i just dont understand what is happening with real estate why so expensive?

[yukookoo]

I thought the bubble burst? I'm looking in sonoma county, ca and just looking at listings for fun, but everything I look at seems listed at least 200,000 or more higher than what i would pay for it. If you go to zillow they show a graph of the houses worth over 4 -5 years and some of the prices im seeing are pretty close to the top.

Anyone else noticing this in their area? What do you guys see happening with real estate over the next 2 years?

I thought prices would still drop for another year at least and then maybe start climbing slowly, now i think maybe in 2 years we will be back up the enflated prices we saw in 06 or at the height

Is it just me? im confused

[Bokonon]

There are just some areas where the bubble burst harder than others. Here in San Diego, there are some neighborhoods that "corrected" and are now valued closer to what would be expected, but others never really dropped very far.

It's all supply and demand. Sales determine market value, so if people are buying, the prices won't drop as much.

[cappuccinosmom]

In my observation, CA is just expensive. One reason we don't live there.

In our area the market dropped drastically. Had a friend visiting from philly and she couldn't believe the prices I was telling her. But on the other side of that, COL is very low, and wages/salaries are lower too, and we're not near anywhere important or interesting.

[AAK]

Our area dropped a lot. I don't think it will go any lower as everything seems to have leveled out now. But, I don't think things will really pick up for a couple years either.

Amy

[BathrobeGoddess]

Our area remained almost completly unchanged....

[zebra15]

Its all about location. CA is historically expensive.

My area (phx,az) is still down by 50% or more from the top of the price range. Honestly this area may never see those prices again. It seems prices are still going down around here. The econonmy is horrible in this state. Employment is down, budgets are being cut, spending is down.... its all going to continue to trickle down.

[amma_mama]

We're in the Washington, DC area and after the initial price correction (which we missed as we were overseas, saving up for our first home purchase), things held pretty steady. Good properties are being swept up pretty fast (within one week), so prices have remained relatively high in most areas, above what you would think that area incomes would support when you see the median incomes for different neighborhoods. Based on that, one would have expected a larger market "correction" in this area, but it just has not happened, even with the threat of a new wave of foreclosures. You can get pretty good deals on short sales and fixer uppers, but move-in ready/upgraded, regular sales have held tight. Funny enough, the best "deals" in our area are probably on the McMansions, where a 10% price correction was in the hundreds of thousands, rather than the tens of thousands.

We ended up choosing a fixer upper in order to stay within our comfort range and get everything else we wanted (big property with woods, good schools, nice neighborhood, easy commute, particular architectural style). We were reaching the desperation point in our search (more than 6 months), but finally happened upon the house that was meant for us (our very patient agent promised that we would).

[Alison's Mom]

We're in Vancouver, BC, and the prices here are still super high - in fact we were looking through a realty site today just for fun and were just astounded at townhouses and duplexes that were higher than we would pay for a detached house. I'm just glad we bought 4yrs ago and don't have to deal with the prices now that are even higher than when we bought. Our property assessment done by the city has gone down the last two years, though, which I also find fascinating.

I think because interest rates are still very low, people can afford to borrow more, which jacks up the prices. When the rates start to go up, housing prices are expected to drop.

Like another poster mentioned, it depends on the area. I think some of the suburbs and rural areas were harder hit, but we are still in the city and very close to downtown so prices are still crazy

It must be so frustrating. I really envy the people who bought 10 years ago for 1/2 of what we paid, and are mortgage-free.

[BetsyS]

Originally Posted by Alison's Mom

It must be so frustrating. I really envy the people who bought 10 years ago for 1/2 of what we paid, and are mortgage-free.

Our neighborhood is 10 years old. People that need to sell now are having to sell at LESS than they bought their house for 10 years ago. So, instead of envy, I just feel sorry for all of us that didn't ride out this bubble and wait to buy our houses.

I think it's very dependent on where you live. We've seen a huge drop in my area (by 1/3 to 1/2).

[Annie Mac]

I think it might have something to do with the concentration of wealth in the hands of few, and the decline of the middle class. Houses DO cost as much as the market will bear, but most of us, at least those of us in high COL areas, will attest that we have to mortgage ourselves to the hilt to buy. Spending 60% of family income on housing, and carrying debt loads in excess of half a million dollars, is not really the natural set point of the market. But, if you have 10% (or less) of the population who are fantastically wealthy and can afford to snap up 5 or 6 million+ dollar properties at a go, well, prices go up. IMO, It is just another symptom of a shifting of the general wealth into the pockets of very few individuals.

[HeatherAtHome]

I didn't see a huge price drop, but a lot of houses were sitting on the market for quite a while (over a year) and ended up lowering their prices. Some had priced their homes too high (imo) and were bringing it down to a reasonable level.

We bought last fall and even still, most houses in our area were more than we were willing to spend. When we found our house we jumped on it. Fixer upper with small mortgage payment for 15 years. (Hoping to pay extra each year once we aren't putting as much into it fixing it up.)

We had so much drama the last couple of years (living with parents, being apart, working extra shitty jobs to pay debt and save money only to wonder if DH's company would close leaving us without ability to get a mortgage once we finally found the right home...). We came so close to not having all this and I am so happy we are here!

[19spitfire]

I am originally from Sonoma County and moved 60 miles away 3 years ago. We moved to a more rural county. We moved up here right as the market began to drop and this is what I've seen:
When we first moved up here there were a lot of transplants from Sonoma County commuting back there for their jobs, construction workers, teachers, hairstylists, you name it. But when the bubble burst alot of these people lost their jobs and then their homes. Most of these people have moved back to Sonoma County over the course of the last 2 years. I know they aren't able to buy houses yet, but they are all renting down there. Also.... I have friends who are into real estate investment and when the bubble burst they sold their commercial real estate and began to buy residential real estate in Santa Rosa. So, to put it all together, I think the people who are ahead of the game are buying rentals in Sonoma County and keeping the prices up. It's really a nice place to live with lots to do and see nearby, but I'm happier up here in the hills with less mortgage and more open space.

[bluebirdiemama]

We spent 6+ months looking for a home last year, and everythng here was way over priced. No one is buying because of it. I think everyone is just refusng to believe they are going to loose money, insist on asking too much, and therefore we are at a stand still in my area

[p.s]

i believe the prices mostly reflect intense govt effort to prop up the housing market.

yes, factors like high local salaries/ wages, low unemployment, high demand, etc. do influence prices somewhat/ greatly.

but what would happen if you take away all the govt support? stimulus money to banks, the buyer rebate (which has now just ended), cont. bailout to Freddie and Fannie. The inevitable would happen alot quicker.

Consider also the stats re: houses in default, houses in foreclosure, houses in short sale, etc.....
and you realize there is a huge pipeline of problem mortgages.

We moved to the DC area 13 m ago, and have been looking HARD for a home to buy for the past 18 mo. Literally, every mo, my $XXX,XXX amount of money will buy us more than the previous mo. Initially we signed a 1 y lease, with the absolute intent to buy a home at the end of that lease. We just renewed for another 2 years.

At the beginning of our search, we did find a beautiful old home, but did need minor work (like repainting). The home had just listed, so we went back and forth with the buyers over $XX,XXX.
The amount of money that we would have "lost" (you can look at how much one could get today for the same amount of $, or look at assessed values), in just 1 y >>> just about equals how much we will pay in rent x 3 y. When you add in closing costs..... just did not make sense to buy.

here are some articles for fun. I think there is still a large correction ahead:
http://www.nytimes.com/2010/06/01/bu...ce=patrick.net
http://blogs.wsj.com/economics/2010/...ce=patrick.net
http://www.nytimes.com/2010/05/27/op...trick.net#main

[yukookoo]

so you think we are headed for a time where there's no funding/loans again but this time no money for a bail out...

home buyers will be people who can afford a lot down or pay cash

at the same time as the baby boomers start to die our generation is set to inherit an insane amount of money as a group

i think mcmansions will still be selling and investors will buy up real estate in city's and high col areas

because i think t he people that lost their starbucks and mcmansions and manicures havent learned anything and if they inherit money they will go right back to that lifestyle except prop it up, so they inherit 3 mil they put 1 on a 2 mil house, owe a mil and spend the rest on starbucks and manicures haha

just so interesting how the next 5 years will pan out.

[p.s]

Originally Posted by yukookoo

.... our generation is set to inherit an insane amount of money as a group
.....so they inherit 3 mil they put 1 on a 2 mil house, owe a mil and spend the rest on starbucks and manicures haha ...

except that the insane amount of money is a myth. baby boomers actually have a fairly small amount of net worth currently, and how much of that will be eaten up by health care, etc?

http://www.nytimes.com/2003/07/13/bu...OOGLESENIORITY

http://money.cnn.com/2009/02/25/real...ting/index.htm

http://www.cepr.net/documents/.../ba...th-2009-02.pdf

in light of this, makes buying housing like a huge Ponzi scheme.