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It's quite possible that the market hasn't hit bottom, but you can't necessarily apply the percentage the market should adjust to individual houses. Once the big landlords start scooping up good deals in the area you are likely near the bottom. They are very specific in what they are looking for though.
Depends on where he is looking. Some areas of San Diego have returned to pre-bubble price ranges and the mortgage v. rent calculation pans out. In other areas, home prices are still in la-la land, ~ 2003/2004 prices, which are still double their pre-bubble value. Those areas are still in for more substantially more correction, IMO.Regardless of the area though, I think people are fooling themselves if they think that another huge housing value run is in the works. Macro-economic conditions are still extremely poor. We've just endured the worst recession since the 1930s, I don't understand the argument that those conditions suggests a housing value boom is on the way. Houses aren't like stocks.
That house has been on the market for 140 days. To me that suggests that the 400k asking price is high. If it's a deal, why is it still on the market 5 months later?
I knew i would get you out here my friend.That house has been on the market for 140 days. To me that suggests that the 400k asking price is high. If it's a deal, why is it still on the market 5 months later?
Can't find anybody to qualify and drop $35kThat house has been on the market for 140 days. To me that suggests that the 400k asking price is high. If it's a deal, why is it still on the market 5 months later?
It's not surprising that we've seen an uptick in housing in San Diego recently. Even during the 90s bust, if you look at charts, there was a seasonal uptick virtually every year. Add in the significant gov't assistance ($8k home buyers credit, FED rate at 0%) and it shouldn't surprise anyone that there has been a momentary stabilization. Questions that remain, IMO, are:- Have prices in your area retrenched to historical rent/buy and % of income norms? If so, and you could rent your home and cover your mortgage and fees with the proceeds, then there is little risk in buying. If not, we're not there yet.- What happens when the $8K credit is gone and the FED rate is back at 4.5%?
Then that means it's still overpriced. Personally I think we'll see some more pain this winter once that 1st time buyer's tax credit expires. Unless they end up extending it. But we'll probably see some more correction whenever it ends.Can't find anybody to qualify and drop $35kThat house has been on the market for 140 days. To me that suggests that the 400k asking price is high. If it's a deal, why is it still on the market 5 months later?
Doesn't this mean that the price is too high?ETA: Yuk beat me to the punch.Can't find anybody to qualify and drop $35kThat house has been on the market for 140 days. To me that suggests that the 400k asking price is high. If it's a deal, why is it still on the market 5 months later?
Agreed. We have to remember that rates are historically low. Even if rates go back up to around 6%, which is still very low, that is going to hurt housing values. I just can't see rates staying under 5% for the next few years enough for values to rise substantially again.
- What happens when the $8K credit is gone and the FED rate is back at 4.5%?
Yes, supply and demand. The house is worth whatever someone is willing (and able) to pay for it.Doesn't this mean that the price is too high?Can't find anybody to qualify and drop $35kThat house has been on the market for 140 days. To me that suggests that the 400k asking price is high. If it's a deal, why is it still on the market 5 months later?
Oops, my bad. Party on, dudes!That just makes too much sense. Don't you know that we are all entitled to a 5 BR, 3,000 sf house w/3 flat screens, granite counters, pergo floors and stainless steel appliances? Get with the program, man.
I'd argue that 20% is too stringent. I'm not sure that the "pick-a-payment" NINJA loans we saw the past 5-8 years that were often based on fraudulent applications means that we have to go back to 20%.Why not 10%, with strong underwriting? I just think 20% leaves out lots of folks on the lower end of the fiscal spectrum who are otherwise responsible and willing borrowers.That just makes too much sense. Don't you know that we are all entitled to a 5 BR, 3,000 sf house w/3 flat screens, granite counters, pergo floors and stainless steel appliances? Get with the program, man.
pergo?That just makes too much sense. Don't you know that we are all entitled to a 5 BR, 3,000 sf house w/3 flat screens, granite counters, pergo floors and stainless steel appliances? Get with the program, man.
travertine
If you can't show the fiscal restraint to save 20% for a down payment, I question how serious you are towards making such a financial commitment. Sorry, not everyone should be a homeowner.And lenders obviously feel much more comfortable seeing their borrowers having more skin in the game. Not only does this help cushion the lender from declines in the housing market, but it also gives borrowers a much stronger disincentive from walking away during such declines.Besides, if you get the government to stop juicing the housing market through all of the subsidies, easy financing and easy monetary policies, prices would adjust accordingly at all income levels.I'd argue that 20% is too stringent. I'm not sure that the "pick-a-payment" NINJA loans we say the past 5-8 years that were often based on fraudulent applications means that we have to go back to 20%.Why not 10%, with strong underwriting? I just think 20% leaves out lots of folks on the lower end of the fiscal spectrum who are otherwise responsible and willing borrowers.
If you are buying a home within 3 to 3.5 times your annual income, this shouldn't be so hard. If that ratio is higher, then you are buying beyond your means, and, quite possibly, your local market is still overvalued.
pergo?That just makes too much sense. Don't you know that we are all entitled to a 5 BR, 3,000 sf house w/3 flat screens, granite counters, pergo floors and stainless steel appliances? Get with the program, man.
travertine
Around here, it's been termed "pergraniteel"... pergo + granite + stainless steel.The thinking was that you throw as much money you could into the granite counters and stainless steel appliances that no one would notice the pergo floors.
fha loan?
yes FHA. But I was amazed how little paperwork I showed to qualify. I showed three years of tax returns and my banking and brokerage accounts. They never asked for a list of my monthly expenses at all. I had also prepaid most of my 2009 taxes, but they never even asked for that info. Since that's a sizeable debt owed (stock market gains, income, etc), I easily could have looked like I had a lot more money than I did (when in fact I would have owed it to the IRS). The underwriter then just wanted two years of our LLC's taxes (making sure the company was making money) and that was it. Admittedly I have a good number of assets (savings, checking, brokerage, 401ks, have good credit rating and don't have bills, but I also have one of the more peculiar job situations in America. They really weren't ever worried about that which was a bit surprising to me. And at just 3.5% down in a slumping California market, this loan would appear to be very risky (in my opinion).
Which is exactly why they get what they deserve; people walking away and putting keys in the mailbox. I'm not sure what has to happen for these banks to start acting responsibly.
The 20% down comes from a time where the average house price was < $100k, people didn't have to fund their own retirements, pay for health insurance, etc. The reality is that we have far less disposable income than we have had historically.
And what do you think would happen if 20% down became the norm again? House prices would adjust accordingly. Home builders and resale sellers will not price themselves out of the market.
I understand that in rare instances neg-am loans can be useful, but I think that overall they're products that people abuse while living outside of their means. Buyers who can't even afford the interest payment (not to mention the principle) probably shouldn't be buying anyway.
Creative lenders will find a way around it. And borrowers know that the legislators will be there to rescue them from their own stupidity.
I would argue that if the 20% rule had stayed in effect, the house never would have been valued at 500k. In fact, since it is difficult for anyone to save up that kind of payment, that would drive the price of the home down.
Pretty tough to save 20% for a $700k+ house when you're already paying $2200/mo. in rent. For us though the hard part isn't the down payment but actually being approved for a loan.If you can't show the fiscal restraint to save 20% for a down payment, I question how serious you are towards making such a financial commitment. Sorry, not everyone should be a homeowner.And lenders obviously feel much more comfortable seeing their borrowers having more skin in the game. Not only does this help cushion the lender from declines in the housing market, but it also gives borrowers a much stronger disincentive from walking away during such declines.Besides, if you get the government to stop juicing the housing market through all of the subsidies, easy financing and easy monetary policies, prices would adjust accordingly at all income levels.I'd argue that 20% is too stringent. I'm not sure that the "pick-a-payment" NINJA loans we say the past 5-8 years that were often based on fraudulent applications means that we have to go back to 20%.Why not 10%, with strong underwriting? I just think 20% leaves out lots of folks on the lower end of the fiscal spectrum who are otherwise responsible and willing borrowers.That just makes too much sense. Don't you know that we are all entitled to a 5 BR, 3,000 sf house w/3 flat screens, granite counters, pergo floors and stainless steel appliances? Get with the program, man.
You think that the politicians (let alone the community) would let that much wealth be crushed? There's a lot of the nation's wealth tied up in real estate and unwinding that will take years of hard policy decisions. If steps are taken too quickly, the entire economy could flounder.What's needed is a steady 3-5% reduction in home prices, or at least 1% below inflation... steady deflation of the prices of real estate assets.That coupled with tighter lending practices should restore the both the balance of wealth tied up in real estate as well as the balance of renters vs. owners. Obviously it's lopsided now and many people agree on that part. How to get there is another story.Nonetheless, there's plenty of people like myself that have good, stable jobs with above median salary, little debt, and still no way to buy a home in today's market.
Yea, I was talking more in retrospect. As far as what to do now, I agree that it's not possible to just all of a sudden tighten up standards.If you have a stable job with above median salary, and still can't buy a home, you must live in California. That place is ####ed up.
I think Z is facing the same issues I'm facing; Z can probably buy a home now, but it just makes no sense based on historical housing data and current macroeconomic environment. Homes in many/most areas of CA still have a long way to fall to get back to normal price v. income levels. That coupled with 12% unemployment, stricter lending standards, and a mountain of foreclosures on the way suggest that waiting is still preferable in many areas.I agree with the "####ed up" part. It sucks that I'll probably be renting for another 2-3 years watching the price of the home I'll eventually buy continue to fall in value instead of being able to purchase it now and start building equity with my monthly payments. It's frustrating, but preferable to buying now and drowning as my house falls deeper and deeper underwater.
is it possible to do that for a while and work your way up? Get something that is affordable and livable but needs work...over time, pour in some sweat equity and after a few years, sell for a slight mark-up, roll over any appreciation you have, throw down some additional savings, and buy something a little closer to where you want to be. Repeat if necessary.I'm assuming you are a pretty handy guy...I'm sure tiling a bathroom, re-doing a floor, updating the landscaping, etc...these are all things that you can do on your own, don't have to cost a ton of money, and can really help turn an outdated house around.I know it's probably not the answer you want to hear because it's not immediate gratification, but I think that's how people eventually afford the $700k houses.
That may work in many places, but even the fixer uppers around here are $400k+. I'm not going to live in Richmond, Union City, or some other suburb that is borderline dangerous.Here's an example: my brother bought 1/2 a Victorian in SF in an OK "up and coming" (read: formerly ghetto) neighborhood. It was a Tenant-in-Common with the flat above. He's since split it into 2 condos, where there's separate titles. He's put in a new bathroom himself, and we're installing new hardwood floors right now. It's a 1 bedroom with a convertible 2nd bedroom that used to be the dining room. Probably 900 sq. ft.He paid ~$500k a few years ago for it. This was a fixer-upper. He could afford it because he only had to put 5% down. That's $25k. That same down payment at 20% down is $125k. Try finding ANYTHING in the Bay Area (regardless of ghetto or not) for $125k. Housing prices are so out of whack here...moleculo said:
That's pretty bad.
Keep in mind there might be other reasons. Tax bills would be one. Also, if there wasn't any equity, the bank could step in with an upset bid.FavreCo said:You gotta be kidding: http://finance.yahoo.com/news/At-foreclosu...ml?x=0&.v=1
But at a recent auction of about 100 foreclosed houses and condos, it was just Property No. 20 -- and drawing no bids from a roomful of buyers despite its bargain-basement price.
"Any interest in this home at $7,000?" fast-talking auctioneer Renee Jones asked the crowd. "If not, we'll move on."''
What are you paying 8% for? What is the commission the agent is charging? Also, figure you pay your legal fees but most other stuff would be picked up by the buyer.
I assume 3% and 3%... so aside from realtor fees is 2% average for selling a house minus realtor commission?I understand the realtor portion is negotiable.What are you paying 8% for? What is the commission the agent is charging? Also, figure you pay your legal fees but most other stuff would be picked up by the buyer.
Whether the loan products are good or not should be for the consumer to decide, not the government. If people were really held accountable for their actions, these products would not be so widespread.
We would already be on the rebound if Wash DC had let the market find the bottom. Expect another bill to continue to prop up prices and extend the tail spin.
you wouldn't be out anything as you wouldn't be selling it.also, people who are selling (i know as both myself and my fiance are selling our condos to buy a home) are willing to cut prices as they are sitting on 150%+ gains. if i only gain 150% instead of 200%, i am not crying in my milk. i am willing to cut prices on my place to sell in a reasonably short amount of time to get into a bigger home cheaper. what i save on a larger place is greater than what i will lose on a smaller place.Buying now in San Diego is absolutely idiotic. Reductions are everywhere, and the -1% YOY drop in the San Diego median last month isn't anywhere close to representing where the market is right now. Inventory at record highs and sales of 30% YOY, and prices just starting to dip, and you're advocating "buy now"?
Glad I didn't take your advice a few months ago on this place 2 blocks from my apartment, I'd be out $100,000:
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