Where? Temecula has fallen Where? Temecula has fallen alot more than NCC, and their turn around points will be different. Same as national turnaround will be different than SoCal or Florida or Vegas or AZ.
fredo4
January 7, 2009 @
1:17 PM
How about just buying when How about just buying when prices actually start going up? Wouldn’t that be the most accurate indicator of when the bottom has hit?
I’m not planning on waiting quite that long. I want my kids to actually still be living at home when I buy. I’m thinking maybe when things start levelling out or really slowing down is a good time for us, since we’re not first time buyers and have some cash left from our last house.
blahblahblah
January 6, 2009 @
4:55 PM
March 13, 2014.
1:33PM. March 13, 2014.
1:33PM.
Eugene
January 6, 2009 @
5:00 PM
22 votes and not a single 22 votes and not a single soul believes in a turnaround in 2009.
I wonder where all the pigg knife catchers are coming from.
carlsbadworker
January 6, 2009 @
6:46 PM
esmith wrote:22 votes and not [quote=esmith]22 votes and not a single soul believes in a turnaround in 2009.
I wonder where all the pigg knife catchers are coming from.[/quote]
The keyword is “turn around”. I’m a knife catcher because I think the downside is limited in the most likely scenario. But I don’t think it will turn around anytime soon. With all the hidden inventory, how could it even be possible for a “turn around” before 2011? But I’d rather wait for the turn around in my house than in a rental, as long as the downside is limited, because who knows how long it will take.
golfproz
January 6, 2009 @
8:26 PM
Just because we don’t believe Just because we don’t believe the market is going to turn around doesn’t mean we shouldn’t buy. You have to live somewhere, right?. If I can buy at the right price and minimize most of the downside I anticipate then why wait. I hope to buy this year. The plan is to buy at a price I think will minimize the risk. If it goes down 10%, I’ll be ok with that. I plan on being in the house till I croak. Well, probably 20 years at least. I don’t mind catching a very very dull knife. That way I can resharpen it and use it to carve up my rack of lamb that I’ll be cooking!
BTW, my money is on 2011-2016 for the bottom. It’s a long flat bottom!
an
January 6, 2009 @
11:26 PM
esmith wrote:22 votes and not [quote=esmith]22 votes and not a single soul believes in a turnaround in 2009.
I wonder where all the pigg knife catchers are coming from.[/quote]
With the amount of government intervention, I wouldn’t rule out a slow decline for 5-10 years. We can be w/in 10% of a bottom in some area, but that last 10% might take 5-10 years to materialize. Can you wait that long in a rental? Does it pencil out considering how much money you’re throwing away in rent when you’re throwing away less when you buy a comparable house? While you wait 10 years for that last 10%, you’re now 10 years older too. If you’re 30 now, that mean you’ll be 40. If you take out a 30 years mortgage, will you be working until you’re 70 or will you have enough in retirement to cover your living expenses and a mortgage?
DWCAP
January 7, 2009 @
12:59 PM
asianautica wrote:esmith [quote=asianautica][quote=esmith]22 votes and not a single soul believes in a turnaround in 2009.
I wonder where all the pigg knife catchers are coming from.[/quote]
With the amount of government intervention, I wouldn’t rule out a slow decline for 5-10 years. We can be w/in 10% of a bottom in some area, but that last 10% might take 5-10 years to materialize. Can you wait that long in a rental?[/quote]
First off, I was talking about bottom pricing, not payment or total cost pricing. The assumption in total cost pricing is that I care about interest rates and such now because I could buy now or choose to delay. I dont care about TCP because I am not in a place in my life where I am ready to buy. So as it would be financially irresponisble for me to buy now, and I would be risking loseing my DP+ credit+ whatever I put into the place, the risk reward to me is still tilted to fence sitting. Part of the money you are saving is due to the higher risks you are taking as a owner. If we are gonna talk about 10-20 Ala Japan, lets also talk about a job loss. That 12k a year savings wont seem so great if the income is cut. (I sincerly hope this doesn not happen to you or anyone. I wish no ill will to other people. But at 600k plus jobs being lost per month it needs to be factored in)
Second off, you were using the long end of your predictions. I used the short end. Considering the massive upheaval in todays markets, 14% off is still within the picture in the next 5 years. As you said, what do you think interest rates will be then? At Trillion dollar deficits, ill bet it is higher than 4-5%. But housing will have to adjust the price to reflect that too. So it is very possible in my mind to do just as well as you have done in 5 years when I am ready to buy, even if interest rates are higher.
Third, I dont understand your numbers. I am most likely off here, so please dont take offense, but if you are gonna use yourself as an example then I will too.
House:433k
DP:87k
Interest:4.8% (I am guessing)
prop tax:4500
insurance:500/yr
So, how are you saving $1000/month over rent before tax deductions? Even if we add 10% onto the rent to compensate for the smaller house, that gives us about 2400-2600/month, only 300-400 more than your payment. Unless you had a huge DP, which isnt exactly the same thing. If you take out the 20% DP, something more akin to rent, it is more like 2800/month. That is still 200-300 less than the no DP payment. I just want to understand you numbers, because maybe I looking at things wrong.
an
January 7, 2009 @
1:56 PM
DWCAP, are you counting in DWCAP, are you counting in principal payment into your calculation? I also consider property tax + insurance will be canceled out by the tax deduction you get. So, when I say $ wasted, I mean the $ you pay in interest vs the $ you pay in rent. Both of those $ are gone forever and you’ll never see it again.
Obviously, if you’re not in a position in your life to buy, please don’t buy. But there are people who are ready to buy 4-5 years ago and waited till now.
I personally would love to see a major crash by now, but it didn’t happen. Especially now, when the government are stepping up to try and stop the massive decline, I think we’ll see a slow decline and inflation eating most of the decline rather than in nominal $ term. That’s just my personal prediction.
SDEngineer
January 6, 2009 @
6:13 PM
Another point is that it Another point is that it seems pretty likely (from a historical perspective) that there will be a pretty good sized window during which to buy.
Last few times we’ve seen a bubble (though admittedly never of this magnitude), once the deflation more-or-less ended, we still had a couple of years of the market bumping around at the bottom. In the areas I’m looking to buy, I’m thinking that (barring even more of an economic meltdown) it’ll hit bottom (in terms of overall sale price) sometime this year. I expect it will then plod along with no real gain for several years at least before we start seeing year over year gains. I’m ok with buying at or near that point, even though in terms of inflation adjusted dollars the house is still probably going to be losing money.
In other words, when people think the market will bottom is likely to be quite different from when the market will actually turn around. I expect it’ll bottom in various areas between 2009 and 2010, but I don’t see a turnaround until 2012 at the earliest.
stockstradr
January 6, 2009 @
6:21 PM
I predict that what will I predict that what will bottom in 2009 are the rates for 30-year fixed rate loans.
We plan to try and catch that bottom, estimating rates might bottom below 4.5% about six months out from here, hopefully housing values (in Silicon Valley) will have also fallen another 10% by then. The other BIG advantage of our waiting another six months before looking seriously at buying is that then we’ll have a better handle on HOW BAD this economic recession/depression will get!
The smartest realtors I know in Silicon Valley are predicting a massive wave of IT tech job layoffs will hit in 2009. Obviously that will cause a new wave of foreclosures.
Similar could happen for San Diego.
urbanrealtor
January 6, 2009 @
7:09 PM
Why?
Is it down? Why?
Is it down?
patientrenter
January 6, 2009 @
7:59 PM
Previous downturns lasted 5-7 Previous downturns lasted 5-7 years from peak to bottom. Then spent a year or two in between, and then a couple of years of gradual increases.
Can’t guarantee this will be the same, but history does tend to repeat itself. If so, then we’re not at the bottom yet in most places, and it won’t snap back quickly even after the bottom.
peterb
January 6, 2009 @
8:09 PM
Bottom calling is for Bottom calling is for suckers. If you’re intrested in buying just before prices start to rise then wait until unemployment gets below 6% and stay there for at least 6 months. Then things can improve.
Arraya
January 6, 2009 @
8:47 PM
peterb wrote:Bottom calling [quote=peterb]Bottom calling is for suckers. If you’re intrested in buying just before prices start to rise then wait until unemployment gets below 6% and stay there for at least 6 months. Then things can improve.[/quote]
As many as a million American jobs could be lost every month by next spring as businesses struggle to raise capital in financial markets consumed by fear, according to a new analysis.
November was the worst month in the US labour market since the oil crisis of 1974, as more than 500,000 US workers were laid off, according to official figures released on Friday.
But Graham Turner, of consultancy GFC Economics, says the rising cost of corporate debt is now flashing a red warning signal that far worse is to come over the next few months and job losses are heading for levels last seen in the 1930s Great Depression.
CDMA ENG
January 6, 2009 @
11:19 PM
Unemployment will never hit Unemployment will never hit that number…
Just like everything else…
The Goverment will change the definition…
😛
Arraya
January 7, 2009 @
9:07 AM
CDMA ENG wrote:Unemployment [quote=CDMA ENG]Unemployment will never hit that number…
Just like everything else…
The Goverment will change the definition…
😛
[/quote]
Maybe, but some things are hard to hide…
NY’s unemployment hotline crashes
The state Department of Labor, which oversees unemployment insurance claims, received more than 10,000 phone calls an hour on a toll-free hotline Tuesday, leading to the crash. The department’s online claim filing system also shut down under the volume of traffic it received.
The unemployment claims systems in Ohio and other states buckled this week under an onslaught of telephone calls and Web site hits, officials said Tuesday.
The telephone hot line generally receives about 7,500 calls a day, but has been getting about 80,000 each of the past two days.
Unemployment claims systems in New York and North Carolina were experiencing similar problems due to a surge in callers.
There used to be a time when people who called Linda Jahraus’ home in Laguna Beach, Ca., were actually wanting to speak to her or her husband.
But for the past several months, the majority of callers have been trying to reach an Alabama unemployment hot line. The call confusion has added to the frustrations of the state’s unemployed and has left at least two California households hoping for a little less ringing in the new year.
“We almost didn’t pick up the phone,” Jahraus said Friday after spotting an incoming Alabama number from The Associated Press on her caller-ID. “It’s a pain in the neck, quite frankly. The day after Christmas we had 50 or more phone calls and they started at 5 a.m.”
Industrial Relations Director Tom Surtees said state officials are working hard to resolve the problem.
“I can’t explain somebody sitting in north Alabama making a call and it ending up in somebody’s private residence in California,” he said.
A spokeswoman for AT&T Alabama, which has the department’s account, called the problem unusual. Spokeswoman Sue Sperry said the company would be working through the weekend to trace the problem. She said it could involve a number of factors, from the long-distance network to a glitch in the switching center.
JEFFERSON CITY, Mo. (AP) – Missourians seeking to extend jobless benefits will have to start doing that on Monday, Wednesday and Friday.
An unemployment benefits hot line run by the Missouri Department of Labor and Industrial Relations will no longer be available on Tuesday and Thursday except for first-time applicants.
Department spokeswoman Wanda Seeney said the shutdown will allow staff to process the increasing number of unemployment claims. Through November 2008, more than 65,000 Missourians were receiving jobless benefits.
peterb wrote:Bottom calling [quote=peterb]Bottom calling is for suckers. If you’re intrested in buying just before prices start to rise then wait until unemployment gets below 6% and stay there for at least 6 months. Then things can improve.[/quote]
By the time you start to buy when it is rising, you may not be able to pick the perfect orange you want at the price you desire.
5yearwaiter
January 7, 2009 @
2:24 PM
donaldduckmoore wrote:peterb [quote=donaldduckmoore][quote=peterb]Bottom calling is for suckers. If you’re intrested in buying just before prices start to rise then wait until unemployment gets below 6% and stay there for at least 6 months. Then things can improve.[/quote]
By the time you start to buy when it is rising, you may not be able to pick the perfect orange you want at the price you desire.[/quote]
Don’t worry this time such ride is not going to be happen nor even possible. No one have enough money nor any inverstors looking this can yield much in future for a while
donaldduckmoore
January 7, 2009 @
9:46 PM
5yearwaiter [quote=5yearwaiter][quote=donaldduckmoore][quote=peterb]Bottom calling is for suckers. If you’re intrested in buying just before prices start to rise then wait until unemployment gets below 6% and stay there for at least 6 months. Then things can improve.[/quote]
By the time you start to buy when it is rising, you may not be able to pick the perfect orange you want at the price you desire.[/quote]
Don’t worry this time such ride is not going to be happen nor even possible. No one have enough money nor any inverstors looking this can yield much in future for a while[/quote]
Who knows what will happen. I am guessing while you are guessing too.
peterb
January 8, 2009 @
8:39 AM
Exactly! Why guess when you Exactly! Why guess when you can follow the indicators and be sure of the market when it starts to moves up? Anything else is gambling.
sunny88
January 8, 2009 @
2:21 PM
This is a recent article in This is a recent article in MarketWatch:
Home buyers advised to look before they leap
Building analyst warns 2009 is a ‘bad time to buy a home’ as jobs vanish
By John Spence, MarketWatch
Last update: 3:46 p.m. EST Jan. 7, 2009Comments: 473BOSTON (MarketWatch) — Fox-Pitt Kelton home-builder analyst Robert Stevenson said Wednesday he thinks this year will turn out to be “a bad time to buy a home” as the U.S. economy loses more jobs, especially if buyers don’t plan on staying in the house for at least several years.
“While some suggest that now is great time to buy a home given low mortgage rates and falling home prices, we believe that for most homebuyers, the opposite is true,” Stevenson said in a report to clients.
The analyst’s bearish outlook is based largely on escalating unemployment, and jobs are the lifeblood of the housing market.
“As if 2008 weren’t bad enough for housing — given the mounting foreclosures, falling home prices, and a tightening credit market — millions more Americans are now in danger of losing their jobs,” said Stevenson at Fox-Pitt. “As unemployment heads towards 8%, we expect foreclosures to spike, taking home prices down materially.”
Investors will be closely watching employment reports later this week to gauge the economy’s ailing health. The Labor Department’s unemployment report for December is set to be released Friday, and the weekly jobless claims report is due out Thursday. On Wednesday, the ADP employment index showed U.S. private-sector firms shed 693,000 jobs in December, far worse than expected.
“If unemployment can be held under 8%, we believe the housing market will start a slow recovery beginning in 2010,” Stevenson said. “However, if the bears are correct and the U.S. experiences 9% [or higher] unemployment in [the second half of 2009] or 2010, we believe the housing market could experience a meltdown even more severe than the one we’ve experienced in the past few years.”
On the supply side of housing, there remains a sizable overhang of unsold homes on the market. The supply of both new and existing homes is massive by historical standards, and a surge in foreclosures would only add to the glut if the government can’t find a solution to the foreclosure problem.
Buyers who do jump into the housing market should consider the possibility that they may need to stay in the home for many years in order to come out ahead, assuming home prices fall substantially further.
“Given the likelihood of a meaningful decline in home values in 2009, we continue to wonder why anyone would buy a home today,” said Stevenson, the home-builder analyst, in a loud and clear warning to buyers.
The housing market “is likely to remain significantly oversupplied into 2010,” he said. “Given the likelihood of incremental home price declines, we see little reason for most Americans to rush into buying a home today.”
Arraya
January 8, 2009 @
4:19 PM
From the article:
“However, From the article:
“However, if the bears are correct and the U.S. experiences 9% [or higher] unemployment in [the second half of 2009] or 2010, we believe the housing market could experience a meltdown even more severe than the one we’ve experienced in the past few years.”
You can pretty much book the greater than 9%. We could easily be 12%+, officially, by the end of 09. The natives should start getting restless in 2010.
WaitingToExhale
January 8, 2009 @
4:55 PM
sunny88 wrote:This is a [quote=sunny88]This is a recent article in MarketWatch:
Home buyers advised to look before they leap
Building analyst warns 2009 is a ‘bad time to buy a home’ as jobs vanish
[/quote]
Many people have quoted the idea that one should buy when “everybody knows it is a terrible time to buy.”
Does it seem like that’s now?
(former)FormerSanDiegan
January 8, 2009 @
5:04 PM
WaitingToExhale wrote:sunny88 [quote=WaitingToExhale][quote=sunny88]This is a recent article in MarketWatch:
Home buyers advised to look before they leap
Building analyst warns 2009 is a ‘bad time to buy a home’ as jobs vanish
[/quote]
Many people have quoted the idea that one should buy when “everybody knows it is a terrible time to buy.”
Does it seem like that’s now?[/quote]
I think that outside of geekdoms like Piggington.com and OCRenter’s blogs you can find nearly universal acceptance that real estate really sucks right now.
The problem is the “nearly” part. These conditions can persist for a long time until the “nearly universal” becomes “completely universal”
sunny88
January 8, 2009 @
5:09 PM
The bottom line is, nobody The bottom line is, nobody know what will happen in the near future. Most likely, it will take several years until we see a meaningful recovery in the housing and job market.
an
January 8, 2009 @
5:14 PM
You can never get a unanimous You can never get a unanimous agreement on one thing. You didn’t get a unanimous agreement on the top of this cycle, what make you think you’ll get a unanimous agreement on the bottom?
sunny88
January 8, 2009 @
6:28 PM
You’re right, nobody knows You’re right, nobody knows and there can be no agreement…
bsrsharma
January 8, 2009 @
7:32 PM
I think real estate will I think real estate will definitely turn around, quickly, if Gold crosses 2K (or Oil crosses 200). Bernanke is working hard to achieve that. I believe, he and Obama, working together, will be successful (in 3 years max, before 2012). At that point, housing inventories should melt away like snow in spring. All monies now flowing into treasuries and agency paper will turn around on a dime and jack up real (physical) assets.
sunny88
January 14, 2009 @
1:57 PM
You’re on the point. As long You’re on the point. As long as these conditions are not met there will be no turnaround. Hopefully we’ll see it in our lifetime….
cr
January 14, 2009 @
3:11 PM
bsrsharma wrote:I think real [quote=bsrsharma]I think real estate will definitely turn around, quickly, if Gold crosses 2K (or Oil crosses 200). Bernanke is working hard to achieve that. I believe, he and Obama, working together, will be successful (in 3 years max, before 2012). At that point, housing inventories should melt away like snow in spring. All monies now flowing into treasuries and agency paper will turn around on a dime and jack up real (physical) assets.[/quote]
I agree with you on inflation, but it doesn’t necessarily correlate to rising RE prices.
Home prices are dependent on incomes; gold and oil are not.
BB can fly his helicopter over every failing company in the world, and BO can borrow from our children to pay people to dig ditches to China until 2016, but if none of that translates to incomes that can afford a home, RE prices will continue to fall.
2008 saw rampant inflation in oil, gold, commodities, etc., but housing prices fell the whole time.
Eugene
January 14, 2009 @
3:44 PM
cooprider wrote:
BB can fly [quote=cooprider]
BB can fly his helicopter over every failing company in the world, and BO can borrow from our children to pay people to dig ditches to China until 2016, but if none of that translates to incomes that can afford a home, RE prices will continue to fall.[/quote]
Have you seen the thread about the house I’m buying?
I can tell you that my PITI after tax deduction comes out around $2650/month. Of these, $600 go to principal (forced savings). I probably could have bought with 3% down and my PITI would still be under $3000.
If I just wanted a house in a decent safe area – there’s a 4-bedroom house not far from where I currently live. I could’ve bought that one with 3% down and PITI of $2150. Poway school district.
How many people in San Diego can afford to spend $2150/month on housing?
Does that tell you anything about affordability?
sunny88
January 14, 2009 @
6:42 PM
I believe, that in the I believe, that in the current environment less than half of people in SD can afford to spend more than $2,000 on housing.
Eugene
January 14, 2009 @
6:55 PM
sunny88 wrote:I believe, that [quote=sunny88]I believe, that in the current environment less than half of people in SD can afford to spend more than $2,000 on housing.[/quote]
Under normal conditions (no housing bubble), how many people in SD should be able to afford Poway School District?
sunny88
January 14, 2009 @
10:09 PM
Only as many as the capacity Only as many as the capacity of the school district allows. I just wonder if the Poway School District is currently at capacity or not.
an
January 14, 2009 @
10:30 PM
sunny88 wrote:Only as many as [quote=sunny88]Only as many as the capacity of the school district allows. I just wonder if the Poway School District is currently at capacity or not. [/quote]
Which means less than 1/2 of the people in SD, right?
sunny88
January 15, 2009 @
7:17 AM
Yes, much less than 50%, Yes, much less than 50%, perhaps 5%.
(former)FormerSanDiegan
January 15, 2009 @
8:46 AM
sunny88 wrote:Yes, much less [quote=sunny88]Yes, much less than 50%, perhaps 5%.[/quote]
Np, it’s closer to 50% of families…
The median family income in San Diego: 72,407
(source: Census Bureau)
Percentage of income represented by the $2150 monthly housing costs : 36%
$2150 is maybe a bit on the high side compared to median income, but the answer is much closer to 50% than 5%.
Also, considering that San Diego traditionally has between 50-60% home ownership and that a significant fraction of that is condos, I am shocked that a 4 BR single family home in a desirable school district can be afforded by anything close to the median income.
(former)FormerSanDiegan
January 15, 2009 @
8:58 AM
I missed the after tax I missed the after tax deduction part of esmith’s PITI numbers.
Assuming this makes the monthly PITI more like 2700 per month, that puts required income around the 100K mark (32% DTI).
Based on Census bureau income distribution, this makes it more like 33% of San Diego families being able to afford a pre-tax 2700/post tax 2150 outlay.
That’s much closer to what I would have expected at this stage of the market.
Eugene
January 15, 2009 @
10:47 AM
The house is listed for 390K, The house is listed for 390K, and monthly PITI with 3% down before tax deduction would be $2600.
32% DTI is a rather strict requirement. I’d say that a 390K house starts looking affordable around 85K. At 85K, you would bring home $5800-5900 after taxes and you’d have $3200-3300/month left on other expenses.
The question is, how many families are there in San Diego that make more than 85K, and how many houses that are nicer / more expensive than a 1300 sf 4-bedroom in Poway School District?
(former)FormerSanDiegan
January 15, 2009 @
11:02 AM
esmith wrote:The house is [quote=esmith]The house is listed for 390K, and monthly PITI with 3% down before tax deduction would be $2600.
32% DTI is a rather strict requirement. I’d say that a 390K house starts looking affordable around 85K. At 85K, you would bring home $5800-5900 after taxes and you’d have $3200-3300/month left on other expenses.
The question is, how many families are there in San Diego that make more than 85K, and how many houses that are nicer / more expensive than a 1300 sf 4-bedroom in Poway School District?[/quote]
esmith, according to the census bureau for the city of Dan Diego
48% of families make more than 75K
and
34% of families make more than 100K.
SO, I’m guessing that at least 40% of families have income exceeding the 85K level you used.
Also, based on the median family income from this source, the Median family income CAN afford the median priced SFH in Central San Diego.
Median house: 350K (source :Data QUick, Nov 2008)
Median Family Income : 72K (source: Census Bureau)
PITI assuming 20% down and 5.25% 30-year fixed = $2000
Debt-to-income ratio = 0.33
The median priced SFR in San Diego is affordable to families making median incomes !
Incomes could be declining, but the median price is also declining. We are approaching affordability levels seen in only 4 or 5 of the past 30 years. And it is likely to get more affordable.
Also, based on the median family income from this source, the Median family income CAN afford the median priced SFH in Central San Diego.
Median house: 350K (source :Data QUick, Nov 2008)
Median Family Income : 72K (source: Census Bureau)
PITI assuming 20% down and 5.25% 30-year fixed = $2000
Debt-to-income ratio = 0.33
The median priced SFR in San Diego is affordable to families making median incomes !
Incomes could be declining, but the median price is also declining. We are approaching affordability levels seen in only 4 or 5 of the past 30 years. And it is likely to get more affordable.
The “gotcha” of course being the down payment. My gut feeling is not too many families in SD making the median HHI have $70,000+ sitting in their bank account today for a DP in addition to 6 months of salary, etc. And in this economy… I’m thinking more like 12-18 months salary is needed.
(former)FormerSanDiegan
January 15, 2009 @
11:06 AM
The old 2005 argument that The old 2005 argument that rent is half the cost of owning is now a moot point.
The bubble has been deflated.
We are below the mean in terms of virtually any metric used to define the bubble (price to income, affordability, price to rent, etc).
From here on out the three most inportant issues are jobs, jobs, jobs.
DWCAP
January 15, 2009 @
12:12 PM
esmith wrote:
The question [quote=esmith]
The question is, how many families are there in San Diego that make more than 85K, and how many houses that are nicer / more expensive than a 1300 sf 4-bedroom in Poway School District?[/quote]
The other question is how many people want to move. Incomes tend to go up with age, so many of the people making the highest incomes tend to have been here for a long time. They already own homes, and if they havnt bought in this decade prob at a much lower cost. Prop 13, moving hassels, and general attachment to ones home reduce the number of people who actually want to move into this house.
I would think the buyer pool of people who will buy a 1300sf 4bd older house in poway is considerably smaller than the general population who could afford it. I would guess it is limited to move up buyers who are trading out of crappy school districts/condo’s, first time buyers who saved as renters, or people looking to pick up a rental.
The move up buyers are hurting cause their old place isnt worth what they wish it was (possibly underwater). FTB’s are scared for their jobs and are holding off big purchases. People looking to be a LL need to take a long hard look at cost/benifit on a house like this.
There is someone who will buy this house and can afford it. I am not saying there isnt. I am saying that we need to look at a much larger picture than just income/cost.
cr
January 15, 2009 @
3:18 PM
esmith wrote:
32% DTI is a [quote=esmith]
32% DTI is a rather strict requirement.
The question is, how many families are there in San Diego that make more than 85K, and how many houses that are nicer / more expensive than a 1300 sf 4-bedroom in Poway School District?[/quote]
[quote=FormerSanDiegan]
PITI assuming 20% down and 5.25% 30-year fixed = $2000
Debt-to-income ratio = 0.33
The median priced SFR in San Diego is affordable to families making median incomes ![/quote]
It may seem like that given what you needed 5 years ago, but that’s much closer to historcial lending standards.
20% is a tall order too, but it should be a requirement.
And how many families making 85K/yr would want to live in a 1300sq ft house?
FSD that may be, but that certainly doesn’t mean we’ve hit a bottom…
(former)FormerSanDiegan
January 15, 2009 @
3:38 PM
coop –
True we haven’t hit coop –
True we haven’t hit bottom. But lack of affordability is no longer driving the train. Overall economy, jobs and fear are.
BTW, re: “And how many families making 85K/yr would want to live in a 1300sq ft house?”
When we made around the median family income in 1996 we also did not want to live in a 1300 sq foot house, but all we could afford was a 1100 square foot house in Clairemont (due to only 5% down, 8% interest rates, PMI, and student loans). And, in hindsight, that was at the bottom.
sunny88
January 15, 2009 @
2:59 PM
FormerSanDiegan wrote:sunny88 [quote=FormerSanDiegan][quote=sunny88]Yes, much less than 50%, perhaps 5%.[/quote]
Np, it’s closer to 50% of families…
The median family income in San Diego: 72,407
(source: Census Bureau)
Percentage of income represented by the $2150 monthly housing costs : 36%
$2150 is maybe a bit on the high side compared to median income, but the answer is much closer to 50% than 5%.
Also, considering that San Diego traditionally has between 50-60% home ownership and that a significant fraction of that is condos, I am shocked that a 4 BR single family home in a desirable school district can be afforded by anything close to the median income.
[/quote]
I misunderstood your question. I was thinking that about 5% of people are able afford a house in the Poway school district. Of course much more people are able to buy a house at the median price in SD, perhaps 40-50%. Also, one has to keep in mind, 50-60% ownership is a number from the “bubble” era.
(former)FormerSanDiegan
January 15, 2009 @
3:09 PM
Also, one has to keep in Also, one has to keep in mind, 50-60% ownership is a number from the “bubble” era.
Not really. Only the near 60% rate is in the bubble years. Homeownership rate in San Diego peaked at around 60% in 2005. Prior to the bubble it was typically in the 50-55% range.
cr
January 15, 2009 @
10:24 AM
esmith wrote:I can tell you [quote=esmith]I can tell you that my PITI after tax deduction comes out around $2650/month. Of these, $600 go to principal (forced savings). I probably could have bought with 3% down and my PITI would still be under $3000.
If I just wanted a house in a decent safe area – there’s a 4-bedroom house not far from where I currently live. I could’ve bought that one with 3% down and PITI of $2150. Poway school district.
How many people in San Diego can afford to spend $2150/month on housing?
Does that tell you anything about affordability?[/quote]
It proves my point.
To afford a $2150/month payment your monthly gross needs to be at least 3 times that, or $77,400/yr. Average FAMILY income in SD was $59,775 in 2006 according to Money. You only get the tax write-off once a year, so the monlthy payments will be even higher than the numbers you used.
Now, that’s not to say there aren’t families that make $80k/yr and over, but I’m speaking in general terms and averages.
I don’t know your financial status, but pointing to one house in Poway that you can afford doesn’t mean affordability has returned. And certainly not enough to send home prices back up.
The historical price to income ratio is 3 or 4 to 1. If $60,000 is the median HH income, and per the CSI the avg middle tier home price in SD is $476,000 we’ve still got a ways to correct. Even if SD (since everyone wants to live there) has a ratio of 5 or 6 to 1, it’s still got 25%-30% to drop.
ibjames
January 15, 2009 @
10:37 AM
cooprider wrote:esmith [quote=cooprider][quote=esmith]I can tell you that my PITI after tax deduction comes out around $2650/month. Of these, $600 go to principal (forced savings). I probably could have bought with 3% down and my PITI would still be under $3000.
If I just wanted a house in a decent safe area – there’s a 4-bedroom house not far from where I currently live. I could’ve bought that one with 3% down and PITI of $2150. Poway school district.
How many people in San Diego can afford to spend $2150/month on housing?
Does that tell you anything about affordability?[/quote]
It proves my point.
To afford a $2150/month payment your monthly gross needs to be at least 3 times that, or $77,400/yr. Average FAMILY income in SD was $59,775 in 2006 according to Money. You only get the tax write-off once a year, so the monlthy payments will be even higher than the numbers you used.
Now, that’s not to say there aren’t families that make $80k/yr and over, but I’m speaking in general terms and averages.
I don’t know your financial status, but pointing to one house in Poway that you can afford doesn’t mean affordability has returned. And certainly not enough to send home prices back up.
The historical price to income ratio is 3 or 4 to 1. If $60,000 is the median HH income, and per the CSI the avg middle tier home price in SD is $476,000 we’ve still got a ways to correct. Even if SD (since everyone wants to live there) has a ratio of 5 or 6 to 1, it’s still got 25%-30% to drop.[/quote]
I’ve pretty much decided to let all the analysis and tracking of the market hit cruise control for a while. There is so much going on other than housing I can’t see how there could be a rebound. Maybe Obama will bring back some confidence and maybe there will be some buying, but the fact remains that jobs are being lost at record paces. People aren’t thinking about buying houses, they are thinking of keeping their jobs.
They recently had a poll on CNN about people concerned about their jobs. While 1/3 thought they were safe, 2/3 knew they were in trouble or were worried about their job.
I can’t say that I am not a little concerned. With that, I’m keeping my money liquid in case I do end up unemployed for a while in a down market, I’m sure I’m not the only one.
I also agree with coop’s posting of the median income and historical price to income ratios, but the tendency is to think that there shouldn’t be truly affordable property in SD since demand is so high
DWCAP
January 6, 2009 @
11:38 PM
AN,
by your own admission it AN,
by your own admission it could only be 5 years to the drawnout bottom. I am more than willing to wait that long. I am not married, I am far enough under 30 that 5 years isnt a big deal, and I have no intention of having a kid for another half decade. Hell, bring a 5 year bottom on, sounds about right to my “I dont wanta grow up……..” mentality. I wont even be collecting SS in 35 years, assuming it is even available then. (I have just written off my contribution as a enforced gift to my grandparents.) It is good to be young at heart. 🙂
an
January 7, 2009 @
10:53 AM
DWCAP wrote:AN,
by your own [quote=DWCAP]AN,
by your own admission it could only be 5 years to the drawnout bottom. I am more than willing to wait that long. I am not married, I am far enough under 30 that 5 years isnt a big deal, and I have no intention of having a kid for another half decade. Hell, bring a 5 year bottom on, sounds about right to my “I dont wanta grow up……..” mentality. I wont even be collecting SS in 35 years, assuming it is even available then. (I have just written off my contribution as a enforced gift to my grandparents.) It is good to be young at heart. :)[/quote]
DWCAP, I said 5-10 years. What if it’s 10 years, or even 15-20 years like Japan? The house I got, I’m paying ~$1k/month less in interest vs rent of comparable house (this is w/out even talking about tax deductions). So, a year, I save $12k, and in 5 years, I’ve saved $60k. That means my house would need to drop another 14% just for me to break even when comparing rent vs buy. If you’re talking 10 years vs 5 years, then the house would have to drop 28%. This is also not counting in interest rates. Where do you see rates 5 years from now? Personally, I think it’ll be higher. Do you see where I’m heading at?
orthofrancis
January 7, 2009 @
1:31 AM
I think that the DECLINES I think that the DECLINES might stop in 2010 or so, but prices won’t pick up for several years after that.
peterb
January 7, 2009 @
9:20 AM
When you take out a loan to When you take out a loan to buy a house, all you’ve done is taken on a big debt for the title to something. Unless you’re paying cash, you have not “bought” anything. Total illusion. So let’s see, you take out a huge debt on something while it sits in the cellar or heads further down. All the while rationalizing that you “bought” the house you wanted. The industry has most people fairly brainwashed about this.
Check the U-6 number for unemployment on the BLS stats sheet. It’s actually believable. So the BLS is not a total fraud, they chose not to advertise the real number, but they do in fact calculate it. Which is why the govt is in absolute panic mode right now.
DWCAP
January 7, 2009 @
3:09 PM
I am counting principal. I am counting principal. Mostly because there is no guarentee that you will ever see that money again. There are plenty of people who have been paying principal for years now who have no equity and hence, no enforced savings. That money is gone. HLS just posted about someone who was paying on a 15 year loan who cant access his liquidity and may loose out on alot of future value having to sell now. I consider your entire payment as part of the cost, atleast for the first 3-5 years. You dont consider the principal payments on your car loan ‘saving’ do you? You will never see most of that car money again, though it isnt interest either.
If you wanted to put the amount of your pricipal payment into an “investment” catagory and say you are saving or investing X% of your income then Id agree with that. Investments go up and down and it matters more when you sell vs buy then anything else. But I dont call it saving, cause it isnt money in the bank.
In the very least you need to be adding in the cost of your dp if you want to count principal. The foregone interest on a minimum 100k you have put into the place or will very soon should be included. Taking a longer term view of things (going back 3-5 years, interest rates BLOW right now) you should be subtracting atleast 3-4k in foregone interest from your 12k number. If you used historical stock returns, it should be closer to 8-9k off. Still money in your direction, but not 60k in 5 years.
And I have absoulty no intention of buying right now. (Thank you for your concern though. 🙂 ) Infact, I am looking for a new rental right now. I hope to own a house someday, but am not dumb enough to let my emotional attachment to buying a house ruin the hard work I have done saving like an idiot and the lucky advantages i have had (some of my future dp is from an inheritance). I do not mean to come across as either jealous or frustrated if I did give those hints. I believe that right now is the first time in a long time that buying a house is not a financially horrible decision unless you are flipping.
I find no real fault to your decisions. However I have noticed what you said about being ready to buy 5 years ago but having to wait due to the bubble as a common trait around here. Delaying your life now for future small returns, if any, is not a smart decision. However, that does not mean that waiting in this market is a bad idea either. Many many good buys are in the future, and IMO not just in 2009.
sunny88
January 7, 2009 @
3:13 PM
I guess if you buy now to I guess if you buy now to have a home for a few years and don’t see it as an investment property you will be ok. However, in my opinion the prices here in SD are still very high in most areas and further declines are very likely over the next 2-3 years.
an
January 7, 2009 @
3:37 PM
DWCAP, short term, yes, the DWCAP, short term, yes, the principle you’re paying cannot be accessed. However, to count principle as “wasted” money, then I’ll have to disagree with you there. Even a car, a depreciating asset, you still can get some of your principle back when you sell it. But you can’t get any of the lease $ or the interest $ back. A house, over a long term, is a appreciating asset. So, 30 years from now, all the $ you put into principle will not disappear.
I know 2009 will have more good buys and 2010 will have more good buys than 2009. I’m not saying waiting is not a smart decision. For you, it definitely is. Everybody is different and there’s no one “yard stick” to measure when is a good time to buy for everyone.
34f3f3f
January 7, 2009 @
7:39 PM
Asianautica makes a good Asianautica makes a good point. If declines slow enough, rent could be pouring money down the drain, but I think Fredo4 hits the nail on the head. When prices start to go up, that’s when you’ll know where the bottom was. However, informed opinion is part of what this forum is all about.
jpinpb
January 7, 2009 @
7:52 PM
I just moved into a new I just moved into a new rental. 2/2 w/a 2 car garage and a panoramic, albeit distant, ocean view for 1800 in Bay Ho.
There’s a house up the street that’s bank owned that just listed for 428k w/no view.
Would it make sense for me to buy and settle on a place w/no view and end up spending more on a mortgage than the rent in a declining market w/unemployment rising and more Alt-As on the way and Option ARMs recasting/resetting w/more NODs and foreclosures to come?
Eh. I think I’ll pay another 20k more for rent this year. Something tells me that I’ll see more than a 20k reduction on a place I’d want to buy by year end.
We’d not only need to stave off this disaster but some kind of wonderful, spectacular thing to happen to see any rise in prices any time soon. I agree the bottom will languish and flatline for a while.
rbeast
January 7, 2009 @
8:41 PM
calling Enorah – you have an calling Enorah – you have an amazing pulse for such things – what’s your read?
rbeast
carlsbadworker
January 8, 2009 @
4:14 PM
qwerty007 wrote:Asianautica [quote=qwerty007]Asianautica makes a good point. If declines slow enough, rent could be pouring money down the drain, but I think Fredo4 hits the nail on the head. When prices start to go up, that’s when you’ll know where the bottom was. However, informed opinion is part of what this forum is all about.[/quote]
I actually always puzzle at the following question: what if, and God forbids, that sdr was actually right and we indeed see a rebound in house price in the coming spring. What would most piggs do? “you’ll know where the bottom was” or you will just enter into another angry mood cycle against the housing market?
No one can argue that affordability has improved here in SD. And no one can argue that mortgage rate is at historic low. Peterb says “follow the indicators”. Yeah, right. But what if the indicators say otherwise. Now what?
carlsbadworker
January 8, 2009 @
4:22 PM
By the way, I have this By the way, I have this puzzle because I always think future is unpredictable, whatever the maths or media makes you believe. I think most pigg knife catchers have positioned them to accept further price drops. But I don’t know if the reverse is also true.
Anonymous
January 15, 2009 @
5:38 PM
just to get some feedback– just to get some feedback– is this a good time to buy a house or not?!!
Eugene
January 15, 2009 @
5:45 PM
karmakmet wrote:just to get [quote=karmakmet]just to get some feedback– is this a good time to buy a house or not?!![/quote]
Better than two years ago.
(former)FormerSanDiegan
January 16, 2009 @
8:06 AM
karmakmet wrote:just to get [quote=karmakmet]just to get some feedback– is this a good time to buy a house or not?!![/quote]
Let’s review for San Diego:
1. Prices are off the peak by at least 40% for all but the high end areas, which are off maybe 20-25%
2. You can “own” for about the same monthly cost as rent in many places.
3. The press and the general public are constantly harping on how bad real estate is.
4. Most people are afraid to purchase furniture, much less property.
5. Interest rates for 30-year fixed are hovering near the lowest levels of the past 40 years.
Although I expect there could be a better time within the next year or two I believe that buying property in San Diego right now is not a bad idea. Assuming you have a job, are not stretching yourself on the payments, and have emergency funds in cash equal to about 6-12 months of living expenses.
sdrealtor
January 16, 2009 @
8:23 AM
A quick comment about incomes A quick comment about incomes and homes prices. In any city, traditionally about 50% of households are homeowners and the rest tenants. In any community there are some longtime owners with low incomes (i.e. seniors) but in most areas the median HH income family buys on the low end while the 75th percentile HH income family buys closer to the median priced house.
Comparing a median income with a median home price is a boondoogle IMO.
(former)FormerSanDiegan
January 16, 2009 @
8:53 AM
sdrealtor wrote:A quick [quote=sdrealtor]A quick comment about incomes and homes prices. In any city, traditionally about 50% of households are homeowners and the rest tenants. In any community there are some longtime owners with low incomes (i.e. seniors) but in most areas the median HH income family buys on the low end while the 75th percentile HH income family buys closer to the median priced house.
Comparing a median income with a median home price is a boondoogle IMO.[/quote]
I agree, that’s why it is especially interesting that the median priced house is nearly affordable when compared to the median family income. Just another factor indicating that affordability is at the high end of the historical range.
P.S. – It’s also worth mentioning that 100K is below the 75th percentile for family income in SD (it’s the 66th percentile). 100K income can easily cover PITI in the 2500 per month range, which translates to 375-430K home prices, depending on rates, downpayment, etc. The median SFR is between 311 – 385K for the various areas of the county.
FormerSanDiegan [quote=FormerSanDiegan][quote=karmakmet]just to get some feedback– is this a good time to buy a house or not?!![/quote]
Let’s review for San Diego:
1. Prices are off the peak by at least 40% for all but the high end areas, which are off maybe 20-25%
2. You can “own” for about the same monthly cost as rent in many places.
3. The press and the general public are constantly harping on how bad real estate is.
4. Most people are afraid to purchase furniture, much less property.
5. Interest rates for 30-year fixed are hovering near the lowest levels of the past 40 years.
Although I expect there could be a better time within the next year or two I believe that buying property in San Diego right now is not a bad idea. Assuming you have a job, are not stretching yourself on the payments, and have emergency funds in cash equal to about 6-12 months of living expenses.[/quote]
For the median type houses or entry houses, how many 1st time buyers would have 20% and a cash reserve of 6-12 months? I don’t see many
The funny thing, I don’t hear anyone talking about real estate anymore.. people are finally coming to terms with the bust. It’ll be interesting to see what this year turns out as far as declines, since job news is not getting any better and people are getting more concerned about job security over anything else
sdrealtor
January 16, 2009 @
12:12 PM
The best deals come when no The best deals come when no one is paying attention.
cr
January 16, 2009 @
3:11 PM
sdrealtor wrote:The best [quote=sdrealtor]The best deals come when no one is paying attention.[/quote]
Did you say something?
I would agree in the sense that we’re at or neat the bottom when people start saying it will never turn around.
There’s still optimism, though stifled, that says prices will bounce back next year. But I think we’re now talking about 2 things here: when the bottom will turn around, and if things are generally affordable now.
Whether things are affordable or not ultimately comes down to one’s personal situation. But being affordable for one doesn’t mean affordable for all, or a point of turn around.
I don’t think anyone here is calling a bottom.
sunny88
January 22, 2009 @
2:44 PM
When comparing real estate When comparing real estate prices in SD with prices in other areas in the country one has to notice that despite the steep drop over the last 2 years we are still much higher. One could argue that the great climate justifies a premium but if you factor in the economical problems, traffic jam and high taxes (Mello Roos) we are still paying too much for housing.
Average home prices dropped 24% from 2007 according to a new report. As it looks now the prices will drop at least another 25% before reaching bottom.
an
January 22, 2009 @
3:01 PM
I thought we already I thought we already established here that median/average number is useless.
cr
January 22, 2009 @
3:16 PM
AN wrote:I thought we already [quote=AN]I thought we already established here that median/average number is useless.[/quote]
Only if you’re the NAR and prices are falling.
an
January 22, 2009 @
4:06 PM
cooprider wrote:
Only if [quote=cooprider]
Only if you’re the NAR and prices are falling.[/quote]
I could have sworn that we had a long thread (many threads?) about how useless median/average price were when the median/average price keep on going up, but real prices were actually falling. This was discussed around 2006-ish if I’m not mistaken. So, wouldn’t it also mean real price would actually rise well before it shows up in the median/average #?
(former)FormerSanDiegan
January 22, 2009 @
4:15 PM
AN wrote:I thought we already [quote=AN]I thought we already established here that median/average number is useless.[/quote]
I disagree. These measures are flawed, but not useless.
Whether you use the median, median-per-square-foot, Case-Shiller Index,or comparable sales prices, I think they all point to nearly the same conclusion.
Although none of them except maybe comparable sales are effective for determining regional variations.
cr
January 23, 2009 @
10:21 AM
I’d agree FSD, particularly I’d agree FSD, particularly when you’re talking in generalities such as the Median HH income in SD being $60,000 but the median house price still 7 times that.
On an individual basis your own income and desired house are what matter, but those generalities, flawed as they are, are a very strong indicator (if not proof prices) will continue to fall.
an
January 23, 2009 @
10:59 AM
Can you buy a median house? Can you buy a median house? Since median can change base on the composition of sales, median could be declining while real price could be rising. Just like when median was rising but real price were declining because the composition changed in 2006-ish. So, how is that a strong indicator of anything valuable, unless all you want to do is talk about generalization. If you use median to determine the when to buy or sell, then you’re probably 6 months to a year too late.
hugo
January 23, 2009 @
1:34 PM
Featured story on cnnfn –
Featured story on cnnfn – banks have not listed most of their foreclosures. Given unemployment predictions and a large overhang of reo properties it looks like the market is headed for another strong downward move.
“RealtyTrac, the online marketer of foreclosed properties, recently discovered that it has far more foreclosed properties listed it its database, which the company compiles using courthouse records, than there are listed in the multiple listing services (MLS) maintained by real estate agents.
RealtyTrac looked at listings in four states, California, Maryland, Florida and Wisconsin, and found that they contained only a third of the foreclosures it has in its database.”‘
“Many properties that should be listed on the MLS are not listed on the MLS,” said Lawrence Yun, chief economist for the National Association of Realtors (NAR).
AN wrote:Can you buy a median [quote=AN]Can you buy a median house? Since median can change base on the composition of sales, median could be declining while real price could be rising. Just like when median was rising but real price were declining because the composition changed in 2006-ish. So, how is that a strong indicator of anything valuable, unless all you want to do is talk about generalization. If you use median to determine the when to buy or sell, then you’re probably 6 months to a year too late.[/quote]
Not if it’s still going down. And I think it’s safe bet it is. Even if by a snowball’s chance it’s not, it’s certainly not shooting back up.
an
January 23, 2009 @
3:44 PM
cooprider wrote:
Not if it’s [quote=cooprider]
Not if it’s still going down. And I think it’s safe bet it is. Even if by a snowball’s chance it’s not, it’s certainly not shooting back up.[/quote]
Of course it’s a safe bet it is. However, that doesn’t prove that median price is a string indicator of the market condition. It’s a lagging indicator. There are better indicators out there, such as sales/supply ratio, sales # vs a year ago, etc.
(former)FormerSanDiegan
January 23, 2009 @
3:30 PM
AN wrote:Can you buy a median [quote=AN]Can you buy a median house? Since median can change base on the composition of sales, median could be declining while real price could be rising. Just like when median was rising but real price were declining because the composition changed in 2006-ish. So, how is that a strong indicator of anything valuable, unless all you want to do is talk about generalization. If you use median to determine the when to buy or sell, then you’re probably 6 months to a year too late.[/quote]
Yes, you can buy the median priced house. By definition someone did,since the median is an actual sample.
But seriously, if you look at the median price for Central San Diego it roughly corresponds to a 3BR ~1000-1200 sf house in Clairemont. This has been the case as long as I have been tracking prices (since 1995).
Sure, the median lags the market by 6 months. Sure it is sensitive to sales mix. But as long as we are in either a up-trend or a down trend, it does really matter. If you miss the absolute peak or bottom by 6 months you will be within 5% anyway, since both are typically flat for a reasonable period of time.
The median is flawed, sure, but like Case-Shiller, median per square foot and comparable sales comparisons from your favorite realtor or appraiser it has use as an indicator of the market.
an
January 23, 2009 @
3:45 PM
FormerSanDiegan wrote:
Yes, [quote=FormerSanDiegan]
Yes, you can buy the median priced house. By definition someone did,since the median is an actual sample.
But seriously, if you look at the median price for Central San Diego it roughly corresponds to a 3BR ~1000-1200 sf house in Clairemont. This has been the case as long as I have been tracking prices (since 1995).
Sure, the median lags the market by 6 months. Sure it is sensitive to sales mix. But as long as we are in either a up-trend or a down trend, it does really matter. If you miss the absolute peak or bottom by 6 months you will be within 5% anyway, since both are typically flat for a reasonable period of time.
The median is flawed, sure, but like Case-Shiller, median per square foot and comparable sales comparisons from your favorite realtor or appraiser it has use as an indicator of the market.
[/quote]
If that’s your logic, I’ll just have to agree to disagree. You can only buy a particular house that priced similar to a median house, but you can’t buy a median house. Just like you don’t make a median income.
patientlywaiting
January 23, 2009 @
4:06 PM
What does turning around What does turning around mean? And how will that “save” the homeowners.
Let’s assume the peak is 100. The market goes down to 50 and in 2010 it “recovers”. If the market goes to 52 in 2011, the real estate industry will declare victory.
However, it may take a decade or more to get back to 100. Until that time, there won’t be recovery for the bubble buyers who, by then, would’ve been badly beaten-up.
sunny88
January 30, 2009 @
7:38 PM
patientlywaiting wrote:What [quote=patientlywaiting]What does turning around mean? And how will that “save” the homeowners.
Let’s assume the peak is 100. The market goes down to 50 and in 2010 it “recovers”. If the market goes to 52 in 2011, the real estate industry will declare victory.
However, it may take a decade or more to get back to 100. Until that time, there won’t be recovery for the bubble buyers who, by then, would’ve been badly beaten-up.
[/quote]
Turn around means that prices are not falling anymore and climbing steadily.
Chris Scoreboard Johnston
January 15, 2009 @
6:25 PM
Coop you might want to double Coop you might want to double check the charts of Oil and the CRB index if you think those prices inflated in 2008, they crashed. Look at Jan 1 vs Dec 31 prices in them. Gold did rise a very small amount.
peterb
January 15, 2009 @
7:16 PM
Gold’s done very well Gold’s done very well relative to the CRB and most currencies and most other assets classes in general. But check out the US$. Long term bull looks to be in the making for the US$. Despite the govts unending desire to give them away to all the failing business, the US$ is getting harder to get and the multiplier effect is grinding to a halt.
Nor-LA-SD-guy
January 16, 2009 @
8:40 AM
Just my opinion (My two
Just my opinion (My two cents) , With 5% loans for 30 year mortgages the REO’s (the Decent ones) are going to go really really fast When they finally do hit the market in your area.
The decent deals on REO’s from my experiences in Temecula have offers over the listing price in hours from hitting the MSL
So you have to think, is the market really that bad or is everyone just looking for a steal of a deal ???
Good luck,
Nor-LA-SD-guy
January 16, 2009 @
9:50 AM
I think I should start
I think I should start another poll,
How many can afford a home now but just Basically want to steal one if possible ???
Anonymous
January 23, 2009 @
3:12 PM
I am in Wisconsin, and am in I am in Wisconsin, and am in a real estate related business……..or rather, I was. I became dispensable back in September after 31 years.
The initial decline started in October 2005, and has been slowly regressing. Personally, I don’t think it will ever return. The segment of society that are our future homebuyers do not have the incomes to sustain a mortgage payment.
Please share with me your solutions, because frankly, I am at a lose.
an
January 23, 2009 @
3:16 PM
There are two very simple There are two very simple solution. Have price drop to the point where current income can support it or have income rise to a point where a $500k mortgage wouldn’t be an issue. There’s no way around the fundamental.
January 6, 2009 @ 4:07 PM
Where? Temecula has fallen
Where? Temecula has fallen alot more than NCC, and their turn around points will be different. Same as national turnaround will be different than SoCal or Florida or Vegas or AZ.
January 7, 2009 @ 1:17 PM
How about just buying when
How about just buying when prices actually start going up? Wouldn’t that be the most accurate indicator of when the bottom has hit?
I’m not planning on waiting quite that long. I want my kids to actually still be living at home when I buy. I’m thinking maybe when things start levelling out or really slowing down is a good time for us, since we’re not first time buyers and have some cash left from our last house.
January 6, 2009 @ 4:55 PM
March 13, 2014.
1:33PM.
March 13, 2014.
1:33PM.
January 6, 2009 @ 5:00 PM
22 votes and not a single
22 votes and not a single soul believes in a turnaround in 2009.
I wonder where all the pigg knife catchers are coming from.
January 6, 2009 @ 6:46 PM
esmith wrote:22 votes and not
[quote=esmith]22 votes and not a single soul believes in a turnaround in 2009.
I wonder where all the pigg knife catchers are coming from.[/quote]
The keyword is “turn around”. I’m a knife catcher because I think the downside is limited in the most likely scenario. But I don’t think it will turn around anytime soon. With all the hidden inventory, how could it even be possible for a “turn around” before 2011? But I’d rather wait for the turn around in my house than in a rental, as long as the downside is limited, because who knows how long it will take.
January 6, 2009 @ 8:26 PM
Just because we don’t believe
Just because we don’t believe the market is going to turn around doesn’t mean we shouldn’t buy. You have to live somewhere, right?. If I can buy at the right price and minimize most of the downside I anticipate then why wait. I hope to buy this year. The plan is to buy at a price I think will minimize the risk. If it goes down 10%, I’ll be ok with that. I plan on being in the house till I croak. Well, probably 20 years at least. I don’t mind catching a very very dull knife. That way I can resharpen it and use it to carve up my rack of lamb that I’ll be cooking!
BTW, my money is on 2011-2016 for the bottom. It’s a long flat bottom!
January 6, 2009 @ 11:26 PM
esmith wrote:22 votes and not
[quote=esmith]22 votes and not a single soul believes in a turnaround in 2009.
I wonder where all the pigg knife catchers are coming from.[/quote]
With the amount of government intervention, I wouldn’t rule out a slow decline for 5-10 years. We can be w/in 10% of a bottom in some area, but that last 10% might take 5-10 years to materialize. Can you wait that long in a rental? Does it pencil out considering how much money you’re throwing away in rent when you’re throwing away less when you buy a comparable house? While you wait 10 years for that last 10%, you’re now 10 years older too. If you’re 30 now, that mean you’ll be 40. If you take out a 30 years mortgage, will you be working until you’re 70 or will you have enough in retirement to cover your living expenses and a mortgage?
January 7, 2009 @ 12:59 PM
asianautica wrote:esmith
[quote=asianautica][quote=esmith]22 votes and not a single soul believes in a turnaround in 2009.
I wonder where all the pigg knife catchers are coming from.[/quote]
With the amount of government intervention, I wouldn’t rule out a slow decline for 5-10 years. We can be w/in 10% of a bottom in some area, but that last 10% might take 5-10 years to materialize. Can you wait that long in a rental?[/quote]
First off, I was talking about bottom pricing, not payment or total cost pricing. The assumption in total cost pricing is that I care about interest rates and such now because I could buy now or choose to delay. I dont care about TCP because I am not in a place in my life where I am ready to buy. So as it would be financially irresponisble for me to buy now, and I would be risking loseing my DP+ credit+ whatever I put into the place, the risk reward to me is still tilted to fence sitting. Part of the money you are saving is due to the higher risks you are taking as a owner. If we are gonna talk about 10-20 Ala Japan, lets also talk about a job loss. That 12k a year savings wont seem so great if the income is cut. (I sincerly hope this doesn not happen to you or anyone. I wish no ill will to other people. But at 600k plus jobs being lost per month it needs to be factored in)
Second off, you were using the long end of your predictions. I used the short end. Considering the massive upheaval in todays markets, 14% off is still within the picture in the next 5 years. As you said, what do you think interest rates will be then? At Trillion dollar deficits, ill bet it is higher than 4-5%. But housing will have to adjust the price to reflect that too. So it is very possible in my mind to do just as well as you have done in 5 years when I am ready to buy, even if interest rates are higher.
Third, I dont understand your numbers. I am most likely off here, so please dont take offense, but if you are gonna use yourself as an example then I will too.
House:433k
DP:87k
Interest:4.8% (I am guessing)
prop tax:4500
insurance:500/yr
That gives us a payment of ~2232/month.
Nice houses are being advertised in MM for between 2200-2400/month to rent. I know they are about 200sqft smaller, but I think one backs up to a canyon with no rear neighbor (I like that).
http://sandiego.craigslist.org/csd/apa/983871386.html
http://sandiego.craigslist.org/ssd/apa/983613481.html
http://sandiego.craigslist.org/csd/apa/981558286.html
So, how are you saving $1000/month over rent before tax deductions? Even if we add 10% onto the rent to compensate for the smaller house, that gives us about 2400-2600/month, only 300-400 more than your payment. Unless you had a huge DP, which isnt exactly the same thing. If you take out the 20% DP, something more akin to rent, it is more like 2800/month. That is still 200-300 less than the no DP payment. I just want to understand you numbers, because maybe I looking at things wrong.
January 7, 2009 @ 1:56 PM
DWCAP, are you counting in
DWCAP, are you counting in principal payment into your calculation? I also consider property tax + insurance will be canceled out by the tax deduction you get. So, when I say $ wasted, I mean the $ you pay in interest vs the $ you pay in rent. Both of those $ are gone forever and you’ll never see it again.
Obviously, if you’re not in a position in your life to buy, please don’t buy. But there are people who are ready to buy 4-5 years ago and waited till now.
I personally would love to see a major crash by now, but it didn’t happen. Especially now, when the government are stepping up to try and stop the massive decline, I think we’ll see a slow decline and inflation eating most of the decline rather than in nominal $ term. That’s just my personal prediction.
January 6, 2009 @ 6:13 PM
Another point is that it
Another point is that it seems pretty likely (from a historical perspective) that there will be a pretty good sized window during which to buy.
Last few times we’ve seen a bubble (though admittedly never of this magnitude), once the deflation more-or-less ended, we still had a couple of years of the market bumping around at the bottom. In the areas I’m looking to buy, I’m thinking that (barring even more of an economic meltdown) it’ll hit bottom (in terms of overall sale price) sometime this year. I expect it will then plod along with no real gain for several years at least before we start seeing year over year gains. I’m ok with buying at or near that point, even though in terms of inflation adjusted dollars the house is still probably going to be losing money.
In other words, when people think the market will bottom is likely to be quite different from when the market will actually turn around. I expect it’ll bottom in various areas between 2009 and 2010, but I don’t see a turnaround until 2012 at the earliest.
January 6, 2009 @ 6:21 PM
I predict that what will
I predict that what will bottom in 2009 are the rates for 30-year fixed rate loans.
We plan to try and catch that bottom, estimating rates might bottom below 4.5% about six months out from here, hopefully housing values (in Silicon Valley) will have also fallen another 10% by then. The other BIG advantage of our waiting another six months before looking seriously at buying is that then we’ll have a better handle on HOW BAD this economic recession/depression will get!
The smartest realtors I know in Silicon Valley are predicting a massive wave of IT tech job layoffs will hit in 2009. Obviously that will cause a new wave of foreclosures.
Similar could happen for San Diego.
January 6, 2009 @ 7:09 PM
Why?
Is it down?
Why?
Is it down?
January 6, 2009 @ 7:59 PM
Previous downturns lasted 5-7
Previous downturns lasted 5-7 years from peak to bottom. Then spent a year or two in between, and then a couple of years of gradual increases.
Can’t guarantee this will be the same, but history does tend to repeat itself. If so, then we’re not at the bottom yet in most places, and it won’t snap back quickly even after the bottom.
January 6, 2009 @ 8:09 PM
Bottom calling is for
Bottom calling is for suckers. If you’re intrested in buying just before prices start to rise then wait until unemployment gets below 6% and stay there for at least 6 months. Then things can improve.
January 6, 2009 @ 8:47 PM
peterb wrote:Bottom calling
[quote=peterb]Bottom calling is for suckers. If you’re intrested in buying just before prices start to rise then wait until unemployment gets below 6% and stay there for at least 6 months. Then things can improve.[/quote]
That won’t happen for a long long time.
http://www.guardian.co.uk/business/2008/dec/07/recession-job-losses
January 6, 2009 @ 11:19 PM
Unemployment will never hit
Unemployment will never hit that number…
Just like everything else…
The Goverment will change the definition…
😛
January 7, 2009 @ 9:07 AM
CDMA ENG wrote:Unemployment
[quote=CDMA ENG]Unemployment will never hit that number…
Just like everything else…
The Goverment will change the definition…
😛
[/quote]
Maybe, but some things are hard to hide…
January 7, 2009 @ 2:19 PM
peterb wrote:Bottom calling
[quote=peterb]Bottom calling is for suckers. If you’re intrested in buying just before prices start to rise then wait until unemployment gets below 6% and stay there for at least 6 months. Then things can improve.[/quote]
By the time you start to buy when it is rising, you may not be able to pick the perfect orange you want at the price you desire.
January 7, 2009 @ 2:24 PM
donaldduckmoore wrote:peterb
[quote=donaldduckmoore][quote=peterb]Bottom calling is for suckers. If you’re intrested in buying just before prices start to rise then wait until unemployment gets below 6% and stay there for at least 6 months. Then things can improve.[/quote]
By the time you start to buy when it is rising, you may not be able to pick the perfect orange you want at the price you desire.[/quote]
Don’t worry this time such ride is not going to be happen nor even possible. No one have enough money nor any inverstors looking this can yield much in future for a while
January 7, 2009 @ 9:46 PM
5yearwaiter
[quote=5yearwaiter][quote=donaldduckmoore][quote=peterb]Bottom calling is for suckers. If you’re intrested in buying just before prices start to rise then wait until unemployment gets below 6% and stay there for at least 6 months. Then things can improve.[/quote]
By the time you start to buy when it is rising, you may not be able to pick the perfect orange you want at the price you desire.[/quote]
Don’t worry this time such ride is not going to be happen nor even possible. No one have enough money nor any inverstors looking this can yield much in future for a while[/quote]
Who knows what will happen. I am guessing while you are guessing too.
January 8, 2009 @ 8:39 AM
Exactly! Why guess when you
Exactly! Why guess when you can follow the indicators and be sure of the market when it starts to moves up? Anything else is gambling.
January 8, 2009 @ 2:21 PM
This is a recent article in
This is a recent article in MarketWatch:
Home buyers advised to look before they leap
Building analyst warns 2009 is a ‘bad time to buy a home’ as jobs vanish
By John Spence, MarketWatch
Last update: 3:46 p.m. EST Jan. 7, 2009Comments: 473BOSTON (MarketWatch) — Fox-Pitt Kelton home-builder analyst Robert Stevenson said Wednesday he thinks this year will turn out to be “a bad time to buy a home” as the U.S. economy loses more jobs, especially if buyers don’t plan on staying in the house for at least several years.
“While some suggest that now is great time to buy a home given low mortgage rates and falling home prices, we believe that for most homebuyers, the opposite is true,” Stevenson said in a report to clients.
The analyst’s bearish outlook is based largely on escalating unemployment, and jobs are the lifeblood of the housing market.
“As if 2008 weren’t bad enough for housing — given the mounting foreclosures, falling home prices, and a tightening credit market — millions more Americans are now in danger of losing their jobs,” said Stevenson at Fox-Pitt. “As unemployment heads towards 8%, we expect foreclosures to spike, taking home prices down materially.”
Investors will be closely watching employment reports later this week to gauge the economy’s ailing health. The Labor Department’s unemployment report for December is set to be released Friday, and the weekly jobless claims report is due out Thursday. On Wednesday, the ADP employment index showed U.S. private-sector firms shed 693,000 jobs in December, far worse than expected.
“If unemployment can be held under 8%, we believe the housing market will start a slow recovery beginning in 2010,” Stevenson said. “However, if the bears are correct and the U.S. experiences 9% [or higher] unemployment in [the second half of 2009] or 2010, we believe the housing market could experience a meltdown even more severe than the one we’ve experienced in the past few years.”
On the supply side of housing, there remains a sizable overhang of unsold homes on the market. The supply of both new and existing homes is massive by historical standards, and a surge in foreclosures would only add to the glut if the government can’t find a solution to the foreclosure problem.
Buyers who do jump into the housing market should consider the possibility that they may need to stay in the home for many years in order to come out ahead, assuming home prices fall substantially further.
“Given the likelihood of a meaningful decline in home values in 2009, we continue to wonder why anyone would buy a home today,” said Stevenson, the home-builder analyst, in a loud and clear warning to buyers.
The housing market “is likely to remain significantly oversupplied into 2010,” he said. “Given the likelihood of incremental home price declines, we see little reason for most Americans to rush into buying a home today.”
January 8, 2009 @ 4:19 PM
From the article:
“However,
From the article:
You can pretty much book the greater than 9%. We could easily be 12%+, officially, by the end of 09. The natives should start getting restless in 2010.
January 8, 2009 @ 4:55 PM
sunny88 wrote:This is a
[quote=sunny88]This is a recent article in MarketWatch:
Home buyers advised to look before they leap
Building analyst warns 2009 is a ‘bad time to buy a home’ as jobs vanish
[/quote]
Many people have quoted the idea that one should buy when “everybody knows it is a terrible time to buy.”
Does it seem like that’s now?
January 8, 2009 @ 5:04 PM
WaitingToExhale wrote:sunny88
[quote=WaitingToExhale][quote=sunny88]This is a recent article in MarketWatch:
Home buyers advised to look before they leap
Building analyst warns 2009 is a ‘bad time to buy a home’ as jobs vanish
[/quote]
Many people have quoted the idea that one should buy when “everybody knows it is a terrible time to buy.”
Does it seem like that’s now?[/quote]
I think that outside of geekdoms like Piggington.com and OCRenter’s blogs you can find nearly universal acceptance that real estate really sucks right now.
The problem is the “nearly” part. These conditions can persist for a long time until the “nearly universal” becomes “completely universal”
January 8, 2009 @ 5:09 PM
The bottom line is, nobody
The bottom line is, nobody know what will happen in the near future. Most likely, it will take several years until we see a meaningful recovery in the housing and job market.
January 8, 2009 @ 5:14 PM
You can never get a unanimous
You can never get a unanimous agreement on one thing. You didn’t get a unanimous agreement on the top of this cycle, what make you think you’ll get a unanimous agreement on the bottom?
January 8, 2009 @ 6:28 PM
You’re right, nobody knows
You’re right, nobody knows and there can be no agreement…
January 8, 2009 @ 7:32 PM
I think real estate will
I think real estate will definitely turn around, quickly, if Gold crosses 2K (or Oil crosses 200). Bernanke is working hard to achieve that. I believe, he and Obama, working together, will be successful (in 3 years max, before 2012). At that point, housing inventories should melt away like snow in spring. All monies now flowing into treasuries and agency paper will turn around on a dime and jack up real (physical) assets.
January 14, 2009 @ 1:57 PM
You’re on the point. As long
You’re on the point. As long as these conditions are not met there will be no turnaround. Hopefully we’ll see it in our lifetime….
January 14, 2009 @ 3:11 PM
bsrsharma wrote:I think real
[quote=bsrsharma]I think real estate will definitely turn around, quickly, if Gold crosses 2K (or Oil crosses 200). Bernanke is working hard to achieve that. I believe, he and Obama, working together, will be successful (in 3 years max, before 2012). At that point, housing inventories should melt away like snow in spring. All monies now flowing into treasuries and agency paper will turn around on a dime and jack up real (physical) assets.[/quote]
I agree with you on inflation, but it doesn’t necessarily correlate to rising RE prices.
Home prices are dependent on incomes; gold and oil are not.
BB can fly his helicopter over every failing company in the world, and BO can borrow from our children to pay people to dig ditches to China until 2016, but if none of that translates to incomes that can afford a home, RE prices will continue to fall.
2008 saw rampant inflation in oil, gold, commodities, etc., but housing prices fell the whole time.
January 14, 2009 @ 3:44 PM
cooprider wrote:
BB can fly
[quote=cooprider]
BB can fly his helicopter over every failing company in the world, and BO can borrow from our children to pay people to dig ditches to China until 2016, but if none of that translates to incomes that can afford a home, RE prices will continue to fall.[/quote]
Have you seen the thread about the house I’m buying?
I can tell you that my PITI after tax deduction comes out around $2650/month. Of these, $600 go to principal (forced savings). I probably could have bought with 3% down and my PITI would still be under $3000.
If I just wanted a house in a decent safe area – there’s a 4-bedroom house not far from where I currently live. I could’ve bought that one with 3% down and PITI of $2150. Poway school district.
How many people in San Diego can afford to spend $2150/month on housing?
Does that tell you anything about affordability?
January 14, 2009 @ 6:42 PM
I believe, that in the
I believe, that in the current environment less than half of people in SD can afford to spend more than $2,000 on housing.
January 14, 2009 @ 6:55 PM
sunny88 wrote:I believe, that
[quote=sunny88]I believe, that in the current environment less than half of people in SD can afford to spend more than $2,000 on housing.[/quote]
Under normal conditions (no housing bubble), how many people in SD should be able to afford Poway School District?
January 14, 2009 @ 10:09 PM
Only as many as the capacity
Only as many as the capacity of the school district allows. I just wonder if the Poway School District is currently at capacity or not.
January 14, 2009 @ 10:30 PM
sunny88 wrote:Only as many as
[quote=sunny88]Only as many as the capacity of the school district allows. I just wonder if the Poway School District is currently at capacity or not. [/quote]
Which means less than 1/2 of the people in SD, right?
January 15, 2009 @ 7:17 AM
Yes, much less than 50%,
Yes, much less than 50%, perhaps 5%.
January 15, 2009 @ 8:46 AM
sunny88 wrote:Yes, much less
[quote=sunny88]Yes, much less than 50%, perhaps 5%.[/quote]
Np, it’s closer to 50% of families…
The median family income in San Diego: 72,407
(source: Census Bureau)
Percentage of income represented by the $2150 monthly housing costs : 36%
$2150 is maybe a bit on the high side compared to median income, but the answer is much closer to 50% than 5%.
Also, considering that San Diego traditionally has between 50-60% home ownership and that a significant fraction of that is condos, I am shocked that a 4 BR single family home in a desirable school district can be afforded by anything close to the median income.
January 15, 2009 @ 8:58 AM
I missed the after tax
I missed the after tax deduction part of esmith’s PITI numbers.
Assuming this makes the monthly PITI more like 2700 per month, that puts required income around the 100K mark (32% DTI).
Based on Census bureau income distribution, this makes it more like 33% of San Diego families being able to afford a pre-tax 2700/post tax 2150 outlay.
That’s much closer to what I would have expected at this stage of the market.
January 15, 2009 @ 10:47 AM
The house is listed for 390K,
The house is listed for 390K, and monthly PITI with 3% down before tax deduction would be $2600.
32% DTI is a rather strict requirement. I’d say that a 390K house starts looking affordable around 85K. At 85K, you would bring home $5800-5900 after taxes and you’d have $3200-3300/month left on other expenses.
The question is, how many families are there in San Diego that make more than 85K, and how many houses that are nicer / more expensive than a 1300 sf 4-bedroom in Poway School District?
January 15, 2009 @ 11:02 AM
esmith wrote:The house is
[quote=esmith]The house is listed for 390K, and monthly PITI with 3% down before tax deduction would be $2600.
32% DTI is a rather strict requirement. I’d say that a 390K house starts looking affordable around 85K. At 85K, you would bring home $5800-5900 after taxes and you’d have $3200-3300/month left on other expenses.
The question is, how many families are there in San Diego that make more than 85K, and how many houses that are nicer / more expensive than a 1300 sf 4-bedroom in Poway School District?[/quote]
esmith, according to the census bureau for the city of Dan Diego
48% of families make more than 75K
and
34% of families make more than 100K.
SO, I’m guessing that at least 40% of families have income exceeding the 85K level you used.
Also, based on the median family income from this source, the Median family income CAN afford the median priced SFH in Central San Diego.
Median house: 350K (source :Data QUick, Nov 2008)
Median Family Income : 72K (source: Census Bureau)
PITI assuming 20% down and 5.25% 30-year fixed = $2000
Debt-to-income ratio = 0.33
The median priced SFR in San Diego is affordable to families making median incomes !
Incomes could be declining, but the median price is also declining. We are approaching affordability levels seen in only 4 or 5 of the past 30 years. And it is likely to get more affordable.
Sources:
Census Data
http://tinyurl.com/8mun6f
Median House price:
http://tinyurl.com/8wmzvp
January 15, 2009 @ 12:38 PM
FormerSanDiegan wrote:
Also,
[quote=FormerSanDiegan]
Also, based on the median family income from this source, the Median family income CAN afford the median priced SFH in Central San Diego.
Median house: 350K (source :Data QUick, Nov 2008)
Median Family Income : 72K (source: Census Bureau)
PITI assuming 20% down and 5.25% 30-year fixed = $2000
Debt-to-income ratio = 0.33
The median priced SFR in San Diego is affordable to families making median incomes !
Incomes could be declining, but the median price is also declining. We are approaching affordability levels seen in only 4 or 5 of the past 30 years. And it is likely to get more affordable.
Sources:
Census Data
http://tinyurl.com/8mun6f
Median House price:
http://tinyurl.com/8wmzvp
[/quote]
Agree it’s definitely getting more affordable.
The “gotcha” of course being the down payment. My gut feeling is not too many families in SD making the median HHI have $70,000+ sitting in their bank account today for a DP in addition to 6 months of salary, etc. And in this economy… I’m thinking more like 12-18 months salary is needed.
January 15, 2009 @ 11:06 AM
The old 2005 argument that
The old 2005 argument that rent is half the cost of owning is now a moot point.
The bubble has been deflated.
We are below the mean in terms of virtually any metric used to define the bubble (price to income, affordability, price to rent, etc).
From here on out the three most inportant issues are jobs, jobs, jobs.
January 15, 2009 @ 12:12 PM
esmith wrote:
The question
[quote=esmith]
The question is, how many families are there in San Diego that make more than 85K, and how many houses that are nicer / more expensive than a 1300 sf 4-bedroom in Poway School District?[/quote]
The other question is how many people want to move. Incomes tend to go up with age, so many of the people making the highest incomes tend to have been here for a long time. They already own homes, and if they havnt bought in this decade prob at a much lower cost. Prop 13, moving hassels, and general attachment to ones home reduce the number of people who actually want to move into this house.
I would think the buyer pool of people who will buy a 1300sf 4bd older house in poway is considerably smaller than the general population who could afford it. I would guess it is limited to move up buyers who are trading out of crappy school districts/condo’s, first time buyers who saved as renters, or people looking to pick up a rental.
The move up buyers are hurting cause their old place isnt worth what they wish it was (possibly underwater). FTB’s are scared for their jobs and are holding off big purchases. People looking to be a LL need to take a long hard look at cost/benifit on a house like this.
There is someone who will buy this house and can afford it. I am not saying there isnt. I am saying that we need to look at a much larger picture than just income/cost.
January 15, 2009 @ 3:18 PM
esmith wrote:
32% DTI is a
[quote=esmith]
32% DTI is a rather strict requirement.
The question is, how many families are there in San Diego that make more than 85K, and how many houses that are nicer / more expensive than a 1300 sf 4-bedroom in Poway School District?[/quote]
[quote=FormerSanDiegan]
PITI assuming 20% down and 5.25% 30-year fixed = $2000
Debt-to-income ratio = 0.33
The median priced SFR in San Diego is affordable to families making median incomes ![/quote]
It may seem like that given what you needed 5 years ago, but that’s much closer to historcial lending standards.
20% is a tall order too, but it should be a requirement.
And how many families making 85K/yr would want to live in a 1300sq ft house?
FSD that may be, but that certainly doesn’t mean we’ve hit a bottom…
January 15, 2009 @ 3:38 PM
coop –
True we haven’t hit
coop –
True we haven’t hit bottom. But lack of affordability is no longer driving the train. Overall economy, jobs and fear are.
BTW, re: “And how many families making 85K/yr would want to live in a 1300sq ft house?”
When we made around the median family income in 1996 we also did not want to live in a 1300 sq foot house, but all we could afford was a 1100 square foot house in Clairemont (due to only 5% down, 8% interest rates, PMI, and student loans). And, in hindsight, that was at the bottom.
January 15, 2009 @ 2:59 PM
FormerSanDiegan wrote:sunny88
[quote=FormerSanDiegan][quote=sunny88]Yes, much less than 50%, perhaps 5%.[/quote]
Np, it’s closer to 50% of families…
The median family income in San Diego: 72,407
(source: Census Bureau)
Percentage of income represented by the $2150 monthly housing costs : 36%
$2150 is maybe a bit on the high side compared to median income, but the answer is much closer to 50% than 5%.
Also, considering that San Diego traditionally has between 50-60% home ownership and that a significant fraction of that is condos, I am shocked that a 4 BR single family home in a desirable school district can be afforded by anything close to the median income.
[/quote]
I misunderstood your question. I was thinking that about 5% of people are able afford a house in the Poway school district. Of course much more people are able to buy a house at the median price in SD, perhaps 40-50%. Also, one has to keep in mind, 50-60% ownership is a number from the “bubble” era.
January 15, 2009 @ 3:09 PM
Also, one has to keep in
Also, one has to keep in mind, 50-60% ownership is a number from the “bubble” era.
Not really. Only the near 60% rate is in the bubble years. Homeownership rate in San Diego peaked at around 60% in 2005. Prior to the bubble it was typically in the 50-55% range.
January 15, 2009 @ 10:24 AM
esmith wrote:I can tell you
[quote=esmith]I can tell you that my PITI after tax deduction comes out around $2650/month. Of these, $600 go to principal (forced savings). I probably could have bought with 3% down and my PITI would still be under $3000.
If I just wanted a house in a decent safe area – there’s a 4-bedroom house not far from where I currently live. I could’ve bought that one with 3% down and PITI of $2150. Poway school district.
How many people in San Diego can afford to spend $2150/month on housing?
Does that tell you anything about affordability?[/quote]
It proves my point.
To afford a $2150/month payment your monthly gross needs to be at least 3 times that, or $77,400/yr. Average FAMILY income in SD was $59,775 in 2006 according to Money. You only get the tax write-off once a year, so the monlthy payments will be even higher than the numbers you used.
Now, that’s not to say there aren’t families that make $80k/yr and over, but I’m speaking in general terms and averages.
I don’t know your financial status, but pointing to one house in Poway that you can afford doesn’t mean affordability has returned. And certainly not enough to send home prices back up.
The historical price to income ratio is 3 or 4 to 1. If $60,000 is the median HH income, and per the CSI the avg middle tier home price in SD is $476,000 we’ve still got a ways to correct. Even if SD (since everyone wants to live there) has a ratio of 5 or 6 to 1, it’s still got 25%-30% to drop.
January 15, 2009 @ 10:37 AM
cooprider wrote:esmith
[quote=cooprider][quote=esmith]I can tell you that my PITI after tax deduction comes out around $2650/month. Of these, $600 go to principal (forced savings). I probably could have bought with 3% down and my PITI would still be under $3000.
If I just wanted a house in a decent safe area – there’s a 4-bedroom house not far from where I currently live. I could’ve bought that one with 3% down and PITI of $2150. Poway school district.
How many people in San Diego can afford to spend $2150/month on housing?
Does that tell you anything about affordability?[/quote]
It proves my point.
To afford a $2150/month payment your monthly gross needs to be at least 3 times that, or $77,400/yr. Average FAMILY income in SD was $59,775 in 2006 according to Money. You only get the tax write-off once a year, so the monlthy payments will be even higher than the numbers you used.
Now, that’s not to say there aren’t families that make $80k/yr and over, but I’m speaking in general terms and averages.
I don’t know your financial status, but pointing to one house in Poway that you can afford doesn’t mean affordability has returned. And certainly not enough to send home prices back up.
The historical price to income ratio is 3 or 4 to 1. If $60,000 is the median HH income, and per the CSI the avg middle tier home price in SD is $476,000 we’ve still got a ways to correct. Even if SD (since everyone wants to live there) has a ratio of 5 or 6 to 1, it’s still got 25%-30% to drop.[/quote]
I’ve pretty much decided to let all the analysis and tracking of the market hit cruise control for a while. There is so much going on other than housing I can’t see how there could be a rebound. Maybe Obama will bring back some confidence and maybe there will be some buying, but the fact remains that jobs are being lost at record paces. People aren’t thinking about buying houses, they are thinking of keeping their jobs.
They recently had a poll on CNN about people concerned about their jobs. While 1/3 thought they were safe, 2/3 knew they were in trouble or were worried about their job.
I can’t say that I am not a little concerned. With that, I’m keeping my money liquid in case I do end up unemployed for a while in a down market, I’m sure I’m not the only one.
I also agree with coop’s posting of the median income and historical price to income ratios, but the tendency is to think that there shouldn’t be truly affordable property in SD since demand is so high
January 6, 2009 @ 11:38 PM
AN,
by your own admission it
AN,
by your own admission it could only be 5 years to the drawnout bottom. I am more than willing to wait that long. I am not married, I am far enough under 30 that 5 years isnt a big deal, and I have no intention of having a kid for another half decade. Hell, bring a 5 year bottom on, sounds about right to my “I dont wanta grow up……..” mentality. I wont even be collecting SS in 35 years, assuming it is even available then. (I have just written off my contribution as a enforced gift to my grandparents.) It is good to be young at heart. 🙂
January 7, 2009 @ 10:53 AM
DWCAP wrote:AN,
by your own
[quote=DWCAP]AN,
by your own admission it could only be 5 years to the drawnout bottom. I am more than willing to wait that long. I am not married, I am far enough under 30 that 5 years isnt a big deal, and I have no intention of having a kid for another half decade. Hell, bring a 5 year bottom on, sounds about right to my “I dont wanta grow up……..” mentality. I wont even be collecting SS in 35 years, assuming it is even available then. (I have just written off my contribution as a enforced gift to my grandparents.) It is good to be young at heart. :)[/quote]
DWCAP, I said 5-10 years. What if it’s 10 years, or even 15-20 years like Japan? The house I got, I’m paying ~$1k/month less in interest vs rent of comparable house (this is w/out even talking about tax deductions). So, a year, I save $12k, and in 5 years, I’ve saved $60k. That means my house would need to drop another 14% just for me to break even when comparing rent vs buy. If you’re talking 10 years vs 5 years, then the house would have to drop 28%. This is also not counting in interest rates. Where do you see rates 5 years from now? Personally, I think it’ll be higher. Do you see where I’m heading at?
January 7, 2009 @ 1:31 AM
I think that the DECLINES
I think that the DECLINES might stop in 2010 or so, but prices won’t pick up for several years after that.
January 7, 2009 @ 9:20 AM
When you take out a loan to
When you take out a loan to buy a house, all you’ve done is taken on a big debt for the title to something. Unless you’re paying cash, you have not “bought” anything. Total illusion. So let’s see, you take out a huge debt on something while it sits in the cellar or heads further down. All the while rationalizing that you “bought” the house you wanted. The industry has most people fairly brainwashed about this.
Check the U-6 number for unemployment on the BLS stats sheet. It’s actually believable. So the BLS is not a total fraud, they chose not to advertise the real number, but they do in fact calculate it. Which is why the govt is in absolute panic mode right now.
January 7, 2009 @ 3:09 PM
I am counting principal.
I am counting principal. Mostly because there is no guarentee that you will ever see that money again. There are plenty of people who have been paying principal for years now who have no equity and hence, no enforced savings. That money is gone. HLS just posted about someone who was paying on a 15 year loan who cant access his liquidity and may loose out on alot of future value having to sell now. I consider your entire payment as part of the cost, atleast for the first 3-5 years. You dont consider the principal payments on your car loan ‘saving’ do you? You will never see most of that car money again, though it isnt interest either.
If you wanted to put the amount of your pricipal payment into an “investment” catagory and say you are saving or investing X% of your income then Id agree with that. Investments go up and down and it matters more when you sell vs buy then anything else. But I dont call it saving, cause it isnt money in the bank.
In the very least you need to be adding in the cost of your dp if you want to count principal. The foregone interest on a minimum 100k you have put into the place or will very soon should be included. Taking a longer term view of things (going back 3-5 years, interest rates BLOW right now) you should be subtracting atleast 3-4k in foregone interest from your 12k number. If you used historical stock returns, it should be closer to 8-9k off. Still money in your direction, but not 60k in 5 years.
And I have absoulty no intention of buying right now. (Thank you for your concern though. 🙂 ) Infact, I am looking for a new rental right now. I hope to own a house someday, but am not dumb enough to let my emotional attachment to buying a house ruin the hard work I have done saving like an idiot and the lucky advantages i have had (some of my future dp is from an inheritance). I do not mean to come across as either jealous or frustrated if I did give those hints. I believe that right now is the first time in a long time that buying a house is not a financially horrible decision unless you are flipping.
I find no real fault to your decisions. However I have noticed what you said about being ready to buy 5 years ago but having to wait due to the bubble as a common trait around here. Delaying your life now for future small returns, if any, is not a smart decision. However, that does not mean that waiting in this market is a bad idea either. Many many good buys are in the future, and IMO not just in 2009.
January 7, 2009 @ 3:13 PM
I guess if you buy now to
I guess if you buy now to have a home for a few years and don’t see it as an investment property you will be ok. However, in my opinion the prices here in SD are still very high in most areas and further declines are very likely over the next 2-3 years.
January 7, 2009 @ 3:37 PM
DWCAP, short term, yes, the
DWCAP, short term, yes, the principle you’re paying cannot be accessed. However, to count principle as “wasted” money, then I’ll have to disagree with you there. Even a car, a depreciating asset, you still can get some of your principle back when you sell it. But you can’t get any of the lease $ or the interest $ back. A house, over a long term, is a appreciating asset. So, 30 years from now, all the $ you put into principle will not disappear.
I know 2009 will have more good buys and 2010 will have more good buys than 2009. I’m not saying waiting is not a smart decision. For you, it definitely is. Everybody is different and there’s no one “yard stick” to measure when is a good time to buy for everyone.
January 7, 2009 @ 7:39 PM
Asianautica makes a good
Asianautica makes a good point. If declines slow enough, rent could be pouring money down the drain, but I think Fredo4 hits the nail on the head. When prices start to go up, that’s when you’ll know where the bottom was. However, informed opinion is part of what this forum is all about.
January 7, 2009 @ 7:52 PM
I just moved into a new
I just moved into a new rental. 2/2 w/a 2 car garage and a panoramic, albeit distant, ocean view for 1800 in Bay Ho.
There’s a house up the street that’s bank owned that just listed for 428k w/no view.
Would it make sense for me to buy and settle on a place w/no view and end up spending more on a mortgage than the rent in a declining market w/unemployment rising and more Alt-As on the way and Option ARMs recasting/resetting w/more NODs and foreclosures to come?
Eh. I think I’ll pay another 20k more for rent this year. Something tells me that I’ll see more than a 20k reduction on a place I’d want to buy by year end.
We’d not only need to stave off this disaster but some kind of wonderful, spectacular thing to happen to see any rise in prices any time soon. I agree the bottom will languish and flatline for a while.
January 7, 2009 @ 8:41 PM
calling Enorah – you have an
calling Enorah – you have an amazing pulse for such things – what’s your read?
rbeast
January 8, 2009 @ 4:14 PM
qwerty007 wrote:Asianautica
[quote=qwerty007]Asianautica makes a good point. If declines slow enough, rent could be pouring money down the drain, but I think Fredo4 hits the nail on the head. When prices start to go up, that’s when you’ll know where the bottom was. However, informed opinion is part of what this forum is all about.[/quote]
I actually always puzzle at the following question: what if, and God forbids, that sdr was actually right and we indeed see a rebound in house price in the coming spring. What would most piggs do? “you’ll know where the bottom was” or you will just enter into another angry mood cycle against the housing market?
No one can argue that affordability has improved here in SD. And no one can argue that mortgage rate is at historic low. Peterb says “follow the indicators”. Yeah, right. But what if the indicators say otherwise. Now what?
January 8, 2009 @ 4:22 PM
By the way, I have this
By the way, I have this puzzle because I always think future is unpredictable, whatever the maths or media makes you believe. I think most pigg knife catchers have positioned them to accept further price drops. But I don’t know if the reverse is also true.
January 15, 2009 @ 5:38 PM
just to get some feedback–
just to get some feedback– is this a good time to buy a house or not?!!
January 15, 2009 @ 5:45 PM
karmakmet wrote:just to get
[quote=karmakmet]just to get some feedback– is this a good time to buy a house or not?!![/quote]
Better than two years ago.
January 16, 2009 @ 8:06 AM
karmakmet wrote:just to get
[quote=karmakmet]just to get some feedback– is this a good time to buy a house or not?!![/quote]
Let’s review for San Diego:
1. Prices are off the peak by at least 40% for all but the high end areas, which are off maybe 20-25%
2. You can “own” for about the same monthly cost as rent in many places.
3. The press and the general public are constantly harping on how bad real estate is.
4. Most people are afraid to purchase furniture, much less property.
5. Interest rates for 30-year fixed are hovering near the lowest levels of the past 40 years.
Although I expect there could be a better time within the next year or two I believe that buying property in San Diego right now is not a bad idea. Assuming you have a job, are not stretching yourself on the payments, and have emergency funds in cash equal to about 6-12 months of living expenses.
January 16, 2009 @ 8:23 AM
A quick comment about incomes
A quick comment about incomes and homes prices. In any city, traditionally about 50% of households are homeowners and the rest tenants. In any community there are some longtime owners with low incomes (i.e. seniors) but in most areas the median HH income family buys on the low end while the 75th percentile HH income family buys closer to the median priced house.
Comparing a median income with a median home price is a boondoogle IMO.
January 16, 2009 @ 8:53 AM
sdrealtor wrote:A quick
[quote=sdrealtor]A quick comment about incomes and homes prices. In any city, traditionally about 50% of households are homeowners and the rest tenants. In any community there are some longtime owners with low incomes (i.e. seniors) but in most areas the median HH income family buys on the low end while the 75th percentile HH income family buys closer to the median priced house.
Comparing a median income with a median home price is a boondoogle IMO.[/quote]
I agree, that’s why it is especially interesting that the median priced house is nearly affordable when compared to the median family income. Just another factor indicating that affordability is at the high end of the historical range.
P.S. – It’s also worth mentioning that 100K is below the 75th percentile for family income in SD (it’s the 66th percentile). 100K income can easily cover PITI in the 2500 per month range, which translates to 375-430K home prices, depending on rates, downpayment, etc. The median SFR is between 311 – 385K for the various areas of the county.
http://www.signonsandiego.com/sdhomes/area_homesales/index.php
January 16, 2009 @ 12:03 PM
FormerSanDiegan
[quote=FormerSanDiegan][quote=karmakmet]just to get some feedback– is this a good time to buy a house or not?!![/quote]
Let’s review for San Diego:
1. Prices are off the peak by at least 40% for all but the high end areas, which are off maybe 20-25%
2. You can “own” for about the same monthly cost as rent in many places.
3. The press and the general public are constantly harping on how bad real estate is.
4. Most people are afraid to purchase furniture, much less property.
5. Interest rates for 30-year fixed are hovering near the lowest levels of the past 40 years.
Although I expect there could be a better time within the next year or two I believe that buying property in San Diego right now is not a bad idea. Assuming you have a job, are not stretching yourself on the payments, and have emergency funds in cash equal to about 6-12 months of living expenses.[/quote]
For the median type houses or entry houses, how many 1st time buyers would have 20% and a cash reserve of 6-12 months? I don’t see many
The funny thing, I don’t hear anyone talking about real estate anymore.. people are finally coming to terms with the bust. It’ll be interesting to see what this year turns out as far as declines, since job news is not getting any better and people are getting more concerned about job security over anything else
January 16, 2009 @ 12:12 PM
The best deals come when no
The best deals come when no one is paying attention.
January 16, 2009 @ 3:11 PM
sdrealtor wrote:The best
[quote=sdrealtor]The best deals come when no one is paying attention.[/quote]
Did you say something?
I would agree in the sense that we’re at or neat the bottom when people start saying it will never turn around.
There’s still optimism, though stifled, that says prices will bounce back next year. But I think we’re now talking about 2 things here: when the bottom will turn around, and if things are generally affordable now.
Whether things are affordable or not ultimately comes down to one’s personal situation. But being affordable for one doesn’t mean affordable for all, or a point of turn around.
I don’t think anyone here is calling a bottom.
January 22, 2009 @ 2:44 PM
When comparing real estate
When comparing real estate prices in SD with prices in other areas in the country one has to notice that despite the steep drop over the last 2 years we are still much higher. One could argue that the great climate justifies a premium but if you factor in the economical problems, traffic jam and high taxes (Mello Roos) we are still paying too much for housing.
Average home prices dropped 24% from 2007 according to a new report. As it looks now the prices will drop at least another 25% before reaching bottom.
January 22, 2009 @ 3:01 PM
I thought we already
I thought we already established here that median/average number is useless.
January 22, 2009 @ 3:16 PM
AN wrote:I thought we already
[quote=AN]I thought we already established here that median/average number is useless.[/quote]
Only if you’re the NAR and prices are falling.
January 22, 2009 @ 4:06 PM
cooprider wrote:
Only if
[quote=cooprider]
Only if you’re the NAR and prices are falling.[/quote]
I could have sworn that we had a long thread (many threads?) about how useless median/average price were when the median/average price keep on going up, but real prices were actually falling. This was discussed around 2006-ish if I’m not mistaken. So, wouldn’t it also mean real price would actually rise well before it shows up in the median/average #?
January 22, 2009 @ 4:15 PM
AN wrote:I thought we already
[quote=AN]I thought we already established here that median/average number is useless.[/quote]
I disagree. These measures are flawed, but not useless.
Whether you use the median, median-per-square-foot, Case-Shiller Index,or comparable sales prices, I think they all point to nearly the same conclusion.
Although none of them except maybe comparable sales are effective for determining regional variations.
January 23, 2009 @ 10:21 AM
I’d agree FSD, particularly
I’d agree FSD, particularly when you’re talking in generalities such as the Median HH income in SD being $60,000 but the median house price still 7 times that.
On an individual basis your own income and desired house are what matter, but those generalities, flawed as they are, are a very strong indicator (if not proof prices) will continue to fall.
January 23, 2009 @ 10:59 AM
Can you buy a median house?
Can you buy a median house? Since median can change base on the composition of sales, median could be declining while real price could be rising. Just like when median was rising but real price were declining because the composition changed in 2006-ish. So, how is that a strong indicator of anything valuable, unless all you want to do is talk about generalization. If you use median to determine the when to buy or sell, then you’re probably 6 months to a year too late.
January 23, 2009 @ 1:34 PM
Featured story on cnnfn –
Featured story on cnnfn – banks have not listed most of their foreclosures. Given unemployment predictions and a large overhang of reo properties it looks like the market is headed for another strong downward move.
“RealtyTrac, the online marketer of foreclosed properties, recently discovered that it has far more foreclosed properties listed it its database, which the company compiles using courthouse records, than there are listed in the multiple listing services (MLS) maintained by real estate agents.
RealtyTrac looked at listings in four states, California, Maryland, Florida and Wisconsin, and found that they contained only a third of the foreclosures it has in its database.”‘
“Many properties that should be listed on the MLS are not listed on the MLS,” said Lawrence Yun, chief economist for the National Association of Realtors (NAR).
http://money.cnn.com/2009/01/21/real_estate/ghost_inventory/index.htm?postversion=2009012315
January 23, 2009 @ 3:18 PM
AN wrote:Can you buy a median
[quote=AN]Can you buy a median house? Since median can change base on the composition of sales, median could be declining while real price could be rising. Just like when median was rising but real price were declining because the composition changed in 2006-ish. So, how is that a strong indicator of anything valuable, unless all you want to do is talk about generalization. If you use median to determine the when to buy or sell, then you’re probably 6 months to a year too late.[/quote]
Not if it’s still going down. And I think it’s safe bet it is. Even if by a snowball’s chance it’s not, it’s certainly not shooting back up.
January 23, 2009 @ 3:44 PM
cooprider wrote:
Not if it’s
[quote=cooprider]
Not if it’s still going down. And I think it’s safe bet it is. Even if by a snowball’s chance it’s not, it’s certainly not shooting back up.[/quote]
Of course it’s a safe bet it is. However, that doesn’t prove that median price is a string indicator of the market condition. It’s a lagging indicator. There are better indicators out there, such as sales/supply ratio, sales # vs a year ago, etc.
January 23, 2009 @ 3:30 PM
AN wrote:Can you buy a median
[quote=AN]Can you buy a median house? Since median can change base on the composition of sales, median could be declining while real price could be rising. Just like when median was rising but real price were declining because the composition changed in 2006-ish. So, how is that a strong indicator of anything valuable, unless all you want to do is talk about generalization. If you use median to determine the when to buy or sell, then you’re probably 6 months to a year too late.[/quote]
Yes, you can buy the median priced house. By definition someone did,since the median is an actual sample.
But seriously, if you look at the median price for Central San Diego it roughly corresponds to a 3BR ~1000-1200 sf house in Clairemont. This has been the case as long as I have been tracking prices (since 1995).
Sure, the median lags the market by 6 months. Sure it is sensitive to sales mix. But as long as we are in either a up-trend or a down trend, it does really matter. If you miss the absolute peak or bottom by 6 months you will be within 5% anyway, since both are typically flat for a reasonable period of time.
The median is flawed, sure, but like Case-Shiller, median per square foot and comparable sales comparisons from your favorite realtor or appraiser it has use as an indicator of the market.
January 23, 2009 @ 3:45 PM
FormerSanDiegan wrote:
Yes,
[quote=FormerSanDiegan]
Yes, you can buy the median priced house. By definition someone did,since the median is an actual sample.
But seriously, if you look at the median price for Central San Diego it roughly corresponds to a 3BR ~1000-1200 sf house in Clairemont. This has been the case as long as I have been tracking prices (since 1995).
Sure, the median lags the market by 6 months. Sure it is sensitive to sales mix. But as long as we are in either a up-trend or a down trend, it does really matter. If you miss the absolute peak or bottom by 6 months you will be within 5% anyway, since both are typically flat for a reasonable period of time.
The median is flawed, sure, but like Case-Shiller, median per square foot and comparable sales comparisons from your favorite realtor or appraiser it has use as an indicator of the market.
[/quote]
If that’s your logic, I’ll just have to agree to disagree. You can only buy a particular house that priced similar to a median house, but you can’t buy a median house. Just like you don’t make a median income.
January 23, 2009 @ 4:06 PM
What does turning around
What does turning around mean? And how will that “save” the homeowners.
Let’s assume the peak is 100. The market goes down to 50 and in 2010 it “recovers”. If the market goes to 52 in 2011, the real estate industry will declare victory.
However, it may take a decade or more to get back to 100. Until that time, there won’t be recovery for the bubble buyers who, by then, would’ve been badly beaten-up.
January 30, 2009 @ 7:38 PM
patientlywaiting wrote:What
[quote=patientlywaiting]What does turning around mean? And how will that “save” the homeowners.
Let’s assume the peak is 100. The market goes down to 50 and in 2010 it “recovers”. If the market goes to 52 in 2011, the real estate industry will declare victory.
However, it may take a decade or more to get back to 100. Until that time, there won’t be recovery for the bubble buyers who, by then, would’ve been badly beaten-up.
[/quote]
Turn around means that prices are not falling anymore and climbing steadily.
January 15, 2009 @ 6:25 PM
Coop you might want to double
Coop you might want to double check the charts of Oil and the CRB index if you think those prices inflated in 2008, they crashed. Look at Jan 1 vs Dec 31 prices in them. Gold did rise a very small amount.
January 15, 2009 @ 7:16 PM
Gold’s done very well
Gold’s done very well relative to the CRB and most currencies and most other assets classes in general. But check out the US$. Long term bull looks to be in the making for the US$. Despite the govts unending desire to give them away to all the failing business, the US$ is getting harder to get and the multiplier effect is grinding to a halt.
January 16, 2009 @ 8:40 AM
Just my opinion (My two
Just my opinion (My two cents) , With 5% loans for 30 year mortgages the REO’s (the Decent ones) are going to go really really fast When they finally do hit the market in your area.
The decent deals on REO’s from my experiences in Temecula have offers over the listing price in hours from hitting the MSL
So you have to think, is the market really that bad or is everyone just looking for a steal of a deal ???
Good luck,
January 16, 2009 @ 9:50 AM
I think I should start
I think I should start another poll,
How many can afford a home now but just Basically want to steal one if possible ???
January 23, 2009 @ 3:12 PM
I am in Wisconsin, and am in
I am in Wisconsin, and am in a real estate related business……..or rather, I was. I became dispensable back in September after 31 years.
The initial decline started in October 2005, and has been slowly regressing. Personally, I don’t think it will ever return. The segment of society that are our future homebuyers do not have the incomes to sustain a mortgage payment.
Please share with me your solutions, because frankly, I am at a lose.
January 23, 2009 @ 3:16 PM
There are two very simple
There are two very simple solution. Have price drop to the point where current income can support it or have income rise to a point where a $500k mortgage wouldn’t be an issue. There’s no way around the fundamental.