Too many factors to answer this question. If we are talking about bubble zones like california I think the drop will be shocking, more than 30%. Prices have already come down a healthy amount. So far it seems like all the original predictions have been very short of reality. Look at the subprime write offs, every time we hear that we have got them all taken care of a new round of write offs is announced. I think one place where you can look for insight on this is the homeowners bailout bill being shuffled around congress. This bill is suggesting banks write off 15% of the value. So I think you have to at the very least expect another 15%. Housing is cyclical and a good majority of the activity occurs in the spring/summer season. I find it very scary how foreclosures and the subprime fallout is growing and yet we haven't even gotten into the season that most affects this market. In 2 months we will have a much clearer idea what is going on.
So I take it the consensus is prices are going way lower... I'm a first time buyer and I've been looking at open houses every Sunday. I figured I would just go in and low ball anything I liked. I live in North NJ I wonder how bad it will be here. Isn't there a way to compare the personal income with cost of living, past and present, not just nationally but in specific states/cities? Then if you adjust for inflation why can't we see where the prices should be? I mean based on the average income in a certain areas among other variables... no one is going to buy till its affordable. I know whats affordable to me and I'm going to bid on homes based on that no matter how big the spread is. Another thing is property tax... 8-13K/year over here... crazy!
My advice to you is to wait until the fall to buy. Wait until we at least get closer to a bottom, wait until the supply is bigger...Historically when there is a housing slump; when we find a bottom we stay there for an extended period if time even after it stabilizes...There is no rush
Keep speculating on real estate sitting on the fence and doing nothing. It doesnot matter how much it will go down, it matters can you qualify with 10% down?
i certainly can qualify anywhere anytime with FICO score >830 and have no problem to put 10-20% down. but i do have problem with property taxes,like it was mentioned above. in our area, on new condo(starts @ 500K!) my taxes will be 15K a year.15! add utilities,condo fees..man..who can afford this?
In my neck of the woods, the starter home costs are now slowly rising. Perhaps because with more stringent lending requirements, more people can only afford a smaller house. And people move due to job relocation, divorce, etc., every day. Note that I don't live in Miami or California, so my market doesn't count. SM
They'll all rent. And rents will go up. When rates went down, rents when down because the demand for rental property was low. So if rates go up, rents go up. Seems like if you really believe that mortgages are going to go to 10% or 15%, the smart move would be to buy a house for yourself now. Even if you believe that housing prices will come down further, if you don't buy, you're subjecting yourself to ever rising rents in that scenario. Its not all about what the house costs...its also about what your monthly payment is. SM
In california --- the 20 year old cinderblock ranch with 1900 sq feet that was build for 60K ---- and rocketd to 500k in 2007 -- is back to 350K after a 30% drop so the people being hurt by that are ? speculators fools carpetbaggers and of course...... anyone who took a HELOC to 95% LTV (but you shouldn't do that anyway if you are using that money to buy a plasma and a new escalade)