Posted on 04/03/2006 7:38:13 AM PDT by ex-Texan
Are you always this grouchy?
Are you always THIS dense and nasty?
How much did the guy pay for it? The market is definitely slowing down, but the scenario you've described only indicates that this guy is asking too much for his home. That could happen in a red-hot market as well as a slow market.
We have people in our neighborhood asking way too much for their homes, and consequently they aren't selling. We listed ours at a market price, and had two full price offers in two days. We made a nice gain on it too.
you forgot the 'no-doc' loan.
"you forgot the 'no-doc' loan."
The term I used is "stated-stated" and that is the terminology in the loan business, so I am told.
It means no documents are required to verify what the borrower states.
Don't know what he paid. I know that I purchased my house back in 1993. We did extensive work on it in side and out. I redid the entire landscape. I got over double for it when I sold in January. The market was starting to go down then. I got, according to my agent, probably $20,000 less than I could have got maybe 4-6 months ago.
I've bought in oversupply. I bought in MA in 1990 and according to the pumpers of the day, much like we see in this thread, said prices wouldn't fall any more. I paid 155k, sold in 1993 for 135k and had to pay the buyer's closing costs. My experience was far from worst case. After I bought in VA in early 1994, my value went nowhere for about 4 years. The expansion may continue in Phoenix in particular, but the bubble has ended and the retracement will being shortly. Prices will revert to the long term average increase which may well increase as inflation really kicks in. But for most areas like Phoenix that means a price correction or many years of price stagnation. The only scenario in which that could change is a highly inflationary one if the Fed decides to reopen the spigots.
About 15%. About what I'd figure for maximum drop before sellers get stubborn and refuse to sell.
Phoenix I think is now about the same price range as Las Vegas, but still cheaper than California, despite an average of 40-50% gains last year. I expect prices to be flat (forecast is 5% gain), but I seriously doubt they'll fall. California is forecast to fall, and it needs to. It wouldn't surprise me for my house to continue to rise more than average because of location.
As long as growth continues, even a little growth, then it's difficult to be "overbuilt", because the market will just fix the housing starts to match growth. It's when growth stops entirely, or reverses as it did in Houston that the real trouble starts. Phoenix is continuing to grow, and there's several reasons to think it will continue.
Your prices may progress on a higher long term average growth, but even if that long term average is an unlikely 10%, you will will have a couple of stagnant years or a drop before resumption of increases. I would not consider the market orderly enough to perform flat or small increases considering the carrying costs of investors are greater and they won't want to wait for years.
It's not lack of growth that is your problem, it's amateur investors who want to get rick quick. It doesn't take very many of them wanting to get out to start bidding down asking prices. I would also note that growth did not stop in Boston, although there was a realignment out of some industries as DEC and Data General faltered. But the main problem, as it is now, was speculation.
Fully 22 percent of the borrowers who borrowed at initial rates of 2.5 percent or less during the past two years have negative equity in their homes, and 40 percent have less than 10 percent equity. The study also finds that a third of people who took out adjustable rate mortgages last year have negative equity and 52 percent have less than 10 percent equity. How is this possible? One reason is that 43 percent of first-time home buyers paid no down payment last year.
Holy &=@%ing $#!+!!!
Ladyjane, don't feel bad. You just can't argue with a fool...
Nopardons asks me,"You live in Washington state...what do you REALLY know about the real estate markets in Manhattan and Chicago?"
Answer: I only lived for 10 of the last 15 YEARS in the 312 area code. Let's see that would be in a part of Chicago called the Loop. Maybe you've heard of it.
I still have many friends, clients and relatives that live throughout the city and suburbs. I visit Chicago annually, usually around Thanksgiving.
I've also travelled to all 50 states in the last 16 years and I've been to NYC several times.
It's my strong opinion that there is excellent reason to believe that many parts of the US are indeed in a RE bubble. It is also my opinion that many cities are in the largest of bubbles.
In January, I saw a nice, simple home in Anaheim that had just sold for 750k. In December I saw a nicer home in Killeen,Texas that was for sale. Only $89,000.
At some point people in Boston, NY, Seattle, Chicago, LA and Frisco say 'wait a minute'. I could sell my shack for 450,000-1.5 mil. And move to Wilcox Arizona, Moab Utah, Killeen Texas, Dothan AL, heck even Medford Oregon.
They end up with a nicer home, less taxes, money in the bank, less crime and a lot less traffic.
Of course there will be some, like nopardons, who won't figure it out until after the bubble bursts around them and they'll be the ones crying the loudest.
Like you, though I no longer live there, I still have family living in Chicago, as well as many friends, and unlike you, I visit there several times a year, talk with people who live there daily and just happen to be there RIGHT THIS VERY MINUTE.
I also happen to know the real estate history of that city and even though there were down turns, in real estate, the ONLY major real estate BUBBLE, which burst badly, happened in the mid 1800s! And please don't bring up what happened during the GREAT DEPRESSION, because even though there had been real estate speculation prior to the "CRASH of '29", it was the GD, that forced not only real estate prices to do a nosedive, but everything else as well.
Visiting someplace isn't the same as actually living there, for an extended period of time. And I really doubt, HIGHLY, that you know anything whatsoever about Manhattan real estate. OTOH, I do. :-)
And while it IS true that that market has slowed down a bit ( places aren't selling in one day, with a fierce bidding war, as they were up until January; it now is back to a much more NORMAL pace ), in N.Y.C., one would be very hard pressed to find a place there, whose price had crashed and crashed hard.
You obviously HATE city life.
Some people thrive on it...high taxes and having to have the bother of living in a blue state and all that that entails. It's the price they pay, for living where they want to. Not everyone yearns to live in the places you've mentioned.
You "believe" that big cities are in a real estate BUBBLE, because YOU want then to be. You are basing your position solely on your own bias and emotion; not fact. OTOH, I am posting hard, cold, FACTS!
It is a fact that the North East is not only stable, pricewise, but NOT in any kind of BUBBLE at all.
It is also a fact, that there are real estate BUBBLES in various regions of this country...Southern Florida for one...which IS, indeed CRASHING somewhat. And nary a place there, is what one would call a BIG city. Heck, they aren't even middle sized cities!
One reason that Manhattan and the tri-state area's real estate is far from CRASHING, is that the market had a good year last year and this year, with the enormous dividends and stock that the seat owners got, when the NYSE merged AND went public, with the IPO, there is now vast sums of money burning holes in a lot of people's pockets!
And some of the Chicago exchanges went public, BEFORE the NYSE did, making those people extremely wealthy. And look for yet another Chicago exchange to go public in a year.
But of course, there are people like you, who post on FR, bloviating about all manner of things they neither know much , if anything at all about, calling other people, who actually DO know what they are talking about, "fools". That only makes YOU and they the fool.
And BTW...you have NO idea just WHERE I live, nor what I may or may not get caught in. All you are doing is assuming and wishing me ill. Yet YOU live in Washington state...a very BLUE state. LOL
And then there are others who think they are in a different category. They think they're the one with the real 'truth' and think everyone around them is stupid.
LOL. The more NP writes, the more obvious it is that NP knows zip.
I don't understand the anger level. Life is so much easier with a positive attitude.
I personally am thrilled that some people see the real estate market as only going up.
I understand that some people can't see the warning signs until after the train has struck them.
Usually, we call them liberals.
It's okay NP, we still love ya.
"You obviously HATE city life."
Yes, that is why I chose to live in Chicago for 10 years. [sarcasm]
Honestly, I don't think most cities provide a good value. Housing should be a lot less expensive when you're scrunched together like sardines. It's not.
Yes, we still visit cities, for business or pleasure. In the last 4 months, I've been to Seattle, Portland, SLC, San Antonio, Phoenix, LA, and Vancouver. Next month I'll be travelling to New Orleans. I for one wouldn't buy in a city again unless I was convinced it was a better value.
With high taxes, traffic and crime, prices would need to come down a lot to counter those negatives.
One key thing you leave out of your analysis of big cities and their relative value: in general, most of the good paying jobs are in cities. While you can certainly find cheaper housing in smaller towns, you won't find many high-paying jobs.
Instead of getting upset when people don't agree with you, think about how much easier life is when people disagree with you.
I used to get upset that some of my colleagues chose to spend their money on vacations and depreciating assets and never had enough money to buy their own home. Then I became a landlord, catering to those who chose to drive Mercedes and live in nice places they couldn't afford to buy. Their choices made my life a lot easier. A lot easier.
Think about it, if everybody felt the market was going to continue to spiral higher we'd all be jumping in to buy and we would be competing with you.
Your best friends are those who disagree with you. They're selling or they've already sold. If they're wrong, you win.
Good point. However, trends tell us otherwise, VC. More and more people are working out of the comfort of their own homes. I
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