inflation and the housing market

[gentlemango]

Why is everyong talking about inflation when all I see are prices going down? Housing prices are still sinking, houses are still not selling. Won't this get better when there's inflation and the prices of everything rise?

Am I crazy for hoping for hyperinflation? I desperately want to get out of our house but we're crazy underwater. Will inflation help? Will the housing market pick back up? We need to get back to 2004 prices to break even.

[wildmonkeys]

First off, I am sorry you are underwater with your housing situation.

I think that people are talking about inflation because of all of the other things that have gone up in recent years (gas, food, etc.)

[sweetjasmine]

Next year through maybe 2012 alot of option arm mortgages will reset and when that happens there will be another wave of foreclosures. Its just starting to happen. My brother lives in Denver and they've just reset his mortgage. They won't modify his loan and he felt he had no choice but to declare bankruptcy and give up the house which will happen for him next year.

[gentlemango]

Thanks for the replies. Do they think the market will come back after the next wave of foreclosures sorts out? Any hope to throw me? I was just reading about how the baby boomers need to start retiring and most of them have no savings and all their equity in these big houses that they will be forced to sell, further flooding the market with low prices & lots of vacancies. Or the financial talking heads with their "double dip" theory that this is all a bubble right now and the worse depression is going to hit in a year or two.

I feel like all the economics news articles are saying is HOUSING MARKET WILL STAY DEPRESSED UNTIL 2020 and it makes me want to slit my wrists! I don't wanna be trapped in this house forever!

[sweetjasmine]

I'm so sorry, hon! I don't know what to tell you. And I feel very badly for my brother, too. This is eating him up. From my reading (and its in NO way comprehensive) I gather that the ones trying to paint a rosy picture of the future housing market are mostly in the industry. I have read the same things as you. Some liken this period to when, during the Great Depression, things started to really look up and they thought the worst was over and then the economy got slammed again. I hate to be doom and gloom but I'm also not at the other extreme to where I think things will go back to the way they were because they won't. At least not any time soon, if ever.

[Denvergirlie]

I highly doubt hyperinflation would help you out much.

Sure price of housing would more than likely rise, but at the same time so would every thing else.... bread, eggs, electricity, gas would all rise as well, thus your money would have less value, as would the money of the potiental home buyer. The potienal home buyer who would buy your house, would be looking at lower priced houses because the price of everything else will have raised considerably. Not many people are getting raises right now, certainly not enough to keep up with inflation, and I highly doubt that in the current culture, that people's incomes will rise to keep equal with inflation, much less hyperinflation. So yes, prices might rise, but income isn't going to keep pace, thus a loss for everyone.

Inflation is basically making your money worth less.

As for housing recovery, I personally wouldn't count on anything rebounding in the near future (personally I can not imagine it rebounding for 10 years or so). Unemployment is 9%- 20% depending on what numbers you look at, and it's still rising. Houses that were not foreclosed on this summer due to Obama mandate to delay for x number of days, are now going into foreclosure as people can not re-work their loans. There are a lot of ARM's that are re-setting now or will be doing so in near future, foreclosures will only be rising and I can not imagine how that wouldn't depress prices even further.

Best of luck to you in your current situations.

[cschick]

Originally Posted by gentlemango

I feel like all the economics news articles are saying is HOUSING MARKET WILL STAY DEPRESSED UNTIL 2020 and it makes me want to slit my wrists! I don't wanna be trapped in this house forever!

What's wrong with your house? Are there things you can do to make it a more pleasing place for you and your family to live?

I've always hated those analysis that purely look at changes to your house versus the amount those changes will "up" the price at which you can sell your house. There are reasons to make changes beyond that: if a few renovations will make you much happier to live there the next 5+ years, there's a reason to do those renovations.

[chirp]

our house price has rebounded. but i'm not sure how bad the market is in south jersey. no other houses have sold in our neighborhood since we bought ours in march 2009. the prices fell at their deepest that march, when we bought (yay! for us!) and then rose steadily since then.

we didn't count on it rebounding. and i don't think you should. what a pp said about another wave of foreclosures is spot on. i wouldn't be surprised if our house dipped back down at that point.

[gentlemango]

Originally Posted by cschick

What's wrong with your house? Are there things you can do to make it a more pleasing place for you and your family to live?

It's too expensive. Not the mortgage but the heating costs. We have no savings and are barely breaking even & living a painfully frugal lifestyle in order to afford the $600-800/mo heating oil bills for 6 months out of the year. It's killing us.

The thing about a drafty old 1800 house is, it's ridiculous to try to upgrade or replace things because of the size of everything. Huge windows for example. Replacement windows, even vinyl! are $2000 each. EACH. Getting off oil means $2500 chimney liner, $20-40k furnace replacement including ductwork. We are saving, max, $25/month right now in our emergency fund. It's a joke. This old farmhouse is huge, drafty, freezing cold, and needs a ton of upgrades we can't afford.

We bought a house we could afford, but we didn't know that old houses cost SO MUCH to live in & maintain. We didn't know.

[shayinme]

Originally Posted by gentlemango

It's too expensive. Not the mortgage but the heating costs. We have no savings and are barely breaking even & living a painfully frugal lifestyle in order to afford the $600-800/mo heating oil bills for 6 months out of the year. It's killing us.

The thing about a drafty old 1800 house is, it's ridiculous to try to upgrade or replace things because of the size of everything. Huge windows for example. Replacement windows, even vinyl! are $2000 each. EACH. Getting off oil means $2500 chimney liner, $20-40k furnace replacement including ductwork. We are saving, max, $25/month right now in our emergency fund. It's a joke. This old farmhouse is huge, drafty, freezing cold, and needs a ton of upgrades we can't afford.

We bought a house we could afford, but we didn't know that old houses cost SO MUCH to live in & maintain. We didn't know.

Your house sounds a lot like me except thankfully the folks we bought from had already put in new windows. We got a new furnace and upgraded the heating season so have been able to reduce our heating costs (we use oil too) but its high.

Like you our house was affordable but the cost of maintaining and upgrading an old (ours was built in the 1880's) is very expensive. Pretty much after the roof and the heating season we ran out of money, so I feel your pain.

[lmonter]

I'm sure the finance mamas know way more than I could ever hope to. Biut it's my understanding that we're in a slight deflation with some prices sorta getting back to normal before the crazy inflation starts. That's what happens when the secretive bank known as the fed creates money out of thin air - aka just printing it - to make their gov'ts debt seem smaller. Would be nice if I could print my own money when we ran out. Too bad I'm not a politician.

I'm not sure why you'd be happy about inflation... Sure, the "value" of your house may go back "up," but it will also most likely mean your salary will stay the same and a loaf of bread will cost $10+ and a gallon of gas will cost $7-$15 and so on. If you have a salary that can handle that kind of pricing, dude, I want to know where.

I don't think much of anything is going to truly pick back up until the US gov't gets out of the way, lets crap happen quick and dirty, then we can pick up the pieces and move on. As it is, it's like we're ripping the bandaid off one. hair. at. a. time. so it's going to take decades.


As for your house... I'm assuming you've already looking into wood heat? Our house has slight draft issues (hell, our front and patio doors turned out to be held in place by the trim - no nails, no insulation, nothing), and I could see how that would be a problem with a forced air system. But with our wood stoves (in a 2100sf house!), my mom calls it summer when she visits since it's perpetually 74*-84*F. Only costs a couple thousand to put in a new (efficient!) wood stove, even including the pipe.

[cschick]

Originally Posted by gentlemango

It's too expensive. Not the mortgage but the heating costs. We have no savings and are barely breaking even & living a painfully frugal lifestyle in order to afford the $600-800/mo heating oil bills for 6 months out of the year. It's killing us.

The thing about a drafty old 1800 house is, it's ridiculous to try to upgrade or replace things because of the size of everything. Huge windows for example. Replacement windows, even vinyl! are $2000 each. EACH. Getting off oil means $2500 chimney liner, $20-40k furnace replacement including ductwork. We are saving, max, $25/month right now in our emergency fund. It's a joke. This old farmhouse is huge, drafty, freezing cold, and needs a ton of upgrades we can't afford.

We bought a house we could afford, but we didn't know that old houses cost SO MUCH to live in & maintain. We didn't know.

What's the layout of your house? Can you basically block off part of the house for the winter, heating only those parts in which you plan to live? Maybe better insulating those parts: putting up the shrinkwrap plastic and heavy curtains over those big windows? You'll want to check where the pipes run when deciding to do this, any wall a water pipe runs through needs to be kept warmer.

My parents live in what used to be a drafty old Victorian, with gas heat that could run them that much. They built a planned addition (a kitchen, tv area and dinette) which can be closed off from the rest of the house and installed a wall unit electric heater for the addition. They kept the rest of the house at 55 on the gas heat (lower, they risk the pipes) and also had an electric heater installed in their bedroom. The electric heaters did cost them a bit (I'm not talking about the little units you get at Target, but big, in-wall units) but they made that money back two months into the first winter. (In their bedroom, they also eliminated two windows.) They basically lived in the addition and their bedroom.

(They have since completed renovating/fiberglass insulating the rest of the house, which has also made a big, big difference, but my dad can do drywall and insulation himself. He basically did 1 room a year: tear down plaster, put up heavy-duty insulation and drywall.)

[Leta]

I hear you on the heat. We were paying $600+/mo to heat a 1500 sq ft house. On natural gas! With brand new argon gas insulated windows! (We also have an 1800s house with huge windows.)

Two words: Pellet Stove.

We bought ours at Lowe's last February, on sale, for $700, plus another $150 for all the stuff we needed to install it, which took an afternoon. You will also need to buy/rent/borrow a large Sawzall. You can even do it with a Lowe's card if you lack the cash.

At big box stores, pellets run $5 for a 40# bag. If you look around you may be able to buy them in bulk for cheaper. Here, a Christian bookstore sells them for $149 a ton.

We went from paying $15-$20/day to heat our house to $2- $6/day, depending on how cold it is. So the pellet stove paid for itself within the first 95 days that we used it, probably sooner. Our gas bill is $40 in the summer, gradually hits a high of $100 for a couple months in the coldest part of the year. We are saving at least $3K per year.

Plus our house is actually warm now.

[canuckgal]

Originally Posted by gentlemango

We bought a house we could afford, but we didn't know that old houses cost SO MUCH to live in & maintain. We didn't know.

Hugs to you, OP. Frustrating isn't it???

I could have said this quote exactly in my situation. My house is a 1930's 1 1/2 storey, only partly sided, 30 yr old windows, probably at least 40-50 yr old gaudy plaid pattern lino in my bedroom and plank flooring with a carpet roll over it in dd room. I have painted wood cupboards, still with a dower in (I think that's what they call them...those drawers that tip outwards from the top and were used to hold flour). The carpet was stapled to the stairs in places!

We've managed to do some things, like attic and some wall insulation, and the roof, but we have found water damage in the basement not obvious to our untrained eyes, so it will have to be gutted someday too .

I am painting to make me feel better (at least I know how to do that properly myself) but it will be a long while till I do anything else. All we focused on was that the mortagage was cheaper than renting and it had 4 bedrooms, but like you we didn't realize the ENORMITY of all the cosmetic stuff it needs in addition to the major stuff. A little at a time I guess. It's hard to be patient. We are gonna be here a long while!

[velochic]

I agree that inflation isn't going to help. And true hyperinflation has only happened a couple of times in our lifetimes (Argentina and Zimbabwe?). We have to expect that at some point we WILL face some serious inflation, but right now we are in a slight deflationary period. I don't see the housing market turning around for a decade.

Have you checked out the thread on keeping warm? I'm sure you have, but maybe you could take another look and get some ideas. Window quilts, blocking off rooms and using safe space heaters in areas you spend your time in can be very effective. I agree on the woodburning stove. We haven't even had to turn on the furnace this year yet. Our budget billing for 1800 sq. ft. (natural gas, mind you) is $16/month because our stove is able to pretty much heat the areas we need to be heated. Thinking about the big picture, I would *not* buy a pellet stove. It requires electricity to run, so in a power outage, it's a useless as your furnace. Plus, you can never get free pellets. With a woodburning stove, there is a lot of opportunity to get free fuel. It's also a backup source of heat.

Good luck!

[gentlemango]

Thanks for all the sympathy! Here's the problem, we already basically have shut the house down. We keep the heat at 50-55 and with the uninsulated pipes inside the walls, we're afraid to put the heat any lower than that.

We use a space heater & huddle up in the office during the day. So, getting a woodstove would be great cause we'd be warmer in the rest of the house, but we can't afford any additional fuel costs. It's not like we'd be able to cut back on heating oil. Thats the problem. We need to save enough money to switch over to a different furnace system for the whole house and that is $$$$$.

That's right, we spend $600-800/month to keep the house at 50. My square footage is 2-3 times what I've seen mentioned here, with high vaulted ceilings & 3-ft-tall drafty single pane windows. (So drafty that plastic wrap on the inside of the windows *blows off* in a windstorm. We staple plexi on the outsides & wrap the insides & then cover them over w/ fleece window quilts.) We are trying to improve the insulation & draft situation but we're broke so saving up is s.l.o.w.

We have talked about draining the pipes & shutting off parts of the house so we could go lower with the oil heat. But I can't stomach the thought of living w/out running water. I don't even know where we'd get water to wash clothes & dishes and stuff. We lived w/out hot water to save money for a year and even that was a lot of work & very unhappy.

I was hoping that inflation would inflate down our debt & make it so that we could sell off this place & downsize to a modern house. Is there anyone out there who thinks the housing market will come back over the next few years? Anyone?

[sunnmama]

Originally Posted by gentlemango

I was hoping that inflation would inflate down our debt & make it so that we could sell off this place & downsize to a modern house. Is there anyone out there who thinks the housing market will come back over the next few years? Anyone?

I wish I could say yes (and I hope I am wrong!), but--no

We have a house we would love to sell (we don't live in it; we moved to another state), and have finally resigned to renting it out--even though it could potentially be a lot of work renting a home 3 states away. We really resisted renting it (it has been vacant for 2 years....), and renting it represents us conceding that the market is not coming back any time soon. Luckily, we bought 10 years ago and we aren't upside down...but it is simply impossible to sell anything in that town right now because it is glutted with foreclosures (FL).

Your house sounds HUGE! Could you rent out rooms to help pay for the utilities? Do you have any family members who could move in and help pay for the heat? Or, possibly rent the entire house out and rent a more manageable home for your family to live in? It sounds like your mortgage is reasonable, so maybe you could rent it to cover the mortgage and let the renters take care of the heat (be up front about the costs, though).

[lolar2]

If renting out your house wouldn't work, would you be able to drain the pipes, shut the house down, and move in with relatives for a year or two? It would be unpleasant but you could put away that $600-$800 per month in a fund to change your heating system.

[gentlemango]

That is a good idea. I'll talk to dh about it. We have family in the NY/NJ area. He'd have to switch jobs if we moved. Would we need someone to look in on the house or could we just leave it for 6-12 months at a time? How is the job market down in New York these days?

[SleeplessMommy]

It should be possible to decrease your heating bills by 25% or more without any furnace replacement. Here are some NH programs to help do energy upgrades on homes: http://www.dsireusa.org/incentives/i...srp=1&state=NH

This book has many ideas on how to fix drafty houses:
http://www.amazon.com/Insulate-Weath...7439519&sr=8-2

A used copy will be 10 bucks well spent.

Your house may well benefit from exterior storm windows, window weatherstripping and a few cases of caulk. You probably have balloon frame construction, which makes a house very drafty :-( It does make insulation retrofit easy, though, if you if you find the right blown in cellulose contractor.