Foreclosure in San Fernando>Question Details

Jeannie, Home Buyer in 91401

How low will it go? We've put in an offer on a bank owned property in Valley Glen. Now we are experiencing

Asked by Jeannie, 91401 Thu Apr 10, 2008

second thoughts that perhaps even though the property is going for more than $200,000 less than it did last year, it will still go lower in the next year or so as market finds it's bottom. (who wants to "lose" their downpayment in devaluation of home?) The house across the street, which is bigger, went for $1,000,000 last year and now I see the price has been lowered to $599,000 (last week it was listed at $699,000) - so a drop of a house in the neighborhood of $100,000 in just a week is scary.

Help the community by answering this question:

Answers

8
No one knows where the market will bottom out... but what is a constant is market dynamics. Up and down, up and down like stocks. Yeah, you want to buy at rock bottom and sell at top dollar, but be realistic- buying anywhere near the bottom is good!

As they say, a home is only worth what someone is willing to pay for it... seems like everyone in that area is sharing the same sentiments as you... no one is willing to pay the piper.
1 vote Thank Flag Link Thu Apr 10, 2008
Mathematical formula notwithstanding, I think Brian's suggestion [give it a decade] seems much more realistic than any of the nonsense they keep spewing on our beloved nightly news. This disaster didn't happen overnight. I'm no economist but, common sense tells ME that the origins of this nightmare are at least a couple of years prior to "the boom" years. (my real estate dealings boomed hard from '04 - '06)

If it took 15 years for one of the most honor-bound and efficient cultures on Earth to dig themselves out of what Brian described as a similar mess then, how long is it likely to take the world's most arrogant and wasteful?

Just a thought from your friend and neighbor and fellow TypikalAmerican.
0 votes Thank Flag Link Wed Mar 18, 2009
Find out what the property was worth ten years ago. Multiply that number by 1.344 (3% a year increase) and use that number. You'll find most properties are WAY over-priced.

Japan was in a similar situation to what the US is in now back in the 1990's (bad banks with toxic assests, politicans not understanding basic economics, a bubble economy & more) . Japan had 15 years of decreasing property values. Don't be surprised if the US has at least 10 years of the same.

Now of course houses can't drop 100K every year and still be worth something in ten, but houses can drop 100K-200K over a year or two and then keep dropping 5% a year in a deflationary cycle (like the Great Depression, a cycle where dollars become worth more but are harder to get). Research deflationary cycles, stagflation and fiat currencies and you might just want to withdraw your bid on that house.

Wait a year or two more if you can.

Good luck!!!
0 votes Thank Flag Link Fri Mar 6, 2009
the tax write off comes down to this
for every $1 you give to the bank in interest (ie not principal)
for every $1 above the standard deduction (which is $16,000 for married couple) you give to the bank
you get tax savings of 33 to 38 cents (depends on your tax bracket)
if that sounds good
you can just give a dollar to me
and i will give you 38 cents
the banks like it
and so do realtors
not sure why
0 votes Thank Flag Link Fri Apr 11, 2008
Jeanie, I hope I didn't influence you to withdraw your offer! It sounds like you and your partner have good reasons to want a home of your own - those tax write offs do help!

Please let me know if fI can help you in any way.

All my best,
Dot
Web Reference: http://www.DotChance.com
0 votes Thank Flag Link Thu Apr 10, 2008
Why did you decide to buy a home ? How long are you going to stay in the home ? No one would like to loose value in their real estate. "Buy and Hold" usually is the best strategy most employ. It is also a matter of "Time in the Market" and not trying to "time the market'. Historically Real Estate is a good investment.
If you are looking to buy a home relate it to the time horizon and to other benifits that would accrue due to home ownership. I guess most decisions will be based on late indicators, now you could be your own judge. Do brainstorm and consult with your own Realtor too.
0 votes Thank Flag Link Thu Apr 10, 2008
As it turns out we withdrew our offer today for reasons not really related to the current state of affairs in the market. However, your reply, Dot, was most appreciated. We are not really looking to buy to make money. But both of us are in need of the interest write off on our taxes and we are currently renting now. We both sold our respective homes about three years ago and moved in together in a rental. I have talked to a few people and everyone's got an opinion. Seems more folks think market will continue its downward trend for some time before it levels off. Some say "just wait and see what happens after the Presidential Election."
0 votes Thank Flag Link Thu Apr 10, 2008
Hi, Jeannie. It is a scary time in the real estate market right now. Do you plan on being in your home for more than a couple of years? It will probably take the market a while to recover.

Anyone who is looking to make quick money in the real estate market should not try right now. This is a time for home buyers to get a great deal for their homes to be in long term.

I wish I could tell you how low it will go or even if we have finally reached the bottom this week - but I can't.

Just make sure this investment is right for you at this time.

All my best,
Dot Chance
Keller Williams Realty
Studio City
Web Reference: http://www.DotChance.com
0 votes Thank Flag Link Thu Apr 10, 2008
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer