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???

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.

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.

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.

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.,

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.

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.

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!:irked:

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.)

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?

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."

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

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.

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.

Being a pessimist... :duck: ... 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. :irked: 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. :shrug

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

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.

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?!

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. :irked:

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.

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

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.

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.

But that's only a factor with ARM's, or if you plan to refinance at some point in the future. If you were to buy an expensive house now with a fixed rate, no matter how the rates fluctuate in the future, your fixed rate will always be the same.

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.

I don't think interest rates will skyrocket the way they did in the 80s. The fed doesn't want to cause another recession, and raising rates will surely do that - they are smarter about it this time around. In fact they just recently lowered rates .5% to try to stave off the recession that we are teetering on the edge of.

Also, what you want to do is make sure you have a fixed rate mortgage. I don't need to worry about being able to afford high rates, my rate isn't going to change.

A number of people involved in real estate one way or the other tell me about 2009 the prices will go up.

One guy on TV says the market will drop further before going up.

I must say the market being low right now can possibly get us into a house on acreage in CA where if it where normal we never could.

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.

That is the way we are leaning. We would still make a profit on the house... it's just frustrating to know that if we had sold it a while back, we could have gotten 30-40K more for it. However, it's one of those things you just have to accept and move on. I also hate the thought of the house sitting on the market a long time. Our last house sold on the first day we put it up for sale. I can't imagine it sitting for months and having to keep it clean enough to show everyday! :dizzy:

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

Hopefully a lot of things will improve - but this will take awhile longer, and unfortunately whoever is president next will NOT get the credit, since it will probably take half their term to halt the slide, and then things may stagnate for awhile. Whcih means the president after THAT will get all the credit.

The current bubble is certainly the fault of the current administration (at least in part) but the hole they've put is in is SO deep and SO muddy that the next adminstration will not be able to dig us out of it quickly enough to not get blamed for the continuing effects.

And most infuriating of all, the same people who were all "ooh, yay capitalism at work!" when housing prices were shooting up (which they encouraged, because it made people feel like they were gaining wealth while their incomes stalled), are now calling for all kinds of regulation to "protect" the lenders from teh wave of foreclosures that is still coming at us (the next ARM reset is going to be like a foreclosure tsunami, in all probability).

I don't think interest rates will skyrocket the way they did in the 80s. The fed doesn't want to cause another recession, and raising rates will surely do that - they are smarter about it this time around. In fact they just recently lowered rates .5% to try to stave off the recession that we are teetering on the edge of.

Also, what you want to do is make sure you have a fixed rate mortgage. I don't need to worry about being able to afford high rates, my rate isn't going to change.

It all depends how long your interest rate is good for. The longest I have heard of a fixed rate lasting is 10 years. A friend of ours just got his locked in at 7.8% for 10 years Ours is good for 5 years at 4.1% but only 2 years of that is remaining. It may be different here in Canada, than it is for you.

It all depends how long your interest rate is good for. The longest I have heard of a fixed rate lasting is 10 years. A friend of ours just got his locked in at 7.8% for 10 years Ours is good for 5 years at 4.1% but only 2 years of that is remaining. It may be different here in Canada, than it is for you.Here in the US, when people talk about fixed rate mortgages they generally mean a rate that is fixed for the entire length of the loan (usually either 15 or 30 years).

Trying to remember what my dh said. He is in real estate and he pays attention to the experts alot.

Its supposed to keep dipping for about 18 months and then start going back up again?

I dunno, that may be new homes though because thats where he works.

I dont think its going to turn around for like 4 years. Its just a feeling I have, I have no good reason. :)

Hopefully a lot of things will improve - but this will take awhile longer, and unfortunately whoever is president next will NOT get the credit, since it will probably take half their term to halt the slide, and then things may stagnate for awhile. Whcih means the president after THAT will get all the credit.

The current bubble is certainly the fault of the current administration (at least in part) but the hole they've put is in is SO deep and SO muddy that the next adminstration will not be able to dig us out of it quickly enough to not get blamed for the continuing effects.

And most infuriating of all, the same people who were all "ooh, yay capitalism at work!" when housing prices were shooting up (which they encouraged, because it made people feel like they were gaining wealth while their incomes stalled), are now calling for all kinds of regulation to "protect" the lenders from teh wave of foreclosures that is still coming at us (the next ARM reset is going to be like a foreclosure tsunami, in all probability).

OMG, :lol

Are you and Amy Goodman friends? (I am a fan, but I do laugh everytime I hear her blame bush for something)

They were talking about the california fires the other day and I told dh "She is going to find a way to blame bush for the fires." Sure enoug about 5 mintues later they were blaming bush for the wildfires. :) :wink

Jenny

Okay, first while I am not a Bush fan, I don't blame him 100% for this problem. Blaming the gov. for a problem that was causing by PEOPLE over-extending themselves and taking out risky loans doesn't make sense to me. I feel that each person who takes out a loan should understand the terms of said loan and be realistic about their future income, expenses, ect. Now, when you take rising oil prices, rising food prices, and rising property taxes into consideration, yes, I do think the BA is partially to blame, but not wholey. We can point fingers all we want, but it's not going to fix anything.

I think that we are headed for a recession and I don't think anything is going to stop it. Changing interest rates won't make a real difference IMO. The problem has been growing over the last several years, with the increase in credit taken out for cars and credit card purchases. Until the basic problem of Americans over-extending themselves is solved, I don't see the housing market or the economy getting any better. I'd say about 5 years or so, maybe more. In my area the housing market isn't too bad, the main problem is a lack of buyers now that so many mort. companies are getting tougher (as they SHOULD), and the ones w/ money to buy are waiting until things kinda even out before buying.

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.

This makes me feel a bit better. My house is wonderful 1950's home under 150,000, 1100 sqft...We live in a major city , things are selling in my area...Hope its true for my home we are going on the market here soon :dizzy:

We see variations is markets around here depending on the town/area. Houses are sitting longer especially $400,000+ houses. An agent told me he is seeing 200+ days now. Anything odd or unique will sit even longer. Buyers are waiting or making low low offers. But on the other hand we have seen a sudden rise in sales in the past 3-4 weeks. Everyone who sat around waiting all summer who need to move have suddenly started buying before we hit winter. If you are smart about it your house will sell, it will just take time. Personally I think this will not end per se. Things will pick up next summer but not what it was like 2-3 years ago.

Before you can establish how long the real estate market is going to be poor, you have to esablish the reasons why the real estate market became poor to begin with. Wasn't too long ago that your property could increase in value 10% or more in 24 months! Why is it so different now?

1) Tighter lending standards beat people that are underqualified right out of the market. This is likely a change that will be semi-permanent. You may have a buyer that is VERY interested in your house but that doesn't mean that they will be qualified to buy it today even if they would have been able to get a subprime mortgage in the years earlier. I believe that this is approximately 15% of the reason for the current recession.

2) Foreclosures are a major concern. Remember those fancy little adjustable rate mortgages that allowed people to finance a house at 600K for about $3000 per month for 3-5 years? The joke is on them now because their house payments are jumping up 1,000-2,000 per month and they can't afford them. Add to this the fact that their property is probably not worth any more than they paid for it and you have quite a fine mess on your hands. If you are them, you can't make the payments anymore AND you can't sell it so you let the foreclosure demon sweep you away. As for timing, these ARMs were very popular here from 2001-2005 and they were good for 3-5 years right? This means that the last of them will have issues with their payments starting in 2010 and it can take up to 24 months for a foreclosure to become complete after the owners do default. This tells me that there will likely be a surplus of inventory until about 2012 and the banks are far more likely to "dump" these properties at rock bottom prices just to get them off of their books after a foreclosure. This is certainly not helpful to the real estate market as a whole. I believe that this is about 30% of the reason for a recession.

3) Renting is now a fantastic option! Sorry but it is true. The fact it that it is much cheaper to rent a nicer home in a nicer area than it is to buy the same house. I believe that home prices will fall until the price to rent is comparable to the price to own the same house. Consumers do not feel pressured to make a purchase if they can rent a comparable home for $500 less per month, particularly when the consumer's confidence has gone down in terms of real estate being a good investment. This is probably about 20% responsible for the recession.

4) Builders overbuilt and continue to overbuild. As we speak, property values are sinking in the Twin Cities and I have 7 new constuction developments being built within 1 mile of my front door! Pretty scary huh? Too many houses to too few buyers always equals a recession because people still need to sell their houses, even if they have to lower the price until it sells. Appraisals are based on similar home sales in the previous six months, so these sales are affecting your literal property values as we speak. I paid $1M for my house but if my neighbor sells her house for $825K next week...that will be the new value of my property almost immediately and I am out $175K! This is about 20% percent of the reason for the recession.

5) Lastly, there were many scandalous and even recreational activities going on during the recent real estate boom. It really wasn't just regular American Average Joe's jacking the prices up alone to begin with. House flippers, investors, mortgage fraud cases and people buying second homes believing they were a good investment was about 15% of the pie as well.

My advice to you is to put your house on the market ASAP because your values are only going down from here. Make sure you have the nicest property within a 15-mile radius of you for the price range that you are asking for. I expect my property to lose about 10% of it's value over the next 18 months and that is assuming that none of my neighbors are about to go into foreclosure, which would cause a much greater loss indeed.

In Salt Lake City the number of houses currently on the market is the number that would normally sell in a 3 year period of time. Our problem here is that there are tons of brand new homes on the market that aren't selling, and no one wants to buy a "used" home that is 3 years old, when the brand new equivalent is cheaper.

I just heard advertised on the radio that one builder is including a free Ford F-250 with every new home purchase. You can get a new home and a new truck for $190,000.

As long as the subprime buyers keep defaulting the market will not improve. I'm not necessarily blaming the buyers - just pointing out that every time one defaults that's one more home on the market at a cut-rate price, which lowers the value of everyone else's house too.

I'm with the side that hopes the market continues to fall, at least here in Colorado.

The rent we pay on this house would cover about 40% of the neighbors mortage payment. I can see paying more for a mortage than rent, but 60% more... no, not gonna happen.

The rent we pay on this house would cover about 40% of the neighbors mortage payment. I can see paying more for a mortage than rent, but 60% more... no, not gonna happen.

Yep. We're renting a house valued at about $344K for $1000 a month. Waaaaay less than the equivalent mortgage, and in a school district we could never afford to buy in. Our house is considered 'low-income housing' for our suburb. We're quite happy to rent at this point. :lol

Yep. We're renting a house valued at about $344K for $1000 a month. Waaaaay less than the equivalent mortgage, and in a school district we could never afford to buy in. Our house is considered 'low-income housing' for our suburb. We're quite happy to rent at this point. :lol

That's why I don't worry as much about the market crashing here; rents are about equal to mortgage payments if you had almost nothing down. Even though the house prices are about double what they were 5 years ago, rents have kept pace so I don't think that property is as inflated.

As long as the subprime buyers keep defaulting the market will not improve. I'm not necessarily blaming the buyers - just pointing out that every time one defaults that's one more home on the market at a cut-rate price, which lowers the value of everyone else's house too.

You are exactly right. Now the government wants to bail these homeowners out to reduce foreclosure rates as they went up 30% this past quarter. I have mixed feelings on this. I like the idea because if foreclosures are reduced then the recession will likely be somewhat slowed at the very least. On the other hand, I don't feel certain that fixing just one of the many economic concerns is the right way to go about it. Particularly since that will guarantee interest rate hikes. I definitely believe that our generation thinks more in terms of monthly payment than actual loan values. As a result, higher interest rates mean higher payments, which means property values are still likely to be forced down.

Also, from an American standpoint, I am having a really tough time feeling sorry for those that are facing foreclosure. It doesn't seem fair that these individuals contributed to the apparently "artificial inflation" of property values by purchasing a home that they could only afford during the "introductory period". Remember that these consumers were very well aware that their payments were going to go up in only a couple of years, and they were probably also aware that when the payments did adjust to real terms, they would no longer be able to afford their own home. Why would someone do that?

This caused a market that made it appear like Corporate America could afford $600K homes when in all actuality these homes were only affordable to the general public when the loan terms were teasers and were unsustainable. Had these individuals bought homes that they could afford on real terms their current foreclosures would not be happening and the market for luxury housing would not have swelled to the level that it did. Now the rest of us will have to suffer even higher interest rates, in addition to the real estate recession, so that our government can "bail out" people that were capable of making a better decision to begin with.

Bottom line: We all know what we can afford. We all know that we want nicer things than we can afford. We all know that if we buy nicer things than we can afford...there are financial issues in our future. :dizzy:

In Salt Lake City the number of houses currently on the market is the number that would normally sell in a 3 year period of time. Our problem here is that there are tons of brand new homes on the market that aren't selling, and no one wants to buy a "used" home that is 3 years old, when the brand new equivalent is cheaper.

This is a great way to track your local market. Go to realtor.com and record the number of properties in your zip code. As the number decreases, the market is getting a little better. If it goes up, its getting worse.


If you want to buy a house, plan on looking at lots. Don't let any realtor pressure you into making an offer. There is no hurry!
If your first offer is accepted, you are paying too much! Consider "days on market" of each property you look at.
Check out your area at www.zillow.com.


Some areas, like Flint Mi, have lost 10% of population in the past few decades. I do not expect these real estate prices to go up, in the foreseeable future.

List of top 500 foreclosure counties: http://money.cnn.com/2007/06/19/real_estate/500_top_foreclosure_zip_codes/index.htm

Some people in Las Vegas were buying new construction properties (pre-ordering 6 months in advance) and then selling them days after taking ownership. These people got burned big time, Las Vegas is high on the foreclosure list.

If you are selling, price to today's local market, even if you take a loss.

Remember that these consumers were very well aware that their payments were going to go up in only a couple of years, and they were probably also aware that when the payments did adjust to real terms, they would no longer be able to afford their own home. Why would someone do that?


You know, this is the biggest thing I don't get about the whole thing.

All this "here, we'll get you into the house with this mortgage, and then you can refinance before the ARM resets."

WTF was supposed to happen? Interest rates were at a historic low! How was refinancing supposed to save you from having a house you couldn't afford? Sure, you might have a buttload of "equity" in three years if prices appreciated, but so what? The outstanding loan balance remains the same,r ight? It's not like you could "cash out" 200K in equity to pay off your 600K mortgage -- the only way to *truly* "cash out" equity is to sell the house! If you use your equity to pay for other things, you still owe the bank the amount of your equity! So how was this "refinance fix" going to help anyone?

If you want to buy a house, plan on looking at lots. Don't let any realtor pressure you into making an offer. There is no hurry!
If your first offer is accepted, you are paying too much! Consider "days on market" of each property you look at.
Check out your area at www.zillow.com.


Some areas, like Flint Mi, have lost 10% of population in the past few decades. I do not expect these real estate prices to go up, in the foreseeable future.

List of top 500 foreclosure counties: http://money.cnn.com/2007/06/19/real_estate/500_top_foreclosure_zip_codes/index.htm



I'm not sure I understand this link. Wouldn't you need to see foreclosures as a percentage of all homes financed? This just looks like raw numbers. So more densely packed counties would have more foreclosures, no?

I'm not sure I understand this link. Wouldn't you need to see foreclosures as a percentage of all homes financed? This just looks like raw numbers. So more densely packed counties would have more foreclosures, no?

To some extent - but you don't see NYC on there, do you?

Vegas is no surprise at all to me. I used to live 2 hours away and our local RE market was inflating more than usual because people were buying there to commute to Vegas. There were articles in the paper about homes in Vegas selling in 4 hours. Many were bought up by speculators. It was not difficult *at all* to see that it was inflated.

Another easy thing to look at is are the wages in the area keeping pace with the jobs? Is it possible to afford the median home on the median income? In Vegas it was out of control. In St. George, too, where the median home costs $400,000 but the median job paid $40,000. That's just impossible. So inventory built up ..... but it was inventory at the higher prices. Lucky for poor folks like us the bottom end of the market ($125,000 range) didn't fall at all. There is always someone there to buy the cheapest house in town, especially if it's the only townhouse that's detached with a yard.
In St. George there was a literal glut of $400,000 homes - more than half the homes for sale were in the $300,000-500,000 range and relatively new construction - so those homes took it the hardest.

I feel more secure in my current area where we have a stable job market built on oil-field and natural gas mining jobs which pay well. The average income earner can afford the average home. Even though prices doubled within the last 5 years I wouldn't say the market is over-inflated like it was in Vegas or St. George. To my novice perspective it looks stable and sustainable.

To some extent - but you don't see NYC on there, do you?
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Actually, Brooklyn had three zip codes on the forclosure list.

I for one don't think a change in the administration will improve (or hurt it for that matter) real estate. I just don't think they are that closely connected.

I do think the median income and median home price ratio is important. If you market is still out of wack than things are likely to fall more. If they are in more in line with reality in the first place they where less likely to have bubbled in the first place.

WTF was supposed to happen? Interest rates were at a historic low! How was refinancing supposed to save you from having a house you couldn't afford? Sure, you might have a buttload of "equity" in three years if prices appreciated, but so what? The outstanding loan balance remains the same,r ight? It's not like you could "cash out" 200K in equity to pay off your 600K mortgage -- the only way to *truly* "cash out" equity is to sell the house! If you use your equity to pay for other things, you still owe the bank the amount of your equity! So how was this "refinance fix" going to help anyone?

I think the 'theory' was some combination of the following:

1. People who had crappy credit would have a history of making their mortgage payments and/or would have paid down debt in the meantime and could refi into a better rate later.

2. People who financed 100% would have a better loan-to-value ratio, because of the buttload of equity, and would be able to refi into a better rate later.

3. I think lots of people thought they'd just refi into another ARM with a teaser rate and keep doing it forever, so they'd never have to pay the 'real' rate on their loans... or that they could keep churning the teaser rate until some magical time where they'd switch to a fixed rate just in the nick of time before rates rose again.

I think the 'theory' was some combination of the following:


2. People who financed 100% would have a better loan-to-value ratio, because of the buttload of equity, and would be able to refi into a better rate later.


I know several people who went in with this train of thought. If not to qualify for better rate but for the idea of being able to refi and drop the mortgage insurance once they have 20% equity. So once they lock at a fixed rate, the payments wouldn't actually be higher because they would be able to drop the PMI and break even with no difference on the payments from when they started.

Actually, Brooklyn had three zip codes on the forclosure list.

I for one don't think a change in the administration will improve (or hurt it for that matter) real estate. I just don't think they are that closely connected.

I do think the median income and median home price ratio is important. If you market is still out of wack than things are likely to fall more. If they are in more in line with reality in the first place they where less likely to have bubbled in the first place.

I saw the 3 Brooklyn zips. :) NYC as a whole has far more people than Vegas, and if the list truly were just showing meaningless raw numbers, you'd see NYC zips represented much more heavily than Vegas or Denver. But you don't. That's all I was getting at.

I'm not sure I understand this link. Wouldn't you need to see foreclosures as a percentage of all homes financed? This just looks like raw numbers. So more densely packed counties would have more foreclosures, no?

If you look at it as # of people drowning in a particular zip code, it makes sense. For a house to go into foreclosure, it needs to be unsellable by the owner at what they paid for it (0 to 25 years ago) ... or the owner has taken out a home equity loan based on an inflated appraisal.

To have over 700 foreclosures in a single zip code is a sign of very serious oversupply in that local real estate market. Realtor.com has 847 homes listed in the Ohio high-foreclosure zip code, 44105. Starting price is $1,500 for a single home, $2,800 for a two-unit! Building lots are $2-10,000. http://homes.realtor.com/search/searchresults.aspx?zp=44105&typ=F

Also, every home for sale (and not in foreclosure) in that "high foreclosure" zip code is in competition with the foreclosure homes. Would you prefer to pay "full price" for a home, or buy from a bank desperate to unload a property and willing to take 20-30% off of the "going rate"?