""buy in a good area as soon as the market goes down" that statement isnt always true. Prices will come down, dont think you missed out. Its like buying CSCO at 50 after it dropped from 75, its now under 30. Houses near me arent selling well, prices have come down and still very few takers. I live in an area where houses range from $500,000-$800,000
Yeah, but you can't live in a stock... People forget about housing, that you might have overpaid for it, but at least you are using it...
Calculate the net tax value and equity built for own vs. rent. Calculate the potential equity downside over the next year or two. Compare the two numbers. Is it an obviously bad deal to buy now? Up here in No Cal, prices doubled over the last 5 years. The run rate for this area probably should have been 30-40% and not 100%. I'd rather rent than own this year as I see obvious downside of 10% and potential downside of another 30% over then next 3-5 years. If you don't own now in No Cal I'd wait for all the mortgage resets to hit at the least to really assess values in the "hotter" markets. In many parts of Texas, you'd probably be fine buying now. It just depends. I'd say the same is likely to be true for most areas of LA as well.
I think you have misunderstood me. People who already made a decent wage in the years before housing went huge....were able to take advantage of the housing prices THEN. I was working alongside another journeyman plumber who bought his house in Ventura for 200K in 1998, which is when I was a first year apprentice making 10 bucks an hour, my friend had been making journeyman wage for 10 years already at that time. Come 2005 his house topped out at around 650K in value, now I make the same wage he does, though I have to pay 3.5 times what he did to own the same house! Who would have anticipated that? To sum it up, I had no money before the boom. Anyway, I never even had credit at all, I had hospital bills that went to collection in the late 90's which I was too poor and uninsured to pay, I finally got a secured credit card from B of A two years ago and I joined a credit union to take out a secured loan but by the time I had any decent credit it was a little late, I still didn't have the money to put down on a house and didn't want to buy too high or take on a shady mortgage just to keep up with the Joneses. What did I spend my money on instead, you ask? Basic living expenses, survival under a roof! lol WHY do I bring up the trust fund/inheritance thing? Do you know what it is like to LOSE it all? And then find yourself with NOBODY and I mean NOBODY to help you? Most people I know have SOME kind of help from their families, pops will co-sign, help with a downpayment, etc...I mention this because rich or poor, good families help out and pass things on to their kids and so on down the line, people in my kind of situation can be a little upset when they find a grand canyon separating themselves and what used to or what they "should have", so to speak. "I know many people who became successful without an inheritance" THAT WAS NOT MY DAMN POINT! lolol Families can HELP, inheritance can HELP and in some cases, even MAKE someone, but I'm not saying it can't be done on your own, if anyone knows that it's me, I have succeeded in leaps and bounds over the years from where I came, all strictly on my own and I feel like I still haven't begun to reach the potential of my success. True independence and success gives a great sense of accomplishment no one can take away! So maybe it is good that I have had all this stuff happen, builds character! However, I must say, I KNOW I am not the only one who has gone through times of anger and frustration because they can't currently afford the same dream their parents had, largely as a result of the RE boom. So lets give the market a little time, I plan on waiting it out and simultaneously building business and investing power to the level where it won't matter as much, boom or bust, wish me luck, the best and good luck to you all!
This whole national housing melt down is a big joke. Yes there will be poor areas that will get hurt,, but prime areas like manhattan are still thriving. Check out this building in manhattan.. its been on the market for 3 days and is already 20% sold out. Prices are starting at $2mil. Brokers there have no issues moving units like these priced around $2k per sq ft. As long as unemployment stays low, mortgage rates are low ( i am talking about the majority of prime borrowers) and the stock market doesnt crash - housing will thrive in most strong metro markets, especially like NYC. www.thelucida.com
Point is that neighborhoods where people have strong income and tend to have good credit, will be fine.
My mother just bought a house in TX and actually had to get into a bidding war to get the home. Yes, she actually paid OVER list price. Another friend of mine just moved to CT and he also got into a bidding war with other buyers. I know another friend who had the same thing happen in LA. I'll tell you what. I was a bear in RE before. I'm not so much anymore. I also agree, it completely depends on the local economy. Not the national economy. As long as there are jobs in the area, housing prices will stay bid. I'm sorry, there is just too much demand out there. The subprime mess is affecting a very small part of the market. I am seeing no evidence of a housing meltdown. All I see is CNBC talking it up at every turn to create ratings. I'm not saying at some levels locally the market is not going to flatten our or drift slightly lower in some cases. But a meltdown? Forget it.
Mav- You haven't been to Florida lately I assume... I live in CT and you see the number of foreclosures in the paper (in high rent Gold Coast towns)..This "meltdown" is happening in some parts of the country....MI, FL, Upstate NY...properties not moving.... What happens to all the buyers at the top when values drop 20-30% like they are now in these states? Alot of inventory, banks owning alot of properties, tight credit weakening demand..is what I see...
I haven't seen prices of SFH's in SoFla come in by anything more than 10-20% and that's off of stratospheric levels. In other words homes that were 500k in 1996 got up to 1.8 in 2005 and are now 1.6.
I'm from St. Louis and real estate prices have been dropping there for 2 years now and still dropping. It's not because of the "bubble". They never appreciated to begin with! The reason they are dropping is because the economy in St. Louis sucks and there are no jobs there. The bottom line is, in areas with no job growth or where there have been large layoffs or downsizing, you will see declining prices. In areas where there are plenty of jobs and growth, you will see two things. One, a strong market that is being bid by buyers who have the means, and two, a spec market driven by interest only loans where they are maxed out on leverage. These people who have no money, no credit, and no ability to carry their investment properties, are f*cked. But there is a lot of liquidity waiting to take those properties off their hands and send them back to their old jobs at wal-mart where they belong. Again, it all comes down to the local economy. I don't know a lot of investment bankers or lawyers who are in interest only mortgages.