Housing Market

[Rudyard K]

Originally Posted by Marcus Aurelius

I then bought a house for 186k. Now it's worth 160k. I'm under water and now do I send them the keys or when I want a new place to live I swallow the loss and pay the diff?

You're not really asking yourself the right questions.

Can you afford the payments?
Are you happy with your homstead?
Does it fullfill your needs?
Are you planning to leave the area any time soon?

It doesn't matter what the percieved value of the house is. If you can answer the first three questions with a "Yes" and the last one with a "No", then why even fret over a decision that does not need to be made. The real value of an asset is the value that a willing seller will sell to a willing buyer, when neither is under undue influence to act. In 3 years...5 years...15 years...odds are that you will have some kind of equity in the dwelling. If the answers to the above questions are still, Yes, yes, yes and no...then it won't matter then either. But if those answers have changed...you will probably be in a much better position to act.

[flinde]

Here in SA, things are getting a little scary. We were stable pretty much since 07. I think my house was worth about 10% less in 2009 than 2007. Not a big deal.

Now, there are probably 5% to 8% of the houses in my subdivision for sale.

This is a 20 year old manned gated subdivision in the NW of $400,000 (just a few) to $1,500,00 houses (just a few). Most houses are 500k to 700k. An experienced realtor told me that there are a number of short sales on the market in my subdivision and others.

Short sales?? In SA?? Unbelievable!! We havent seen that since George Bush's dad was president and the savings and loans died. A market with significant short sales on the market is on the precipice of really falling.

[Marcus Aurelius]

Originally Posted by Rudyard K

You're not really asking yourself the right questions.

Can you afford the payments?
Are you happy with your homstead?
Does it fullfill your needs?
Are you planning to leave the area any time soon?

It doesn't matter what the percieved value of the house is. If you can answer the first three questions with a "Yes" and the last one with a "No", then why even fret over a decision that does not need to be made. The real value of an asset is the value that a willing seller will sell to a willing buyer, when neither is under undue influence to act. In 3 years...5 years...15 years...odds are that you will have some kind of equity in the dwelling. If the answers to the above questions are still, Yes, yes, yes and no...then it won't matter then either. But if those answers have changed...you will probably be in a much better position to act.

Yes,
no,
no,
perhaps.

[guest041110]

Originally Posted by flinde

Here in SA, things are getting a little scary. We were stable pretty much since 07. I think my house was worth about 10% less in 2009 than 2007. Not a big deal.

Now, there are probably 5% to 8% of the houses in my subdivision for sale.

This is a 20 year old manned gated subdivision in the NW of $400,000 (just a few) to $1,500,00 houses (just a few). Most houses are 500k to 700k. An experienced realtor told me that there are a number of short sales on the market in my subdivision and others.

Short sales?? In SA?? Unbelievable!! We havent seen that since George Bush's dad was president and the savings and loans died. A market with significant short sales on the market is on the precipice of really falling.

Yeppers... that is what I noticed as well when I was recently looking at homes to buy in the area. More than likely I will go somewhere further out towards Boerne or Bandera and do a commute but who knows? Even just north of 1604 on 281 is a great place that I first thought of buying in along the Guadalupe River back in 2000... glad I did not do that. Yet now it looks good there too for a buyer and it is quiet. As for the market in SA, I was living in SA in the late ‘80’s and saw what you are referencing back then as well when I was considering a purchase.

[Rudyard K]

Originally Posted by Marcus Aurelius

Yes,
no,
no,
perhaps.

Then the answer for you is personal...not economic. And like your decision with your X...only the mirror knows the answer.

If you are asking about timing?...my crystal ball is no better than the next man's. I don't think there will be significant changes in the next 6-8 months...one way or another.

But inflation is coming. Maybe in a year...maybe in three years...maybe in five years...but it is coming, and it is coming big. As such, owning assets is a hell of a lot better in inflationary times than owning cash.

[WTF]

I suggest you boys just fall in love, follow your lil lo hearts and quit worrying about that ter $$$$$ and housing bubble and inflation. After all, if these threads can be believed that is what makes the majority on here happy. Love sweet love! Ahhhhhhhhhhhhhhh.

[atlcomedy]

Originally Posted by SR Only

--------------------
News Alert: New home sales hit record low in January
10:03 AM EST Wednesday, February 24, 2010
--------------------

Sales of new homes plunged to a record low in January, underscoring the formidable challenges facing the housing industry as it tries to recover from the worst slump in decades.

The Commerce Department reported Wednesday that new home sales dropped 11.2 percent last month to a seasonally adjusted annual sales pace of 309,000 units, the lowest level on records going back nearly a half century. The big drop was a surprise to economists who had expected sales would rebound to an annual rate of 360,000 units.
http://www.washingtonpost.com/wp-dyn...l?hpid=topnews

While this is obviously not good for those in the building trades (& indirectly for about everyone), as a homeowner concerned about home values I'm more concerned the selling prices of existing homes and how well they are holding up. Adding unnecessary supply to an already bad market only puts more pressure on pricing.

Originally Posted by Marcus Aurelius

The X got the estate. It was worth it. I then bought a house for 186k. Now it's worth 160k. .

Probably about right for stable parts of the Midwest that haven't been hit too hard, but many areas of the Country would love to only be down <15%

Originally Posted by Marcus Aurelius

Yes,
no,
no,
perhaps.

Originally Posted by Rudyard K

Then the answer for you is personal...not economic. And like your decision with your X...only the mirror knows the answer.

If you are asking about timing?...my crystal ball is no better than the next man's. I don't think there will be significant changes in the next 6-8 months...one way or another.

But inflation is coming. Maybe in a year...maybe in three years...maybe in five years...but it is coming, and it is coming big. As such, owning assets is a hell of a lot better in inflationary times than owning cash.

Rk asks the right questions and makes a good point about this kind of being a moot point if you don't want/need to sell.

But since you want to...I got to tell you I know a lot of people in the same boat...would like to but really don't think they can & are unhappy but don't feel like they have any options. On the other hand some are approaching this a little differently & moving(this assumes you can handle a loss on the current home and coming up with a suitable down payment on the new one... They figure that whatever hit they take on the current place they recoup by buying in a soft market. Net when they sell 5, 10, 15 years down the road they are in about the same place, but are happier with the place they are living in the interim.

[atlcomedy]

Originally Posted by flinde

Here in SA, things are getting a little scary. We were stable pretty much since 07. I think my house was worth about 10% less in 2009 than 2007. Not a big deal.

Now, there are probably 5% to 8% of the houses in my subdivision for sale.

This is a 20 year old manned gated subdivision in the NW of $400,000 (just a few) to $1,500,00 houses (just a few). Most houses are 500k to 700k. An experienced realtor told me that there are a number of short sales on the market in my subdivision and others.

Short sales?? In SA?? Unbelievable!! We havent seen that since George Bush's dad was president and the savings and loans died. A market with significant short sales on the market is on the precipice of really falling.

The important thing is not the absolute % of houses on the market, but the change in the % on the market. I have to say I know a lot of high end places that were double or triple your 5-8% even in boom times. (Those days are long gone but, I think some people just casually listed their home with no sense of urgency whatsoever and just figured if someone wanted to give 'em "their price" they were happy to take it and find somewhere else to live)

I can't say I wouldn't share your concern, but I would think about the amount of turnover you've had in the last few years. The good news about your subdivision being 20 years old is if there hasn't been too much turnover, you at least should have a pretty strong number of owners that have significant equity in their places (that is not only did they likely see some appreciation, 20 years ago you actually had to put up a decent down payment - contrast with the "hot new golf community" built last decade).

[69er]

I think the answer is not as simple as multiple choice.

For example, the Silicon Valley saw large increases in property values, and has seen some large declines, as jobs in the area have severely been cut. Areas where property was plentiful have seen little or no decline in property value, as competion had been stong before the economic downturn.

Another large effect is market segment. There are fewer buyers for the most expensive properties, which has almost universally eroded their value. Mid-priced homes have seen modest increases in some cases, as some buyers are taking lower interest rates as an opportunity to trade up.

So, it is all about individual cases. In general... I think you can't generalize right now on this topic. ;-)

[TexTushHog]

Several points. First, a six month time horizon is awfully short to accurate predict anything, much less something as complex as the housing market. If you need to buy or sell a house now or six months form now, it's very likely that timing won't make much difference. To get a time horizon that means something, you're going to need to look at 6 years, not 6 months.

Second, as quite a few others have pointed out, there is no "housing market." There isn't even a "Dallas housing marked." It's more like "the condo market above $350k in uptown Dallas," to get specific enough to give real answers. A very segmented market both geographically and in terms of prices.

P.J. has made some general geographic observations that I generally agree with. But I still think you're going to have to narrow your question quite a bit to get any meaningful information.

[woodyboyd]

Nicolette, the housing market is going down. The federal reserve has been buying up mortgages, which lowers mortgage interest rates, and they are going to scale back doing so.

And you can see a real interesting chart here, http://seattlebubble.com/blog/2010/0...income-ratios/

Look at the last column income:rent, and you can see how rational the pricing is and how uniform it is.

Now if you look at home prices: income, some cities jump out as being way, way overpriced. A rule of thumb is a house should go for double one's income, so any market over a ratio of two I would be concerned about.

Finally, the price:rent ratio is where you can see where the housing bubble has still not deflated. When you look at these ratios in SF and NYC, a person would have to be insane to buy there. OTOH, buying versus renting makes a lot sense in Detroit not that anyone would want to live there.

[nevergaveitathought]

we need to be able to draw charts and graphs

[Marcus Aurelius]

Sell the house.
Find a parcel.
Live in a Yurt.
http://www.yurts.com/

[Guest083011]

The rental market has been fairly strong of late. Low end and high end (why tie up cash in a devaluating or fluctuating instrument?).

[atlcomedy]

Originally Posted by SR Only

The rental market has been fairly strong of late. Low end and high end (why tie up cash in a devaluating or fluctuating instrument?).

That may be true in some areas, but like the purchase market, everything is local with the rental market as well.

But if you want to make a macro-statement, maybe it is the rental market is holding up better than the purchase market? That is I think rents have taken a hit (in many places) but not as bad as home values.

I'll admit to not knowing too much about the rental market for single family homes, and I have to think it is a relatively small market to begin with, but I imagine that is an interesting segment. On one hand you have a lot of families (man, wife, some kids) that are being displaced from homes (foreclosures, etc.) that need a place to live but don't really "fit" in a traditional apartment. On the other hand there can't be much room for pricing; in many cases the reason they left their home was they couldn't make their monthly nut.