Homeowners Call a Bottom: Optimism or Delusion?

I believe that if the $15,000 tax credit becomes a reality (It still has to be synchronized with the House bill), it will trigger some buyers in the market. The question is, why do they cap it at $15,000? Other items I think still need to occur are a lifting of the Jumbo limits in some areas. Having only two numbers $417,000 and $700+ are not enough. There needs to be a sliding scale.

We shall see!

Above NY Times URL was too long, here’s a shorter version to the same chart:

tinyurl.com/HomePricesFor100Years

Lots more pain on the way in 2009, 2010, and 2011.

Common sense rules. The economy is still going down, jobless claims is increasing, and businesses are cutting/closing. Therefore house prices will continue to go down.
Most sellers are still hoping that the stimulus package will save them, and therefore still sell/list their homes at high prices. Real estate brokers still want large profits( most of them). When buyers like myself go to the bank with excellent credit, the bank tells us that even though our credit is good the house is not appraised for that value, and will NOT give a loan, unless the buyer is willing to fork up the differences .Buyers are not going to do this when their stocks, 401K, and other investments are losing big time every posting. This is one of the major reasons why home buying is becoming difficult. The buyers are there, but the prices are still inflated, and banks are not giving inflated loans like before. Sellers need to be realistic and brokers need to cut their margins.

oldnavajo: You are basing your numbers on a Zestimate and not actual sales prices. Unless you have the previous sales prices for those homes you cannot say that prices are rising. For all we know those homes could be selling for 300,000 less than their “Zestimate” was in 2005 or 2006. If you said that the houses sold were 15,000 dollars above the sale price in 2005 then you would have a valid argument. The zillow estimate is just that, an estimate. I have seen houses sell for 200k over the zestimate as well as 200k under the zestimate. It is a helpful tool, but you shouldn’t compare sale prices to a “zestimate.”

The 15000 tax credit has just been wiped out by senate negotiations. Sorry. The old 7500 credit will at least be in place, however it may still have to be repayed. Lots of people are going to be upset with this.

Agreed: These handouts, credits, easy money, etc. should be done away with. What we need is for home prices to come down to an “affordable” rate and for people who shouldn’t own a home to get out of the market via foreclosure. Low home prices are a good thing; but the media (which is controlled by baby boomers; the ones who want values to be high) is saying that low home prices are a bad thing. However for the future residents and leaders of this country (the under 30 crowd who hasn’t bought yet) low home prices are the best thing that is happening right now. This economy needs to be cleansed of all of the fake wealth and bad business that got us into this situation.

With a continuing increase in unemployment and no marked sign of a financial turnaround, foreclosures will continue the current trend. But don’t forget, for all those who had overpaid and over borrowed for their home, fueling the bubble, there are a lot of people who sold at the high and are sitting on a lot of cash. The same goes for the stock market. When a bubble bursts, prices simply return to where they should have been. That should not be confused with a normal downturn due to the deterioration of the general economy. Although, that may trigger the bursting of an existing bubble. At this point, it may be less important to call the bottom than to realize that even if the economy recovers and home prices stop falling, it will be a slow climb afterward if we’d learned our lesson. It’s just too bad for the people who overpaid in the bubble. But they are also at fault for helping to fuel the bubble at the time. People are never forced to own homes; they can always rent.

Jimbo01. You don’t read to well do you. The question was is a bottoming forming. Of course these houses are selling for 100′s of thousands less than they did at the peak in ’05 and ’06. Nobody said they were selling for more. I’m telling you that this neighborhood has bottomed and is rising from the bottom. I’m using zillows zestimates and sale price per square footage. You can shoot your mouth off like you know what your talking about but go pick on somebody else. These homes are being purchased by experienced multi millionaire realestate investors who in addition to buying them they are planning on spending an additional 100k+ on upgrading them. So unless your a bigger millionaire than them I suggest you keep your line of BS to yourself.

oldnavajo writes: “In the 4th quarter (Nov.) a house sold for a $120k less than the zestimate. Here in the 1st quarter of 09 (Jan) another house sold for $10k more than the zestimate.”

Zestimates don’t mean much in determining market conditions. They are a theoretical estimate. You need to look at actual home sale transactions.

People are selling for losses, sometimes large losses, in the premium towns in my area.

Jennifer, this is not a claim it is a fact. Sorry I’m not going to give you a zip I have nothing to prove. Besides the sales are so new and some still in escrow that Zillow and the other services won’t even pick up the data for another 30 to 45 days. Even if I did give you a zip, the zip is to big and covers to much area.

Jennifer, I’m not saying that a bottom is in place everywhere. Only in this specific neighborhood. It has some very unique qualities which I’m not going to get into. This is my 4th realestate recession and this one appears to be playing out like the other 3 before it. The only thing that appears to be different is that the media and the government seem to be making it out to be bigger than what it is. Personally I think things were much worse back in the ’80-’82 recession.

This is an example of a real estate fact: A home in Lexington Massachusetts, which is an upscale town considered to be “immune” from the real estate bubble in REALTOR circles around here, had a selling price in 1999 of 390,000. It sold last week for 450,000. That is not even keeping pace with inflation. The seller made no gain and technically lost money. That is a fact. Inflation adjusted that home should be selling for 497,000 today, and no, it was not a foreclosure or short sale.

The only way to find the bottom is when it has come and gone…….a fact repeated in history time and time again.

The housing market can either be an appreciating market or a depreciating market. Right now we are in a depreciating market. Seller’s need to stop treating their house like a product and treat it like a commodity, which it is. Until inventory levels go down, prices will continue to drop. The current inventory levels will take over a year to get rid of. We have not come to the bottoming out of the real estate market. Unfortunately, it is going to get worse. If sellers want to overprice their home, it will sit on the market for a very long time.

A few things. First, that chart Jennifer posted on Feb 10 doesn’t make sense to me. Maybe I am dumb, but it appears by it that home prices in roughly 1895 were the same 105 years later in 2000. Help educate me if I am reading it wrong.

Second, an observation: in Orange County, CA, the number of sales for all of 2008 (24,527) were 19% greater than 2007. Also, in Jan. ’09 sales were 68% greater than Jan. ’08. Additionally, inventory of available homes for sale has decreased 36% from its high in 2007. Finally, prices year over year are still much lower but: 1) the rate of decrease has been flattening, and; 2) there were actually three months in 2008 where sales prices rose compared to the previous month.

Now, a feeling. I’ve been following the real estate market since 1985. To me the market today feels just like where we were in 1996-1997. That’s when housing sales began their recovery from that recession. Inventory dropped, sales increased and prices then began their long climb upward. We still had a financial mess then and we were recovering from the S&L bailout and all those problems that brought. Again, just a gut feeling but I do believe we are bumping along the bottom. Will the “official” price recovery be March? April? May? All I can say is that we are very close.

Here’s a thought: whether you think I’m an idiot or a genius, save the url of this thread and come back to it in, say, July. If it turns out I am an idiot, make a comment then and let me know. I will humbly acknowledge it. If it turns out I am a genius, comment on that too.

Thanks for reading.

I believe the market will pick up this year. What we need to do is be a team member. The government has given us a boost but the bottom line is it is up to us, the people, to get this economy going again from buying a cup of coffee at your local “Cup of Joe” to buying a house whether you qualify for the tax credit or not. Let’s not only think positive but start talking positive. It’s a proven fact that smiles are contagious. Be realistic yet worry not.

I have the solution, we need massive amounts of capital infusion into the housing market. What does America have to sell, the ‘American Dream’ and security knowing that if things go bad in their native country, the have dual citizenship if they pass a Homeland Security test.
The American government makes an offer to the world, you can get a fastracked America family citizenship package if you purchase a home with 35% down, you own a piece of the dream. By offering 1-2 million packages, the housing market would rock, jobs in housing related fields improves ( which is a great part of the current unemployment problem ), and it wouldn’t cost the taxpayers billions, just go out and sell America. Plus America has one of the greatest salesmen on earth, President Obama.
If homeowners knew their biggest investment may start appreciating, consumer confidence grows, as will the economy and more jobs will return.
America was built by immigrants, let’s go back to what works and rebuild America with new investors and new talent.