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Answers (8)
- Pasadenan
- Contributions:21458
Median Value trend curve for Agoura Hills:
Don't get confused by the temporary "plateau" created by the several "first time buyer" tax incentives. Everyone knows that only delayed the market correction and created artificially high prices about 4 times the amount of the incentive.
Don't get confused by the temporary "plateau" created by the several "first time buyer" tax incentives. Everyone knows that only delayed the market correction and created artificially high prices about 4 times the amount of the incentive.
- Pasadenan
- Contributions:21458
Use the "local info" tab above, and download all the local trend data.
Then in Excel, add an "inflation" curve, from January 1997 forward.
You want the slope of the median value curve to be reaching zero. (Or upper or lower tier trend if more appropriate. Also consider SFR or Condo, or 1 Bed, 2 Bed... curves if more applicable). You also want the value curve to reach or go below the inflation curve that you have added. Try different assumptions on the inflation rate.
Make sure you look at the foreclosure saturation curves. If more than 5% of the market is "foreclosures", you know prices are still dropping. A normal market should be about 1% of the market being foreclosures. Look at the trend to see when that starts tapering off.
And then you want to check housing turn-over rate. (Inverse of percent sold per year). If houses are taking 30 years to turn over or even over 24 years... the market is fairly stable and there is not much risk of major loss. If houses are turning over in less than 7 years on average, there is no neighborhood stability and there is high risk in buying in that market.
Also look at the % declining in value trends, and the sold to list price ratio trends.
And then go to the US Bureau of Labor and Statistics web-page for the "region", and get the data on employment opportunities and unemployment rate. If there is no work, there is high risk of additional foreclosures, and not being able to sustain housing prices.
Similarly, check the Census.Gov for the median income for the area as compared to median housing prices.
Then in Excel, add an "inflation" curve, from January 1997 forward.
You want the slope of the median value curve to be reaching zero. (Or upper or lower tier trend if more appropriate. Also consider SFR or Condo, or 1 Bed, 2 Bed... curves if more applicable). You also want the value curve to reach or go below the inflation curve that you have added. Try different assumptions on the inflation rate.
Make sure you look at the foreclosure saturation curves. If more than 5% of the market is "foreclosures", you know prices are still dropping. A normal market should be about 1% of the market being foreclosures. Look at the trend to see when that starts tapering off.
And then you want to check housing turn-over rate. (Inverse of percent sold per year). If houses are taking 30 years to turn over or even over 24 years... the market is fairly stable and there is not much risk of major loss. If houses are turning over in less than 7 years on average, there is no neighborhood stability and there is high risk in buying in that market.
Also look at the % declining in value trends, and the sold to list price ratio trends.
And then go to the US Bureau of Labor and Statistics web-page for the "region", and get the data on employment opportunities and unemployment rate. If there is no work, there is high risk of additional foreclosures, and not being able to sustain housing prices.
Similarly, check the Census.Gov for the median income for the area as compared to median housing prices.
- SteadyState
- Contributions:787
I would wait till the prices continue to rise for three months on a seasonally adjusted basis.
- sunnyview
- Contributions:25139
I think that you need to keep any eye on your PITI (mortgage, taxes, insurance) cost vs what the area rents are. You also need to consider prebubble historical prices for the area. Some areas do not pencil out for PITI vs rent and they have not penciled out that way for many years. Those areas are based on ownership and the overall appreciation of houses instead of monthly cost, but those areas are relatively few.
Focus on the long term value and the cost of owning vs rent. It can be smart to buy before the bottom if low rates mean that you can buy the house you want for not too much above the likely bottom as long as your monthly cost is close to or less than rents in the area. You have to weigh the numbers and see what you think. Most people do not buy at the ultimate bottom or sell at the ultimate top, but you do not have to do that to make a good deal or to seek value in your market.
Focus on the long term value and the cost of owning vs rent. It can be smart to buy before the bottom if low rates mean that you can buy the house you want for not too much above the likely bottom as long as your monthly cost is close to or less than rents in the area. You have to weigh the numbers and see what you think. Most people do not buy at the ultimate bottom or sell at the ultimate top, but you do not have to do that to make a good deal or to seek value in your market.
- Chris Westwood
- Contributions:137
Dear Concerned Buyer,
I completely understand your concern regarding declining values. If I were in your shoes I would feel the same way. Having said that, I do strongly feel the worst is over in regards to price depreciation and I would be more concerned with increases in the interest rates. Prices have obviously come down from their peaks, however, compared to surrounding areas, Agoura hasn't seen as much depreciation. For instance, in Morrison Ranch, at the peak a 2400 sq/ft. home was selling for around 900K, now they are selling for around 710K. That's only a 20% decline, where much of the market has fallen at least 30% or more from their peaks. Agoura is a very desirable location and has remained strong in part because of the income level in the area as well as the amazing school district. What are your goals? Are you going to be living in this home long term or do you feel your living situation will change in the near future to where you will need to sell to upsize/downsize? If this home is going to be long term, I think you will be just fine and it would pay to take advantage of today's phenomenally low rates. Hope this helps and best of luck :)
I completely understand your concern regarding declining values. If I were in your shoes I would feel the same way. Having said that, I do strongly feel the worst is over in regards to price depreciation and I would be more concerned with increases in the interest rates. Prices have obviously come down from their peaks, however, compared to surrounding areas, Agoura hasn't seen as much depreciation. For instance, in Morrison Ranch, at the peak a 2400 sq/ft. home was selling for around 900K, now they are selling for around 710K. That's only a 20% decline, where much of the market has fallen at least 30% or more from their peaks. Agoura is a very desirable location and has remained strong in part because of the income level in the area as well as the amazing school district. What are your goals? Are you going to be living in this home long term or do you feel your living situation will change in the near future to where you will need to sell to upsize/downsize? If this home is going to be long term, I think you will be just fine and it would pay to take advantage of today's phenomenally low rates. Hope this helps and best of luck :)
- Cindy Quinton, "Cindy Quinton"
- Contributions:1322
Do you think values are dropping, or are people listing at a price and then having to drop it to sell?
Also, unless you are buying with cash, I don't see how interest rates can go much lower. That has a significant impact on the final cost of the house.
Lastly, don't forget to figure in the tax implication of home owning. There are so many factors it makes my head hurt. Good luck, I plan to purchase myself, so I could use a four leaf clover myself.
Also, unless you are buying with cash, I don't see how interest rates can go much lower. That has a significant impact on the final cost of the house.
Lastly, don't forget to figure in the tax implication of home owning. There are so many factors it makes my head hurt. Good luck, I plan to purchase myself, so I could use a four leaf clover myself.
- Shawn Ryan Rosa, "sryan1980"
- Contributions:493
dont try to time the market. find a good deal on a home you like and lock in today's historically low interest rate on a 30 yr fixed rate mortgage
- Dan, "the_country_hick"
- Contributions:4697
Wait until house prices have stabilized. If house prices remain about the same for 6 months it should be stable. (ignoring the free $8,000 to buy a house that came and went away)
Do not forget that interest rates affect house prices. Houses are bought with borrowed money. As a result when the cost of borrowing money increases the money available to buy houses on a relatively fixed income decreases.
If you have $500 a month for a mortgage only payment you can get
A 30 year $100,000 mortgage costs $491.94 a month at 4.25%.
A 30 year $82,000 mortgage costs $491.63 a month at 6.00%
A 30 year $80,000 mortgage costs $492.57 a month at 6.25%
A 30 year $69,000 mortgage costs $494.32 a month at 7.75%
A 30 year $67,000 mortgage costs $491.62 a month at 8.00%
A 30 year $56,000 mortgage costs $491.44 a month at 10.0%
That means when interest rates rise house prices will be forced down. I would think waiting until interest rates go back up would be a good move but others may disagree.
Do not forget that interest rates affect house prices. Houses are bought with borrowed money. As a result when the cost of borrowing money increases the money available to buy houses on a relatively fixed income decreases.
If you have $500 a month for a mortgage only payment you can get
A 30 year $100,000 mortgage costs $491.94 a month at 4.25%.
A 30 year $82,000 mortgage costs $491.63 a month at 6.00%
A 30 year $80,000 mortgage costs $492.57 a month at 6.25%
A 30 year $69,000 mortgage costs $494.32 a month at 7.75%
A 30 year $67,000 mortgage costs $491.62 a month at 8.00%
A 30 year $56,000 mortgage costs $491.44 a month at 10.0%
That means when interest rates rise house prices will be forced down. I would think waiting until interest rates go back up would be a good move but others may disagree.
How long would you suggest a buyer wait in a decreasing market?
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