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Replies (5)
- sunnyview
- Contributions:25139
I think that the market will continue to decline until it reaches levels that can be supported with the local incomes. Trying to buy at the lowest of the low should not be goal. The goal should be to seek value at a price that is supported by the local incomes and historical trends.
If you can buy with a PITI for less than rent, then it may make sense to buy if your employment is stable and you intend to stay in the same area for at least 5 years.
If you can buy with a PITI for less than rent, then it may make sense to buy if your employment is stable and you intend to stay in the same area for at least 5 years.
- Dan, "the_country_hick"
- Contributions:4699
The market is going to continue down more. When incomes have risen by around 35% since 1997 and house prices have risen much more house prices have to reset lower to historic standards for a long term sustainability. Low interest rates are only interfering with the needed housing recovery.
Even now a lot of areas have houses that cost at least 2 times what they did in 1997. That is to expensive.
This shows what the housing bubble looked like It also shows how bubbles form and die. Bubble dynamics says that prices drop to the beginning price and then go even lower when a bubble pops.
Do you know what the housing bubble really looks like? ... - Zillow Real Estate Advice
The federal reserve knows that house prices are to high.
The Fallacy of a Pain-Free Path to a Healthy Housing Market - Economic Letter, December 2010 - FRB Dallas
Interest rates being low only cause house prices to be higher. When interest rates go from 5% to 7% 23.7% of buying power is lost. That means a 5% $200k mortgage will suddenly shrink to a 7% $153k mortgage with the same monthly payment being made.
As incomes can not rise that quickly house prices can only be forced down further.
I do not buy at this time as I have many reasons to expect that lower house prices will be coming. I do not want to buy a $200k house only to see 8% interest rates in 3 or 4 years and realize I have lost over $60k in my houses value.
Even now a lot of areas have houses that cost at least 2 times what they did in 1997. That is to expensive.
This shows what the housing bubble looked like It also shows how bubbles form and die. Bubble dynamics says that prices drop to the beginning price and then go even lower when a bubble pops.
Do you know what the housing bubble really looks like? ... - Zillow Real Estate Advice
The federal reserve knows that house prices are to high.
The Fallacy of a Pain-Free Path to a Healthy Housing Market - Economic Letter, December 2010 - FRB Dallas
Interest rates being low only cause house prices to be higher. When interest rates go from 5% to 7% 23.7% of buying power is lost. That means a 5% $200k mortgage will suddenly shrink to a 7% $153k mortgage with the same monthly payment being made.
As incomes can not rise that quickly house prices can only be forced down further.
I do not buy at this time as I have many reasons to expect that lower house prices will be coming. I do not want to buy a $200k house only to see 8% interest rates in 3 or 4 years and realize I have lost over $60k in my houses value.
- Steve Roake, "Steve Roake"
- Contributions:285
The "missing buyers" are the move up buyers. These are people who first must be sellers and have frozen equity in their homes. First time buyers are the main type of buyer as they aren't tied to a current mortgage. Many people would buy a bigger home if they could sell their home for a profit.
The rest of the people who aren't buying may be waiting for rates to show signs of going up and prices to hit bottom. This probably won't happen until the unemployment rate goes down.
The rest of the people who aren't buying may be waiting for rates to show signs of going up and prices to hit bottom. This probably won't happen until the unemployment rate goes down.
- SteadyState
- Contributions:787
Home are too expensive for lenders to fund and buyers to afford. Consider the following three cities in the San Francisco Bay Area:
Sunnyvale: Median Home Price = 8 * Median Household Income
Cupertino: Median Home Price = 10 * Median Household Income
Saratoga: Median Home Price = 12 * Median Household Income
Only government intervention and funding have kept home prices inflated.
Private lenders will NOT fund such high risk loans.
People are NOT necessarily afraid of their jobs!
People do NOT believe that interest rates will go lower.
People do believe that the market will go lower because the government funded party MUST END sometime. Rates must go up. Government must cut back; no more interest deduction; no more tax credits, etc. Else we will become Greece or Italy.
Sunnyvale: Median Home Price = 8 * Median Household Income
Cupertino: Median Home Price = 10 * Median Household Income
Saratoga: Median Home Price = 12 * Median Household Income
Only government intervention and funding have kept home prices inflated.
Private lenders will NOT fund such high risk loans.
People are NOT necessarily afraid of their jobs!
People do NOT believe that interest rates will go lower.
People do believe that the market will go lower because the government funded party MUST END sometime. Rates must go up. Government must cut back; no more interest deduction; no more tax credits, etc. Else we will become Greece or Italy.
- Michael Emery, "MikeEmery"
- Contributions:7298
What's keeping me from buying a house today?
Folks who are not buying a house from me today.
Folks who are not buying a house from me today.
What is keeping you from buying a home today?
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- 5.0/5.0
- (5 reviews)
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