Falling prices trap new homebuyers

The Orange County Register ^ | December 13, 2006 | JEFF COLLINS

[GodGunsGuts]

Wednesday, December 13, 2006

Falling prices trap new homebuyers

Neighbors in a new Garden Grove tract say a developer's plan to slash prices by about $140,000 has left them owing more for their homes than they're now worth.

By JEFF COLLINS

The Orange County Register

[bert]

You are precisely on target. If you could afford the payment, the fact the current market value has declined is pretty much irrelevant.

A residence is a long term investment and short term fluctuations should not be a worrisome consideration.

If you have an increas in the adjustable rate loan and want to re finance there may be some problems. That is however financial risk and was theoretically already paid for by the period of low payments.

[GodGunsGuts]

Looks like the Houston area should hold steady, but who knows?

But the rest of the USA better watch out below!

See the following website, very interesting graph showing which areas are most likely to fall relative to inflation...

http://www.housingbubblebust.com/HM/HM-Metros.html

[doc30]

$870,000 for that house? You could score something like that for 1/4 the price on the east coast.

In the Tampa Bay FL area, my guess would be about $400-500K. I'm anxiously waiting for prices to come down more so I can get a bigger house. Need more room.

[JoeGar]

What your home is worth today is irrelevant unless you sell it today.

Or if, as in the article, you want to refinance it to get out of the stupid ARM you got yourself into!

[doc30]

Toll Brothers hasn't dropped prices in NJ. In fact, they have increased the prices from $500,000 to $800,000 in the last 3 years.. On the same models in the same towns...

3 years covers the big rise in prices everywhere. What's happened in the lasst 3 months?

[Graybeard58]

And one-sixth in the midwest.

I live in central Illinois and my house has only about tripled in value in the past 12 years, while my real estate taxes have only risen about 25%. My house is paid for, I like it and have no plans to move.

The hub bub about falling prices doesn't directly effect me and won't unless the moonbats in congress come up with a plan to bail out home buyers who made bad decisions.

[em2vn]

What did Cavuto have to do with this?

[RSmithOpt]

You are 100% on target!

Here in NC, cities and counties are pushing to reassess every 4 years which is completely BS.

Reason being, if anyone studies the US and local economies, bears and bulls, so to speak, run a 7-8 year cycle on average.

A seriously great percentage of folks in charge of running our government ironically hound the hell out of drug addicts' and alcoholics in society with a blind 'holier than thou' attitude toward the addicts behaviors, while in the meantime, the elected officials are even more addicted to money and power.

Nuttin' but 'crack whores' in a sense; a always sniffin' around the backside cracks of us citizens to see if anything is left in our wallets. Willful blatant corruption, deceit, lies and practically do anything to get their next fix / high from yours and my hard earned dollars.

[JoeGar]

California home prices have been way out of control.

The last time I was in San Diego (2003), I read that just the building permits for a 3-bedroom, 2-bath home costs $87,000 -- and that's before paying for the land and the house!

[Darnright]

>If your home is assessed at more than it's worth you will pay more in taxes than you should.<

Our county just re-assessed property. Land went from $4,000 an acre to $10,000 an acre, and, of course, the houses are up in value. The board of supervisors has yet to adjust new tax rates. They're fixing to have a big fight on their hands, if they get greedy.

There are for sale signs all over the place. Those of us who bought our homes for the long run are going to get royally hosed, while a few farmers who've sold off large tracts of land recently are making out like bandits.

[em2vn]

Remember, this is FR. Sometimes conservatism is overshadowed by stupidity.

[N3WBI3]

I'm not a fan of the whole 'real estate is going to collapse' bandwagon but certainly there are many areas where it is overpriced.

My wife and I two years ago were faced with a choice we had a baby six months way and we did not want to live in an apartment. On the same side we had been married a little more than half a year so we did not have what I would consider a large enough down payment for a nice house.

We found a condo conversion project in a great school district and a great neighborhood the only problem was it was a rather urban block of four unit apartments all owned by different people in a suburban neighborhood. The circle bound by the houses is infamous in the city, we took the chance and bought the first one for 115,000 we put another 25k into it (central air / new heater, hardwood floors, whole new kitchen, whole new bathroom, and a ton of little stuff) anded up with a rather nice 1k sq ft condo for about 1K a month with association fees.

The neighborhood was still pretty rough but it is turning a second building has went condo and three more are in the process of converting in the next six months. The last unit sold for 155 (about 18 months after we purchased ours) and even the non upgraded units with carpet 1980's kitchens / bathrooms / fixtures / no AC are going for 125.

Meanwhile I know people who have bought a 400K house only to see one sold a few weeks later go for 25% less. The twin cities will not collapse the way many state but it is correcting. The trick is to do what you do when the stock market corrects look for the bargains, look for the diamonds in the rough (and thats not McMansions in new developments)

[Tribune7]

Assessment is usually based on sale price, although readjustments happen and I suspect a lot are coming.

[linda_22003]

We did the same thing, and while we've never had one income completely disappear, we have had our ups and downs with specific jobs.

Of course, we couldn't afford our house today, most likely, the way it has appreciated, but then, we don't have to buy it today.

[Fierce Allegiance]

Sometimes? I see it a LOT on these threads, and the RINORudy threads.

[hawkaw]

Interesting comments and thanks.

I guess for me, my bi-weekly mortagage payment was cheaper than rent. I am almost finished my loan - just a couple years left - and thus, will not have to make a monthly payment.

Oddly, when I bought in 1994, the market dropped my house by about 20,000 dollars. Now I am up by about 75,000 from my original price I paid.

You are right on the tax issue and of course the maintenance issue. But if I rent, part of my landlord's rental rate would go to the tax.

Having said all of that, your facts are correct and in those cases you have shown, renting would seem to be the way to go in certain circunstances.

Again, thanks for the information and take care.

[thinking]

I don't recall any complaints, concerning homeowners being trapped in their homes due rising prices

[savedbygrace]

Many years ago, I lived in the D. C. area. We used to refer to rapidly rising real estate prices there as 'a bunch o' white folks cheatin' one another'.

Today, the white folks aren't alone.

[hawkaw]

LOL!

[Esther Ruth]

What's going to happen to property taxes when the value of so many homes begins to go down? Will they go down? The brand new big schools, teacher's salaries, fancy libraries, 6 lane roads through all these new communities etc are all based on the property taxes they would receive based on the over-priced homes.