Economy/Credit/Housing Issues Ping List
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If the house is 350 offer them 250. The bank will take it.
I just bought a 4044 sq ft house for 250 in Phoenix.
This housing “crisis” is in its’ normal cycle...about every eight years...
While one reason for this massive sales slump is due to a normal housing cycle, the big reason is the bursting of the huge credit bubble, that is causing a fall of greater magnitude which I assume will be of longer than normal duration.
You also have to remember that after house prices fall, they will still retain a good portion of their appreciation, as homes have historically always appreciated at about the rate of inflation. So we know what homes should be priced at, and it is not like home values will crash.
Now here is the part that scares me. What if the FED had to raise interest rates. Home sales have plunged and prices are going down, yet interest rates are still not much above historic lows. What happens if inflation does return and rates on conforming loans go back to 9.5% or even into the double-digits. That is going to go have a huge negative impact on home sales prices.
I can imagine a worst-case scenario where homes sales begin to rebound and prices stabilize only to have the FED be forced to raise interest rates to fight inflation, and kill any recovery in housing. This could put the recover off years or even a decade.
This could be good for home buyers who might otherwise not be able to afford, since the amount they need to save for down payments will be smaller and their property taxes will be lower — all assuming they can qualify for that 10% loan and afford those high interest payments.
On the other side, it would be brutal for all of those people who honestly thought that the paper gains in their home values at peak was a permanent gain in their net worth.