Foosball God
Foos
Appraised value for my house came in. 2 1/2 years ago, purchase price $314k. Today corporate buyout appraisel $251k.
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How's your housing market? (1 Viewer)
- Thread starter tommyGunZ
- Start date
EYLive
Footballguy
ouch
I'll never be able to afford a house in L.A unless the market comes back down some more, I get promotion/raise, and get married for a 2nd income. 
OC Zed
Footballguy
Where again are you moving? If it's any consolation, if you are going to a more expense market, the chances are pretty good that your new market will have experienced/be experiencing greater losses.
How are taxpayers subsidizing anything? Rates on jumbo loans already went way up due to the risk. Something tells me that this change will just end up increasing conforming rates if lenders have to give the same rates to 200k as they would now to 550k. It is a stupid change because it will make current conforming loans more expensive in order to make previously jumbo loans less expensive. It isn't like you can't get a jumbo loan right now, so I don't see any subsidies here. For example, this is what I think will happen:Current Rates
0-417k - 5.5%
417k-700k - 6.5%
700k+ - 6.5%
New Rates (in places where the increase is OK)
0-700k - 6.0%
700k+ - 6.5%
It will be a good deal for the folks in that 417k-700k range where they fall into conforming, but bad for the normal folks out there who now have to pay more because there is more risk in conforming loans.
Foosball God
Foos
Moving to Northern Virgina (basically D.C.). Market is much more expensive and I have been seeing some fallout there, but it isn't nearly as bad as Southeast Michigan. The corporate incentive package we are getting is the only thing making this move possible.
Actually, unfortunately for him the Midwest (especially Detroit) has been hit just as hard because of economic reasons as areas like DC/Northern VA (where he is going) which got hit because of the huge runups. I didn't realize, but in those articles about where prices were falling, you would always see Midwestern cities right along with SD, Florida, etc.
OC Zed
Footballguy
The subsidy arises from the government insuring more expensive loans ($417,000 - $700,000).
Current Rates
0-417k - 5.5%
417k-700k - 6.5%
700k+ - 6.5%
New Rates (in places where the increase is OK)
0-700k - 6.0%
700k+ - 6.5%
It will be a good deal for the folks in that 417k-700k range where they fall into conforming, but bad for the normal folks out there who now have to pay more because there is more risk in conforming loans.
Are they compensating you for the difference or is it just a set of bonuses, etc. that will make it more palatable?Either way, I think in the long run you would be better off in NoVA economically than SE MI.
Redwes25
Footballguy
I think this just brings jumbo rates down. The reason conforming rates are so low is that Fannie and Fredie will buy them. Everyone else has currently left the business of buying mortgages so if it weren't for Fannie and Freddie rates on conforming mortgages would probably be a lot closer to jumbo levels.Whether this is good policy is an entirely different discussion as having quasi govt entities such as Fannie and Fredie is probably a bad idea in the first place.
Current Rates
0-417k - 5.5%
417k-700k - 6.5%
700k+ - 6.5%
New Rates (in places where the increase is OK)
0-700k - 6.0%
700k+ - 6.5%
It will be a good deal for the folks in that 417k-700k range where they fall into conforming, but bad for the normal folks out there who now have to pay more because there is more risk in conforming loans.
OC Zed
Footballguy
I would wait to buy for a little bit once you move. Prices aren't going up in NoVa anytime soon (and will likely continue to fall) and you can get a feel for which town you want to settle in.
Maybe I am missing something, but people can now get loans for say $600k, who handles that versus a $400k loan?The subsidy arises from the government insuring more expensive loans ($417,000 - $700,000).
Current Rates
0-417k - 5.5%
417k-700k - 6.5%
700k+ - 6.5%
New Rates (in places where the increase is OK)
0-700k - 6.0%
700k+ - 6.5%
It will be a good deal for the folks in that 417k-700k range where they fall into conforming, but bad for the normal folks out there who now have to pay more because there is more risk in conforming loans.
Redwes25
Footballguy
The difference is that for conforming mortgages (under 417k) the quasi govt entities can buy them in the secondary market. Above 417k they are forbidden to buy them by law unless we get this change.To be honest, this change does not cost the govt a cent as the govt does not give money to Fannie. Fannie just gets the benefit of a perceived govt backstop since they are federally chartered, which allows them to have incredibly high ratings for there debt.Maybe I am missing something, but people can now get loans for say $600k, who handles that versus a $400k loan?The subsidy arises from the government insuring more expensive loans ($417,000 - $700,000).
Current Rates
0-417k - 5.5%
417k-700k - 6.5%
700k+ - 6.5%
New Rates (in places where the increase is OK)
0-700k - 6.0%
700k+ - 6.5%
It will be a good deal for the folks in that 417k-700k range where they fall into conforming, but bad for the normal folks out there who now have to pay more because there is more risk in conforming loans.
Last edited by a moderator:
Got it. There obviously are people still buying loans (or giving them out themselves, i.e. Wachovia) at both levels, but I understand that having Fannie and Freddie to compete on buying them would create a bigger buyer market and thus help lower rates.I think this just brings jumbo rates down. The reason conforming rates are so low is that Fannie and Fredie will buy them. Everyone else has currently left the business of buying mortgages so if it weren't for Fannie and Freddie rates on conforming mortgages would probably be a lot closer to jumbo levels.Whether this is good policy is an entirely different discussion as having quasi govt entities such as Fannie and Fredie is probably a bad idea in the first place.
Current Rates
0-417k - 5.5%
417k-700k - 6.5%
700k+ - 6.5%
New Rates (in places where the increase is OK)
0-700k - 6.0%
700k+ - 6.5%
It will be a good deal for the folks in that 417k-700k range where they fall into conforming, but bad for the normal folks out there who now have to pay more because there is more risk in conforming loans.
OC Zed
Footballguy
Redwes' post from above gives the most complete explanation.Maybe I am missing something, but people can now get loans for say $600k, who handles that versus a $400k loan?The subsidy arises from the government insuring more expensive loans ($417,000 - $700,000).
Current Rates
0-417k - 5.5%
417k-700k - 6.5%
700k+ - 6.5%
New Rates (in places where the increase is OK)
0-700k - 6.0%
700k+ - 6.5%
It will be a good deal for the folks in that 417k-700k range where they fall into conforming, but bad for the normal folks out there who now have to pay more because there is more risk in conforming loans.
Redwes25
Footballguy
yup, that is why conforming mortgages have always been cheaper. However, with the credit crunch the spread between the conforming and jumbo has increased since that market has pratically disappeared.Got it. There obviously are people still buying loans (or giving them out themselves, i.e. Wachovia) at both levels, but I understand that having Fannie and Freddie to compete on buying them would create a bigger buyer market and thus help lower rates.I think this just brings jumbo rates down. The reason conforming rates are so low is that Fannie and Fredie will buy them. Everyone else has currently left the business of buying mortgages so if it weren't for Fannie and Freddie rates on conforming mortgages would probably be a lot closer to jumbo levels.Whether this is good policy is an entirely different discussion as having quasi govt entities such as Fannie and Fredie is probably a bad idea in the first place.How are taxpayers subsidizing anything? Rates on jumbo loans already went way up due to the risk. Something tells me that this change will just end up increasing conforming rates if lenders have to give the same rates to 200k as they would now to 550k. It is a stupid change because it will make current conforming loans more expensive in order to make previously jumbo loans less expensive. It isn't like you can't get a jumbo loan right now, so I don't see any subsidies here. For example, this is what I think will happen:
Current Rates
0-417k - 5.5%
417k-700k - 6.5%
700k+ - 6.5%
New Rates (in places where the increase is OK)
0-700k - 6.0%
700k+ - 6.5%
It will be a good deal for the folks in that 417k-700k range where they fall into conforming, but bad for the normal folks out there who now have to pay more because there is more risk in conforming loans.
Foosball God
Foos
Package is based on your salary band at the company. For Mrs. Foos that equals:$100k incentive check. 30% of which was supposed to cover losses on the sale of your house. They soon realized that 30% wouldn't begin to cover losses for most people. So they bumped it up to cover the difference.They pay for all realtor fees, closing costs, moving expenses (including packing).$150k interest free loan to put towards a house in Virginia.A four day trip to Virginia to "look and see" to help us decide to move.A 5 day house hunting trip.Spousal resume and job finding services.Special deals with several mortgage companies (Wacohvia, Wells Fargo, etc.) for discounted rates.
Thanks. I used to live in NoVA, so I know a lot about those 2 and tons of people that worked there, hence my wondering what the "subsidies" were. Especially, all the complaints from other banks about advantages they had by being linked into the government.It seems like this is a case like the Postal Service, where taxpayers aren't paying anything extra although if the Postal Service/Fannie/Freddie ever got into dire straits, then we would be holding the hook for it. That said, I know Fannie/Freddie were very profitable for a very long time, so I don't know how their reserves/cash looks.The difference is that for conforming mortgages (under 417k) the quasi govt entities can buy them in the secondary market. Above 417k they are forbidden to buy them by law unless we get this change.To be honest, this change does not cost the govt a cent as the govt does not give money to Fannie. Fannie just gets the benefit of a perceived govt backstop since they are federally chartered, which allows them to have incredibly high ratings for there debt.Maybe I am missing something, but people can now get loans for say $600k, who handles that versus a $400k loan?The subsidy arises from the government insuring more expensive loans ($417,000 - $700,000).
Current Rates
0-417k - 5.5%
417k-700k - 6.5%
700k+ - 6.5%
New Rates (in places where the increase is OK)
0-700k - 6.0%
700k+ - 6.5%
It will be a good deal for the folks in that 417k-700k range where they fall into conforming, but bad for the normal folks out there who now have to pay more because there is more risk in conforming loans.
I don't think Fannie/Freddie were involved much, if at all in subprime/oddball loans as you haven't heard anything about them in the news. If they were really in the prime only, the could be lobbying congress to open up their capabilities as they could make a killing now that other banks are really hurting because they took on too much of the riskier stuff.
Not a bad deal at all, especially for anyone looking to move out of that area. My buddy/neighbor in VA worked for the FBI and he moved down here to SC a couple months before we left and the FBI took care of all of that as well. I pretty much paid for everything, but that was still a lot less than what I would have lost in house value had I stayed.
OC Zed
Footballguy
But the problem is when and to what extent the federal government has to step in to ensure payment on these bonds. Ya, it shouldn't cost the government anything if the collateral (homes) securing these loans weren't losing value, but that's not the likely scenario for the next few years.The difference is that for conforming mortgages (under 417k) the quasi govt entities can buy them in the secondary market. Above 417k they are forbidden to buy them by law unless we get this change.To be honest, this change does not cost the govt a cent as the govt does not give money to Fannie. Fannie just gets the benefit of a perceived govt backstop since they are federally chartered, which allows them to have incredibly high ratings for there debt.Maybe I am missing something, but people can now get loans for say $600k, who handles that versus a $400k loan?The subsidy arises from the government insuring more expensive loans ($417,000 - $700,000).How are taxpayers subsidizing anything? Rates on jumbo loans already went way up due to the risk. Something tells me that this change will just end up increasing conforming rates if lenders have to give the same rates to 200k as they would now to 550k. It is a stupid change because it will make current conforming loans more expensive in order to make previously jumbo loans less expensive. It isn't like you can't get a jumbo loan right now, so I don't see any subsidies here. For example, this is what I think will happen:
Current Rates
0-417k - 5.5%
417k-700k - 6.5%
700k+ - 6.5%
New Rates (in places where the increase is OK)
0-700k - 6.0%
700k+ - 6.5%
It will be a good deal for the folks in that 417k-700k range where they fall into conforming, but bad for the normal folks out there who now have to pay more because there is more risk in conforming loans.
Last edited by a moderator:
Redwes25
Footballguy
Very true and I think they create a major risk for our economy. The WSJ has been pointing this out for about a decade now. However, just the value of the collateral going down won't hurt Fannie and Freddie. They will need to go under for the Federal govt to step in and a bail out would be in the trillions.But the problem is when and to what extent the federal government has to step in to ensure payment on these bonds. Ya, it shouldn't cost the government anything if the collateral (homes) securing these loans weren't losing value, but that's not the likely scenario for the next few years.The difference is that for conforming mortgages (under 417k) the quasi govt entities can buy them in the secondary market. Above 417k they are forbidden to buy them by law unless we get this change.To be honest, this change does not cost the govt a cent as the govt does not give money to Fannie. Fannie just gets the benefit of a perceived govt backstop since they are federally chartered, which allows them to have incredibly high ratings for there debt.Maybe I am missing something, but people can now get loans for say $600k, who handles that versus a $400k loan?The subsidy arises from the government insuring more expensive loans ($417,000 - $700,000).
Current Rates
0-417k - 5.5%
417k-700k - 6.5%
700k+ - 6.5%
New Rates (in places where the increase is OK)
0-700k - 6.0%
700k+ - 6.5%
It will be a good deal for the folks in that 417k-700k range where they fall into conforming, but bad for the normal folks out there who now have to pay more because there is more risk in conforming loans.
Chadstroma
Footballguy
Interesting list of states there. You have the obviously way too fast price growth in CA, FL, NV and AZ, along with the midwestern states where I think the economy/movement of jobs is the story in IL, IN, OH and MI.What I don't know about is GA and CO. I wonder if at the bottom of the top 10 you start getting into rates that aren't all that much different than the national rates.Foreclosures aren't surprising at all when housing prices go down because to a ton of investors and homeowners, ruining their credit probably isn't that big of a deal. Once your house goes into foreclosure, you really don't have anyone calling you about paying the mortgage. I don't think they can go after you for anything else.I wish I could remember my bold prediction for the housing boom after foreclosures from earlier in the thread (yes, I am lazy enough to not look
). I think I will restate it based upon the rise in foreclosures and call the housing boom of 2014-2020. Mark it down. 
RoarinSonoran
Footballguy
![[scooter]](/data/avatars/m/22/22287.jpg?1659477690){kind=avatar}
KiddLattimer
Footballguy
Albany NY area is up 2% for the second straight quarter 
Chadstroma
Footballguy
Zillow has my condo losing 10% in the last 30 days.
OC Zed
Footballguy
How much did home values in Albany jump in the last 10 years?Albany NY area is up 2% for the second straight quarter
Gr00vus
Footballguy
Another triumph for personal and corporate fiscal responsibility.
OC Zed
Footballguy
I don't disagree, but I'm glad to see it's only a 30-day freeze - which should be small enough time-frame to be meaningless. More than anything, I think it's a way for the Bush administration and the major lenders to make it look like they are trying to be sympathetic to defaulting borrowers while still knowing that the market will ultimately have to run its course. Style over substance.
tommyGunZ
Footballguy
January foreclosure numbers for San Diego have just leaked out - it ain't pretty. For the number to resonate, know the following:
My data source has foreclosure info for San Diego County all the way back to 1991 (16 years of data). The record for total foreclosures in a month before the recent explosion occurred in July of 1996 (during the last CA housing bust). There were 589 foreclosures that month, a record that held up until 2007. In 2007, the 589 foreclosure record was broken several times:
April 604
May 614
June 738
July 686
Aug 902
Sept 767
Oct 911
Nov 535
Dec 1,285
January 2008 total foreclosures in SD County: 1,461
According to a couple local experts, Feb is already ahead of January's pace. This is going to be a freaking disaster.
My data source has foreclosure info for San Diego County all the way back to 1991 (16 years of data). The record for total foreclosures in a month before the recent explosion occurred in July of 1996 (during the last CA housing bust). There were 589 foreclosures that month, a record that held up until 2007. In 2007, the 589 foreclosure record was broken several times:
April 604
May 614
June 738
July 686
Aug 902
Sept 767
Oct 911
Nov 535
Dec 1,285
January 2008 total foreclosures in SD County: 1,461
According to a couple local experts, Feb is already ahead of January's pace. This is going to be a freaking disaster.
OC Zed
Footballguy
Do you have any data showing how the foreclosures break down across the different market segments?In Orange County, approximately 50% of "distressed" sales (foreclosures and short sales) are occurring below the median County price of $590,000. This is not surprising given the subprime difficulties, but I'm curious to see when and how much this will effect the pricier neighborhoods.January foreclosure numbers for San Diego have just leaked out - it ain't pretty. For the number to resonate, know the following:
My data source has foreclosure info for San Diego County all the way back to 1991 (16 years of data). The record for total foreclosures in a month before the recent explosion occurred in July of 1996 (during the last CA housing bust). There were 589 foreclosures that month, a record that held up until 2007. In 2007, the 589 foreclosure record was broken several times:
April 604
May 614
June 738
July 686
Aug 902
Sept 767
Oct 911
Nov 535
Dec 1,285
January 2008 total foreclosures in SD County: 1,461
According to a couple local experts, Feb is already ahead of January's pace. This is going to be a freaking disaster.
Link
John Mamula
Moderator
Article in the AZ Republic on Sunday about how the time is ripe for people in AZ to buy a condo in San Diego. I don't know that market enough to know how far off the article is, but good press removing fear of the buyers is half the battle.With that said, being a realtor on the side for friends and family, I am swamped right now here in Phoenix. Land prices have bottomed at about $15,000 for a finished lot (to put it into perspective the cost to finish a lot is about $25,000 on average so buyers are getting the land for free and some of the finishing costs paid for when they buy land). Home prices are still declining. I've talked to a home builder who is coming back into the market after being out of it for a few years and he is coming to market at $85k a home in some of the outlying areas of Phoenix (Maricopa, Coolidge).2008 will be worse than 2007 in Phoenix though. I would imagine that almost all of the private homebuilders will be either going BK or getting acquired or short selling their assets to banks. We're working with new home builders to step into this void, although it doesn't help that virtually my entire portfolio will be wiped out this year (my "main" job is mezzanine financing and equity partnerships with homebuilders).There are some smoking deals on the MLS right now through short sales from lenders. If you can find a home you love at a great price compared to the market and can afford the payments, there is no reason to wait. It is amazing to see even within a city how certain areas have actually appreciated during this downturn compared to other areas that have completely free falled. When people are greedy, be afraid. When people are afraid, be greedy.January foreclosure numbers for San Diego have just leaked out - it ain't pretty. For the number to resonate, know the following:My data source has foreclosure info for San Diego County all the way back to 1991 (16 years of data). The record for total foreclosures in a month before the recent explosion occurred in July of 1996 (during the last CA housing bust). There were 589 foreclosures that month, a record that held up until 2007. In 2007, the 589 foreclosure record was broken several times: April 604May 614June 738July 686Aug 902Sept 767Oct 911Nov 535Dec 1,285January 2008 total foreclosures in SD County: 1,461According to a couple local experts, Feb is already ahead of January's pace. This is going to be a freaking disaster.
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tommyGunZ
Footballguy
Unfortunately, people in SD aren't afraid enough yet. Buying now when foreclosures are setting new records every month would be the height of stupidity.
ericttspikes
Footballguy
That Zillow site blows and I think unfairly hurts some sellers because buyers do look at it. We've lived in our 1950's ranch house for 10 years and in that time have finished our basement, put a jacuzzi tub in, new roof, cedar fenced yard, new mechanicals (furnace, HW heater), remodled our bathrooms and put in a new kitchen with granite counters, 42" cabs and SS appliances. We've probably put in $80K over that time. The exact same model house as mine four houses down has a higher "Zestimate" and has gone down less than mine in the last month eventhough it hasn't been upgraded in 20 years, smells like cats, has a leaky unfinished basement and has appliaces and decor from the 50's. Not sure how that even works, but it sucks for me.
tommyGunZ
Footballguy
This piece yields some interesting info for the RE
's like me, you and bagger. The author, Ramsey Su, is a San Diego RE market analyst who has been in the SD RE game for over 30 years.
John Mamula
Moderator
It depends.Don't confuse the movements of the market as a whole with the movements of individual properties. There may be a home that is exactly what you want in the exact location you want at a price you think is within a reasonable range of the bottom. Maybe its due to a short sale or some other circumstance where that home is significantly below the market now and has already priced in future declines.For example, if the market was $500k for a home and you think the bottom is $450k for that home...if someone lists that home for $450k now, it won't fall another $50k. It has already priced it in to move now. These are the homes you need to look for in the area you love. If you don't see any, wait. If you do, don't fall into the trap that since the market as a whole still needs to correct that you shouldn't buy that individual home.Unfortunately, people in SD aren't afraid enough yet. Buying now when foreclosures are setting new records every month would be the height of stupidity.
tommyGunZ
Footballguy
How in the world could you ever know this, especially with the numbers screaming that price declines are accelerating, not stabilizing?With thousands of REOs entering the market monthly, how could prices stabilize anytime in the near future? If every month adds 1k in REO to inventory, the downward pressure on price increases. What kind of data would support the idea that a home has reached it's "bottom" re: price in a market that is in virtual free fall?It depends.Don't confuse the movements of the market as a whole with the movements of individual properties. There may be a home that is exactly what you want in the exact location you want at a price you think is within a reasonable range of the bottom. Maybe its due to a short sale or some other circumstance where that home is significantly below the market now and has already priced in future declines.
For example, if the market was $500k for a home and you think the bottom is $450k for that home...if someone lists that home for $450k now, it won't fall another $50k. It has already priced it in to move now. These are the homes you need to look for in the area you love. If you don't see any, wait. If you do, don't fall into the trap that since the market as a whole still needs to correct that you shouldn't buy that individual home.
Not being argumentative, but asking questions. I can understand bottom calling once indicators suggest the market is stabilizing, but the foreclosure numbers I've cited suggest that must-sell inventory is flooding the market. Can you come up with any reasonable scenario to support the idea that prices are at bottom in a market where the foreclosure rate is accelerating at record levels?
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John Mamula
Moderator
I'm not saying that prices are stabilizing at all.What I am saying is that if you think that the market has x% to fall, and you see a home compared to other houses for sale like it that has priced in that decline (for whatever reason) recognize that.How in the world could you ever know this, especially with the numbers screaming that price declines are accelerating, not stabilizing?With thousands of REOs entering the market monthly, how could prices stabilize anytime in the near future? If every month adds 1k in REO to inventory, the downward pressure on price increases. What kind of data would support the idea that a home as reached it's "bottom" re: price in a market that is in virtual free fall?It depends.Don't confuse the movements of the market as a whole with the movements of individual properties. There may be a home that is exactly what you want in the exact location you want at a price you think is within a reasonable range of the bottom. Maybe its due to a short sale or some other circumstance where that home is significantly below the market now and has already priced in future declines.
For example, if the market was $500k for a home and you think the bottom is $450k for that home...if someone lists that home for $450k now, it won't fall another $50k. It has already priced it in to move now. These are the homes you need to look for in the area you love. If you don't see any, wait. If you do, don't fall into the trap that since the market as a whole still needs to correct that you shouldn't buy that individual home.
Not being argumentative, but asking questions. I can understand bottom calling once indicators suggest the market is stabilizing, but the foreclosure numbers I've cited suggest that must-sell inventory is flooding the market. Can you come up with any reasonable scenario to support the idea that prices are stabilizing in a market where the foreclosure rate is accelerating at record levels?
Homes don't move all in lock step with each other, and certain areas of SD County that you have no interest living in may be throwing your stats off as they have nothing to do with where you want to live.
Now you may say that you have no idea how much the market has to fall, you just know that it will, then you're smarter than most. It then becomes a function of you really liking a home you'll be in long term, getting a deal on that home you think reflects the risk you're taking, and having a payment for that house that you can afford.
It is very tough to buy a home in this kind of market compared to a stabilized market that is growing 3% a year. However this is also where people make the most money because of the unknowns and you doing the research to put yourself at a competitive advantage compared to the rest of the masses.
If you don't feel comfortable, don't buy. But be aware that a home is not a commodity that is the same block to block, zip code to zip code.
commisholio
Come out with your pants down!
I would agree with this. The overall housing market comprises a lot of individual parts. Just because the overall direction of the market is south, it doesn't necessarily follow that every house that's bought in the next 2 years will decline.TG, you're in an enviable position because you don't have any pressure to do anything soon - you can wait until you see a good opportunity to pounce on.I will tell a little story about how I bought the house I live in now. I was looking, not needing to buy anything anytime soon, just waiting for the right opportunity to come along. This was in 2000, the market was hot, I was convinced that we were going to buy at the top of the market, but we needed a place to live for the long term and I was tired of paying rent and we had a good down payment available. We looked at a lot of houses over 3-4 months, made one offer (got out-bid by a lot) but stayed patient. Eventually our agents' connections in the industry paid off- they knew another agent that had just gotten a listing that she wanted to flip quickly without having to spend a lot of time marketing. We got in and met the woman who was selling the place and she decided she liked us enough to sell without ever putting the property on MLS. I am 100% confident that we would not have been able to beat the highest bid if the property had been marketed properly to the public. The point of this story is, in every market, hot, cold, or sideways, there are properties out there that are underpriced relative to the market. If you have no pressure to buy immediately, you can wait for one of those properties to come along.It depends.Don't confuse the movements of the market as a whole with the movements of individual properties. There may be a home that is exactly what you want in the exact location you want at a price you think is within a reasonable range of the bottom. Maybe its due to a short sale or some other circumstance where that home is significantly below the market now and has already priced in future declines.For example, if the market was $500k for a home and you think the bottom is $450k for that home...if someone lists that home for $450k now, it won't fall another $50k. It has already priced it in to move now. These are the homes you need to look for in the area you love. If you don't see any, wait. If you do, don't fall into the trap that since the market as a whole still needs to correct that you shouldn't buy that individual home.
tommyGunZ
Footballguy
I don't consider myself smarter than the average Joe - but I do have enough curiosity to pour through the data before investing several hundred thousand dollars. In this case, the data is extremely one sided. Housing prices do not turn on a dime. You can accurately predict the relative health of a market months in advance by looking at sales, inventory, foreclosures, notice of defaults, etc. A review of that data suggests that there is 0% chance that home prices in San Diego County stabilize within the next 6-8 months. I can state with 100% certainty that home prices will fall significantly over the next 6 months in SD County. It's really not difficult at all.
That sounds nice and all, but the reality is that even if you like the home you buy now, if you can buy a much nicer place for the same $ 1 year later, you'll regret it. It's human nature.
Amen.
I agree, to a certain extent. While RE is local and markets can fluctuate from zip code to zip code, when entire areas are in free fall, all homes in the surrounding area are affected. Just like a rising tide lifts all boats, the receding tide will bring all home prices down, even in neighborhoods w/o a singe foreclosure. Good post bagger.
RoarinSonoran
Footballguy
The bottom has been reached!!!!
According to Zillow (yeah yeah), my Zestimate has gone up 0.4% in the past 30days.
According to Zillow (yeah yeah), my Zestimate has gone up 0.4% in the past 30days.
tommyGunZ
Footballguy
I thought so too. Some excellent analysis, and it doesn't paint a pretty picture for SD RE in the near term. Looks like I won't be buying anytime soon.Wow, this was an extremely interesting read.tommyGunZ said:This piece yields some interesting info for the REOC Zed said:
OC Zed
Footballguy
Although I would echo bagger's points about looking at each home individually, for a general sense of the market, I would rely on historical indicators as price-to-income ratios and mortgage vs. rent comparisons. You can get this information for specific towns and neighborhoods (heck, I'm sure your local "bubble" blog is constantly featuring this data and how out-of-whack it is).tommyGunZ said:How in the world could you ever know this, especially with the numbers screaming that price declines are accelerating, not stabilizing?With thousands of REOs entering the market monthly, how could prices stabilize anytime in the near future? If every month adds 1k in REO to inventory, the downward pressure on price increases. What kind of data would support the idea that a home has reached it's "bottom" re: price in a market that is in virtual free fall?bagger said:It depends.Don't confuse the movements of the market as a whole with the movements of individual properties. There may be a home that is exactly what you want in the exact location you want at a price you think is within a reasonable range of the bottom. Maybe its due to a short sale or some other circumstance where that home is significantly below the market now and has already priced in future declines.tommyGunZ said:bagger said:Unfortunately, people in SD aren't afraid enough yet. Buying now when foreclosures are setting new records every month would be the height of stupidity.
For example, if the market was $500k for a home and you think the bottom is $450k for that home...if someone lists that home for $450k now, it won't fall another $50k. It has already priced it in to move now. These are the homes you need to look for in the area you love. If you don't see any, wait. If you do, don't fall into the trap that since the market as a whole still needs to correct that you shouldn't buy that individual home.
Not being argumentative, but asking questions. I can understand bottom calling once indicators suggest the market is stabilizing, but the foreclosure numbers I've cited suggest that must-sell inventory is flooding the market. Can you come up with any reasonable scenario to support the idea that prices are at bottom in a market where the foreclosure rate is accelerating at record levels?
OC Zed
Footballguy
OC Zed
Footballguy
This could be true, but keep in mind that the median is only a reflection of the middle point of where the sales are occurring in the market. The median could be dragged down by a lot of the lower-end, subprime housing forced to sell due to foreclosures while upper-end sellers may try to wait 2008 out without budging on prices (and thus prolonging the correction). This is what's happening in Orange County right now. It's both amusing and frustrating to listen to beachtown sellers try to explain why their homes are completely immune from any market correction while the rest of the County gets pounded down. Of course, no one is buying that argument as the sales volume has been in decline for 2 straight years.
