The housing bubble bursts! Where's the bottom?

[soulcougher73]

What are your wages compared to 10, 15 and 20 years ago? Have your wages tripled in the past 10 years? How about tripled in the past 5 years?

Like most Americans, your probably making close to what you were making 10 years ago, maybe even 15 years ago.

Look for the price of housing to adjust back to the same price to when people could afford to buy a home. This might be prices 15 years ago, it might be prices 20 years ago.

Personally, I would like to see the price of housing adjust back to what they were back in the 1980s and 1990s. That was the last time I remember an average middle class family actually being to afford a home.

This would be nice. Cant expect people whos salary only went up 30% in 10 years to buy a house whos value went up 200% in those same 10 years. That is just math fail.

 

[Texashiker]

This would be nice. Cant expect people whos salary only went up 30% in 10 years to buy a house whos value went up 200% in those same 10 years. That is just math fail.

I am making "about" the same wages I was making in 1990 - 1996.

But in the in past 15 years, prices of housing around here has more then tripled.

I look for the housing market to continue to crash until housing becomes affordable, and people can actually "afford" to buy a home.

 

[EagleKeeper]

I am making "about" the same wages I was making in 1990 - 1996.

But in the in past 15 years, prices of housing around here has more then tripled.

I look for the housing market to continue to crash until housing becomes affordable, and people can actually "afford" to buy a home.

Yet others are different.

My salary is about twice from 1990.
House I purchased in Fla in 1990 was for $125K. Sold in in 1998 for $110K
House now in Denver area 10 years later is for $180K

So salary has gone up 100% and house has gone up 70%

Much depends on the area that one is in and the field.

 

[Texashiker]

My salary is about twice from 1990.
House I purchased in Fla in 1990 was for $125K. Sold in in 1998 for $110K
House now in Denver area 10 years later is for $180K

So salary has gone up 100% and house has gone up 70%

The keyword I saw in your post was "now" - what did the homes cost before the housing crash? Had they still only gone up 70%?

In parts of southeast Texas, home prices have about tripled from the early 1990s. But prices have started to come down in the last 8 months - 1 year.

A buddy of mine, his dad sold their childhood home - starting price was around $150,000. About 6 months later the house had not sold, price was reduced to around $125,000. I think it finally sold for about $120,000 or so. Which was about 2X what the same size house cost in the early 1990s. The home was 3 bedroom, 2 bath, on about an acre of land. But, it had gotten 6 feet of flood water from Hurricane Ike. The storm and flood drove the price down, as well as the market crash.

 

[Alienwho]

I think housing in my area is starting to hit the right spot. In 1994 my dad built a house for about 100k. My wife and I are looking at houses right now, and the same quality of house is going for ~200k, and I make twice as much money as my dad did in '94. But then again my dads income at the time was spot on for median income, while my current income is probably 30% higher than that.

A few years ago when I got married it was obvious that housing prices were unrealistic. The $200k house listed above was going for over $350k at the time and I was making half of what I am making now, which was probably 30% under average for the area (but I was in school at the time and took the lower pay in exchange for a highly flexible job).

I love these articles about doom and gloom in the housing industry because I'm house hunting. I'm sure my tone will change the day I purchase a home. But even if I buy a home for 200k tomorrow and the value drops 50k in 5 years, I really wont' care that much.

My poor father in law bought a house in the housing peak for 400k. Now the houses we're looking at buying just a few miles away are nearly exactly the same (maybe slightly smaller land and 500 less sq. ft) for half the price.

 

[EagleKeeper]

My salary is about twice from 1990.
House I purchased in Fla in 1990 was for $125K. Sold in in 1998 for $110K
House now in Denver area 10 years later is for $180K

So salary has gone up 100% and house has gone up 70%

The keyword I saw in your post was "now" - what did the homes cost before the housing crash? Had they still only gone up 70%?

In parts of southeast Texas, home prices have about tripled from the early 1990s. But prices have started to come down in the last 8 months - 1 year.

A buddy of mine, his dad sold their childhood home - starting price was around $150,000. About 6 months later the house had not sold, price was reduced to around $125,000. I think it finally sold for about $120,000 or so. Which was about 2X what the same size house cost in the early 1990s. The home was 3 bedroom, 2 bath, on about an acre of land. But, it had gotten 6 feet of flood water from Hurricane Ike. The storm and flood drove the price down, as well as the market crash.

bought the house from a flipper that had refurb it 2 years ago.

When resarching the house, the higher listing price was 250K.
Gutted, it went to the flipper for $110K

 

[Naeeldar]

Why does our economy need all these new houses? I mean, who's gonna live in them? The baby boomers, who are the population bloat (and I do not mean that in a negative way) of our Country, are starting to pass away and their numbers are receding. There is less of need for greater numbers of houses.

With all these way overpriced half-million (plus) dollar, 100 year old houses around here (especially in areas such as Philadelphia), why do we need MORE houses built?

Certainly there are epidemics of of areas where those old, decaying half-million (plus) dollar houses could be demo'd/redeveloped - if anything. A kind of 'new deal' redevelopment project could be proposed and provide decent, affordable housing and to rejuvenate the economy (*cough* jobs). Couldn't it?

I'm sure I'm over-simplifying things and it may not be the full solution, but it could be the beginning of something.

Just thought I'd chime in. Philadelphia area and the surrounding suburbs have more or less normalized on housing (it's been flat for a few months).

your unlikely to see anymore drops unless we were to enter a double dip recession.

 

[Jhhnn]

your unlikely to see anymore drops unless we were to enter a double dip recession.

What factors would prevent that double dip? decreased participation by the workforce? the end of extended unemployment benefits & stimulus spending? Republican budget cutting? Wishful thinking? Trickledown goodness from ongoing top tier tax breaks? What?

While there are some bright spots, we're in for an extended slide, as with the Japanese experience of the lost decade. It was the financial elite's model for our own boom & bust cycle all along.

 

[bfdd]

Median home price in CA is far lower than 600k.

http://articles.latimes.com/2010/apr/16/business/la-fi-home-sales16-2010apr16

Like I said I was making 80k a few years ago, housing prices were at their highest then. I would have been absolutely retarded to get locked into something that was 10x's my yearly income. Hell median house price for the city I live in is still over 500k. Still over 10x's what I make now(48k).

 

[phillyTIM]

http://www.msnbc.msn.com/id/42258117/ns/business-eye_on_the_economy/

Flawed housing data might mask depth of woes
Critics say Realtors' monthly report overly optimistic

Two high-profile reports on home sales this week confirmed that the housing market is still mired in a deep slump with prices still falling and sales activity sluggish at best. In fact, the market may be in much worse shape than even those numbers suggest.

Figures from the National Association of Realtors that are among the most closely watched indicators on the housing market have been called into question by economists who say they may overstate existing-home sales activity by up to 20 percent.

...

One reason for concern about the Realtors' data is that whenassessing the outlook for future sales, forecasters rely heavily on the inventory of homes on the market, which is generally expressed in number of "months' supply."

That number is derived by comparing the number of unsold homes and the current pace of sales. Prices tend to be fairly stable when the market has about six to eight months' worth of unsold homes. Tighter supplies tend to push prices higher, bigger supplies tend to depress prices.

According to the NAR's latest monthly data, the number of unsold homes in February represents an 8.6-month supply at the current sales pace, based on an annual sales rate of 4.88 million.

But other measures — including mortgage data tracked by the mortgage bankers, show a much lower sales pace. Private research firm CoreLogic, which counts closings filed in more than 2,000 counties, says the pace of home sales in February was just 3.6 million units on an annual basis. If true, that means the inventory of unsold houses is more like 17 months' supply, or roughly double the level reported by the NAR, according to Mark Fleming, chief economist at CoreLogic.

 

[Naeeldar]

http://www.msnbc.msn.com/id/42258117/ns/business-eye_on_the_economy/

Some of that data is correct. Some of it is wrong. Some of it is not relevant. For instance January/February is always some of the worst months with housing.

The main thing is your talking about housing on a national scale. It's just not an accurate way for people who are buying houses in a specific region. If you pull out California (this is done for a lot of industries because Cali is out of wack on so many different scales), Las Vegas, Michigan, and Florida the housing stats jump tremendously.

At the end of the day though it's regional that matters. The philadelphia area and it's suburbs have been very flat for months now. Unless we end up in a double dip recession housing prices will not drop further in our area.

 

[mizzou]

I am jonesin to some land asap. Just need one more year to see where my new job will be. Wish i could jump on it now but. I dont want to be saddled with 50 acres 1000 miles away if i end up moving this year. If i do end up staying, hellllooo hunting resort

 

[Zebo]

You'd be crazy to buy a NEW home right now but there are serious deals to be made out there and super low rates to boot. Developers are getting killed so I can understand why you wouldn't go near it. Buying is picking up nicely, at least in my area. Prices are also ticking up steadily. It's a risk I can take because of the tremendous opportunity.

As far as bottom, that all depends on location.

I've been saying over a year now it's not the bottom and every couple months a "shocking" story comes out how prices keep going down. I believe we'll be having same shocking news a year from now...

I stated my reasoning clearly in post you sniped just think about it.

There are other reasons too besides impossible to stimulate demand under current dogma and that is the banks themselves are still holding tons of bad paper. You know who's buying what they slowly release? Middle and upper middle class investors wide eyed at low interest rates and dow ticker about to get taken again. 40% of home sales are from them. Smart money, banks, are selling at inflated price to them by trickling them out rather than declaring their insolvency and clearing them out. (thats another story)

 

[Fern]

I've been saying over a year now it's not the bottom and every couple months a "shocking" story comes out how prices keep going down. I believe we'll be having same shocking news a year from now...
-snip-

I'm afraid you may very well be correct.

In addition to the info in the MSNBC article, I believe I've recently read that many ARM type mortages with super low introductory rates or interest only periods will reset in the coming months/years and more defaults/foreclosures are expected.

All the above combined with continuing unemployment leads me to suspect lingering excessive inventory and more downwards pressure on home prices.

Fern

 

[Zebo]

http://www.msnbc.msn.com/id/42258117/ns/business-eye_on_the_economy/

Anything to extend and pretend then always the revision is found on pp13 in a small two three liner. Unemployment, housing data, etc.

Two stats I'm watching for real rebound. The employment rate of population and tax revenue significantly increasing (as minimum wage service jobs don't buy $350,000 houses, well at least not anymore)

 

[spidey07]

Anything to extend and pretend then always the revision is found on pp13 in a small two three liner. Unemployment, housing data, etc.

Two stats I'm watching for real rebound. The employment rate of population and tax revenue significantly increasing (as minimum wage service jobs don't buy $350,000 houses, well at least not anymore)

Location, location, location. Prices and selling is ticking up strongly in my area and just today I read that those with capital are purchasing the foreclosed properties in droves with cash. Buy, buy, buy.

 

[Zebo]

I'm afraid you may very well be correct.

In addition to the info in the MSNBC article, I believe I've recently read that many ARM type mortages with super low introductory rates or interest only periods will reset in the coming months/years and more defaults/foreclosures are expected.

All the above combined with continuing unemployment leads me to suspect lingering excessive inventory and more downwards pressure on home prices.

Fern

Yeah I posted about the ARMs reset before which will only have banks holding more paper, paper they have tons of inventory of and only Obama's blaickmail of FASB keeps them solvent. Basically there are about half a dozen good reasons not to buy. There are a couple reasons to buy though such as attractive interest rates and Stock Market trickle down to employment theory. 6:2 is Just to risky IMO. There is always the opportunity to buy R&R at a steal and sell it quick though but exceptions don't make rule.

Edit: I like to add the trickle down theory is dubious because many economists are talking about "a jobless recovery." There can be no housing recovery w/o jobs. JOBS = demand = more homes sold = recovery. The main problem as I see it with making jobs here is Americans are over benefited, cost too much, and take too much time off. If you want to create wealth (wealth is mining, manufacturing and growing) you do it elsewhere to maximize profit like China or India.

 

[Zebo]

Location, location, location. Prices and selling is ticking up strongly in my area and just today I read that those with capital are purchasing the foreclosed properties in droves with cash. Buy, buy, buy.

You said slowly last time now strongly? Link?

Like I said small investors. Smart money, Banks want no part of them which is why they are letting many live rent free for two years now.

 

[spidey07]

You said slowly last time now strongly? Link?

Like I said small investors. Smart money, Banks want no part of them which is why they are letting many live rent free for two years now.

I'm biased, I admit as we're looking for our dream home and some others for wealth building. But you can't discount location. My wifes house spent 7 months on the market last year and we relisted and had a contract offer in 2 days after listing.

I'm literally salivating at the deals available. Buy it for 100k, rent it for 1300/month. You have your plans, and I have mine. Neither of us is wrong.

 

[werepossum]

I'm afraid you may very well be correct.

In addition to the info in the MSNBC article, I believe I've recently read that many ARM type mortages with super low introductory rates or interest only periods will reset in the coming months/years and more defaults/foreclosures are expected.

All the above combined with continuing unemployment leads me to suspect lingering excessive inventory and more downwards pressure on home prices.

Fern

Best thing the federal government could do would be to outlaw (at least for Fannie Mae and Freddy Mac) such things as ARMs, interest-only periods, and bubble payments. Unfortunately a lot of homeowners cannot afford their homes except through those gimmicks.

A friend looking at new homes has been thrown everything from 110% financing to 40 year, 50 year, and 10 year interest only bubble loans. The 110% financing offer is even on a sign at the street. People are freakin' stupid, if not marginally evil trying to sell someone a house she manifestly cannot afford by gimmicks almost guaranteed to make her lose it.

 

[Zebo]

I'm biased, I admit as we're looking for our dream home and some others for wealth building. But you can't discount location. My wifes house spent 7 months on the market last year and we relisted and had a contract offer in 2 days after listing.

I'm literally salivating at the deals available. Buy it for 100k, rent it for 1300/month. You have your plans, and I have mine. Neither of us is wrong.

If a woman's involved you got no choice. I'd live in a used $6000 single wide if I were single as a house is a liability for most, especially with a note, but you gotta live somewhere but I'd make it as cheap as possible.

 

[Zebo]

Best thing the federal government could do would be to outlaw (at least for Fannie Mae and Freddy Mac) such things as ARMs, interest-only periods, and bubble payments. Unfortunately a lot of homeowners cannot afford their homes except through those gimmicks.

A friend looking at new homes has been thrown everything from 110% financing to 40 year, 50 year, and 10 year interest only bubble loans. The 110% financing offer is even on a sign at the street. People are freakin' stupid, if not marginally evil trying to sell someone a house she manifestly cannot afford by gimmicks almost guaranteed to make her lose it.

Just think only a couple generations ago "neither a borrower or lender be" was ingrained in our psyche. Now we do this crap. Is it any wonder we're in trouble at all levels?

 

[Zorkorist]

It's not us, borrowing, or lending, that is getting us into trouble, but the Federal Government (Church) borrowing and lending.

-John

 

[the DRIZZLE]

Best thing the federal government could do would be to outlaw (at least for Fannie Mae and Freddy Mac) such things as ARMs, interest-only periods, and bubble payments. Unfortunately a lot of homeowners cannot afford their homes except through those gimmicks.

A friend looking at new homes has been thrown everything from 110% financing to 40 year, 50 year, and 10 year interest only bubble loans. The 110% financing offer is even on a sign at the street. People are freakin' stupid, if not marginally evil trying to sell someone a house she manifestly cannot afford by gimmicks almost guaranteed to make her lose it.

There are legitimate uses for ARMs and interest only mortgages, mostly for investors. If people are too stupid to know whats good for them, thats their problem. 110% financing is insane though. I'm surprised you're seeing that. My experience lately is that the banks are being very conservative.

 

[Zebo]

It's not us, borrowing, or lending, that is getting us into trouble, but the Federal Government (Church) borrowing and lending.

-John

Afraid not: to maintain illusions over last 30 years we went from 5 trillion in total debt in USA to 55 trillion. Corporate balance sheets, personal balance sheets, municipal and federal balance sheets, etc leveraged all to hell.

The Federal government, today, is the only one with wherewithal to inject almost 2 trillion a year to continue illusions somewhat. However it's just a matter of time before the bond market throws up or commodity prices start really skyrocketing which will end the world as you know it. In the mean time thank big brother.

2/3rd of Americans depend on her to eat in one form or another and many more with cursory attachment. How many walmarts are open to cash SS and welfare checks that's borrowed money?