i don''t see anything wrong with housing price going down...

[CrookedRock]

Date: 2/23/2009 12:44:01 PM
Author: TravelingGal

Date: 2/23/2009 6:41:15 AM
Author: tradergirl
Would it still be a ''joy'' to own the house if you or your husband lost your jobs and had to struggle to pay the mortgage or had to turn down a better job elsewhere because you are tied to it and can''t sell? That is the problem people have all over the country.

I kind of have to agree with this. When you don''t have a house, you want the prices to drop drop drop, then of course once you buy, you hope and think it will only lose 10-15% more.

Would you love your house if it dropped 40%? If you knew that your money, if you had waited, would have bought you a bigger and better house in a better neighborhood? Not picking on anyone at all, btw...these are questions I am dealing with myself as we struggle to figure out if the joys of homeownership would outweigh waiting another year or two. So far, the waiting is winning.

TGal... We''re in the same boat. Part of me is thrilled we waited bc we didn''t lose our a$$ like many of our friends have. The other part of me wants to stop renting and start my married life in a home that we can call ours. I''m ready for a home, not a house. But I have to look at the bright side of all this. The way we see it is that we''ve been paid to rent for the past couple years. (meaning we didn''t lose $ on such a large investment.) (I also enjoyed laughing at everyone who tried to tell us we were throwing our money away renting, and now they are totally upside down in their crappy condos)
But we struggle with the same thing as you, weighing out our options. And waiting is winning with us too. We know that if we wait we''ll be able to purchase a home that we''ll be in for maybe 20 years to come. Or more. I''ll tell you what though... Patience really is a virtue.

 

[tradergirl]

House Prices Still Way Too High

http://www.businessinsider.com/shiller-house-prices-still-way-too-high-2009-2

 

[TravelingGal]

Date: 2/23/2009 12:55:10 PM
Author: CrookedRock

Date: 2/23/2009 12:44:01 PM
Author: TravelingGal

Date: 2/23/2009 6:41:15 AM
Author: tradergirl
Would it still be a ''joy'' to own the house if you or your husband lost your jobs and had to struggle to pay the mortgage or had to turn down a better job elsewhere because you are tied to it and can''t sell? That is the problem people have all over the country.

I kind of have to agree with this. When you don''t have a house, you want the prices to drop drop drop, then of course once you buy, you hope and think it will only lose 10-15% more.

Would you love your house if it dropped 40%? If you knew that your money, if you had waited, would have bought you a bigger and better house in a better neighborhood? Not picking on anyone at all, btw...these are questions I am dealing with myself as we struggle to figure out if the joys of homeownership would outweigh waiting another year or two. So far, the waiting is winning.

TGal... We''re in the same boat. Part of me is thrilled we waited bc we didn''t lose our a$$ like many of our friends have. The other part of me wants to stop renting and start my married life in a home that we can call ours. I''m ready for a home, not a house. But I have to look at the bright side of all this. The way we see it is that we''ve been paid to rent for the past couple years. (meaning we didn''t lose $ on such a large investment.) (I also enjoyed laughing at everyone who tried to tell us we were throwing our money away renting, and now they are totally upside down in their crappy condos)
But we struggle with the same thing as you, weighing out our options. And waiting is winning with us too. We know that if we wait we''ll be able to purchase a home that we''ll be in for maybe 20 years to come. Or more. I''ll tell you what though... Patience really is a virtue.

CrookedRock, it really is, isn''t it? I''ve been watching the market for some time, as I said. My friends bought at the top, and told me that interest only or adjustables are the only way to go. I was a bit nervous at the time thinking I might be missing out on something but I just really felt the market could not sustain these prices. I didn''t know much about the squirrely loans at the time, but still preferred the idea of a fixed loan. My friend and I were discussing this yesterday and I told her I had been watching our local market for years and knew this was going to happen. She said, really? You knew this was going to happen? I said, well, I didn''t know that ALL *THIS* was going to happen (meaning the banks going under, etc) but it doesn''t take rocket science to know that in SoCal, too many people bought who couldn''t afford what they purchased.

Waiting is tough. We''re in a great area but we have a crappy neighbor with a cat who is let outdoors when it shouldn''t be. Because of this, the outside of our house is INFESTED with fleas and we get an infestation in our apt every year when the weather starts getting warmer. We had never had this problem before they moved in. I hate smelling the cigarette smoke from the same neighbor (it comes in through the vents) and the list goes on and on. I''ve been in this apartment for THIRTEEN years after my parent''s house was foreclosed in the 90''s. I guess I''ve been here this long to help ensure I don''t suffer the same fate.

But it''s annoying raising a baby in this apartment. And yet I see gals like Curlygirl raising her two girls in a one bedroom in NYC, so I know it can be done and I really have nothing to complain about.

 

[Beacon]

Date: 2/23/2009 12:43:32 PM
Author: tradergirl
Not true. In ''05 you''d have had buyers camped out on your doorstep bidding up your selling price.

Are you a realtor?

No, I am not a realtor. I actually hate real estate. The transaction costs are huge, it eats capital, it is fairly illiquid and it is not always easy to borrow against. Though I own my home and have since I was very young, the way I invest in real estate, to the extent I do so at all, is through publically traded REITs. They are more effective landlords than I am.

What I meant is that while it is nice to buy at the bottom and sell at the top, and nice to never lose a job or have trouble paying a bill, you cannot imagine that you will always be just right. You can always paint a dire scenario, like you did in the prior post.

I also think homes should be mentally separated from investments. People got this idea that homes were a way to make money, when really they were just looking good cause they were able to margin them so high in a generally rising market. Then greed took over and people didn''t care what they paid and now the bottom fell out. This happens in every tradable market from time to time.

 

[tradergirl]

If you''re in publicly traded REITS, I hope you''re hedged or collared. That''s the next crash to come.

 

[Beacon]

Date: 2/23/2009 3:16:47 PM
Author: tradergirl
If you''re in publicly traded REITS, I hope you''re hedged or collared. That''s the next crash to come.

They are crashing in real time. I don''t own a lot right now. I continue to own what I picked up in 1992 during the last debacle. They pay dividends, I write calls on them, it goes on for years like this. Time can be a friend. There are some apartment reits that probably won''t go bust. They get any cheaper, I''ll buy more.

There are others that probably will not get well for a loooong time. The mall REITs are terrifying.

 

[Clairitek]

Date: 2/23/2009 6:41:15 AM
Author: tradergirl
Would it still be a ''joy'' to own the house if you or your husband lost your jobs and had to struggle to pay the mortgage or had to turn down a better job elsewhere because you are tied to it and can''t sell? That is the problem people have all over the country.

Well, you bring up an interesting point. This sort of situation would certainly put a damper on the joys of home ownership. The way I look at is that we knowingly took a risk by purchasing a home in this kind of economic climate so I don''t feel like I should be whining about the continually dropping home prices and how we might not break even when we sell. Sure, it would suck to see that our risk didn''t pay off at all and that we now have that much less sitting in our retirement funds or wherever but like I said, we knowingly took the risk in order to experience homeownership. We knew we could have rented for much less than our mortgage and other expenses but we chose not to. I don''t regret it at all.

(I really hope I will still feel this way if when we go to sell the worst case scenario is true.)

 

[zhuzhu]

Date: 2/23/2009 6:41:15 AM
Author: tradergirl
Would it still be a ''joy'' to own the house if you or your husband lost your jobs and had to struggle to pay the mortgage or had to turn down a better job elsewhere because you are tied to it and can''t sell? That is the problem people have all over the country.

If this question was for me. The answer is that we are more than prepared for what could happen. Both of us have the education and skill sets that will land us another job easily, and we chose to buy where we live now because this is the place that we want to retire in. Lastly, we are both relatively young with many years ahead of us, so the house pricing coming back up is just a matter of time.

How risky any purchase (investment purpose or enjoyment purpose alike) is a matter of how prepared you are.

If you don''t feel prepared to buy, don''t. There is not a set of formula that''s right for everybody.

 

[Beacon]

Date: 2/23/2009 6:11:27 PM
Author: zhuzhu

Date: 2/23/2009 6:41:15 AM
Author: tradergirl
Would it still be a ''joy'' to own the house if you or your husband lost your jobs and had to struggle to pay the mortgage or had to turn down a better job elsewhere because you are tied to it and can''t sell? That is the problem people have all over the country.

If this question was for me. The answer is that we are more than prepared for what could happen. Both of us have the education and skill sets that will land us another job easily, and we chose to buy where we live now because this is the place that we want to retire in. Lastly, we are both relatively young with many years ahead of us, so the house pricing coming back up is just a matter of time.

How risky any purchase (investment purpose or enjoyment purpose alike) is a matter of how prepared you are.

If you don''t feel prepared to buy, don''t. There is not a set of formula that''s right for everybody.

You are so right Zhuzhu!!!

If only most people would have kept this in mind and used common sense. Unfortunately people bought houses and they have almost no excess savings in case of trouble. They did not prepare for anything. If people would use this idea you present, then there would not be any housing bubble and crisis.

And you are right - if you are young and if you hang in there and carry on, you will be just fine. I bought my first house when I was very young, it has been fine.

I think in the future people will use the commonsense you presented and eventually all this will recover.

 

[tradergirl]

Beacon, unless you''re 60+ years old, when you were "very young" was still in the midst of this credit bubble where financial mistakes were forgiven by the market if one waited long enough. I doubt anyone who bought a house in the 2005 - 2007 time period will see their money back in anything resembling a normal holding period for a house.

 

[tradergirl]

Z - we all have great "skill sets." Ask the Wharton and Harvard MBAs pounding the pavement in NYC now without a job. Nobody is immune. However, you can''t live in fear all your life. Hopefully, people who prudently managed their finances will be able to get through this even if a layoff occurs.

 

[ksinger]

All I know is I bought my house in ''98, when housing was really really inexpensive (here at least), and back when they had real, sensible guidelines for making loans. I bought less than I could afford, in a place I intended to end up. I thought at that point that I would be single forever, so I relied on no one but me. I didn''t buy more space than I thought I could reasonably maintain as a single woman getting older. Since that time I''ve managed a 10 month stint with no job. I''m certain I could do that and more, again, if necessary. I never saw my home as an "investment". It was trading rent for something I would own, that was all.

Of course, the real kicker, is that most people on these threads at least, aren''t willing to live in what they consider to be a backwater. I''d rather live well in a backwater, and visit the places I want to see, than to SCRRRRAPE to live someplace "sexier" and be too poor to enjoy it...every choice we make is a tradeoff.

The housing here in Oklahoma never really "bubbled", and we aren''t seeing a crash right now. It is dropping some, but I expect my home to retain much of the value it gained during my first decade in it.

 

[Beacon]

Date: 2/23/2009 7:54:51 PM
Author: tradergirl
Beacon, unless you're 60+ years old, when you were 'very young' was still in the midst of this credit bubble where financial mistakes were forgiven by the market if one waited long enough. I doubt anyone who bought a house in the 2005 - 2007 time period will see their money back in anything resembling a normal holding period for a house.

For sure Tradergirl - people who purchased at the top have a long way to go to see that home come back into line. A very long time. That is why many of them are walking away.

I do appreciate your imagining me to be quite young, and to be sure I feel I don't look my age

. But I bought my home in the 80s. Before the bubble at the end of the 80s. The ARM was invented in the 80s as was the neg am ARM. That product messed up alot of people then, and it has done the same now. I cannot tell you how similar the time periods are. It's just that they didn't have the leverage in the securitization back then as they do now and that has made all the difference.

I live in Northern California. Since the 80s, and even with current depreciation, homes have gone up quite a bit. My home dropped 20% in 1990-2, and I imagine it will drop more than that this time.

 

[Dancing Fire]

Date: 2/23/2009 7:54:51 PM
Author: tradergirl
Beacon, unless you''re 60+ years old, when you were ''very young'' was still in the midst of this credit bubble where financial mistakes were forgiven by the market if one waited long enough. I doubt anyone who bought a house in the 2005 - 2007 time period will see their money back in anything resembling a normal holding period for a house.

we won''t see that level again in central Ca within the next 12 yrs.

 

[TravelingGal]

Date: 2/23/2009 9:55:27 PM
Author: ksinger
All I know is I bought my house in ''98, when housing was really really inexpensive (here at least), and back when they had real, sensible guidelines for making loans. I bought less than I could afford, in a place I intended to end up. I thought at that point that I would be single forever, so I relied on no one but me. I didn''t buy more space than I thought I could reasonably maintain as a single woman getting older. Since that time I''ve managed a 10 month stint with no job. I''m certain I could do that and more, again, if necessary. I never saw my home as an ''investment''. It was trading rent for something I would own, that was all.

Of course, the real kicker, is that most people on these threads at least, aren''t willing to live in what they consider to be a backwater. I''d rather live well in a backwater, and visit the places I want to see, than to SCRRRRAPE to live someplace ''sexier'' and be too poor to enjoy it...every choice we make is a tradeoff.

The housing here in Oklahoma never really ''bubbled'', and we aren''t seeing a crash right now. It is dropping some, but I expect my home to retain much of the value it gained during my first decade in it.

It''s a balancing act, but I will scrape to live somewhere more enjoyable and sexy (OK, where I want to buy is nowhere near sexy, but it definitely isn''t backwater.)

I''ve traveled a decent bit - enough to know that there is no place like home. And I want home to be somewhere I 100% want to live. A place where quality of life is wonderful and I feel blessed to live there, and that nowhere in the world compares to it.

So yeah, I save my pennies and will find a way to live where I want to live and won''t settle for somewhere I don''t want to come home to.

As for educated, prepared, etc. Well, in California, people can''t even get divorces because they can''t sell their house and are forced to live together (I think the LA times did a story on that.) Even the most educated, easily hireable people can''t prepare for that kind of stuff. But as someone said, you can''t live in fear...you just have to figure out when is right for you and hopefully don''t regret your decisions.

 

[zhuzhu]

I agree.
Purchasing a home in an expensive state like CA is a huge commitment and possibly risky investment (especially at this time). It is surely not for the faint-hearted.

 

[CrookedRock]

Date: 2/23/2009 9:55:27 PM
Author: ksinger
Of course, the real kicker, is that most people on these threads at least, aren''t willing to live in what they consider to be a backwater. I''d rather live well in a backwater, and visit the places I want to see, than to SCRRRRAPE to live someplace ''sexier'' and be too poor to enjoy it...every choice we make is a tradeoff.

Why should we? We worked hard, were responsible, and waited. We''ve saved and invested wisely, and would never buy something that we couldn''t afford. So if I want to live some place "sexier" well then I will.

I think the craziest part is that Americans have come to think that just bc they live in America they have the right to own a home. Hence the situation we are in now! Look back in history that was never the case!

 

[tradergirl]

Check out this one. This is the sort of "homeowner" Rick Santelli is ranting about. Go Rick!

http://steadfastfinances.com/blog/2009/02/23/living-beyond-your-means-school-bus-driver-losing-her-800000-home-to-foreclosure/?ref=patrick.net

 

[CrookedRock]

Date: 2/25/2009 9:19:39 AM
Author: tradergirl
Check out this one. This is the sort of ''homeowner'' Rick Santelli is ranting about. Go Rick!

http://steadfastfinances.com/blog/2009/02/23/living-beyond-your-means-school-bus-driver-losing-her-800000-home-to-foreclosure/?ref=patrick.net

I love how she says the lender made it too easy for her. What happened to personal responsibility?
Tradergirl, do you watch Glenn Beck? We seem to be on the same page about most of this... And I love Glenn puts the truth out.

 

[tradergirl]

Yes, I''m a full on member of the Vast Right Wing Conspiracy (libertarian division)

Here''s another good site. Maybe you''d want to join the Red State Army

www.redstate.com

 

[Dancing Fire]

Date: 2/25/2009 9:27:33 AM
Author: CrookedRock

Date: 2/25/2009 9:19:39 AM
Author: tradergirl
Check out this one. This is the sort of 'homeowner' Rick Santelli is ranting about. Go Rick!

http://steadfastfinances.com/blog/2009/02/23/living-beyond-your-means-school-bus-driver-losing-her-800000-home-to-foreclosure/?ref=patrick.net

I love how she says the lender made it too easy for her. What happened to personal responsibility?
Tradergirl, do you watch Glenn Beck? We seem to be on the same page about most of this... And I love Glenn puts the truth out.

love Glenn Beck.

 

[CrookedRock]

Date: 2/25/2009 12:30:02 PM
Author: Dancing Fire

Date: 2/25/2009 9:27:33 AM
Author: CrookedRock

Date: 2/25/2009 9:19:39 AM
Author: tradergirl
Check out this one. This is the sort of ''homeowner'' Rick Santelli is ranting about. Go Rick!

http://steadfastfinances.com/blog/2009/02/23/living-beyond-your-means-school-bus-driver-losing-her-800000-home-to-foreclosure/?ref=patrick.net

I love how she says the lender made it too easy for her. What happened to personal responsibility?
Tradergirl, do you watch Glenn Beck? We seem to be on the same page about most of this... And I love Glenn puts the truth out.

love Glenn Beck.

Most people I talk to that don''t like him are in denial of the truth. I loved his book too!

 

[icekid]

Date: 2/20/2009 12:52:31 PM
Author:Dancing Fire
a young couple can now buy a nice home for less money. my daughter''s generation maybe able to afford a house now.

Housing prices SHOULD and MUST go down. This ridiculous market was created by ridiculous mortgages that didn''t actually force owners to pay for their homes until now. Overinflated home prices are not real values!

And can I say... it drives me CRAZY when I listen to these finance shows. People keep asking if they should wait to sell a few years until prices go back up. Hello, prices are not going back up! The market is correcting to where it SHOULD be, so people can actually afford to buy homes. Ahhhh.

My husband and I have been on the fence for a while now about buying and are leaning pretty heavily to no for the time being. We''re moving to Baltimore this summer. However, it will only be for three years and like others I strongly believe we have not seen the bottom of this market. Still, it''s tempting to have a place to call our own! And more space for our little pooch to run around. But I just don''t think it''s worth the risk right now, since it will only be for three years.

 

[flutterby]

I am so sad that house prices are going down. I know they should, but we bought at the top of the market, we were moving from Chicago to LA and wanted to put our money in another place. We put over $300k down and didnt get a crazy loan, but only got a 2bedroom townhouse. Living very close to T-Gal the average home price was about $800k. Now it is as if we threw most of that down payment out the window. So selfishly I hope that we can someday sell this place, and buy a new home, but unless we win the lotto I doubt we will ever have another $300k to use as a downpayment.

 

[TravelingGal]

Date: 2/25/2009 11:40:31 PM
Author: msflutter
I am so sad that house prices are going down. I know they should, but we bought at the top of the market, we were moving from Chicago to LA and wanted to put our money in another place. We put over $300k down and didnt get a crazy loan, but only got a 2bedroom townhouse. Living very close to T-Gal the average home price was about $800k. Now it is as if we threw most of that down payment out the window. So selfishly I hope that we can someday sell this place, and buy a new home, but unless we win the lotto I doubt we will ever have another $300k to use as a downpayment.

I feel for you msflutter...wish I could have spoken with you then and urged you to rent, as I know where you purchased. I know this area well, lived here all my life and since that location technically qualifies as Hawthorne, it would tumble faster than somewhere like Manhattan Beach, even though it was close by. In theory, it should have worked...it is a great location and could have been full of young professionals that work in nearby El Segundo. But they built it too late and charged too much.

However, the bright side is that you have had a great place to live while raising your son. I know that it''s hard to see that has a huge plus when there is a tangible loss of money associated with it, but it''s not a loss until you sell, so you never know, it may come back up again, but it''s going to take a while.

 

[Mara]

icekid... in some areas the prices will go back up over time, and probably even surpass what the craziness was 2-3 years in 05. imo this area is one of them. i have seen rises and falls, and houses that dropped from 400 to 190 go back up to 500 and surpass that. it's very cyclical in this area.

it is great that the prices are dropping so that more people who are 'ready' and were trying to save to just get into something, are going to be able to get so much more bang for their buck. this market, especially here in the CA Bayarea, was pricing out tons of people.

however, i think based on what i have seen previously that prices will recover here and while the growth may be slow again, eventually it'll all just happen all over again. kind of like bell bottoms being cool again at some point. people and generations forget what happened 10/20 years ago and then history just repeats itself.

msflutter, i know what you mean about thinking you could have gotten a better deal if you waited...but RE is never a guarantee for anything. you could have waited and the market could have taken longer to correct, or the place you wanted might not have been available. a house is not just an investment but it's also a home, a place where you need to live and be happy. i would never just want to live in a place because it's a great investment if i didn't like it. my parents did that for 8 years because it was in a great school district for my sisters, but they hated that house and i can't imagine not loving your home that you go to each day and spend time in.

we just bought a 3/2.5 house in a nice area with great schools in the south bay... and it was probably about 50k-70k less than it would have been in a better market, so we feel it was a smart decision. but now we have to sell our townhouse, so while we got a deal by waiting...we are paying 2 mortgages which is super stressful, and we just have fingers crossed our place will sell. buyers are very unpredictable right now! so do count yourself lucky that you have a place, you love it, you can make the payments. over time you will most likely reap back what you put in, but on the other hand if you did sell and buy something else cheaper then you get more for your money due to the market.

on a random note, we see a huge dearth of nice properties go up for sale around here. so yeah there are some great 'deals' but would i want to live there? heck no, not without a lot of remodeling or a gutting. is that kind of deal 'worth it'....not for us....we don't have the time or inclination to do that. the nice properties are going within 30 days around here still, so the market is still somewhat there, but older or properties not maintained or needing a lot of work seem to be much harder for people to want to buy.

on a funny note, we totally see people are torn between waiting it out til their property has more value to sell and then go buy something else BUT when their property has more value, then the new prop they buy will be more expensive too. the two go hand in hand. if people CAN buy because they have savings and can get a loan, then i would go for it if you do see something you love. it's a home not just a house.

 

[tradergirl]

and I would contend that this is a very bad time to be buying in California for the reasons laid out on the left side of this page.

www.patrick.net

Not to mention that almost nobody can get a mortgage any more and rates are going up.

 

[Beacon]

I have to agree w/ Tradergirl here. It is a difficult time for housing and CA in particular. If you are buying with a jumbo loan - forget about it. Those rates are persistently high.

Even w/o the exisitng problems, there are new looming problems specific to CA. These include the fact that our state taxes are rising and our state sales tax is rising (we''ll be at 9.25%!). This takes money out of people''s hands and makes everything just that more expensive. Less money for housing.

Obama''s new budget throws a chill on the higher income levels and those are the ones who can afford CA prices. What Obama is doing is raising the tax rates on people above 208K and specifically reducing the deductibility of mortgage interest on the higher earners. That makes it less attractive for those people to pay big money for a home.

At this moment we have a moratorium on forclosures, but that moratorium will end and new supply will be on the market.

Honestly, it doesn''t look good. This is not a two year turnaround to the old highs. It will be much longer.

 

[Mara]

having just gone through the process here in CA, it wasn't that horrible. sure it was a PITA at the time because the landscape is different, but we closed within 30 days with wells fargo, and held our other property while doing it. i have multiple friends who are refinancing and have not had any issues at all, and got great rates. we keep in touch with our bank guy at wells fargo and he said he was going to be closing a few hundred loans in the first few months of this year and he was so busy it was ridiculous. there is only one more round of foreclosures they say.

in terms of lowering the tax deductability for the homes over time (won't happen right away) on big earners... would that mean that no one would want to buy a house? i just found out last year that kids are only like 2500 write off. does that mean we won't have one because the write off is going to suck? not even a factor. though man i am a little bitter they aren't a better write off, diapers are expensive!

people need houses to live in... so while the 1m+ houses might languish a little, the under 1m pricing will still be desirable. rents right now in this area are ridiculously high and stuff is being rented quickly...if you can't get a loan then sure, rent, but like i am telling everyone who is even thinking about the housing market...do your due diligence, talk to a bank or a few lenders, talk to a good realtor, and find out information relevant to what YOUR specific situation is. don't just assume based on hearsay from other people or some website blog.

i am kind of an odd-bird because i was raised here and have seen how much people can make in RE if you are in it for the long term. my parents started out with a 60k house 35 years ago, and just finished a 1.7m remodel in los gatos...they have come so far. yes they saw the crazy ups and downs and probably wanted to pull their hair out numerous times, but they stuck with it. RE can't be viewed as a short-term investment or like stocks IMO. but because of what i have seen in this area i have lived in all my life, where we have crazy highs and lows in both jobs and housing, i tend to just think it all levels out one time or another and then just starts to climb again.

 

[Harriet]

Is anyone for making mortgages recourse debt?