Correct that houses are worth less but, the lower prices probably go back before the 2000's and maybe the early 90's prices??
My house was appraised at 84K 2 weeks ago 🙁 and was around 135K in 2001.
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US home prices tumble record 4.1% in July
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Correct that houses are worth less but, the lower prices probably go back before the 2000's and maybe the early 90's prices??
My house was appraised at 84K 2 weeks ago 🙁 and was around 135K in 2001.
Even if you're upside down on your house you will more than make up for it on an upgrade because you're getting that one at the same steep discount, and since the discount is generally a percentage, the more expensive home get's more discount. Now is the time to build wealth and get real estate and dirt bottom prices and record breaking mortgage rates. I still can't believe the deal I got on mine and what the payment will be. Will close in OCT.
randomrogue
Diamond Member
San Jose is a really big city and I'm not expert on it but overall prices there have dropped 30% or so. Median of 700k to 500K putting it back to where it was almost 10 years ago. You think it's going to get better and be worth buying now? I have friends in different parts of the bay and none of them are doing well unless they bought their house a very long time ago. Then at least they're still ahead.
randomrogue
Diamond Member
I'm happy for you. I think one problem, for me, is that I don't live in an area with affordable housing to begin with. Therefore when you're dealing with much bigger numbers the % shifts are much more drastic.
My rent is very low (relatively) and therefore without having to drop a down payment and a much larger housing payment each month I do far better financially by investing my money elsewhere.
If I can make a profit on my money and rent then that's better than breaking even or losing money and buying. It's just a lot nicer owning your own place.
dullard
Elite Member
Prices were almost perfectly steady in 2010 and almost exactly 5% down throughout every month 2011 (5% total down when compared to the same month 2010, not 5% cumulative each month). And things are pointing towards leveling off again. Need a few months more data though to be sure. This is using the NAR data (covers resold homes only, unlike the OP's data, but also covers the entire country unlike the OP's data which covers only a few cities).
Going from $300k to $250k is a 17% drop. We had a sizable ~15% drop in 2009, but I don't see any signs of another drop that size again (well not until the next bubble). You could argue that you might lose 5% for several years in a row (unlikely) but I could argue with renting you lose 100% every year no matter what.
That is common sense advise there! No one should buy a house if they don't plan to own it for long. Flipping isn't what it used to be.
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shortylickens
No Lifer
Which is funny cuz I am of the opinion most houses are 200% overpriced anyway.
Dropping 4.1 percent means little.
Dropping 4.1 percent means little.
randomrogue
Diamond Member
I wasn't suggesting a short term loss of 17% but I do think it's going to keep dropping so that if you were to buy now and then want to sell it wouldn't be that much of a stretch to lose $50K. Look at your market and see how much it rose. Did houses go from $100,000 to $300,000 in 10 years? That's over twice normal (I'm using a national average, your market may vary). It's got room to drop.
I really am happy for people if they buy a new home. I just don't think it's a good financial investment compared to other vehicles. That's all I'm saying. I haven't been following foreclosures but I'm pretty sure they peaked this year but there's a lot left.
If you can get a job where you're buying affordable real estate then that's great. It's really tough to argue with anyone who's buying a $100,000 house where they have job stability. It's a much tougher pill to swallow though when a piece of complete crap is still $500,000. At that point if I risk a 10% drop (we can say 5% even) then that's $25-$50K that I would lose (plus property taxes) while I could instead be investing that downpayment and more on something making me cash.
I think it's going to keep dropping. I'll wait. Nobody listened to me before the bubble and I'm sure nobody will listen to me now but I'm confident that this housing market is still over inflated.
I read somewhere that if you look at housing prices over long periods of time they rise with roughly the rate of inflation. I've also read about 6%. There are certain exceptions of course. If you were to ask your great grandparents, grand parents, and parents how much of their income they spent on housing you would see that it was about 3 times. So if they were making $30,000 a year they might buy a $90,000 house. Probably not though. They probably spent less. Today though you see people that are spending exorbitant amounts of money because everyone thinks it rises at these fantastic rates. Well it doesn't. Not without some really shady lending practices. If you buy a house and it goes up 4-6% a year you're doing pretty damn good. Of course if you get lucky and hit a great market before moving to a much more affordable market you can make a lot of money but I wouldn't plan on it. That's what got so many people in CA in trouble since they took their money and bought property in Florida, Nevada, and Arizona - markets that completely crashed - and lost boat loads.
I really am happy for people if they buy a new home. I just don't think it's a good financial investment compared to other vehicles. That's all I'm saying. I haven't been following foreclosures but I'm pretty sure they peaked this year but there's a lot left.
If you can get a job where you're buying affordable real estate then that's great. It's really tough to argue with anyone who's buying a $100,000 house where they have job stability. It's a much tougher pill to swallow though when a piece of complete crap is still $500,000. At that point if I risk a 10% drop (we can say 5% even) then that's $25-$50K that I would lose (plus property taxes) while I could instead be investing that downpayment and more on something making me cash.
I think it's going to keep dropping. I'll wait. Nobody listened to me before the bubble and I'm sure nobody will listen to me now but I'm confident that this housing market is still over inflated.
I read somewhere that if you look at housing prices over long periods of time they rise with roughly the rate of inflation. I've also read about 6%. There are certain exceptions of course. If you were to ask your great grandparents, grand parents, and parents how much of their income they spent on housing you would see that it was about 3 times. So if they were making $30,000 a year they might buy a $90,000 house. Probably not though. They probably spent less. Today though you see people that are spending exorbitant amounts of money because everyone thinks it rises at these fantastic rates. Well it doesn't. Not without some really shady lending practices. If you buy a house and it goes up 4-6% a year you're doing pretty damn good. Of course if you get lucky and hit a great market before moving to a much more affordable market you can make a lot of money but I wouldn't plan on it. That's what got so many people in CA in trouble since they took their money and bought property in Florida, Nevada, and Arizona - markets that completely crashed - and lost boat loads.
randomrogue
Diamond Member
The numbers are really not that important unless we want to look at a specific market. That's why I don't care if we use a 5% number.
However I have followed certain properties in CA (friends, family, homes I looked at buying) and the numbers aren't that low.
Example: $1.9M to $980,000
Yeah. That hurts.
Another one that's more reasonable: $498K to $281K.
If you want to call that more reasonable.
Then one where they doubled their money since they bought it 20 years ago:
$952K to $756K
Luckily none of those people bought at the peak. However 2 of the 3 are down from what they bought. I'm just saying that they're dropping quite a bit where I'm looking.
PrinceofWands
Lifer
We had another adjustment from the Assessor this year, and FINALLY got the price down about where it should be. Wouldn't complain to see another 10-15k drop, but at least it's under control now (at 149k down from 189k a few years ago). Looks like facing the wrath of hundreds of angry homeowners and watching the entire housing market collapse from greed and speculation finally knocked some sense into the government peeps around here.
Ever heard the saying "don't try to catch a falling knife"
Unless you plan to sit on it for quite a while I wouldn't be buying a house anytime soon.
xj0hnx
Diamond Member
This. I've never understood why people think renting is good, rent for ten years and you have exactly squat to show for it.
randomrogue
Diamond Member
If you buy and make no money (or lose) and pay $40,000 in property taxes for 10 years, closing costs, fees, home improvement costs, etc what do you have to show for it? The great thing about buying is the tax breaks and you can deduct interest, property taxes, and points on your mortgage but you still do pay money for your house that can add up to quite a bit.
Remember that if your rent is low enough it can be a very good idea. There is a relationship between renting and buying.
xj0hnx
Diamond Member
Um ...a house. Renting is just making someone else rich off you.
I assume it is because that is what the people who bought him told him to do.
Among most of his other decisions during his "Bush 2.0" presidency. I am equally baffled by both the rights hatred for him and the lefts love for him. Slap an R behind his name and get rid of the healthcare bill and he should be able to win the Republican nomination.
You had a place to live for 10 years?
For all but a very few Americans a house shouldn't be an investment at all. It should be a place to live. If you happen to make a few nickels when you move that's great but otherwise it's simply a place to hang your hat.
They will make up for it somewhere. Your local government is probably not prepared for that significant of a revenue loss. If they are than you live in a rare city/county.
WhipperSnapper
Lifer
I don't think it will reverse, either. Many potential first-time home buyers--college graduates--are sitting on the sidelines because they cannot find decent jobs (or any job) and are burdened with student loans. Heck, many of them are not even living in their own apartments, but with Mom and Dad.
WhipperSnapper
Lifer
Which is why it's amazing that the houses aren't selling, which is a great shadow stat telling us that the economy and the employment market is in really bad shape.
WhipperSnapper
Lifer
Just wait until a Republican free market moron gets into office. They'll open up our borders to any immigrants who want to come here (cause under free market ideology, who is the government to tell someone they can't come here for a job?), they'll import hundreds of thousands of more foreigners on H-1B and L-1 visas to further displace Americans and drive down wages, and then they'll continue to encourage businesses to move offshore by enacting more free trade deals.
I don't like like the Democrats any better, but the Republicans aren't the answer to our economic problems. We need to throw both parties out.
WhipperSnapper
Lifer
Don't you also need to factor in the cost of things like homeowner's insurance, repairs, lawn maintenance, snow removal, and all of the utilities--sewer, water, gas, heat, hot water that are often covered in an apartment? (The only thing I pay for directly at my apartment is electricity.)
My point is that home ownership might not be all gravy.
WhipperSnapper
Lifer
Obama is a closet Republican and/or Neo-Con who has bought into the free market and corporatist religion.
PrinceofWands
Lifer
That actually WAS the backlash from such an act. Years and years ago the state passed a limit on property tax increases. As an end around nearly every county in the state started raising home assessments like it was going out of style. Ours rose $50,000 (almost 40%) in less than 10 years with no improvements done to the home, and a general loss of value in the surrounding neighborhood.
That outraged the public who started filing for exemptions and reviews in unprecedented numbers, as well as going to the state and the courts in record amounts. Most assessors in the state lost elections over that time (sometimes more than one election in a row, which is unheard of for cushy county positions), and in the last 3-4 years we have finally had almost all home values readjusted to equilibrium.
They don't have many options left. Property tax is capped, home values are being watched like a hawk, etc. This 'should' more or less end the issue.
HendrixFan
Diamond Member
That only is true if prices don't drop any further. If they do the equity you are building disappears into thin air.
I for one don't trust the Obama administration to be able to pull us out of this mess, so I think home prices will continue to fall down to a more historical norm.
blackangst1
Lifer
Well, it depends. I dont know about all markets, but here in Phoenix it varies greatly, with the trend being up.
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