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Ex-SD
ParticipantWhen you factor in that you won’t be able to get a jumbo loan (over 417k) at a reasonable interest rate and that qualified buyers will be in very short supply, my guess is that the price by the end of 2008 will be closer to $440-$450k. I also think that if you wait until the end of 2009-2010, these types of properties will sell for around $375-$400k.
Why? (1) Investors won’t buy them to rent out unless they can receive a better return on their money than they can get from a CD or the stock market. (2) Foreclosures are going to get a lot worse than they already are which means lower prices and a glut of homes to sell. This means that anyone who is NOT in trouble with a re-setting, adjustable ARM and who will not be upside down on their loan…… but who has to sell their property due to job loss, health problems, job transfer, etc……….will have to match or beat the prices that the foreclosures will be selling for. Right now, the inventory of listed, unsold homes in L.A., Orange and SD counties combined is almost double of what it was a little over a year and a half ago. You can’t have rising foreclosures, rising inventories, lack of qualified buyers due to new loan restrictions, etc. without having drastically falling prices. They may fall in chunks or start free-falling within the next month……who knows? But………they WILL fall. When they fall, they won’t recover for years and incomes are not going to rise enough/fast enough to enable enough new buyers to qualify for a mortgage. I can’t imagine any more foreign banks or brokerages buying any more horse-crap, sub-standard home loans from the USA or anywhere else after what happened the last couple of weeks in France, Japan and the USA. Be patient, save your money and you will know when the time is right to buy.
BTW: I sold my house in SD in April of 2005……..cashed out and moved out of state. When the time is right, I will move back and buy again. My wife and I saw this coming like an elephant running in our back yard back in 2004.Participantbsrsharma & enron_by_the_sea hit the key problems in their posts above.
You can’t sell a house in this type of neighborhood and price range unless the borrower is “all cash” or doesn’t need to finance more than $417k………….neither of which is probable. Then, there is the problem with getting an appraisal in a falling market. This is not gloom & doom talking…………..just reality.
If you’re renting, I would continue to do so for a minimum of two more years and see where things go. When prices finally hit the bottom, they’re not going to go back up for years. My guess is that you will be able to buy a similar house in that neighborhood for $400-420k and if you wait another year or so beyond that, you may be able to purchase a similar home for $325-$350k. What happened this week is just the tip of the iceberg. You’re in a market that has growing inventory, rising foreclosures and new loan restrictions and requirements for the borrower. Only a tiny percentage of the population will be able to qualify for a mortgage. If you buy too early and then have to sell before 5-7 years have passed, it his highly likely that you will wind up, upside down. Time to be careful with you hard earned $$$$$.
Participantbsrsharma & enron_by_the_sea hit the key problems in their posts above.
You can’t sell a house in this type of neighborhood and price range unless the borrower is “all cash” or doesn’t need to finance more than $417k………….neither of which is probable. Then, there is the problem with getting an appraisal in a falling market. This is not gloom & doom talking…………..just reality.
If you’re renting, I would continue to do so for a minimum of two more years and see where things go. When prices finally hit the bottom, they’re not going to go back up for years. My guess is that you will be able to buy a similar house in that neighborhood for $400-420k and if you wait another year or so beyond that, you may be able to purchase a similar home for $325-$350k. What happened this week is just the tip of the iceberg. You’re in a market that has growing inventory, rising foreclosures and new loan restrictions and requirements for the borrower. Only a tiny percentage of the population will be able to qualify for a mortgage. If you buy too early and then have to sell before 5-7 years have passed, it his highly likely that you will wind up, upside down. Time to be careful with you hard earned $$$$$.
Participantbsrsharma & enron_by_the_sea hit the key problems in their posts above.
You can’t sell a house in this type of neighborhood and price range unless the borrower is “all cash” or doesn’t need to finance more than $417k………….neither of which is probable. Then, there is the problem with getting an appraisal in a falling market. This is not gloom & doom talking…………..just reality.
If you’re renting, I would continue to do so for a minimum of two more years and see where things go. When prices finally hit the bottom, they’re not going to go back up for years. My guess is that you will be able to buy a similar house in that neighborhood for $400-420k and if you wait another year or so beyond that, you may be able to purchase a similar home for $325-$350k. What happened this week is just the tip of the iceberg. You’re in a market that has growing inventory, rising foreclosures and new loan restrictions and requirements for the borrower. Only a tiny percentage of the population will be able to qualify for a mortgage. If you buy too early and then have to sell before 5-7 years have passed, it his highly likely that you will wind up, upside down. Time to be careful with you hard earned $$$$$.
Participant……………………BINGO!!!
It’s coming. I’m sure that by now, everyone who reads internet news sites has seen the story about France’s largest bank by market value, who announced today that one of its units was suspending three of its asset-backed securities funds, saying it could not value them accurately because of problems in the U.S. subprime mortgage market.
Today, the Dow dropped 387 points due directly to the this big, credit problem that is looming over these bubble markets.
It’s not going to get better over-night……………..My opinion is that it’s going to go further & further down in chunks for the next three to five years before it stabilizes. I know that I won’t be buying any real estate in any of the bubble markets until I am convinced that the mud on the bottom has settled.
Participant……………………BINGO!!!
It’s coming. I’m sure that by now, everyone who reads internet news sites has seen the story about France’s largest bank by market value, who announced today that one of its units was suspending three of its asset-backed securities funds, saying it could not value them accurately because of problems in the U.S. subprime mortgage market.
Today, the Dow dropped 387 points due directly to the this big, credit problem that is looming over these bubble markets.
It’s not going to get better over-night……………..My opinion is that it’s going to go further & further down in chunks for the next three to five years before it stabilizes. I know that I won’t be buying any real estate in any of the bubble markets until I am convinced that the mud on the bottom has settled.
Participant……………………BINGO!!!
It’s coming. I’m sure that by now, everyone who reads internet news sites has seen the story about France’s largest bank by market value, who announced today that one of its units was suspending three of its asset-backed securities funds, saying it could not value them accurately because of problems in the U.S. subprime mortgage market.
Today, the Dow dropped 387 points due directly to the this big, credit problem that is looming over these bubble markets.
It’s not going to get better over-night……………..My opinion is that it’s going to go further & further down in chunks for the next three to five years before it stabilizes. I know that I won’t be buying any real estate in any of the bubble markets until I am convinced that the mud on the bottom has settled.
Participantak1 is right on the money with his post on this page.
In his post, he said……….”If this person is desperate to sell, the other seller, 50 feet away, is going to have a heck of a time selling their house w/o reducing the price.”
The first thing that will happen is when you have two or more houses in the same neighborhood selling for “X” price, those selling prices become the new comps for the rest of the neighborhood (related to $$ per sq. foot/lot size). Unless everyone else who needs or wants to sell, they would have to either find a cash buyer who would be stupid enough to pay “X” $$$$ over the going price because they won’t be able to get an appraisal at a higher, per sq. foot price to show the lender. There are many people who are either ignorant to this fact or they simply don’t want to be objective about the true value of their properties.
Participantak1 is right on the money with his post on this page.
In his post, he said……….”If this person is desperate to sell, the other seller, 50 feet away, is going to have a heck of a time selling their house w/o reducing the price.”
The first thing that will happen is when you have two or more houses in the same neighborhood selling for “X” price, those selling prices become the new comps for the rest of the neighborhood (related to $$ per sq. foot/lot size). Unless everyone else who needs or wants to sell, they would have to either find a cash buyer who would be stupid enough to pay “X” $$$$ over the going price because they won’t be able to get an appraisal at a higher, per sq. foot price to show the lender. There are many people who are either ignorant to this fact or they simply don’t want to be objective about the true value of their properties.
Participantak1 is right on the money with his post on this page.
In his post, he said……….”If this person is desperate to sell, the other seller, 50 feet away, is going to have a heck of a time selling their house w/o reducing the price.”
The first thing that will happen is when you have two or more houses in the same neighborhood selling for “X” price, those selling prices become the new comps for the rest of the neighborhood (related to $$ per sq. foot/lot size). Unless everyone else who needs or wants to sell, they would have to either find a cash buyer who would be stupid enough to pay “X” $$$$ over the going price because they won’t be able to get an appraisal at a higher, per sq. foot price to show the lender. There are many people who are either ignorant to this fact or they simply don’t want to be objective about the true value of their properties.
ParticipantTell him to look at this site to get a grasp on what’s happening in the bubble markets around the USA.
http://bubbletracking.blogspot.com/
When distressed owners slash their prices to get out of their financial nightmares or let the house go to foreclosure and the lender takes whatever the market will give them to get the property off their books, the actual selling prices will be the new values for the respective neighborhoods. If someone bought a house in X-area in 2003 for $500k and a similar house sold across the street in 2005 for $625k………..but two or more desperate sellers or foreclosed similar properties in the same neighborhood are put up for sale and close at $400k in the next couple of months, the real value has now become around $400k. That’s the reality of real estate values…….period. It doesn’t matter what someone paid in 1990 or 2006: What is relevant is how much equivalent properties in the same market/area are now selling for.
ParticipantTell him to look at this site to get a grasp on what’s happening in the bubble markets around the USA.
http://bubbletracking.blogspot.com/
When distressed owners slash their prices to get out of their financial nightmares or let the house go to foreclosure and the lender takes whatever the market will give them to get the property off their books, the actual selling prices will be the new values for the respective neighborhoods. If someone bought a house in X-area in 2003 for $500k and a similar house sold across the street in 2005 for $625k………..but two or more desperate sellers or foreclosed similar properties in the same neighborhood are put up for sale and close at $400k in the next couple of months, the real value has now become around $400k. That’s the reality of real estate values…….period. It doesn’t matter what someone paid in 1990 or 2006: What is relevant is how much equivalent properties in the same market/area are now selling for.
ParticipantTell him to look at this site to get a grasp on what’s happening in the bubble markets around the USA.
http://bubbletracking.blogspot.com/
When distressed owners slash their prices to get out of their financial nightmares or let the house go to foreclosure and the lender takes whatever the market will give them to get the property off their books, the actual selling prices will be the new values for the respective neighborhoods. If someone bought a house in X-area in 2003 for $500k and a similar house sold across the street in 2005 for $625k………..but two or more desperate sellers or foreclosed similar properties in the same neighborhood are put up for sale and close at $400k in the next couple of months, the real value has now become around $400k. That’s the reality of real estate values…….period. It doesn’t matter what someone paid in 1990 or 2006: What is relevant is how much equivalent properties in the same market/area are now selling for.
ParticipantIt sounds to me like Ben Stein is talking about the majority of the USA and leaving CA, parts of Florida, Las Vegas, Washington DC, Seattle and a couple of other places out of his thought processes. You can’t look objectively at southern CA with all of the facts that are now in place and not come to a conclusion that prices will drop substantially. Will it be 20% or will they fall 50%…….? Nobody knows at this point but to me, it looks like we’re going to see a slow slippery slide as time goes bye and finally see a bottoming out in late 2011 or mid 2012. People will have to accept that their house is worth a whole lot less before they will lower their prices to the range where they will actually find a buyer. This will take some time, depending on each individuals circumstances. I read a story yesterday in the San Francisco Chronicle about a man who had been trying to sell the his house in the Castro Valley (SF area) for six months for $550k with no offers. He actually had equity in the home because he owed around $350k. He bought the house in early 2006. He did the smart thing and held an absolute auction. The house sold for $450k, he freed himself from the mortgage that was going to re-set next year and he walked away with some cash. Time will tell but I think he did the smartest thing he could do.
As prices in SoCal drop further and more ARM’s reset to higher rates, a huge number of people who have no equity will simply walk away from the house. Then, when the foreclosed house sells at the true market value, the comps in the area are down the drain for anyone else who has to sell their home. There are many things that are all inter-related that will continue to drive the crazy prices in these bubble markets back to some sort of sanity. When you can buy really nice homes in most parts of the country for around $200k, CA and with liar loans down the drain, etc, my guess is that SFR’s will drop as much as 40% (or more)……………but who has a crystal ball? I just look at the facts and make logical assumptions. -
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