When will the price of homes start rising again?

[ilovebabies]

Just curious what you all have heard. We're upside down on our home (we owe more than what it's worth) and we're just wondering what to do at this point. My dh's hours have just been cut, as all the employees hours have where he works (they are doing this to hopefully avoid layoffs), and he'll be bringing home $1,000 less per month, bring home pay. We were already living frugally and had every dollar budgeted. We were pretty tight. We're concerned that we're going to slip behind in our mortgage payments. If so, we may check into doing a short sale. But if we could hang on somehow.... when do you think things might start to improve?

[sweetjasmine]

From what I've been reading, home prices still haven't reached bottom. They are still falling. Hard to say when they'll rise again but some say 2010 or 2011 but even when they do, they won't bubble up to the heights of the past few years. Prices were artificially inflated and not the real value.

[mightymoo]

Nobody knows, its pure supply and demand and varys with market. Loose lending regulations increased supply by allowing people to afford bigger houses than before, now those are tightening making less folks able to afford those houses, thus dropping prices. As long as that demand is dropping, prices will drop. Until something changes to increase demand, allowing more people to afford houses (or bigger houses) than can now it won't go up. If you live in an area of the country that is affected worse by the recession, it will be longer, if you live somewhere that is enjoying a population growth, it will be sooner. Interest rates are practically as low as they can get, so that isn't going to help - and they definitely will not be relaxing lending regulations. Rising unemployment is going to make things worse.

For the most part, I don't think we'll see prices rising again for at least 3-4 years or more, depending on how long the recession lasts and when they do it will be a very slow rise, nothing like the boom of before, modest 2-3% increases a year.

[Jenelle]

Have you seen the posts on this forum about Suze Orman's free book download? I just sat here and read pretty much the whole thing, and would highly recommend it for your situation. Good luck.

[amyamanda]

I think they'll hit bottom around 2012 and then go up gradually - much more gradually than the last decade has seen. It is had to say how long they will take to get back up to their previous peak, but I think it will take a number of years.

Good luck...

[ilovebabies]

Originally Posted by Jenelle

Have you seen the posts on this forum about Suze Orman's free book download? I just sat here and read pretty much the whole thing, and would highly recommend it for your situation. Good luck.

I haven't but I will look for it. Thanks!

[PenelopeJune]

I don't think we'll ever see prices like they were before.

[Guinevere]

I'm sorry you're dealing with so much stress right now. I empathize with the $ woes -- my DH is/was self-employed but lost most of his clients due to the economy and is now about to start a new, lower-paying job outside the home full-time so we can try and make ends meet.

As to the housing situation, I think it also depends a lot on where you live. What was your real-estate market like before this all happened? Were houses way overvalued to begin with or within a normal range? Do you live in an area that is now economically depressed w/high unemployment or are people continuing to eke by? Do you live in a newer neighborhood/new construction or in an older, more established one? Is it far from jobs/shopping/schools or close-by? All those factors will combine to determine whether you can expect your home to increase in value again or not.

We just got our house reappraised this week b/c we're in the process of refinancing our mortgage. We've lived here for 2 years, it's in an older neighborhood, close-by to lots of things, and the house is older, too, probably close to 60 years old. And while there is definitely unemployment in our town, the largest employers are still holding steady (they're not hiring, but they're not firing, either), so the economy isn't nosediving as badly here the way it is elsewhere. B/c of all that, home values, at least in our area, have remained relatively stable. Our house actually appreciated by 8K, I was surprised to discover.

I'll be hoping that things improve for you guys soon, as well. Is refinancing an option for you, or does being upside-down make that a bad/impossible idea?

Guin

[SeekingJoy]

I wouldn't count on rising prices anytime soon. http://www.chrismartenson.com/crashc...ter-15-bubbles

Check out this short video.

[Violet2]

I suspect it will be 10 years or so for the following reasons...

1. There are a bunch of ARMs set to go up over the next 5 years. These are also risky loans and so long as there is no proactive action to head them off at the pass, these loans will likely default in large numbers. So we have not finished processing the financial fall out. (60 minutes had an interview on this you could google it, the chart is chilling. There are as many ARMs set to go bad in a few years as subprime loans that have gone bad now.)

2.There are millions of people who bought homes they cannot afford and/or have subprime loans. 1 in 9 homeowners are struggling. There is not a corresponding number of bonafide buyers in the market or lenders willing to loan to fill the foreclosed homes. This creates an oversupply which pushes prices down. Either the govt will have to create special financing programs to fill those homes or the excess inventory will have to be destroyed. Or maybe the economy will recover (but I would not count on that solving the problem).

Until you see efforts to rectify 1&2, I do not believe home prices will recover.
This is regardless of what the economy does b/c I think you can have an economic stabilization or recovery but still have a slow housing sector because banks will likely be wary of who gets a mortgage now.

Orman's book is good. There is practical advice but she is not taking into account 1 or 2 so don't be lulled into letting her do your thinking and research for you.

V

[Natsuki]

First of all, it depends on how big the housing bubble was in your particular area and how badly the market has been hit.

I don't expect prices to hit rock bottom for several more years - until the full extent of the ARM's is felt and the economy can recover more.

I'm expecting that the housing market will start to improve in 2012ish - but depending on what you bought your house at and how it is was priced, that doesn't mean you'll cease to be upside down.

(i.e., if you bought an 800 sq. ft. house in southern california for $500,000 two years ago don't ever expect it to go back to that price b/c that was a bubble price - totally unrealistic. If you bought an 800 sq. ft. house in my area for $140,000 two years ago and it's now worth $130,000, hold tight for a few years b/c you'll build equity and the market will rebound - you won't be gaining 10% on your home price per year, but you should be back at or above purchase price within a few years IMO).

[jentilla]

Originally Posted by PenelopeJune

I don't think we'll ever see prices like they were before.

ditto. The price you bought your house for was a falsely inflated one. I'm sorry, but you will likely just be losing that money

[I~love~pie]

There are a bunch of ARMs set to go up over the next 5 years>>>>

cant ARMS adjust down? didnt the interest rate go down?

[notneb]

Originally Posted by I~love~pie

There are a bunch of ARMs set to go up over the next 5 years>>>>

cant ARMS adjust down? didnt the interest rate go down?

They can go down. My inlaws bought their home with an ARM in the early 80s, when interest rates were at an all time high, and their rate has been falling ever since. It's definitely a gamble, though.

The problem now is that rates in the past few years have been at or near historic lows - there's nowhere to go but up. The other issue is that a lot of the ARMS have an introductory/teaser rate that's well below what the adjusted rate will be even if rates stay the same or fall slightly. If you can pay the mortgage at prime or prime - x (the teaser rate) you may have trouble paying at prime + x, the adjusted rate, even if prime hasn't drastically increased.

[notneb]

to the OP. We are also upside down on our home, and my DH's company just did across the board pay cuts. I hope for both of our sakes that prices rebound or at least stabilize soon, but I am not overly hopeful about seeing that for another 3 or 4 years at least.

[ilovebabies]

Thanks everyone!
I've been doing some research online on doing a short sale, foreclosing, and even renting our home out. Wow, none of these are good options!! We're just going to be doing everything we can to keep our head above water here and stay current with our mortgage payments. We will use our tax refund to help with that.

[phathui5]

Originally Posted by I~love~pie

There are a bunch of ARMs set to go up over the next 5 years>>>>

cant ARMS adjust down? didnt the interest rate go down?

The federal interest rate going down doesn't have anything to do with ARMs. Your rate is up to the bank who holds the loan and it isn't in their interest to charge less money.

[ShaggyDaddy]

The last big chunk of the subprime "party" ARMs reset in 2011.

When home prices will get stable or start to go up is HIGHLY subjective to your area. The area you are in can make this a big deal or not so big of a deal.

(Since it is great for example's sake) My Parent's old house in Riverside California was 200k in 2002, and 500k in 2007. It is currently around 250k, and will probably keep dropping to about 200k.

Their current house in Arlington Texas is was 140k in 2002, 160k in 2007 and is 140k currently.

One of the most accurate predictive models we have been using at my work, has been 2002 home prices. A lot of us believe that homes with hit their 2002 level, then start to go back up at the standard 2.5%-5% rate.

The best way we have found to predict future "loss" in home value: take your home's value in 2002, add 2.5% per year up to the current year. If the current "value" is higher than that, you will most likely see more loss.

So:
100k in 2002 should be a maximum of 116k
200k in 2002 should be a maximum of 232k
400k in 2002 should be a maximum of 464k
600k in 2002 should be a maximum of 696k

Once you hit + or - 15% of your 2002 home's value you have taken the housing bubble out of the equation, unfortunatly now you can start taking other economic factors in to the equation... Job availability being a key factor.

[choli]

Originally Posted by ShaggyDaddy

The last big chunk of the subprime "party" ARMs reset in 2011.

When home prices will get stable or start to go up is HIGHLY subjective to your area. The area you are in can make this a big deal or not so big of a deal.

(Since it is great for example's sake) My Parent's old house in Riverside California was 200k in 2002, and 500k in 2007. It is currently around 250k, and will probably keep dropping to about 200k.

Their current house in Arlington Texas is was 140k in 2002, 160k in 2007 and is 140k currently.

One of the most accurate predictive models we have been using at my work, has been 2002 home prices. A lot of us believe that homes with hit their 2002 level, then start to go back up at the standard 2.5%-5% rate.

The best way we have found to predict future "loss" in home value: take your home's value in 2002, add 2.5% per year up to the current year. If the current "value" is higher than that, you will most likely see more loss.

So:
100k in 2002 should be a maximum of 116k
200k in 2002 should be a maximum of 232k
400k in 2002 should be a maximum of 464k
600k in 2002 should be a maximum of 696k

Once you hit + or - 15% of your 2002 home's value you have taken the housing bubble out of the equation, unfortunatly now you can start taking other economic factors in to the equation... Job availability being a key factor.

That sounds about right.
How do you find out what your house was worth in 2002?

[KermitMissesJim]

Originally Posted by choli

That sounds about right.
How do you find out what your house was worth in 2002?

nak

that's what i want to know.