Posted on 12/13/2006 4:40:07 AM PST by 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
(Excerpt) Read more at ocregister.com ...
It happened in California in the early 80's and again the early 90's, each time came back stronger than ever. I look at a home like the stock market... long term gains as long as you choose wisely in the first place.
Psych!
"Democrats in Congress will have a plan for dealing with this."
Well, Bush failed to reverse price declines, even after the desperate attempt to reduce supply by dynamiting the levees in New Orleans.
Democrats may attempt to write more legislation to alter the principles of supply vs. demand.
Probably upset because it messes with the comps in the area.
OK... OK...
To formalize the challenge:
IF the OFHEO reports (at about 5/15/2007) that median home prices have increased in the first quarter of 2007 from the last quarter of 2006, THEN you will owe me a limerick extolling my wisdom, etc., which shall published on one of FR's housing threads.
IF the OFHEO reports that median home prices have decreased in the first quarter of 2007 from the last quarter of 2006, THEN I will owe you a limerick extolling your wisdom, etc., which shall be published on one of FR's housing bubble threads.
Deal?
They also pointed out, correctly, that if a person sees a problem making their mortgage, call the lender the lenders would rather deal than have to go through the expense of foreclosing.
Here's a forecast of New England home sales prices:
Connecticut:This year, the median sales price is forecast to rise...,to 321,900, up 5.5 percent.
Maine: Statewide, the median price is forecast to rise at an annual average of 1.3 percent through 2010,
Massachusetts: Prices are then expected to level off or rise slowly through 2010.
Ne Hampshire: the median statewide home price is forecast to rise at an annual average of 1.2 percent,
Rhode Island: The median home price is forecast to rise 1 percent next year,
Vermont: From 2005 through 2010, home prices are projected to rise at an annual average rate of 2.6 percent in Vermont
That sure doesn't look like any bubble to me.
After being called a jerk by extexan, he sure got quiet when i post some info to show who th real liar is. Gigi doesn't seem to have much to say, either.
Yes, in principle. The problem is, I don't think the OFHEO numbers are as accurate as they could be. For instance, they only include numbers pertaining to loans of something like $415,000 or less, and they mix in appraisal numbers with actual sales price numbers. If you can think of a more accurate housing report, I'm game. (If we can't agree on this, I will probably still be game...but I want your word that you will make a good faith effort to assist me in finding a better one).
Also, we have to agree that we will publish said limerick every time whichever report we choose comes out for the next two years.
Perhaps you will find this house to be a better "bargain":
http://www.siroffices.com/brokerages/greenwich/details.asp?Propertynumber=0063143&quicksearchyn=y&FeatureProp=y&splash=greenwich
The point I hope to make here is that applying crude statistics to discrete local markets is meaningless:
"...sound and fury -- signifying nothing..."
You nailed his MO. Take a miniscule extreme worst case scenario and try apply it as if it were global. Chicken little syndrome.
Must be a weekday.
Or the weekend.
"Owning is still better than renting ...."
I'm renting a $400,000 home for $1,300 a month. That allows me to save an additional $2,000 a month. Now I have time to look for a great deal from a seller who has to cut their price. I'll end up buying a $500,000 house for $300,000 from a desperate developer.
later
Now you've done it!
Gigi and extex are planning your show trial....after the revolution when the purges commence.
Unfortunately, not always true. The couple in this article are one example of the situation many are in or will be in soon. You see, they have an ARM that started w/ a teaser rate. Their payment is now $3000 and will double when the ARM adjusts. They need to refinance, but they can't refi because of what the home is worth today. They can't afford $6000 a month. They'll probably lose the home and kill their credit.
Maybe I'm a jerk, but I don't feel bad for them. They knew what they were getting into. If they didn't consider the risks, that's their own fault. I guarantee they didn't need a $800,000 home.
Oh, yeah. If you do something stupid enough, you'll get yourself jammed up. But that's always been the case, hasn't it?
If I took all my assets and converted them to singles and had a big bonfire in the backyard, I wouldn't have any cash left for lunch-money. That's why I don't do it!
PS The OFHEO numbers also only pick up single family homes, not Condos...which often do worse than SFHs. In short, the OFHEO tends to distort housing prices to the upside. Or in the words of housing economist Thomas Lawler "...there's a growing view that this index (OFHEO)...doesn't reflect what's really going on with home prices."
How about using the NAR report?
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