It's never over till it's over, but something is brewing in Va. Sales down 30%, inventory chart is parabolic (link) http://askmerv.choice3realty.com/cat_loudoun_inventory.html
Your make some good points, but I am still having a problem getting past the multi year 20% run ups in price, while incomes are up about 3% (maybe). This fundamentally is based on??? I believe the excess is speculative, could it be anything else? Hard to make comparisons between cities (ie: Chicago), both have had tremendous relative appreciation in the last few years, can one make a distinction between ridiculous appreciation and obscene appreciation when both do not have basis in fundamentals? This seems to be a problem that has to resolve itself, and since sales have sharply fallen, inventory is up even more sharply, all indicators are pointing to problems in coastal real estate. Not to mention the insurance squeeze on the family budget, especially hitting Florida. And if real estate stops selling in Jersey, might that interrupt the flow of people heading south? OWP
Hardly, my house is worth double what I paid for it and it will be paid off in 7 years or so, as mentioned in previous posts. Ah, and to make sure you sleep better tonight, our monthly payment is less than 15% of our NET, and pretty much lower than we could rent a 2 bedroom appartment right now for. Wich means just a bit more than the basement efficiency you probably live in.
People buying ins coastal areas are not 1st time buyers or pikers working at McDonalds. It really doesn't matter that overall wages went up 3% that year. The sell their 400K home in New Jersey and can pretty much afford anything they like in Florida up to 400K. 5 Years ago, the would have spent maybe 200K and now, as more and more people from the north do the same thing, prices go up as competition go up. Most people hate their jobs and can't wait to retire. They work their whole life so that they can afford to live a few years in the south. The Boomer generation has good pension plans and can afford to do whatever they like when they retire. When you're 60 and this has been your dream for as far as you can remember, you will make it happen, you don't exactly have the time to dick around 10 years waiting to see if your dream retirement house is going to drop 50K. Who cares if it does, when you're dead it won't matter.
i have one of those interest-only ARMS - 7-yr arm fixed for all seven years then it converts.(i'm in year 1) i take the extra cash each month I would normally put into the mortgage and put it aside in case i blow up my trading account. a house is a roof - not an investment or an ATM. if you plan to make money off your house then you will be in for a shocking suprise. be lucky if after all is said and done you break even.(repairs, updates, mortgage interest) btw, i live outside of detroit and we have the same issues here with housing, just not to the same magnitude. the leading indicator here was condos not selling, i have 2 buddies that have had their condos on the market for more then 12 months, both have them listed at least 5k under what they paid. we also have houses that, to me, are overpriced. little 5-acre parcels off of main roads that some developer buys and builds 4 or 5 homes on and expects to get 350k for a 2200 sq ft home - it never has felt right to me. what has felt right is that there is an ebb-and-flow in the housing market, just like the equity market. get ready for that ebb.......
i had a 7/23 loan once, but it was fixed. they are not bad loans, although the spread on the rollover in Year 8 is usually pretty high, but at least it rolls and you dont have to re-qualify. if you guys want a nice "quaranteed" return, then pay extra on your mortgage, the yield is higher than the IR on the mortgage, becuase more of the base payment goes to debt versus interest. it starts slowly, but you can really flip the amort table on the bank.... once your home is paid off, life gets easier.
very very true.. most of boomers simply want to exchange their homes from up north for ones in sunny states and have some $ left over. so whether its 400 to 300k few years back to 600 to 500k now, it doesnt make any difference, they will do it, not that much life left they want to live it out in style. If property prices crashed up north and south remained where it is then I would be worried.
That is interesting...foreclosures down but backlog is up. I wonder what a "normal" backlog is? On this thread, I've seen a lot of folks making statements like, "the backlog is 5 times what it was a year ago". Ok, but how did "a year ago" compare to the historical average? How does today compare to the historical average. I know in my neck of the woods, last year, houses would get listed and tell in less than 2 weeks. I bought one that was only on the market for 4 hours once. What is the historical "average" time that it takes to sell a house? I guess my position is that I recognize that sales have slowed down, and some areas did get ridiculously overprices, but I also know that 5 years ago I would have killed to get the kind of interest rates you can get today without paying any points. I truly wonder if the pain coming from those "frothy" areas (on balance) can derail an economy that is (apparently) hard to slow by those holding the reins.
Agreed about the interest rates, but one thing that is shocking is that most people did not lock (and still are not) in these historically low rates. In many bubble areas people got ARMS or even neg am option ARMs instead. That way they could leaverage even more house. In CA these loans were running about 75% of the market, in San Diego for a short while last year it was over 85% of the market.