Is the US experiencing a house price crash?

[skymama 37]

We reduced my fiance's house by $10,000. That's not much considering the sizable profit he will still have thanks to the housing boom. Someone is coming back for the 4th time next week, so keep your fingers crossed for us!

We were going to add-on to my house, but my dad suggested selling that too, size I will also make an excellent profit after only owning it for 4 years. He predicted we have about 12 months to sell and still find a bargain/foreclosure before prices start going up again. He's been in the building business for 40 years and seems to know what he's talking about.

Like Spence said, I don't think there will be a recession because the Fed lowered the interest rate.

She is Da Man, and you better not mess with Da Man,
because she will lay some keepdown on you faster than, well, really fast. ~Billvon

[CSpenceFLY 1]

Does it mean we are getting old when we sit around on a Saturday and talk about the housing market and use words like recession.

[squirrel 0]

I am a general contractor building spec homes in southern cal. Yeah, times are tough, how ever, the fact that i was making insane profits two years ago, it is understandable how the market it correcting itself. what really has changed is that people that shouldnt have purchased homes, now can not purchase homes due to the vitrual elimination of the sub prime mortages...this was a large percentage of my customers.

but california also had two years of 20% + increase in home prices, so a 15 to 20 % correction is not bad, in fact, its normal. and i would rather build in a "normal" market, where I can acuratley forecast the selling price, than a volitile market.

am i worried, not really. anyway, if i cant work...its more time to play.

________________________________
Where is Darwin when you need him?

[Snowwhite 0]

We had an awful recession in the mid 80s in our area, which we never fully recovered from. Housing has always been cheap in our area because International Harvester, Case and the Rock Island Lines all folded in the same year. You can get a huge old house for CHEAP. My son recently bought two crummy dumpy houses and 4 lots for 10 Grand. My house, which is ok and about 2500 square feet in a decent neighborhood would go for about 115 grand.
My inlaws house was appraised at 89 grand in July, and last week we accepted an 85 grand offer on it. It remains to be seen if the guy can get the financing.
The whole subprime thing has been a bomb waiting to go off. We have known for several years that it was a really BAD idea, and did some lobbying in DC 2 years ago to get it reversed. Unfortunately, no politician wants to be the guy to tell a new home owner that you can't buy this huge McMansion fresh out of college. Guess those kids that did that are finding out the hard way what that is all about.

skydiveTaylorville.org
freefallbeth@yahoo.com

[Phillbo 11]

In Scottsdale, Az the homes at the upper end of the market are still strong (million plus) but the mid range stuff is backing off a bit in price and sitting for a while.

When I made my step up in the market 4 years ago, houses were selling in hours, not days. I found on that had fallen out of escrow and snapped it up before it went back on the market at a reduced price.

I also locked in a 30year fixed at 5.125% so I plan to sit tight for a while and watch the bounce off the bottom and the return of a good market.

[ACMESkydiver 0]

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Alot has happened in just over a year.

Just thought i would resurrect this one to see what sorts of price drops people have seen in their areas.

I know Manhattan and SF area are still holding out well, but aside from that it seems like a full blown crash for a lot of the US, outside the still much-in-demand metropolitan areas.

It has all the feelings of a recession to me, and as the old saying goes, when the US sneezes, Euroland tends to catch a cold...

Yep. Case in point: Last year, two of our neighbors (one next door, one across the street and up one) both sold their houses within a week for full asking price.

Now, our neighbor across the street and down has had her house on the market for over 6 months and has had to lower the price twice and it still hasn't sold.

Our house just over-appraised (I know it's inflated; I used to work mortgage and I know what they were doing. ) for $401k. We bought it for $203 in 2001.

Right now, that neighbor has a better yard, about 200 s.f. less living area, but isn't selling at $318k. These homes would be 'reasonably' appraised in the high $300's.

Seattle area is supposed to be holding better than much of the country, and we're feeling the squeeze alread...

~Jaye
Do not believe that possibly you can escape the reward of your action.

[Newbie 0]

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Alot has happened in just over a year.

Just thought i would resurrect this one to see what sorts of price drops people have seen in their areas.

I know Manhattan and SF area are still holding out well, but aside from that it seems like a full blown crash for a lot of the US, outside the still much-in-demand metropolitan areas.

It has all the feelings of a recession to me, and as the old saying goes, when the US sneezes, Euroland tends to catch a cold...

Yep. Case in point: Last year, two of our neighbors (one next door, one across the street and up one) both sold their houses within a week for full asking price.

Now, our neighbor across the street and down has had her house on the market for over 6 months and has had to lower the price twice and it still hasn't sold.

Our house just over-appraised (I know it's inflated; I used to work mortgage and I know what they were doing. ) for $401k. We bought it for $203 in 2001.

Right now, that neighbor has a better yard, about 200 s.f. less living area, but isn't selling at $318k. These homes would be 'reasonably' appraised in the high $300's.

Seattle area is supposed to be holding better than much of the country, and we're feeling the squeeze alread...

What do you think about the ARM resets due next year and the likely impact on sales going forward? Given your background in mortgage sales etc, would be interesting to know.

Here is the chart from the Real Estate Journal...

http://www.realestatejournal.com/images/buyingselling/20070817-hagerty.jpg

There is a scary amount of subprime ARMs about to reset, almost double that of 2007. I'm not a betting man, but the data points to further nominal falls or at the very lleast ongoing stagnation, leading to real falls through inflation.

I can't see the Fed able to cut rates too much either, certainly not in the medium to long term, there is still way too much upside from inflationary pressures for that to happen. The 50 point cut was a shot in the arm but it's the equivalent of a body builder taking more and more steroids to artifically inflate himself - you know something will eventually have to give out. The old "between a rock and a hard place" comes to mind...

"Skydiving is a door"
Happythoughts

[squirrel 0]

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I can't see the Fed able to cut rates too much either, certainly not in the medium to long term, there is still way too much upside from inflationary pressures for that to happen. The 50 point cut was a shot in the arm but it's the equivalent of a body builder taking more and more steroids to artifically inflate himself - you know something will eventually have to give out. The old "between a rock and a hard place" comes to mind...

but i feel that if it does not "give out" too quickly...thus resulting in too much inventory, that might be benifical to the market. i have also started seeing more adds from lenders, to get people on fixed mortages. funny though, these are the same lenders that gave them the ARM.

________________________________
Where is Darwin when you need him?

[lawrocket 3]

The property market is experiencing a correction. Some claim that neighborhoods around here have lost 25% of their value. I called bullshit.

My house has dropped back to the price that I bought it - in June, 2005. Properties are sellign for somewhat close to the sellign price but are just taking longer to be sold.

The market was in need o a correction. It is being corrected. Still, right now IS the time to buy property. My wife and I are buying another right now because of it.

My wife is hotter than your wife.

[rmsmith 1]

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We reduced my fiance's house by $10,000. That's not much considering the sizable profit he will still have thanks to the housing boom. Someone is coming back for the 4th time next week, so keep your fingers crossed for us!

We were going to add-on to my house, but my dad suggested selling that too, size I will also make an excellent profit after only owning it for 4 years. He predicted we have about 12 months to sell and still find a bargain/foreclosure before prices start going up again. He's been in the building business for 40 years and seems to know what he's talking about.

Like Spence said, I don't think there will be a recession because the Fed lowered the interest rate.

To sell today in many areas the price will have to be lowered significantly.

Housing prices have been puffed up with credit. Lots of adjustable rate mortgages (four years worth) still are waiting for their resets occur. See the graphic.

With the fed currently pumping money into the banking system you'll see inflation; your food bill, fuel for the car, etc., and metals too.

Interesting times indeed!

[ACMESkydiver 0]

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Still, right now IS the time to buy property. My wife and I are buying another right now because of it.

If you NEED to get into a house to get out of a smaller rental, move locations, etc, then yes I agree.

If you're straight up real estate investing, I'd still wait another 12 months for the first massive round of foreclosures.

~Jaye
Do not believe that possibly you can escape the reward of your action.

[lawrocket 3]

For my tastes, the foreclosure market is actually riskier. You buy a home without any disclosures relating to the condition of the home. The home may not have had anyone in it for 18 months and suffered serious dilapidations. On top of that, there is the demand for upfront financing and payment, etc.

A real estate investor may be wise to try it, but there are plenty of pitfalls.

Instead, my wife and I are buying the house literally across the street. Her dad is going to rent it. We're getting it for $300k. It's appraised at $395k. These guys want to sell it quickly because one of them took a job in LA and can get a good deal on a home down there - once he sells this one.

So we've got location. A tenant. A great price. Great neighborhood. The opportunity arose. We hadn't even thought about it until they said, "We're aboutready to put it for sale. We'll take $300 for it, even, but we'll need more for if through a realtor."

That night, the wifey and I talked about it. WE're going for it. We'll find a way to afford it.

My wife is hotter than your wife.

[ACMESkydiver 0]

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For my tastes, the foreclosure market is actually riskier. You buy a home without any disclosures relating to the condition of the home. The home may not have had anyone in it for 18 months and suffered serious dilapidations. On top of that, there is the demand for upfront financing and payment, etc.

A real estate investor may be wise to try it, but there are plenty of pitfalls.

Instead, my wife and I are buying the house literally across the street. Her dad is going to rent it. We're getting it for $300k. It's appraised at $395k. These guys want to sell it quickly because one of them took a job in LA and can get a good deal on a home down there - once he sells this one.

So we've got location. A tenant. A great price. Great neighborhood. The opportunity arose. We hadn't even thought about it until they said, "We're aboutready to put it for sale. We'll take $300 for it, even, but we'll need more for if through a realtor."

That night, the wifey and I talked about it. WE're going for it. We'll find a way to afford it.

Great! Sounds like a good opportunity for you.

~Jaye
Do not believe that possibly you can escape the reward of your action.

[Newbie 0]

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The property market is experiencing a correction. Some claim that neighborhoods around here have lost 25% of their value. I called bullshit.

My house has dropped back to the price that I bought it - in June, 2005. Properties are sellign for somewhat close to the sellign price but are just taking longer to be sold.

The market was in need o a correction. It is being corrected. Still, right now IS the time to buy property. My wife and I are buying another right now because of it.

If the nominal value of your house, i.e. book price if you sold it today - is the same as the book price from 2 years ago, then in real terms it's worth less today than then, because inflation has been about 3-5%/year depending on what figures you look at and who you believe with regards to the rate of inflation.

A book price is not also necessarily the selling price. If you paid $400k and its valued at that today, obviously it goes without saying you will be unlikely to get slap bang on what you ask, particularly in times when the market forces shift to favour the buyer and not the seller, which is what many of the US real estate markets seem to be finding themselves in at the moment, it would seem.

"Skydiving is a door"
Happythoughts

[The111 1]

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Is the US experiencing a house price crash?

No, the US is experiencing the BEGINNING of a housing price SLIDE. This will take years to level off, and for those of you who think prices are turning around any day now, consider this.

1. From 2001 to 2006 property values in many areas DOUBLED. This is not healthy. It is out of line with the average incomes, and out of line with what it has been historically for 200 years (inflation adjusted). So why, after 6 months of tiny drops (10-20%), do people assume the downturn is all over? Prices are still WAY out of whack, even if they happen to be slightly less than they were in February of this year.

2. Inventory is still at an all time high. And I mean all time. Why on earth would prices start to go up again when the over supply is still growing? They won't go up until there is a shortage, which isn't happening anytime soon. The most basic rule of economics still applies to plots of dirt and boxes of wood.

Check back on this thread in 2012.

www.WingsuitPhotos.com

[The111 1]

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If you're interested, check out some forecasting sites. www.hsdent.com is a good one. We are looking at another full-on great depression in the next 10-15 years. Thanks, baby boomers!

A depression is a real possibility though certainly not a certainty. I certainly think it is more likely than not, but you can never be sure about these things. Many area of Europe are further out of whack than we are and the bubble keeps getting bigger. But look at Japan. Still incredibly expensive to live there, but they have experienced a FIFTEEN YEAR DECLINE. Folks, it can happen, even to "US". I wonder if 6 months into their decline, everyone was applauding that it was "over" and prices would begin going back up. Prices may be the lowest they've been in two years right now, but they're still the highest they've ever been, otherwise!

Remember, in down times, CASH IS KING. Get out of debt and get cash in your hands now.

Another good site is thehousingbubbleblog.com.

www.WingsuitPhotos.com

[ACMESkydiver 0]

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Remember, in down times, CASH IS KING. Get out of debt and get cash in your hands now.

That's right...just wait; 12 months - 2 years, we'll be looking at foreclosure properties on the market for 50% of original value -and less. you'll be able to scoop up properties for back taxes only, cash in hand.

Financial institutions are going to feel it; and I'm already seeing mortgage companies closing their doors and walking out on SIGNED MORTGAGE LOANS. That's right; one of my customers is a mortgage brokerage that we got our own loan through, and they had loans lost because the lender bailed while mortgages were still within their 3-day recision period.

Holy nightmare for that mortgage brokerage.

I STILL say that if people are looking to move from an apartment to a house, and they can secure a fixed rate that is well within their budget, that they need to weigh out quality of life vs. waiting 2-3 years to get into a house for much less money.

Financially, sure. Wait. But I'd go crazy if I had to cram my growing kids into a rental apartment...and 2-3 years in an owned home is worth the higher debt to me.

~Jaye
Do not believe that possibly you can escape the reward of your action.

[The111 1]

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Financially, sure. Wait. But I'd go crazy if I had to cram my growing kids into a rental apartment...and 2-3 years in an owned home is worth the higher debt to me.

Don't have to rent an apartment... can rent a nice house too!

In our recent rental search we passed up a 2500sqft house in a gated community asking $1300/month rental (or $370k sale). Kinda funny how out of whack those two numbers are.

We didn't want to rent that place because it's just way too much for 2 people.

www.WingsuitPhotos.com

[RevJim 0]

I have an ARM, but with my wife and my credit, we were damn lucky to get that. It's a conventional though. IO, hell no! We've seen ups and downs on our payments, but since our mortgage is VERY small, it doesn't affect us, too much. Even a full point rise wouldn't hurt us, luckily, though we'd end up paying much more over the 25 years we have left. luckily though, we were smart enough to get a loan w/ no points, and no pre-payment penalties. If we were to pay off the mortgage tomorrow, we'd get a huge chunk of interest back.

We did something along the lines of what you are saying. We bought a repo. It had sat empty for over a year, and it was really, REALLLLLLY run down. Our property values in this are are quite low, and then was well below that. It sat for that year at $45,000. Yes, that's not a typo. Only 5 digits. We offered $35,500 to the mortgage company from Salt Lake City (We're in WI) and they accepted within 2 days. We then took out a second mortgage to cover remodeling, which I did ALL myself. We have a new house with old studs and framework, literally. Our total investment was less than $80,000, including furnace, A/C, all appliances, ect. Our last exit appraisal from our bank was for $215,000. We do plan on paying it off, hopefully within the next 4 years, and do not plan on selling for some time. It's nice to know though that we CAN sell for 50% of market and still be ahead of the game.

Our youngest is 8. We plan on selling when he graduates, and use the procedes to build a smaller, 2 bedroom ranch in our same area, but out of town.

Timing is good, and repos can be really good if you have the time, knowledge, ability, and ambition to do the work yourself. To have the work done to this house by outside contractors would certainly have raised our investment considerably over value.

Repo's, check 'em out. Talented people can do well with ones needing work, while less talented people my be able to find one in good shape that the bank just wants to get rid of.

A house can be equity to you. It's a liability to a bank. Use that to your advantage.

It's your life, live it!
Karma
RB#684 "Corcho", ASK#60, Muff#3520, NCB#398, NHDZ#4, C-33989, DG#1

[ACMESkydiver 0]

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Financially, sure. Wait. But I'd go crazy if I had to cram my growing kids into a rental apartment...and 2-3 years in an owned home is worth the higher debt to me.

Don't have to rent an apartment... can rent a nice house too!

In our recent rental search we passed up a 2500sqft house in a gated community asking $1300/month rental (or $370k sale). Kinda funny how out of whack those two numbers are.

We didn't want to rent that place because it's just way too much for 2 people.

$1300 might get you a 3 bedroom apt here.

~Jaye
Do not believe that possibly you can escape the reward of your action.

[DannHuff 0]

The Australian broadcaster did an investigative piece on the US subprime mortgage situation and its fallout.

I found it interesting viewing and it can be streamed online.


http://www.abc.net.au/4corners/special_eds/20070917/subprime/default.htm

[ematteo 0]

$1300 gets you a studio here (SF).

Credit crunch has really increased rental demand. Given the really tiny rental supply here in SF (exacerbated by rent control), asking rents have been shooting skyward.

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Financially, sure. Wait. But I'd go crazy if I had to cram my growing kids into a rental apartment...and 2-3 years in an owned home is worth the higher debt to me.

Don't have to rent an apartment... can rent a nice house too!

In our recent rental search we passed up a 2500sqft house in a gated community asking $1300/month rental (or $370k sale). Kinda funny how out of whack those two numbers are.

We didn't want to rent that place because it's just way too much for 2 people.

$1300 might get you a 3 bedroom apt here.