What is your opinion on this. Does this have the potential to cause significant home price increases in the next 2 years? Or will this have no affect. And how long will it take at this pace for them to clear all of those, and how many of them will be in SE Michigan
And also, what is the foreclosure situation in Southeastern Michigan? Is there still a big backlog of foreclosures to come onto the market? And how long will it take to clear the foreclosure pipeline? Will it take at least another couple of years?
Because the longer it will take to clear the foreclosure pipeline, the more comfort I can take in nit having to worry about home prices going up much if at all in the next 2 years here in Metro Detroit.
It is nice to see a young man like yourself working and saving for a home. Without knowing how far along you are with your savings and how soon you plan to purchase, I don't think you will have to worry about home prices going up that much in the near future and I don't expect them to get anywhere near where they were during the boom when people were making alot of money on homes and the prices were higher. With that said whenever you purchase a home, you probably will want to see the prices rise so that you can have some equity in the property. Real estate has always been a good investment and with any large investment you will want to see a return on your investment. Sadly in the last few years that has not been the case. That is why anyone looking to buy has a great opportunity with the prices and interest rates so low. You're on the right track.
Good luck to you, if I can help you in any way feel free to contact me.
Thank you for responding to my questions.
I do value a house as only a place to live that I can call my own and have my own privacy while being rent and mortgage free.
My only concern about prices is that I DO NOT want them to go up. In fact, I hate rising home prices because I believe it punishes people like me who work hard to save to pay cash for things and hate debt.
I have NO interest in seeing home prices go up even once I own my own home. I view a home as a PLACE TO LIVE I CAN CALL MY OWN while being free of any rent or mortgage. I have ZERO interest in flipping houses or ever borrowing against a house.
I only ask the question about when we would be back at 2004-2005 prices as a reference point, with me feeling more comfortable the longer that will take.
In fact, I am only 27 years old and I hope home prices stay dead flat in nominal terms for the rest of my life.
Once again, my only concern over prices is to make sure they do not go up so what I am saving to buy does not cost much if anymore in a couple of years.
You have gotten great information from agents, but I want you to remember it is the value of the house, not just the price. My house has great value to me, of course I can't sell it for what I paid for it but I was one of those who knew I was making an investment and I like where I live.
There is a shortage of homes on the market for a few reasons, banks do not want to flood the market with properties because that will only bring the values down so they trickle them out. In turn they get multiple offers and probably sell the home for more then it was listed.
Home owners are reluctant to sell because if they owe more then the house is worth they will never get their money out of it to pay off the mortgage and usually they are not in a position to bring money to the table. As far as home values getting to where they were, you can forget that. In certain locations the market may be showing signs of slightly picking up but you will not see them where they were. Until there is some clearity on the future of this country I'm afraid we will be in this mess. With that being said, interest rates are the lowest they have ever been, why would you wait to purchase a home? If you see a home you like how much more do you think the price will go down, a few thousand dollars, which is about 15 dollars a month on a mortgage.
If you are serious about buying a home the time to buy is when you are ready. Don't feel pressured because of the times or don't feel like you are losing out on something. Buy the house you think will have value to you.
I am a Realtor in the Rochester area, if you have not found an agent to work with yet please feel free to contact me.
Pam Bava, Realtor
Real Living Kee Realty
Thanks for responding. I just had a couple of other questions.
When you say that there is an undersupply of ready to move in homes in that price range, is that because lots of people have taken their homes off the market and there are a lot of foreclosures taken off the market by the banks. Or is there just a natural shortage of supply of them regardless. I have heard that many have taken their home off the market because they cannot afford to sell it and that is why supply is short and that as soon as prices even go up a little, homes will flood the market keeping a lid on any price increases. I have also heard the other side as well.
And also, if the economy does recover fast, will home prices here just rocket back up to 2004-2005 levels really fast, or will that take a long time. And if you had to guess, what year will it be when home prices will be back at their peak which was 2004-2005 levels. Because the longer that will be, the more comfortable I will feel. So hopefully that is at least 12-15 years away.
And just for comparisons sake, was it true that back in 2004-2005, it would have been near impossible to find any home starter or otherwise in an ok area in decent condition for much less than $200K? Or were there areas in Metro Detroit back then that home values were not that bad and you would have still been able to find a starter home for lets say $130K.
Unfortunately, it is anyone's guess as to what will happen. From a financial standpoint you would likely be better off putting 20% down on a home and investing the rest of your savings. Mortgage rates are below 4% and you would have a tax write-off for the interest you pay. If you invested $70K now you would likely have an investment worth many times more than your home in 20 years.
Good luck - Lori Fisher, Coldwell Banker Weir Manuel, Rochester
I cannot predict the future. However interest rates are at an all time low. Investors are gobbling up homes at an alarming rate. Investors seem to have an inside scoop or the ability to see the future. This is why the rich get richer. So there is no time like the present to purchase a home . Foreclosures are a great way to purchase a home way below market value. When interest rates creep up, the prices can also increase because every one will want to purchase quickly. Watch for that trend too. This was a slow year for most Realtors. I say most. Those who have connected with several investors are doing quite well. I say buy soon. Good Luck. You can access my web site for free up to date listings.
Home prices in Michigan are beginning to show signs of stabilizing, and actually have ticked up a bit. If you click on the link below, you will see what home prices have done here in Michigan the past few years.
I personally don't see major increases in home prices in the next 2 - 3 years. You specifically said "significant price increases", and I just don't see that. Until the job market stabilizes here in Michigan, and the country, home prices will fluctuate as the economy goes up and down the next few years.
Another indicator of prices is inventory. Banks, Fannie Mae and Freddie Mac have reduced inventory that they are bringing to market to stabilize prices. Any agent will tell you that new home listings in certain areas do not last long and many have close to full price or over asking price offers. Many homes will have multiple offers on them also.
But the bottom line is no one can see into the future, the only thing anyone can do is speculate by following the trends, and charting the average increases and decreases in pricing of any given city in Michigan. But I think one thing all agents will agree on is the fact there really hasn't been a better time to purchase a home than now.
Prices are fantastic and the low mortgage rates are unheard of. The rates will not remain this low forever so it is definitely time to buy. Chis you may want to sit down with an accountant or financial analyst to review your financial position and maybe make a move earlier than 2 - 3 years from now, even if you don't have the full amount to purchase a home.
Maybe you can purchase a home next year, to lock in both low prices and low rates, obtain a small mortgage and then pay off the mortgage in a few years. I personally don't think prices and rates will remain this low, so it could be to your advantage to move a bit quicker.
If you need help, please feel free to contact me via email or call me, I would love to talk to you.