, and a non-trivial percentage of dollars (from both foreign and domestic sources) flowed into U. S. real estate.
I can also tell you that when Volcker’s inflation-killing policies raised interest rates between 1979 and 1982, prices fell abruptly by one-third or more, and San Diego mid-market houses became nearly impossible to sell unless seller financing was provided.
It can happen either way.
The Federal Reserve and Congress will determine what we see this time by the cleverness (or lack thereof) they show in future monetary and fiscal policy. In other words, nobody knows what will happen.
December 16, 2009 at 11:54 PM #495036analystParticipant[quote=davelj][quote=ucodegen]Yes, the interest rates and house prices move in opposite directions.[/quote]
This is actually not borne out by the facts. If you go back and look at the late-70s and early-80s, when rates increased dramatically, housing prices increased at a very high rate as well. If rates are moving up, it’s probably because of inflation. And if inflation rears its ugly head, there’s a good chance that it will show up in rents, and thus housing prices. Of course, the “next time could be different.”[/quote]
As an active participant in the real estate market at the time, I can tell you that the conditions described by davelj (high inflation, rising interest rates, rising real estate prices) did exist in the early to mid-1970’s, triggered by Nixon’s ending of the right to redeem dollars for U. S. Government gold. Dollar holders went looking for places to put their dollars, and a non-trivial percentage of dollars (from both foreign and domestic sources) flowed into U. S. real estate.
I can also tell you that when Volcker’s inflation-killing policies raised interest rates between 1979 and 1982, prices fell abruptly by one-third or more, and San Diego mid-market houses became nearly impossible to sell unless seller financing was provided.
It can happen either way.
The Federal Reserve and Congress will determine what we see this time by the cleverness (or lack thereof) they show in future monetary and fiscal policy. In other words, nobody knows what will happen.
December 16, 2009 at 11:54 PM #495505analystParticipant[quote=davelj][quote=ucodegen]Yes, the interest rates and house prices move in opposite directions.[/quote]
This is actually not borne out by the facts. If you go back and look at the late-70s and early-80s, when rates increased dramatically, housing prices increased at a very high rate as well. If rates are moving up, it’s probably because of inflation. And if inflation rears its ugly head, there’s a good chance that it will show up in rents, and thus housing prices. Of course, the “next time could be different.”[/quote]
As an active participant in the real estate market at the time, I can tell you that the conditions described by davelj (high inflation, rising interest rates, rising real estate prices) did exist in the early to mid-1970’s, triggered by Nixon’s ending of the right to redeem dollars for U. S. Government gold. Dollar holders went looking for places to put their dollars, and a non-trivial percentage of dollars (from both foreign and domestic sources) flowed into U. S. real estate.
I can also tell you that when Volcker’s inflation-killing policies raised interest rates between 1979 and 1982, prices fell abruptly by one-third or more, and San Diego mid-market houses became nearly impossible to sell unless seller financing was provided.
It can happen either way.
The Federal Reserve and Congress will determine what we see this time by the cleverness (or lack thereof) they show in future monetary and fiscal policy. In other words, nobody knows what will happen.
December 16, 2009 at 11:54 PM #495747analystParticipant[quote=davelj][quote=ucodegen]Yes, the interest rates and house prices move in opposite directions.[/quote]
This is actually not borne out by the facts. If you go back and look at the late-70s and early-80s, when rates increased dramatically, housing prices increased at a very high rate as well. If rates are moving up, it’s probably because of inflation. And if inflation rears its ugly head, there’s a good chance that it will show up in rents, and thus housing prices. Of course, the “next time could be different.”[/quote]
As an active participant in the real estate market at the time, I can tell you that the conditions described by davelj (high inflation, rising interest rates, rising real estate prices) did exist in the early to mid-1970’s, triggered by Nixon’s ending of the right to redeem dollars for U. S. Government gold. Dollar holders went looking for places to put their dollars, and a non-trivial percentage of dollars (from both foreign and domestic sources) flowed into U. S. real estate.
I can also tell you that when Volcker’s inflation-killing policies raised interest rates between 1979 and 1982, prices fell abruptly by one-third or more, and San Diego mid-market houses became nearly impossible to sell unless seller financing was provided.
It can happen either way.
The Federal Reserve and Congress will determine what we see this time by the cleverness (or lack thereof) they show in future monetary and fiscal policy. In other words, nobody knows what will happen.
December 16, 2009 at 11:54 PM #494877analystParticipant[quote=davelj][quote=ucodegen]Yes, the interest rates and house prices move in opposite directions.[/quote]
This is actually not borne out by the facts. If you go back and look at the late-70s and early-80s, when rates increased dramatically, housing prices increased at a very high rate as well. If rates are moving up, it’s probably because of inflation. And if inflation rears its ugly head, there’s a good chance that it will show up in rents, and thus housing prices. Of course, the “next time could be different.”[/quote]
As an active participant in the real estate market at the time, I can tell you that the conditions described by davelj (high inflation, rising interest rates, rising real estate prices) did exist in the early to mid-1970’s, triggered by Nixon’s ending of the right to redeem dollars for U. S. Government gold. Dollar holders went looking for places to put their dollars, and a non-trivial percentage of dollars (from both foreign and domestic sources) flowed into U. S. real estate.
I can also tell you that when Volcker’s inflation-killing policies raised interest rates between 1979 and 1982, prices fell abruptly by one-third or more, and San Diego mid-market houses became nearly impossible to sell unless seller financing was provided.
It can happen either way.
The Federal Reserve and Congress will determine what we see this time by the cleverness (or lack thereof) they show in future monetary and fiscal policy. In other words, nobody knows what will happen.
December 17, 2009 at 7:14 AM #495433rnenParticipant[quote=sdrealtor]rnen
You are looking in my backyard. The challenge is there is lots of demand around here but very little coming on the market. The homeowners around here are a pretty stable lot. If you are looking high end there could be some relief as there has been quite a bit of overbuilding in the way of 4,000 sq ft McMansions. If you are looking for something modest I just have a hard time seeing things get markedly better. I know tons of buyers out there looking for entry level homes. An REO recently came on the market around $500K in Rancho Ponderosa and it was bombarded with buyers/interest. The house was a pit and needed major remodelling. There is a huge demand for homes like this piling up but very little coming on the market. I wish it was otherwise but I dont see that coming. While I think we will see more inventory hit the market, the competition for anything decent and well priced will be substantial.Even if rates jumped 1% or more, I dont think that would make a difference in the market for homes under 700K.[/quote]
You are too right, we have been “looking” for almost 4 yrs and this is the worst we have seen in terms of the quality and number of homes in our range. We have not found anything recently that excites us but will keep trying.
We are not looking to make money but are looking for a home which is why the an increase of even 1% is worth considering. Over 20-25yrs of payments that could translate into significant money. As a transplanted Canadian I have no experience with being able to write off the mortgage interest, maybe a 1- 1.5 point increase is not such a concern.
December 17, 2009 at 7:14 AM #495050rnenParticipant[quote=sdrealtor]rnen
You are looking in my backyard. The challenge is there is lots of demand around here but very little coming on the market. The homeowners around here are a pretty stable lot. If you are looking high end there could be some relief as there has been quite a bit of overbuilding in the way of 4,000 sq ft McMansions. If you are looking for something modest I just have a hard time seeing things get markedly better. I know tons of buyers out there looking for entry level homes. An REO recently came on the market around $500K in Rancho Ponderosa and it was bombarded with buyers/interest. The house was a pit and needed major remodelling. There is a huge demand for homes like this piling up but very little coming on the market. I wish it was otherwise but I dont see that coming. While I think we will see more inventory hit the market, the competition for anything decent and well priced will be substantial.Even if rates jumped 1% or more, I dont think that would make a difference in the market for homes under 700K.[/quote]
You are too right, we have been “looking” for almost 4 yrs and this is the worst we have seen in terms of the quality and number of homes in our range. We have not found anything recently that excites us but will keep trying.
We are not looking to make money but are looking for a home which is why the an increase of even 1% is worth considering. Over 20-25yrs of payments that could translate into significant money. As a transplanted Canadian I have no experience with being able to write off the mortgage interest, maybe a 1- 1.5 point increase is not such a concern.
December 17, 2009 at 7:14 AM #495761rnenParticipant[quote=sdrealtor]rnen
You are looking in my backyard. The challenge is there is lots of demand around here but very little coming on the market. The homeowners around here are a pretty stable lot. If you are looking high end there could be some relief as there has been quite a bit of overbuilding in the way of 4,000 sq ft McMansions. If you are looking for something modest I just have a hard time seeing things get markedly better. I know tons of buyers out there looking for entry level homes. An REO recently came on the market around $500K in Rancho Ponderosa and it was bombarded with buyers/interest. The house was a pit and needed major remodelling. There is a huge demand for homes like this piling up but very little coming on the market. I wish it was otherwise but I dont see that coming. While I think we will see more inventory hit the market, the competition for anything decent and well priced will be substantial.Even if rates jumped 1% or more, I dont think that would make a difference in the market for homes under 700K.[/quote]
You are too right, we have been “looking” for almost 4 yrs and this is the worst we have seen in terms of the quality and number of homes in our range. We have not found anything recently that excites us but will keep trying.
We are not looking to make money but are looking for a home which is why the an increase of even 1% is worth considering. Over 20-25yrs of payments that could translate into significant money. As a transplanted Canadian I have no experience with being able to write off the mortgage interest, maybe a 1- 1.5 point increase is not such a concern.
December 17, 2009 at 7:14 AM #495520rnenParticipant[quote=sdrealtor]rnen
You are looking in my backyard. The challenge is there is lots of demand around here but very little coming on the market. The homeowners around here are a pretty stable lot. If you are looking high end there could be some relief as there has been quite a bit of overbuilding in the way of 4,000 sq ft McMansions. If you are looking for something modest I just have a hard time seeing things get markedly better. I know tons of buyers out there looking for entry level homes. An REO recently came on the market around $500K in Rancho Ponderosa and it was bombarded with buyers/interest. The house was a pit and needed major remodelling. There is a huge demand for homes like this piling up but very little coming on the market. I wish it was otherwise but I dont see that coming. While I think we will see more inventory hit the market, the competition for anything decent and well priced will be substantial.Even if rates jumped 1% or more, I dont think that would make a difference in the market for homes under 700K.[/quote]
You are too right, we have been “looking” for almost 4 yrs and this is the worst we have seen in terms of the quality and number of homes in our range. We have not found anything recently that excites us but will keep trying.
We are not looking to make money but are looking for a home which is why the an increase of even 1% is worth considering. Over 20-25yrs of payments that could translate into significant money. As a transplanted Canadian I have no experience with being able to write off the mortgage interest, maybe a 1- 1.5 point increase is not such a concern.
-
AuthorPosts
- You must be logged in to reply to this topic.