So... when do you think this horrible real-estate market will end?

[b&c'smama]

OK all you smart mamas and papas out there... What is your best opinion, prediction, or just plain guess about when the housing market will turn around? We are thinking about putting our house on the market after the first of the year, but we're also considering staying put a while longer to ride it out. DH thinks things may not improve until we get a new President. Any thoughts???

[lovebug]

well the first thing we all have to remember is....

its not a national market it is a local one. some places are doing great other are doing ok and some are doing bad.


it is not a *blanket* bad market some places are doing rather well.

[Herausgeber]

I think it's going to be basically level for many years to come, which is normal. What happened in the past 5 years was NOT normal.

[ShaggyDaddy]

what was your home's value in 2001, add 2.5% per year till today.

If your home's currently projected value is more than this, then it will likely go down.

If your home's currently projected value is less than this then it will likely go up.

Obviously this is only average and other factors have much more effect on the value (Jobs, new construction, etc).

Also if your house is under $420,000 (near the limit for "normal" federally backed home loans) in value it is much less likely to have a huge swing in value (either up or down).

But like others said, It is a function of your market.

[ChristyH]

I've been wondering this too but I do know that there are areas where the market is doing just fine. I know that in the DC area houses were selling like crazy a few years ago and now they aren't doing as well and the prices have dropped.
Here in Atlanta I never really saw the market as bad or good just going but now here it seems like you can't give houses away. We are planning on putting ours on the market around March and I'm so worried about it taking a long time to sell. My husband is being transfered and they are not helping with the selling or moving costs and I'm afraid of DH having to go without us while I stay here and try and get the house sold.,

[BetsyS]

We're in Atlanta, too, and we just got transferred. Ack. I'm hoping that we don't take a huge loss on the house. I figure we can swing $15,000 in a personal loan. (we've only been in the house 2 years; values have gone down in those 2 years in my neighborhood. The latest foreclosures haven't helped) More than that, and it starts to worry me.

[savithny]

I think Shaggydaddy's got it about right, though he might be a bit pessimistic...

there's also a calculation you can do involving the median family income in your county vs. the median home price. If they're too out of whack, things are likely to "correct" until they're much more in line (not one-to-one, but closer to where they are historically)

I get SO frustrated on the various web boards I participate on, when someone asks a question about homebuying, and all these people say "Oh, go for it! We bought in 2003 and our house is worth 150K more than we paid for it! Housing will go up like that forever and ever and every homeowner will become a kajillionaire!"

In reality, the housing market most places is pretty limited by the eventual ability to pay of the people getting into the market. When no one can buy a starter home, then people in starter homes can't sell them, so they can't cash any of their "equity" to move up to midrange homes. All that "equity" in a bubbled market is just monopoly money anyway.

[b&c'smama]

Thank you everyone for great responses. The market in our area has definitely been in a slump. The homes around us are taking a long time to sell, and they are having to drop prices substantially. The last one to sell in our neighborhood had to drop their asking price $30K, and then they ended up accepting an offer 10K less than that. 12-18 months ago, the houses were selling within a week or two. We could have sold it for almost twice what we bought it for 5 years earlier! Man, I wish we would have sold it then!:

[Belleweather]

The learned economist prediction is that we're not going to see stabilization in the housing market until 3Q or 4Q of 2010. That's STABILIZATION, not increasing prices.

I know everyone wants to think that real estate is local, but the problem is that credit isn't. And with the credit market tightening up, it's going to be harder and harder to find a buyers who are qualified to buy.

(This ignores the amount of subprime debt yet to reset, the number of option-ARM's resetting after that, the general consumer economy, and the number of forclosures. If you're really interested in housing market stuff, I'd recommend checking out www.housingbubbleblog.com and www.doctorhousingbubble.com. The reset chart a couple of entries down on the second site is particularly interesting.)

[b&c'smama]

Originally Posted by Belleweather

The learned economist prediction is that we're not going to see stabilization in the housing market until 3Q or 4Q of 2010. That's STABILIZATION, not increasing prices.

I hope this is not a stupid question but what exactly does stabilization mean? To me that sounds like staying about the same... I thought that in a normal economy real estate was supposed to appreciate approx. 3% per year. Am I misinformed?

[savithny]

Originally Posted by b&c'smama

I hope this is not a stupid question but what exactly does stabilization mean? To me that sounds like staying about the same... I thought that in a normal economy real estate was supposed to appreciate approx. 3% per year. Am I misinformed?

Those are historical averages -- as in "Over the period 1950-2000, houses appreciated an *average* of 3% a year."

What that really means is that they went up 6% a year for 5 years, crashed 10% two years in a row, went up 1% for the next few years, went up 10% for two years, dropped 15%.......

Stabilization means, I think, "stop falling." Then they still have to rise at a more normal rate from there.

The kind of appreciation we saw in the last few years is just hugely abnormal and needs to be corrected to something closer to the actual value of the houses. By "needs to be" I mean not "someone needs to," but "reality will set in."

[MissMommyNiceNice]

IMO, the market will start to improve right around November 2008. Hopefully, a lot of things will start to improve then.

[Bird Girl]

You can find out how housing in your area is doing--first, find out what the median price of a home is in your area; city, county, what have you. Then use google to find out what the median household income is in your area. The median house price should be 3 or 4 times what the median income is. In my area, for example, median house price is currently 10 times the median income. So I'd guess that house prices in my area are going to go down.

thehousingbubbleblog.com is a great resource for those who are looking for a more realistic, as opposed to a more rah-rah point of view on these questions.

[mightymoo]

Well, I do think it has improved in some ways. In 2006, literally *nothing* was selling around here. My parents are real estate agents, they were the top agents in their office that year (just like the year before and this year) yet they sold zero homes from May to November. This year, they are selling a lot more, though in the smaller homes. But, I see that as an improvement, the market was literally dead. I haven't run any numbers recently to see if the prices are improving or not, but I think they are somewhere between slightly declining and stable. I think though its going to be years before we start seeing any increase, as like those above me said - the market was overpriced based on people's incomes and it is going through a correction, its only going to start on a slow upward trend again when incomes have caught back up. I do see in our area smaller homes are doing much better than larger ones - housing is a necessity, but huge houses are not, so people cut back and the smaller homes and condos don't lose value the way the larger ones do in a market like this.

Unless you are planning to ride it out for many years, I would go ahead with my life and sell (if that was a big part of your plans). You might not get as much for your house, but you'll have to pay less for the next house (if you buy one), so it evens out a bit.

[velochic]

Being a pessimist... : ... I think that we are headed for a recession that will take at least one presidential term to get out of (Go Hillary!!!). I believe that the sub-prime loan collapse has sent the stock market in a tailspin and it will be several years to recover. Grain and energy futures are not looking positive, so just daily life will be harder to afford. It kind of makes me angry at the mortgage industry because I feel like they have had the biggest influence on the markets these past few years and it is not doing us investors any benefit. : So, I think the stock market will fall and recover, fall and recover, and perhaps take a big dip over the next 4 - 5 years and it's going to be a reciprocal negative impact between the housing market and the stock market. 2011 - 2012 for a "general" upswing, with isolated rises and falls locally.

Who really knows, though? Predicting is dangerous, but those are my gut feelings.

[meowee]

I agree with velochic... it's going to take 4-5 years for things to normalize, and I believe we are headed to a recession or near recession.

There will be variations in local markets though.

[chrissy]

this is so depressing. our old house has been on the market for 6+ months. we have lowered the price, hired a stager, had it repainted, put in granite countertops, lowered the price again (and again) and it is still on the market. we have had tons of activity- lots of lookers but no offers (well, that isn't exactly true, it was under contract right away but that fell through). this is a beautiful, restored, old house in a fabulous historic district. we bought it before it even went on the market and i don't think it has *ever* been on the market for more than a few weeks. in my area, it is just such a buyers market and they all know it and feel no rush to do anything.

we had to move b/c my dh got a new job in a new area, so we have been paying 2 mortgages (etc) since April. ugh.

ps- anybody in greensboro, nc want an awesome house for a fabulously low price?!

[mightymoo]

Originally Posted by velochic

It kind of makes me angry at the mortgage industry because I feel like they have had the biggest influence on the markets these past few years and it is not doing us investors any benefit. :

I agree, the housing bubble was caused by lenders lending to more people at longer terms and lower down payments. It increased demand by increasing the number of people who could afford houses, so naturally the prices of houses went up and up.

The whole housing bubble / crash thing actually worked pretty well for us. Partially because we knew this was what was going to happen, and it factored into our cross country move plans. We sold our house in Seattle late 2005 while the market was still rising there, and the market in Boston was already declining, lived with my parents for 6 months, then bought a much smaller house here, for the same price we bought the first house for in 2003, pocketing the difference. Our house we are in now has probably gone down a little in value (maybe 5%), but not a ton, but larger homes have lost as much as 12-15% of their value in year and a half we've owned this one. I'm not concerned about the loss in value though as we plan to keep this house long term, even if we go bigger in a few years, we'll rent this one out.

[Dar]

My dad did the opposite - bought a house last May, right before the slide, planning to put his old house on the market after he moved out and fixed up a few things. By the time he did that, the slide had begun, and now he's been paying two mortgages and his old house has been on the market for 17 months... Anyone need a lovely house in Tucson, right by UMC?

dar

[Erin+babyAndrew]

Originally Posted by b&c'smama

OK all you smart mamas and papas out there... What is your best opinion, prediction, or just plain guess about when the housing market will turn around? We are thinking about putting our house on the market after the first of the year, but we're also considering staying put a while longer to ride it out. DH thinks things may not improve until we get a new President. Any thoughts???

your husband is quite right about nothing improving until you guys get a new president. The american dollar has plummeted steadily during bush's presidency, something like over 30% in the last couple years. It's quite shocking, but honestly not surprising.
Anyways, back to the housing market... I agree that not everywhere is experiencing the same type of market. Many cities are having bidding wars on homes and they are selling for astronomical sums. Other cities have a market in which it is realy hard to sell a house and get a reasonable amount for it. The thing with people buying a really expensive house these days, is that interest rates are going up, and they will go up like crazy just like they did 20 years ago and so many people lost their homes because they could no longer afford the payments. My advice to anyone in the market to buy a home right now is, make da^% sure you can still afford those payments when interest rates go through the roof, and they will.