How's your housing market? (1 Viewer)

[rick6668]

Foreclosures on Million Dollar Homes Surge

Foreclosures on million-dollar homes surge

More affluent folks are feeling squeezed and losing their mansions

In 2003, Robert Provost snapped up a $2.5 million villa with its own boat dock in Sarasota, Fla. A finance chief for an auto-sales chain, Mr. Provost earned more than $250,000 a year and had an impeccable credit history.

Then he lost his job. Mr. Provost missed one $10,500 mortgage payment, then another. This month, the 53-year-old put his house, a five-bedroom with sweeping views of an intercoastal waterway, on the market for $3.4 million. But the listing has thus far attracted little interest. Mr. Provost says he expects to receive a notice of default from the bank — the first step to foreclosure — in the next month or two.© 2008 The Wall Street Journal. All rights reserved.

People are still delusional. He's getting foreclosed on and he's still trying to sell his his house for 36 percent more than he paid for it 5 years ago. 36 percent appreciation in 5 years is not reasonable. Why not list it for $2.5 million and walk away? Because he's no doubt refinanced (probably several times), taking out big chunks of cash, and now owes $3.4 million. Hey, dude -- just because you owe $3.4 million on it doesn't mean anyone else wants to pay that much for it.

 

[Gr00vus]

Great, now that prices are coming down rates will go sky high, nobody will make loans and we'll probably lose our jobs. I'm going to start saving up cardboard boxes and water seal.

 

[tommyGunZ]

Great, now that prices are coming down rates will go sky high, nobody will make loans and we'll probably lose our jobs. I'm going to start saving up cardboard boxes and water seal.

all of these things will continue to push down housing prices.

 

[Gr00vus]

Great, now that prices are coming down rates will go sky high, nobody will make loans and we'll probably lose our jobs. I'm going to start saving up cardboard boxes and water seal.

all of these things will continue to push down housing prices.

Dude, no job = no house.

 

[OC Zed]

Foreclosures on Million Dollar Homes Surge

Foreclosures on million-dollar homes surge

More affluent folks are feeling squeezed and losing their mansions

In 2003, Robert Provost snapped up a $2.5 million villa with its own boat dock in Sarasota, Fla. A finance chief for an auto-sales chain, Mr. Provost earned more than $250,000 a year and had an impeccable credit history.

Then he lost his job. Mr. Provost missed one $10,500 mortgage payment, then another. This month, the 53-year-old put his house, a five-bedroom with sweeping views of an intercoastal waterway, on the market for $3.4 million. But the listing has thus far attracted little interest. Mr. Provost says he expects to receive a notice of default from the bank — the first step to foreclosure — in the next month or two.© 2008 The Wall Street Journal. All rights reserved.

People are still delusional. He's getting foreclosed on and he's still trying to sell his his house for 36 percent more than he paid for it 5 years ago. 36 percent appreciation in 5 years is not reasonable. Why not list it for $2.5 million and walk away? Because he's no doubt refinanced (probably several times), taking out big chunks of cash, and now owes $3.4 million. Hey, dude -- just because you owe $3.4 million on it doesn't mean anyone else wants to pay that much for it.

...Because in all likelihood since Mr. Provost bought his home in 2005 for $2.5mm, he took more and more money out of the home via cash-out refis or HELOCs. That $3.4mm figure is likely his break-even figure on the existing debt. Oh, and what did he use with that $900,000 he took out of his home? Expensive cars, decadent vacations, gaudy furniture, etc... everything that has been fueling our overleveraged economy the past 5 years.Folks, you see 10x more of these kind of borrowers in foreclosure than the imaginary poor, dumb borrowers that were lured into mortgages they did not understand by boogie-man mortgage brokers. Let's think long and hard the next time our politicians present us with their next housing bailout plan.

 

[OC Zed]

Great, now that prices are coming down rates will go sky high, nobody will make loans and we'll probably lose our jobs. I'm going to start saving up cardboard boxes and water seal.

all of these things will continue to push down housing prices.

Dude, no job = no house.

So... you would prefer to see our government (really, responsible borrowers, savers and taxpayers) keep home prices artificially high? Do you really think that is a better alternative here? Dying to hear your answer on this...

 

[Gr00vus]

Great, now that prices are coming down rates will go sky high, nobody will make loans and we'll probably lose our jobs. I'm going to start saving up cardboard boxes and water seal.

all of these things will continue to push down housing prices.

Dude, no job = no house.

So... you would prefer to see our government (really, responsible borrowers, savers and taxpayers) keep home prices artificially high? Do you really think that is a better alternative here? Dying to hear your answer on this...

Why does wanting to have a job mean I want housing prices to be artificially high?

 

[OC Zed]

Great, now that prices are coming down rates will go sky high, nobody will make loans and we'll probably lose our jobs. I'm going to start saving up cardboard boxes and water seal.

all of these things will continue to push down housing prices.

Dude, no job = no house.

So... you would prefer to see our government (really, responsible borrowers, savers and taxpayers) keep home prices artificially high? Do you really think that is a better alternative here? Dying to hear your answer on this...

Why does wanting to have a job mean I want housing prices to be artificially high?

I thought you were implying that housing prices ought to remain high. If that was not what you meant, then my bad.

 

[Gr00vus]

Now Dig This:

Fannie and Freddie suspend foreclosures

By halting evictions, the mortgage giants get time to implement a recent rescue plan.

By Les Christie, CNNMoney.com staff writer

Last Updated: November 20, 2008: 6:01 PM ET

NEW YORK (CNNMoney.com) -- Mortgage giants Fannie Mae and Freddie Mac have directed their network of servicers to halt all foreclosure and eviction proceedings between Nov. 26 2008 and Jan. 9, 2009, meant to give a recently announced rescue plan time to work.

The Streamlined Modification Program, set to launch Dec. 15, enables delinquent borrowers to get a modified mortgage that lowers payments to no more than 38% of their gross incomes.

"By delaying these foreclosure sales, the nation's servicers will have the opportunity to work with more borrowers who could qualify for a modification under the new [program]," said Freddie Mac CEO David M. Moffett in a statement.

Freddie has told its servicers to immediately contact the 6,000 borrowers who already have auction sales or evictions scheduled for between the specified dates to tell them the sales are postponed. Fannie estimated that 10,000 of its borrowers will be affected. Borrowers facing eviction between Nov. 20 and Nov. 26 were not expected to get relief.

The foreclosure suspension affects only a small percentage of homeowners facing foreclosure over the next two months. Although Fannie and Freddie mortgages account for more than half of all mortgages, they have relatively few of the most risky subprime loans at the center of the foreclosure crisis.

"The vast majority of what's going into foreclosure are not Fannie Freddie loans," said Freddie Mac spokesman Brad German.

The Fannie, Freddie plan was unveiled on Nov. 11. Eligibility is determined by several factors: Homeowners must be 90 days or more late in their mortgage payments, owe at least 90% of their home's current value, live in the home on which the mortgage was taken and have not filed for bankruptcy.

The mortgage rate could be lowered to as little as 3% for five years. After that, it would increase by 1 percentage point a year until it hits either the market rate or the original interest rate, whichever is lower.

Unlike previous federal efforts, participation by servicers is not voluntary.

Several major servicers -- including Bank of America, JPMorgan Chase and Citigroup -- have recently announced expansions of their foreclosure prevention efforts, which could aid nearly a million more borrowers.

I'm sure this is just the start of this kind of thing. I'm not sure I have a problem with it, since it's the lenders basically realizing they can't afford to foreclose and unilaterally adjusting their rates.

 

[tommyGunZ]

More shenanigans. Despite everyone's best efforts, the market is going to force prices back down to levels where regular folks can afford a regular house.

This is just delaying the inevitable, if even that. In effect, current renters are building equity every month by not buying.

 

[Gr00vus]

More shenanigans. Despite everyone's best efforts, the market is going to force prices back down to levels where regular folks can afford a regular house. This is just delaying the inevitable, if even that. In effect, current renters are building equity every month by not buying.

Don't you think we're beyond the point where we're talking about affecting home prices in a positive way anymore? I can't see a ton of buyers at this point in time regardless of what happens with foreclosures, and as a result I can't see prices going up at all, at best they settle in, but I think that's even unlikely. I think this kind of thing needs to happen now, otherwise we're going to be looking at a lot more homeless people and a lot more businesses going under pretty soon that will drag other, previously non-extended, people down with them.

 

[tommyGunZ]

More shenanigans. Despite everyone's best efforts, the market is going to force prices back down to levels where regular folks can afford a regular house. This is just delaying the inevitable, if even that. In effect, current renters are building equity every month by not buying.

Don't you think we're beyond the point where we're talking about affecting home prices in a positive way anymore? I can't see a ton of buyers at this point in time regardless of what happens with foreclosures, and as a result I can't see prices going up at all, at best they settle in, but I think that's even unlikely. I think this kind of thing needs to happen now, otherwise we're going to be looking at a lot more homeless people and a lot more businesses going under pretty soon that will drag other, previously non-extended, people down with them.

Agreed with re: to the greater economy. I'm very, very worried.The housing stuff is a done deal. We're going back to pre-2000 prices in SD. If I had bought in the last 3-4 years in San Diego, I'd stop paying my mortgage right now.

 

[OC Zed]

Now Dig This:

Fannie and Freddie suspend foreclosures

By halting evictions, the mortgage giants get time to implement a recent rescue plan.

By Les Christie, CNNMoney.com staff writer

Last Updated: November 20, 2008: 6:01 PM ET

NEW YORK (CNNMoney.com) -- Mortgage giants Fannie Mae and Freddie Mac have directed their network of servicers to halt all foreclosure and eviction proceedings between Nov. 26 2008 and Jan. 9, 2009, meant to give a recently announced rescue plan time to work.

The Streamlined Modification Program, set to launch Dec. 15, enables delinquent borrowers to get a modified mortgage that lowers payments to no more than 38% of their gross incomes.

"By delaying these foreclosure sales, the nation's servicers will have the opportunity to work with more borrowers who could qualify for a modification under the new [program]," said Freddie Mac CEO David M. Moffett in a statement.

Freddie has told its servicers to immediately contact the 6,000 borrowers who already have auction sales or evictions scheduled for between the specified dates to tell them the sales are postponed. Fannie estimated that 10,000 of its borrowers will be affected. Borrowers facing eviction between Nov. 20 and Nov. 26 were not expected to get relief.

The foreclosure suspension affects only a small percentage of homeowners facing foreclosure over the next two months. Although Fannie and Freddie mortgages account for more than half of all mortgages, they have relatively few of the most risky subprime loans at the center of the foreclosure crisis.

"The vast majority of what's going into foreclosure are not Fannie Freddie loans," said Freddie Mac spokesman Brad German.

The Fannie, Freddie plan was unveiled on Nov. 11. Eligibility is determined by several factors: Homeowners must be 90 days or more late in their mortgage payments, owe at least 90% of their home's current value, live in the home on which the mortgage was taken and have not filed for bankruptcy.

The mortgage rate could be lowered to as little as 3% for five years. After that, it would increase by 1 percentage point a year until it hits either the market rate or the original interest rate, whichever is lower.

Unlike previous federal efforts, participation by servicers is not voluntary.

Several major servicers -- including Bank of America, JPMorgan Chase and Citigroup -- have recently announced expansions of their foreclosure prevention efforts, which could aid nearly a million more borrowers.

I'm sure this is just the start of this kind of thing. I'm not sure I have a problem with it, since it's the lenders basically realizing they can't afford to foreclose and unilaterally adjusting their rates.

This only delays the market from correcting itself and provides a handout to those people who made the most reckless decisions. Awful.

 

[OC Zed]

More shenanigans. Despite everyone's best efforts, the market is going to force prices back down to levels where regular folks can afford a regular house. This is just delaying the inevitable, if even that. In effect, current renters are building equity every month by not buying.

Don't you think we're beyond the point where we're talking about affecting home prices in a positive way anymore? I can't see a ton of buyers at this point in time regardless of what happens with foreclosures, and as a result I can't see prices going up at all, at best they settle in, but I think that's even unlikely. I think this kind of thing needs to happen now, otherwise we're going to be looking at a lot more homeless people and a lot more businesses going under pretty soon that will drag other, previously non-extended, people down with them.

First, we certainly would not have hyper sales volume without the GSEs' market distortions, but volume would be a hell of lot greater than it is now if prices were allowed to reach a natural equilibrium. And don't forget the lack of sales volume is killing a number of industries as well - all the way from homebuilders to contractors to retailers, etc.Second, foreclosed homeowners <> homeless people... they simply go back to renting which should not be considered a punitive measure by any means.Third, the "foreclosures dragging down the neighborhood" argument just does not compute. The foreclosure price equals the market price. Foreclosures are only indicative of the problem - not the problem itself.

 

[the rover]

Washington State home sales have the biggest drop in the country. The decline started later here (partially driven by people selling in more expensive areas and moving here), but has caught up now.

Link

 

[OC Zed]

Just FYI, from a market update I get that doesn't usually talk about the housing market

But as a side note...the old "Maestro" himself, former Fed Chairman Alan Greenspan was in the news yesterday, saying the current economic downturn was “likely temporary.” Greenspan also noted the worst of the housing market slump is likely past us. During a Q&A session at the annual Charles Schwab Impact conference in Washington , DC, Big Al stated “The economy is obviously going through a significant slowing period, which as best I can tell is more than likely temporary. And while the housing market is not out of the woods yet, the current slump may not worsen.” A little cryptic in his trademark style...but if he's right, this could point to a good buying opportunity for homes right now.

We'll see. I obviously disagree - the economy is cooling significantly, GDP at 1.6 was far worse than anyone projected and I side with analysts who say the next report will be even worse.

Tommy, when you start disagreeing with Greenspan, perhaps it's time for some reflection.

 

[OC Zed]

San Diego's peak median home price last Nov was 518k.  Last month was the first month in a decade, and that negative was -1% (median fell from 493k to 488k).  Assuming the next 5 months decline ~ the same rate as the past 7 months (a very conservative estimate), the median may be around 470k thru Nov. 

That's almost a 10% decline at the beginning of this downturn, heading into Dec, Jan, and Feb, 3 months of traditionally sluggish RE activity.

Again, inventory records are being rewritten everyday in San Diego, and YOY sales numbers are off 20 and 30% consistantly this year.  These figures do not foretell a soft landing folks.

I don't think anyone is debating a "hard landing", but historically a "hard landing" is a 20% drop in 5 years. You are talking about a 50% drop in two. I won't argue that it's not impossible for some parts of San Diego to drop 50%, but for the median home to drop 50% would be quite something. From what I am reading SD as a whole is considered 40% overvalued and that's using 2006 Q1 data where I believe SD had already come down some. Gaining all of that back and then some with a good economy, still historically low interest rates, in a span of two years just seems out there.

I am not sure where San Diego is right now in the market correction, but Orange County is currently 35% off of its median peak set in 2007 and the downward trend is only speeding up. Ironically, the median here will only start to rise higher once all of the distressed homes in the upper tier markets finally capitulate in price and get sold via foreclosure or short sale.This thread is like flipping through an old photo album and getting a chuckle out of all the bad hair and clothing styles.

 

[tommyGunZ]

This thread is like flipping through an old photo album and getting a chuckle out of all the bad hair and clothing styles.

Yeah, and all I was doing was looking at the data. I'm an average joe, with average intelligence, who doesn't work in the RE industry, but it was painfully obvious that the music had stopped and that we were in for a historic decline.Yet many who had actually profited from the market or had a vested interest refused to believe the facts. Mind boggling. Just goes to show how irrational otherwise intelligent people can be.

 

[tommyGunZ]

Washington State home sales have the biggest drop in the country. The decline started later here (partially driven by people selling in more expensive areas and moving here), but has caught up now.

Link

You've consistently been ahead of the curve, playing the market for a windfall in recent years. Have you sold and started renting yet? Or do you have plans to sell and rent soon?

 

[BassNBrew]

Putting an offer in on a 2 bdrm, 1 ba tomorrow at $14K, expecting to settle at $16.5. Some investor completely re-did the interior and then walked. Will need to put in a HVAC system as the current one was stolen. It should rent for $395-$425. Five years and it will be paid for. Unfortunately I will have to pull 401K funds to pay for it, but what good is the stock market doing anyway?

 

[tommyGunZ]

Putting an offer in on a 2 bdrm, 1 ba tomorrow at $14K, expecting to settle at $16.5. Some investor completely re-did the interior and then walked. Will need to put in a HVAC system as the current one was stolen. It should rent for $395-$425. Five years and it will be paid for. Unfortunately I will have to pull 401K funds to pay for it, but what good is the stock market doing anyway?

wow - 15k won't get you a parking space out here. Credit market still tight, eh BNB?

 

[BassNBrew]

Putting an offer in on a 2 bdrm, 1 ba tomorrow at $14K, expecting to settle at $16.5. Some investor completely re-did the interior and then walked. Will need to put in a HVAC system as the current one was stolen. It should rent for $395-$425. Five years and it will be paid for. Unfortunately I will have to pull 401K funds to pay for it, but what good is the stock market doing anyway?

wow - 15k won't get you a parking space out here. Credit market still tight, eh BNB?

Yup. Four house max criteria still in place preventing me from getting any mortgages. Unfortunately I'm stuck in my current home because if I sell it I wouldn't be able to get a mortgage on another home.I'm not thrilled about buying in the hood (probably would prefer to live in a tent in your parking space), but the cashflow will help my balance sheet as I prep for commercial money in the future.

 

[David Dodds]

The market here in the foothills of Northern California is absolutely stagnant. I am currently renting and have the cash to get a great house based on these slumping prices. But when I go to these open houses, I find few people even interested in these houses.

Homes that Zillow listed at 650K-700K (2500 sqft on 1-2 acres) at the peak in this foothill community now get no nibbles at $375-$400K.

I fell in love with one such house:

2868 sqft

2.3 acres

built in 2006 and never been lived in

and all of this for $390K

My gut tells me this is a steal of a lifetime. But as I type this, there are two other houses that are almost just as attractive (same house also built in 2006 on 1.3 acres with better view for $359K, and a beautifully upgraded 2,637 sqft house on an acre for $398K).

But despite what feels like absolute steals, I am going to wait this out a bit longer and see where the economy goes. My sense is that the prices are headed even lower here.

 

[OC Zed]

Putting an offer in on a 2 bdrm, 1 ba tomorrow at $14K, expecting to settle at $16.5. Some investor completely re-did the interior and then walked. Will need to put in a HVAC system as the current one was stolen. It should rent for $395-$425. Five years and it will be paid for. Unfortunately I will have to pull 401K funds to pay for it, but what good is the stock market doing anyway?

That's $14,000 and $16,500??? Amazing.So if my math is right and you purchase $16,500 and rent it out at $400/month, that will give you price-to-rent ratio of 3.44. That's a ridiculously good investment (I am simplifying this by leaving out all of the other costs of ownership, but still...).

This is a good article on price-to-rent ratios and market fundamentals for anyone interested.

 

[Michael Fox Fan]

The market here in the foothills of Northern California is absolutely stagnant. I am currently renting and have the cash to get a great house based on these slumping prices. But when I go to these open houses, I find few people even interested in these houses.Homes that Zillow listed at 650K-700K (2500 sqft on 1-2 acres) at the peak in this foothill community now get no nibbles at $375-$400K. I fell in love with one such house:2868 sqft2.3 acresbuilt in 2006 and never been lived inand all of this for $390KMy gut tells me this is a steal of a lifetime. But as I type this, there are two other houses that are almost just as attractive (same house also built in 2006 on 1.3 acres with better view for $359K, and a beautifully upgraded 2,637 sqft house on an acre for $398K).But despite what feels like absolute steals, I am going to wait this out a bit longer and see where the economy goes. My sense is that the prices are headed even lower here.

That's the thing David, there is really very little risk of waiting.....it is extremely unlikely that the price of real estate suddenly skyrockets. All you have is upside (buy at a cheaper price) if you wait, vs. the potentially large downside (value plummets after you buy) if you purchase now. Seems like a clear choice.Unfortunately, my wife is giddy to buy right now. Ugh.

 

[tommyGunZ]

But despite what feels like absolute steals, I am going to wait this out a bit longer and see where the economy goes. My sense is that the prices are headed even lower here.

Hard to imagine how tight credit, rising unemployment, a deep recession, high inventory, and low sales could result in rising housing prices.

 

[OC Zed]

The market here in the foothills of Northern California is absolutely stagnant. I am currently renting and have the cash to get a great house based on these slumping prices. But when I go to these open houses, I find few people even interested in these houses.

Homes that Zillow listed at 650K-700K (2500 sqft on 1-2 acres) at the peak in this foothill community now get no nibbles at $375-$400K.

I fell in love with one such house:

2868 sqft

2.3 acres

built in 2006 and never been lived in

and all of this for $390K

My gut tells me this is a steal of a lifetime. But as I type this, there are two other houses that are almost just as attractive (same house also built in 2006 on 1.3 acres with better view for $359K, and a beautifully upgraded 2,637 sqft house on an acre for $398K).

But despite what feels like absolute steals, I am going to wait this out a bit longer and see where the economy goes. My sense is that the prices are headed even lower here.

That's the thing David, there is really very little risk of waiting.....it is extremely unlikely that the price of real estate suddenly skyrockets. All you have is upside (buy at a cheaper price) if you wait, vs. the potentially large downside (value plummets after you buy) if you purchase now. Seems like a clear choice.Unfortunately, my wife is giddy to buy right now. Ugh.

Show her the full chronology of this thread to scare her straight.Along that same line... The Great Housing Bubble has received good reviews. Maybe this would be a good stocking stuffer for her?

 

[Michael Fox Fan]

The market here in the foothills of Northern California is absolutely stagnant. I am currently renting and have the cash to get a great house based on these slumping prices. But when I go to these open houses, I find few people even interested in these houses.

Homes that Zillow listed at 650K-700K (2500 sqft on 1-2 acres) at the peak in this foothill community now get no nibbles at $375-$400K.

I fell in love with one such house:

2868 sqft

2.3 acres

built in 2006 and never been lived in

and all of this for $390K

My gut tells me this is a steal of a lifetime. But as I type this, there are two other houses that are almost just as attractive (same house also built in 2006 on 1.3 acres with better view for $359K, and a beautifully upgraded 2,637 sqft house on an acre for $398K).

But despite what feels like absolute steals, I am going to wait this out a bit longer and see where the economy goes. My sense is that the prices are headed even lower here.

That's the thing David, there is really very little risk of waiting.....it is extremely unlikely that the price of real estate suddenly skyrockets. All you have is upside (buy at a cheaper price) if you wait, vs. the potentially large downside (value plummets after you buy) if you purchase now. Seems like a clear choice.Unfortunately, my wife is giddy to buy right now. Ugh.

Show her the full chronology of this thread to scare her straight.Along that same line... The Great Housing Bubble has received good reviews. Maybe this would be a good stocking stuffer for her?

Thx dude. She'd just see this thread as more propoganda. She's convinced I simply don't want to ever own a house. Which is borderline true. But in this case, I really expect prices to keep falling.Thx forr the book rec.

 

[tommyGunZ]

Unfortunately, my wife is giddy to buy right now. Ugh.

Go over the data with her MFox. Show her how it is virtually impossible for prices to rise in the near future due to all the economic factors killing our economy right now. Point out how if you'd have bought at this time last year, you'd be down 10-20% already. Show her how much per month you've saved over the past year by staying on the sidelines. Cash (renting) is a position. I'm lucky - my wife is extremely sharp and after going over the numbers and showing her how much we are saving per month by renting, her eagerness to buy quickly subsided. In a market that's falling 1-2% per month, you're saving $4k-$8k per month on a 400k home just by waiting. Not to mention the fact that rents are cheaper than mortgages, so you're able to save that money every month as well. Once your wife sees that the quality of the house you can purchase next year for the same price is dramatically higher, she's be more patient. At least that was the case in my household."Pride of ownership" has been extremely expensive the past few years.

 

[Michael Fox Fan]

Unfortunately, my wife is giddy to buy right now. Ugh.

Go over the data with her MFox. Show her how it is virtually impossible for prices to rise in the near future due to all the economic factors killing our economy right now. Point out how if you'd have bought at this time last year, you'd be down 10-20% already. Show her how much per month you've saved over the past year by staying on the sidelines. Cash (renting) is a position. I'm lucky - my wife is extremely sharp and after going over the numbers and showing her how much we are saving per month by renting, her eagerness to buy quickly subsided. In a market that's falling 1-2% per month, you're saving $4k-$8k per month on a 400k home just by waiting. Not to mention the fact that rents are cheaper than mortgages, so you're able to save that money every month as well. Once your wife sees that the quality of the house you can purchase next year for the same price is dramatically higher, she's be more patient. At least that was the case in my household."Pride of ownership" has been extremely expensive the past few years.

I'm not lucky - my wife isn't very sharp. We've had this debate literally for about 5 years now. She gets the math and understands the downside risk. But while she used to be patient ....and willing to rent.....now that we have 2 kids, she wants to "nest". It's like switch was flipped.Anyway, great suggestions tgunz. I'll try to use logic once more, along with the emotional appeal of "think how much BETTER of a house we could afford in 1 more year!" [brilliant suggestion BTW!]

 

[BassNBrew]

Unfortunately, my wife is giddy to buy right now. Ugh.

Go over the data with her MFox. Show her how it is virtually impossible for prices to rise in the near future due to all the economic factors killing our economy right now. Point out how if you'd have bought at this time last year, you'd be down 10-20% already. Show her how much per month you've saved over the past year by staying on the sidelines. Cash (renting) is a position. I'm lucky - my wife is extremely sharp and after going over the numbers and showing her how much we are saving per month by renting, her eagerness to buy quickly subsided. In a market that's falling 1-2% per month, you're saving $4k-$8k per month on a 400k home just by waiting. Not to mention the fact that rents are cheaper than mortgages, so you're able to save that money every month as well. Once your wife sees that the quality of the house you can purchase next year for the same price is dramatically higher, she's be more patient. At least that was the case in my household."Pride of ownership" has been extremely expensive the past few years.

I'm not lucky - my wife isn't very sharp. We've had this debate literally for about 5 years now. She gets the math and understands the downside risk. But while she used to be patient ....and willing to rent.....now that we have 2 kids, she wants to "nest". It's like switch was flipped.Anyway, great suggestions tgunz. I'll try to use logic once more, along with the emotional appeal of "think how much BETTER of a house we could afford in 1 more year!" [brilliant suggestion BTW!]

Better suggestion....tell her to put the purchase in her name only, you'll be glad to pay her rent.

 

[BassNBrew]

Putting an offer in on a 2 bdrm, 1 ba tomorrow at $14K, expecting to settle at $16.5. Some investor completely re-did the interior and then walked. Will need to put in a HVAC system as the current one was stolen. It should rent for $395-$425. Five years and it will be paid for. Unfortunately I will have to pull 401K funds to pay for it, but what good is the stock market doing anyway?

That's $14,000 and $16,500??? Amazing.So if my math is right and you purchase $16,500 and rent it out at $400/month, that will give you price-to-rent ratio of 3.44. That's a ridiculously good investment (I am simplifying this by leaving out all of the other costs of ownership, but still...).

This is a good article on price-to-rent ratios and market fundamentals for anyone interested.

Yup, those numbers are correct. The numbers are amzing enough to pay the 10% 401K penalty. $4800

-$400 taxes

-$300 insurance

-$800 vacancy

-$500 repairs and stuff

= $2800

figuring $20000 to might it right to begin with

$2800/$20000 = 14% return

 

[OC Zed]

Unfortunately, my wife is giddy to buy right now. Ugh.

Go over the data with her MFox. Show her how it is virtually impossible for prices to rise in the near future due to all the economic factors killing our economy right now. Point out how if you'd have bought at this time last year, you'd be down 10-20% already. Show her how much per month you've saved over the past year by staying on the sidelines. Cash (renting) is a position. I'm lucky - my wife is extremely sharp and after going over the numbers and showing her how much we are saving per month by renting, her eagerness to buy quickly subsided. In a market that's falling 1-2% per month, you're saving $4k-$8k per month on a 400k home just by waiting. Not to mention the fact that rents are cheaper than mortgages, so you're able to save that money every month as well. Once your wife sees that the quality of the house you can purchase next year for the same price is dramatically higher, she's be more patient. At least that was the case in my household."Pride of ownership" has been extremely expensive the past few years.

I'm not lucky - my wife isn't very sharp. We've had this debate literally for about 5 years now. She gets the math and understands the downside risk. But while she used to be patient ....and willing to rent.....now that we have 2 kids, she wants to "nest". It's like switch was flipped.Anyway, great suggestions tgunz. I'll try to use logic once more, along with the emotional appeal of "think how much BETTER of a house we could afford in 1 more year!" [brilliant suggestion BTW!]

What about renting a house with a yard? That would give you guys more space at a much cheaper cost than a monthly mortgage payment...

 

[BassNBrew]

Putting an offer in on a 2 bdrm, 1 ba tomorrow at $14K, expecting to settle at $16.5. Some investor completely re-did the interior and then walked. Will need to put in a HVAC system as the current one was stolen. It should rent for $395-$425. Five years and it will be paid for. Unfortunately I will have to pull 401K funds to pay for it, but what good is the stock market doing anyway?

That's $14,000 and $16,500??? Amazing.So if my math is right and you purchase $16,500 and rent it out at $400/month, that will give you price-to-rent ratio of 3.44. That's a ridiculously good investment (I am simplifying this by leaving out all of the other costs of ownership, but still...).

This is a good article on price-to-rent ratios and market fundamentals for anyone interested.

Update: Bank said this morning to give them our highest and best offer. That tipped us off that we were going to get a steal so we actually reduced the offer to a hair under $14K net. That doesn't include the commission we'll get back either. Bottom line is that I'm $2500 under where I expected. Better news, the stock fund where I'm drawing the money from was up about $7K in the last hour of today's market. Put a sell order in at 3:59. So in less than a day a great deal just got $10500 beter.

 

[Gr00vus]

Putting an offer in on a 2 bdrm, 1 ba tomorrow at $14K, expecting to settle at $16.5. Some investor completely re-did the interior and then walked. Will need to put in a HVAC system as the current one was stolen. It should rent for $395-$425. Five years and it will be paid for. Unfortunately I will have to pull 401K funds to pay for it, but what good is the stock market doing anyway?

That's $14,000 and $16,500??? Amazing.So if my math is right and you purchase $16,500 and rent it out at $400/month, that will give you price-to-rent ratio of 3.44. That's a ridiculously good investment (I am simplifying this by leaving out all of the other costs of ownership, but still...).

This is a good article on price-to-rent ratios and market fundamentals for anyone interested.

Update: Bank said this morning to give them our highest and best offer. That tipped us off that we were going to get a steal so we actually reduced the offer to a hair under $14K net. That doesn't include the commission we'll get back either. Bottom line is that I'm $2500 under where I expected. Better news, the stock fund where I'm drawing the money from was up about $7K in the last hour of today's market. Put a sell order in at 3:59. So in less than a day a great deal just got $10500 beter.

Nice!

 

[tommyGunZ]

Putting an offer in on a 2 bdrm, 1 ba tomorrow at $14K, expecting to settle at $16.5. Some investor completely re-did the interior and then walked. Will need to put in a HVAC system as the current one was stolen. It should rent for $395-$425. Five years and it will be paid for. Unfortunately I will have to pull 401K funds to pay for it, but what good is the stock market doing anyway?

That's $14,000 and $16,500??? Amazing.So if my math is right and you purchase $16,500 and rent it out at $400/month, that will give you price-to-rent ratio of 3.44. That's a ridiculously good investment (I am simplifying this by leaving out all of the other costs of ownership, but still...).

This is a good article on price-to-rent ratios and market fundamentals for anyone interested.

Update: Bank said this morning to give them our highest and best offer. That tipped us off that we were going to get a steal so we actually reduced the offer to a hair under $14K net. That doesn't include the commission we'll get back either. Bottom line is that I'm $2500 under where I expected. Better news, the stock fund where I'm drawing the money from was up about $7K in the last hour of today's market. Put a sell order in at 3:59. So in less than a day a great deal just got $10500 beter.

Nicely done BnB. Treat yourself to High Life bottles instead of cans tonight.

 

[BassNBrew]

Putting an offer in on a 2 bdrm, 1 ba tomorrow at $14K, expecting to settle at $16.5. Some investor completely re-did the interior and then walked. Will need to put in a HVAC system as the current one was stolen. It should rent for $395-$425. Five years and it will be paid for. Unfortunately I will have to pull 401K funds to pay for it, but what good is the stock market doing anyway?

That's $14,000 and $16,500??? Amazing.So if my math is right and you purchase $16,500 and rent it out at $400/month, that will give you price-to-rent ratio of 3.44. That's a ridiculously good investment (I am simplifying this by leaving out all of the other costs of ownership, but still...).

This is a good article on price-to-rent ratios and market fundamentals for anyone interested.

Update: Bank said this morning to give them our highest and best offer. That tipped us off that we were going to get a steal so we actually reduced the offer to a hair under $14K net. That doesn't include the commission we'll get back either. Bottom line is that I'm $2500 under where I expected. Better news, the stock fund where I'm drawing the money from was up about $7K in the last hour of today's market. Put a sell order in at 3:59. So in less than a day a great deal just got $10500 beter.

Nicely done BnB. Treat yourself to High Life bottles instead of cans tonight.

The Champange of Beers

 

[OC Zed]

But I thought the ultra-high end was immune?

 

[tommyGunZ]

But I thought the ultra-high end was immune?

My favorite part, the realtor scare tactic at the end of the article:

Those kinds of deals will only get better in the months ahead. Then, at some point, the economy will turn, unleashing pent-up demand for luxury homes of all kinds. "When there's finally some good news," says Nelson Gonzalez of Miami realty firm Esslinger Wooten Maxwell, "this market is going to come roaring back in a big way."

 

[RoarinSonoran]

A radio caller, a waitress in Scottsdale, said that she's been seeing a lot of Canadian customers lately. Last night she asked one what was up with all the Canucks, and he said they're getting Visas to come here to buy houses, with the US eventually becoming a "New Canada".

So, it looks like the Phoenix housing market will be picking up, however Woz and LHUCKS will need to watch "Bob and Doug McKenzie's Strange Brew" so they can work on their accents. :hosers:

 

[tommyGunZ]

A radio caller, a waitress in Scottsdale, said that she's been seeing a lot of Canadian customers lately. Last night she asked one what was up with all the Canucks, and he said they're getting Visas to come here to buy houses, with the US eventually becoming a "New Canada".

So, it looks like the Phoenix housing market will be picking up, however Woz and LHUCKS will need to watch "Bob and Doug McKenzie's Strange Brew" so they can work on their accents. :hosers:

Anecdotal evidence is cool and all, but the numbers suggest the Phoenix market isn't picking up at all, in fact it's getting worse according to the Case Shiller report released yesterday:

The weakest housing market nationally was Phoenix, where prices tumbled 31.9 percent from a year earlier. Las Vegas was down more than 30 percent.

San Diego was down over 26% year over year. And remember, Case Shiller numbers are two months behind, so while they're far more accurate than plain vanilla month median numbers, they are a lagging indicator. With the economic cliff we've fallen off since then, these numbers likely underestimate the weakness of the housing market.It's going to get a lot worse in bubble areas before it gets better.

 

[The Z Machine]

A radio caller, a waitress in Scottsdale, said that she's been seeing a lot of Canadian customers lately. Last night she asked one what was up with all the Canucks, and he said they're getting Visas to come here to buy houses, with the US eventually becoming a "New Canada".

So, it looks like the Phoenix housing market will be picking up, however Woz and LHUCKS will need to watch "Bob and Doug McKenzie's Strange Brew" so they can work on their accents. :hosers:

Anecdotal evidence is cool and all, but the numbers suggest the Phoenix market isn't picking up at all, in fact it's getting worse according to the Case Shiller report released yesterday:

The weakest housing market nationally was Phoenix, where prices tumbled 31.9 percent from a year earlier. Las Vegas was down more than 30 percent.

San Diego was down over 26% year over year. And remember, Case Shiller numbers are two months behind, so while they're far more accurate than plain vanilla month median numbers, they are a lagging indicator. With the economic cliff we've fallen off since then, these numbers likely underestimate the weakness of the housing market.It's going to get a lot worse in bubble areas before it gets better.

Could you look up the numbers for SF, Oakland, and Berkeley? kthx

 

[tommyGunZ]

Could you look up the numbers for SF, Oakland, and Berkeley? kthx

Anything for you brother Z.

"There wasn't a good number in there, but these numbers don't really reflect what's happening now," said Patrick Newport, U.S. economist with Englewood, Colo., consulting firm IHS Global Insight, noting that the bad economic news began midway through September and has worsened since. "We should expect really awful housing (data) for the rest of the year."

Among the 20 cities tracked by Case-Shiller, the San Francisco metropolitan region experienced the third-largest annual plunge, 29.5 percent, and by far the largest monthly decline, 3.9 percent. Case-Shiller defines the area as Alameda, Contra Costa, Marin, San Francisco and San Mateo counties. Phoenix led the list with a 31.9 percent annual decline, followed by Las Vegas at 31.3 percent.

A more up-to-date report released Tuesday also showed worsening conditions in California, but not in as dramatic a fashion as some had expected.

The California Association of Realtors said the median price for existing single-family homes fell 39.9 percent in October from the same month last year to $311,060. That was down 1.9 percent from September and fell short of the revised record annual decline set last month of 40.8 percent.

Transactions across California rose 117.1 percent, reaching an annual level not seen since late 2005, largely due to rising sales of priced-to-move foreclosed or distressed properties.

The median declined to $520,920 in the Bay Area, down 35.8 percent annually. The Los Angeles trade group defines the region as San Francisco, Alameda, Contra Costa, Marin, Solano, Santa Clara and San Mateo counties.

Per the numbers, the median price in the Bay Area fell 3.9 in one month. If the median was ~ 540k last month, that means prices fell ~ 21k last month.Why would ANYONE buy when prices are collapsing this fast?

 

[The Z Machine]

Could you look up the numbers for SF, Oakland, and Berkeley? kthx

Anything for you brother Z.

"There wasn't a good number in there, but these numbers don't really reflect what's happening now," said Patrick Newport, U.S. economist with Englewood, Colo., consulting firm IHS Global Insight, noting that the bad economic news began midway through September and has worsened since. "We should expect really awful housing (data) for the rest of the year."

Among the 20 cities tracked by Case-Shiller, the San Francisco metropolitan region experienced the third-largest annual plunge, 29.5 percent, and by far the largest monthly decline, 3.9 percent. Case-Shiller defines the area as Alameda, Contra Costa, Marin, San Francisco and San Mateo counties. Phoenix led the list with a 31.9 percent annual decline, followed by Las Vegas at 31.3 percent.

A more up-to-date report released Tuesday also showed worsening conditions in California, but not in as dramatic a fashion as some had expected.

The California Association of Realtors said the median price for existing single-family homes fell 39.9 percent in October from the same month last year to $311,060. That was down 1.9 percent from September and fell short of the revised record annual decline set last month of 40.8 percent.

Transactions across California rose 117.1 percent, reaching an annual level not seen since late 2005, largely due to rising sales of priced-to-move foreclosed or distressed properties.

The median declined to $520,920 in the Bay Area, down 35.8 percent annually. The Los Angeles trade group defines the region as San Francisco, Alameda, Contra Costa, Marin, Solano, Santa Clara and San Mateo counties.

Per the numbers, the median price in the Bay Area fell 3.9 in one month. If the median was ~ 540k last month, that means prices fell ~ 21k last month.Why would ANYONE buy when prices are collapsing this fast?

I recently had the guys in the machine shop here at work try to convince me that it was a "great" and "perfect" time to buy a house. "It's like getting the property 30% off!".Yeah but... prices are STILL going down AND I don't have 20% down for a house and won't for the next 4-5 years.

They asked me, "What do you pay in rent?" and then said, "Man, you can get a $250,000 loan for that rental amount." Yeah, but... I still don't want to live in a $300k house in Oakland. That's NOT in a good neighborhood in Oakland. Prices need to come down another 30% to even approach affordable levels. That still hasn't happened in the "good" areas of Oakland and in the city.

 

[tommyGunZ]

Could you look up the numbers for SF, Oakland, and Berkeley? kthx

Anything for you brother Z.

"There wasn't a good number in there, but these numbers don't really reflect what's happening now," said Patrick Newport, U.S. economist with Englewood, Colo., consulting firm IHS Global Insight, noting that the bad economic news began midway through September and has worsened since. "We should expect really awful housing (data) for the rest of the year."

Among the 20 cities tracked by Case-Shiller, the San Francisco metropolitan region experienced the third-largest annual plunge, 29.5 percent, and by far the largest monthly decline, 3.9 percent. Case-Shiller defines the area as Alameda, Contra Costa, Marin, San Francisco and San Mateo counties. Phoenix led the list with a 31.9 percent annual decline, followed by Las Vegas at 31.3 percent.

A more up-to-date report released Tuesday also showed worsening conditions in California, but not in as dramatic a fashion as some had expected.

The California Association of Realtors said the median price for existing single-family homes fell 39.9 percent in October from the same month last year to $311,060. That was down 1.9 percent from September and fell short of the revised record annual decline set last month of 40.8 percent.

Transactions across California rose 117.1 percent, reaching an annual level not seen since late 2005, largely due to rising sales of priced-to-move foreclosed or distressed properties.

The median declined to $520,920 in the Bay Area, down 35.8 percent annually. The Los Angeles trade group defines the region as San Francisco, Alameda, Contra Costa, Marin, Solano, Santa Clara and San Mateo counties.

Per the numbers, the median price in the Bay Area fell 3.9 in one month. If the median was ~ 540k last month, that means prices fell ~ 21k last month.Why would ANYONE buy when prices are collapsing this fast?

I recently had the guys in the machine shop here at work try to convince me that it was a "great" and "perfect" time to buy a house. "It's like getting the property 30% off!".Yeah but... prices are STILL going down AND I don't have 20% down for a house and won't for the next 4-5 years.

They asked me, "What do you pay in rent?" and then said, "Man, you can get a $250,000 loan for that rental amount." Yeah, but... I still don't want to live in a $300k house in Oakland. That's NOT in a good neighborhood in Oakland. Prices need to come down another 30% to even approach affordable levels. That still hasn't happened in the "good" areas of Oakland and in the city.

Stay strong Z. As you know, "Getting property 30% off" isn't the correct view. You may pay 30% less than you would have a year ago, but chances are you're paying market price, so you're not getting 30% off of anything. And think of those people who bought last year, because they were "getting property 10% off". Think they're glad they decided to buy instead of renting another 12 months and saving another 30%? Keep waiting and saving Z. Every month that you wait, you're "making" several (if not tens) of thousands in equity by not buying.

 

[RoarinSonoran]

A radio caller, a waitress in Scottsdale, said that she's been seeing a lot of Canadian customers lately. Last night she asked one what was up with all the Canucks, and he said they're getting Visas to come here to buy houses, with the US eventually becoming a "New Canada".

So, it looks like the Phoenix housing market will be picking up, however Woz and LHUCKS will need to watch "Bob and Doug McKenzie's Strange Brew" so they can work on their accents. :hosers:

Anecdotal evidence is cool and all, but the numbers suggest the Phoenix market isn't picking up at all, in fact it's getting worse according to the Case Shiller report released yesterday:

Wow, it really must suck to always look at things through doom and gloom glasses.

 

[tommyGunZ]

A radio caller, a waitress in Scottsdale, said that she's been seeing a lot of Canadian customers lately. Last night she asked one what was up with all the Canucks, and he said they're getting Visas to come here to buy houses, with the US eventually becoming a "New Canada".

So, it looks like the Phoenix housing market will be picking up, however Woz and LHUCKS will need to watch "Bob and Doug McKenzie's Strange Brew" so they can work on their accents. :hosers:

Anecdotal evidence is cool and all, but the numbers suggest the Phoenix market isn't picking up at all, in fact it's getting worse according to the Case Shiller report released yesterday:

Wow, it really must suck to always look at things through doom and gloom glasses.

I'm looking at the data. In yesterday's Case Schiller report, PHX led the country in biggest YOY decline at 31%. Knowing that Case Schiller is based on 2 month old data, what economic events besides the soundbite that you heard on the radio suggest that the PHX housing market is going anywhere but much further down?

 

[The Z Machine]

Could you look up the numbers for SF, Oakland, and Berkeley? kthx

Anything for you brother Z.

"There wasn't a good number in there, but these numbers don't really reflect what's happening now," said Patrick Newport, U.S. economist with Englewood, Colo., consulting firm IHS Global Insight, noting that the bad economic news began midway through September and has worsened since. "We should expect really awful housing (data) for the rest of the year."

Among the 20 cities tracked by Case-Shiller, the San Francisco metropolitan region experienced the third-largest annual plunge, 29.5 percent, and by far the largest monthly decline, 3.9 percent. Case-Shiller defines the area as Alameda, Contra Costa, Marin, San Francisco and San Mateo counties. Phoenix led the list with a 31.9 percent annual decline, followed by Las Vegas at 31.3 percent.

A more up-to-date report released Tuesday also showed worsening conditions in California, but not in as dramatic a fashion as some had expected.

The California Association of Realtors said the median price for existing single-family homes fell 39.9 percent in October from the same month last year to $311,060. That was down 1.9 percent from September and fell short of the revised record annual decline set last month of 40.8 percent.

Transactions across California rose 117.1 percent, reaching an annual level not seen since late 2005, largely due to rising sales of priced-to-move foreclosed or distressed properties.

The median declined to $520,920 in the Bay Area, down 35.8 percent annually. The Los Angeles trade group defines the region as San Francisco, Alameda, Contra Costa, Marin, Solano, Santa Clara and San Mateo counties.

Per the numbers, the median price in the Bay Area fell 3.9 in one month. If the median was ~ 540k last month, that means prices fell ~ 21k last month.Why would ANYONE buy when prices are collapsing this fast?

I recently had the guys in the machine shop here at work try to convince me that it was a "great" and "perfect" time to buy a house. "It's like getting the property 30% off!".Yeah but... prices are STILL going down AND I don't have 20% down for a house and won't for the next 4-5 years.

They asked me, "What do you pay in rent?" and then said, "Man, you can get a $250,000 loan for that rental amount." Yeah, but... I still don't want to live in a $300k house in Oakland. That's NOT in a good neighborhood in Oakland. Prices need to come down another 30% to even approach affordable levels. That still hasn't happened in the "good" areas of Oakland and in the city.

Stay strong Z. As you know, "Getting property 30% off" isn't the correct view. You may pay 30% less than you would have a year ago, but chances are you're paying market price, so you're not getting 30% off of anything. And think of those people who bought last year, because they were "getting property 10% off". Think they're glad they decided to buy instead of renting another 12 months and saving another 30%? Keep waiting and saving Z. Every month that you wait, you're "making" several (if not tens) of thousands in equity by not buying.

Oh I know man. I'm in no place to buy anything. Hell, I'm just saving up for a car right now since I refuse to pay for financing and I don't want a car payment.I think that after I/we save the $$ for the car, which should happen in Feb, I can start actually saving cash to put down. 20% is still a daunting figure though. I gotta think that I'm gonna need at least $65k+ as a down payment. It's gonna take like 10 years to save that kind of coin. Not something I look forward to.

 

[tommyGunZ]

Oh I know man. I'm in no place to buy anything. Hell, I'm just saving up for a car right now since I refuse to pay for financing and I don't want a car payment.I think that after I/we save the $$ for the car, which should happen in Feb, I can start actually saving cash to put down. 20% is still a daunting figure though. I gotta think that I'm gonna need at least $65k+ as a down payment. It's gonna take like 10 years to save that kind of coin. Not something I look forward to.

From what I understand, FHA financing is still available if you have good credit and reliable income. I think the downpayment has been raised to 3.5%, but it's still a way to get into your first home w/o waiting to have 20% down.Obviously the mortgage brokers on the board will know for sure.

 

[The Z Machine]

Oh I know man. I'm in no place to buy anything. Hell, I'm just saving up for a car right now since I refuse to pay for financing and I don't want a car payment.I think that after I/we save the $$ for the car, which should happen in Feb, I can start actually saving cash to put down. 20% is still a daunting figure though. I gotta think that I'm gonna need at least $65k+ as a down payment. It's gonna take like 10 years to save that kind of coin. Not something I look forward to.

From what I understand, FHA financing is still available if you have good credit and reliable income. I think the downpayment has been raised to 3.5%, but it's still a way to get into your first home w/o waiting to have 20% down.Obviously the mortgage brokers on the board will know for sure.

Ah... I see. I had forgotten about that. 3.5-5% is doable, even in the medium-short term. Can some of the mortgage guys on the board give me some info on these programs?