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The_Bayou's Questions (12)
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The_Bayou answered:
For example, if you'd bought three average houses in Augusta in 1975, you'd have paid $20,000 for each and put down just $4,000 apiece. Today, after the recent correction, three average houses are still worth $185,000 each -- or more than $550,000 total
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Even if you only had to pay $4,000 for each house (instead of the $20,000), that would be a total of $12,000 down in 1975 dollars. That is a good amount. But, your return would have had a 12% return rate. However, if you assume that taxes and maintenance on the property were only 2.5% per year (very low), you would have had additional out of pocket costs of $130,000 on the three homes. That does not include any remodeling to modernize the home, or any expansion. You still would have had a great return, but if were not going to live in the house yourself you probably could have done just as good in the stock market and not have had to deal with the hassles of long distance property management.
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Even if you only had to pay $4,000 for each house (instead of the $20,000), that would be a total of $12,000 down in 1975 dollars. That is a good amount. But, your return would have had a 12% return rate. However, if you assume that taxes and maintenance on the property were only 2.5% per year (very low), you would have had additional out of pocket costs of $130,000 on the three homes. That does not include any remodeling to modernize the home, or any expansion. You still would have had a great return, but if were not going to live in the house yourself you probably could have done just as good in the stock market and not have had to deal with the hassles of long distance property management.
Rodney ,
I am an active Realtor in Chicago and I bought my house in 1974 for $23,000. Two weeks ago my neighbor with the same home, right down to the footprint of the house sold for $362,000. Makes a the return on your home look pretty sad.,
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Chgo, 8% rate of return over 35 years is a very good investment. But, once you take out the property taxes paid, the interest paid (or opportunity cost if you paid cash), any upkeep and improvements, etc... the return would be closer to 5%, if that.
Also, if in 1974 you had put that same amount of money in General Electric, which is down to only $16 right now from a high of $58, you still would have made a better return on investment than you did on your property. Granted, you would have had to find a place to live. Which, or course, is why I believe you should not think of a house as a good investment, but instead a place to live that may or may not increase in value.
Also, the Dow Jones Industrials, after being battered for months and down to 8,668 today, was 607 in 1974.
I am an active Realtor in Chicago and I bought my house in 1974 for $23,000. Two weeks ago my neighbor with the same home, right down to the footprint of the house sold for $362,000. Makes a the return on your home look pretty sad.,
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Chgo, 8% rate of return over 35 years is a very good investment. But, once you take out the property taxes paid, the interest paid (or opportunity cost if you paid cash), any upkeep and improvements, etc... the return would be closer to 5%, if that.
Also, if in 1974 you had put that same amount of money in General Electric, which is down to only $16 right now from a high of $58, you still would have made a better return on investment than you did on your property. Granted, you would have had to find a place to live. Which, or course, is why I believe you should not think of a house as a good investment, but instead a place to live that may or may not increase in value.
Also, the Dow Jones Industrials, after being battered for months and down to 8,668 today, was 607 in 1974.
It is my opinion that this period we are now experiencing will be looked back upon as perhaps one of the best opportunities of our time. For those who are brave enough to take the leap, the rewards will be significant.
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Byron,
How are you taking the recent economic downturn into your analysis. For example, many people in the Northeast who were close to retirement lost a lot of their savings. These are the same people who would normally have bought retirement homes in Florida, California or Arizona, three of the states that have been worst hit by the housing market. Wouldn't stand to reason that the elimination of these potential buyers would have a negative future impact on these markets? Also, what about the the Northeast that is heavily dependent on finance jobs and where layoffs are increasing? My guess is that the loss of these jobs will be a drag on the housing market for the next several years. I am looking for other perspectives to understant why now is a good time to buy rather than waiting to see what happens with the economy.
My thinking is that if you wait for the market to have bottomed, the risk is that you miss the bottom and the market goes up before you buy. But, absent a bubble, the real risk is that you will pay no more than 5% more than you would have at the bottom. But, if you buy now, or a year ago as others advised on this site, you risk losing much more than 5% if the market continues to drop.
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Byron,
How are you taking the recent economic downturn into your analysis. For example, many people in the Northeast who were close to retirement lost a lot of their savings. These are the same people who would normally have bought retirement homes in Florida, California or Arizona, three of the states that have been worst hit by the housing market. Wouldn't stand to reason that the elimination of these potential buyers would have a negative future impact on these markets? Also, what about the the Northeast that is heavily dependent on finance jobs and where layoffs are increasing? My guess is that the loss of these jobs will be a drag on the housing market for the next several years. I am looking for other perspectives to understant why now is a good time to buy rather than waiting to see what happens with the economy.
My thinking is that if you wait for the market to have bottomed, the risk is that you miss the bottom and the market goes up before you buy. But, absent a bubble, the real risk is that you will pay no more than 5% more than you would have at the bottom. But, if you buy now, or a year ago as others advised on this site, you risk losing much more than 5% if the market continues to drop.
If you were to put 10% down on your home, pay 6% commission to RE agents, and home prices decline 4%.....Your home is under water.
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You don't pay a 6% commission based on what you paid for the house, you pay it on what you sell it for. Therefore, if you paid $500,000 for a house, and put down 10%, you would have a mortgage of $450,000. If value goes down 4% to $480,000, and you pay a 6% commission on that, you would come out above your mortgage value.
Where are people still paying 6% commissions? I am not criticizing, it is just something I have not seen in years in the Greater Boston area.
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You don't pay a 6% commission based on what you paid for the house, you pay it on what you sell it for. Therefore, if you paid $500,000 for a house, and put down 10%, you would have a mortgage of $450,000. If value goes down 4% to $480,000, and you pay a 6% commission on that, you would come out above your mortgage value.
Where are people still paying 6% commissions? I am not criticizing, it is just something I have not seen in years in the Greater Boston area.
Here is a snapshot of the August Year over Year price changes per Case-Schiller:
20 City Composite: (17%)
Phoenix: (31%)
Las Vegas: (31%)
LA, SD & SF: (26%) - (27%)
Miami: (28%)
Dallas: (3%)
Charlotte: (3%)
Denver: (5%)
Boston: (5%)
Just for comparison, I also ran the numbers for Aug 2008 v. Aug 2005. Here is what it looks like for those same markets:
20 City Composite: (16%)
Phoenix: (29%)
Las Vegas: (31%)
LA, SD & SF: (25%), (32%), (29%) respectively.
Miami: (25%)
Dallas: 1%
Charlotte: 10%
Denver: (3%)
Boston: (10%)
It appears that there has been little compounding of losses over the last three years. However, Boston was the only market in the composite to experience negative year over year prices in 2006. Most markets did not feel the downturn until 2007 (with Tampa taking a 10% hit that year, and Las Vegas, Miami, Phoenix and San Diego each taking an 8% hit).
It is a fair statement that most people who purchased homes in the last year in Miami, San Diego, Phoenix, of any of the markets that experienced more that 20% year over year price declines are probably under water in their homes.
20 City Composite: (17%)
Phoenix: (31%)
Las Vegas: (31%)
LA, SD & SF: (26%) - (27%)
Miami: (28%)
Dallas: (3%)
Charlotte: (3%)
Denver: (5%)
Boston: (5%)
Just for comparison, I also ran the numbers for Aug 2008 v. Aug 2005. Here is what it looks like for those same markets:
20 City Composite: (16%)
Phoenix: (29%)
Las Vegas: (31%)
LA, SD & SF: (25%), (32%), (29%) respectively.
Miami: (25%)
Dallas: 1%
Charlotte: 10%
Denver: (3%)
Boston: (10%)
It appears that there has been little compounding of losses over the last three years. However, Boston was the only market in the composite to experience negative year over year prices in 2006. Most markets did not feel the downturn until 2007 (with Tampa taking a 10% hit that year, and Las Vegas, Miami, Phoenix and San Diego each taking an 8% hit).
It is a fair statement that most people who purchased homes in the last year in Miami, San Diego, Phoenix, of any of the markets that experienced more that 20% year over year price declines are probably under water in their homes.
I believe the Case-Schiller numbers are due out this week. They tend to be more reliable than the NAR, in that they don't need to be revised as often. But, they will be for August which is not too relevant considering all that has happened to the market in the last two months.
Nickolas, did the NAR report allow you to drill down any further. Massachusetts home sales increased 8.5% year over year, so I am curious to know what area is dragging down the Northeast.
Nickolas, did the NAR report allow you to drill down any further. Massachusetts home sales increased 8.5% year over year, so I am curious to know what area is dragging down the Northeast.
My personal experiences are showing an uptick in sales in the Greater Boston market. I have several friends that were looking to sell or buy. One listed their house two weeks ago on a Friday and sold it on Saturday. Another put an offer on a house this weekend that had gone on the market late last week. The offer was accepted. Both sellers were realistic and did not attempt to sell for more than house was worth.
Sadly, I think the last few weeks activity in the stock market has been a great equalizer of people in the housing market and those that got out before the crash.
People that own homes have been hit with decreasing values, and people that sold their homes and cashed out their equity have likely lost more of it in the stock market than they would have had they kept their homes. I know a lot of people who cashed out and rented with the intention of investing the money and then buying when the market eventually bottoms out.
People that own homes have been hit with decreasing values, and people that sold their homes and cashed out their equity have likely lost more of it in the stock market than they would have had they kept their homes. I know a lot of people who cashed out and rented with the intention of investing the money and then buying when the market eventually bottoms out.
Joe the Plumber is going to find how quickly the political machines can turn his life upside down. During the debate he was riding high with the attention, and then within hours it comes out that he and the company he works for are working without a license, and that all plumbers need a license. Now, he will be out of work until he can get a license.
It takes courage to speak up to politicians, but you have to be prepared to pay the price.
It takes courage to speak up to politicians, but you have to be prepared to pay the price.
Nicholas,
Two points.
1) I would not quote a 28 year old mortgage broker in FLA and expect anyone to give it any more credibility than anyone else on the street. In fact, a lot of people blame mortgage brokers for part of the mess we are in.
2) You give two reasons for owning a home, but in my opinion both assume that the home is being purchased as an investment.
I don't really think of a house as a financial investment, but an investment in my family. Iown a home because I really like the house and the neighborhood it is in. It is not a neighborhood with rentals, so that would not be an option. I am doing work on my house that I am almost positive could not be recouped for a decade, but I am doing it because they are improvements that will make my family's life more enjoyable. To each their own, but I don't think of the housing market as a place for financial investments.
Two points.
1) I would not quote a 28 year old mortgage broker in FLA and expect anyone to give it any more credibility than anyone else on the street. In fact, a lot of people blame mortgage brokers for part of the mess we are in.
2) You give two reasons for owning a home, but in my opinion both assume that the home is being purchased as an investment.
I don't really think of a house as a financial investment, but an investment in my family. Iown a home because I really like the house and the neighborhood it is in. It is not a neighborhood with rentals, so that would not be an option. I am doing work on my house that I am almost positive could not be recouped for a decade, but I am doing it because they are improvements that will make my family's life more enjoyable. To each their own, but I don't think of the housing market as a place for financial investments.
In the event that some believe Merriam-Webster to be a liberal rag, here are the dictionary.com definitions:
lib·er·al /ˈlɪbərəl, ˈlɪbrəl/ –adjective
1. favorable to progress or reform, as in political or religious affairs.
2. (often initial capital letter) noting or pertaining to a political party advocating measures of progressive political reform.
3. of, pertaining to, based on, or advocating liberalism.
4. favorable to or in accord with concepts of maximum individual freedom possible, esp. as guaranteed by law and secured by governmental protection of civil liberties.
5. favoring or permitting freedom of action, esp. with respect to matters of personal belief or expression: a liberal policy toward dissident artists and writers.
6. of or pertaining to representational forms of government rather than aristocracies and monarchies.
7. free from prejudice or bigotry; tolerant: a liberal attitude toward foreigners.
8. open-minded or tolerant, esp. free of or not bound by traditional or conventional ideas, values, etc.
9. characterized by generosity and willingness to give in large amounts: a liberal donor.
10. given freely or abundantly; generous: a liberal donation.
11. not strict or rigorous; free; not literal: a liberal interpretation of a rule.
12. of, pertaining to, or based on the liberal arts.
13. of, pertaining to, or befitting a freeman.
–noun
14. a person of liberal principles or views, esp. in politics or religion.
15. (often initial capital letter) a member of a liberal party in politics, esp. of the Liberal party in Great Britain.
lib·er·al /ˈlɪbərəl, ˈlɪbrəl/ –adjective
1. favorable to progress or reform, as in political or religious affairs.
2. (often initial capital letter) noting or pertaining to a political party advocating measures of progressive political reform.
3. of, pertaining to, based on, or advocating liberalism.
4. favorable to or in accord with concepts of maximum individual freedom possible, esp. as guaranteed by law and secured by governmental protection of civil liberties.
5. favoring or permitting freedom of action, esp. with respect to matters of personal belief or expression: a liberal policy toward dissident artists and writers.
6. of or pertaining to representational forms of government rather than aristocracies and monarchies.
7. free from prejudice or bigotry; tolerant: a liberal attitude toward foreigners.
8. open-minded or tolerant, esp. free of or not bound by traditional or conventional ideas, values, etc.
9. characterized by generosity and willingness to give in large amounts: a liberal donor.
10. given freely or abundantly; generous: a liberal donation.
11. not strict or rigorous; free; not literal: a liberal interpretation of a rule.
12. of, pertaining to, or based on the liberal arts.
13. of, pertaining to, or befitting a freeman.
–noun
14. a person of liberal principles or views, esp. in politics or religion.
15. (often initial capital letter) a member of a liberal party in politics, esp. of the Liberal party in Great Britain.
RealtyExec,
I think in the case of the current crisis the media had little to do with it. In fact, I think they have done a bad job of explaining to the public just how bad the current situation actual is.
And regarding the smart investor riding out the downturn. They also could have sold a week ago, reassessed their situation, and then waited to buy in when the market starts to stabilize. Sure they will miss a few percentage points on the way up, but they would have missed much more on the way down.
I think in the case of the current crisis the media had little to do with it. In fact, I think they have done a bad job of explaining to the public just how bad the current situation actual is.
And regarding the smart investor riding out the downturn. They also could have sold a week ago, reassessed their situation, and then waited to buy in when the market starts to stabilize. Sure they will miss a few percentage points on the way up, but they would have missed much more on the way down.
This thread has been going for almost 6 months now, and since then a lot of information has come out (housing reports, unemployment reports, etc...) and a lot has happened (pick up today's paper). I want to remind people of some of the comments that were posted on this board during its first couple of days. There was some good advice out there, but there were also people telling us that the market had bottomed and that it was a good time to buy. Now I know that nobody knows the future, but I am just cautioning people to take all advice with a grain of salt:
April 16 - 18, 2008:
“Just my observation, see what others have to say. I say BUY NOW!”
“I'm pretty much one-sided on it. It's a great time to buy. Prices are good and rates are fantastic. Rates aren't going to stay this low for long. Inflation problems will become apparent soon, and rates will rise. Home prices may drop a bit more, but will be offset by rates, which will easily make monthly payments higher.”
“In the Phoenix area we are now seeing a repeat of that cycle. Investors are again looking for a safe haven for their money, money is cheap, and home prices have been depressed. So, viola! We are experiencing a tremendous uptick in our market”
“ The National Association of Realtors' economists do realistic forecasts based on many factors including financial market stats, political influences, etc., in addition to property sales data. http://www.realtor.org In the years that I have been a Realtor, I have never known these forecasts to be far off, and the indications are that most markets will recover slightly by the end of the year, and that almost all markets will be on an upward price swing by mid 2009. “
“Why SHOULDN'T someone buy in the this market. The decline in housing prices and values in SOME areas of the country was not caused by consumers or Realtor's, it is an effect of the news media railing on it, and the banks making poor chooses with it's "creative financing" practices. It is still a Fact that home values double every 10 years, which is only a 7% increase year over year…”
“The real estate market is great for home buyers! Tons of choices, deals and great rates to finance. Buy, buy, buy!”
April 16 - 18, 2008:
“Just my observation, see what others have to say. I say BUY NOW!”
“I'm pretty much one-sided on it. It's a great time to buy. Prices are good and rates are fantastic. Rates aren't going to stay this low for long. Inflation problems will become apparent soon, and rates will rise. Home prices may drop a bit more, but will be offset by rates, which will easily make monthly payments higher.”
“In the Phoenix area we are now seeing a repeat of that cycle. Investors are again looking for a safe haven for their money, money is cheap, and home prices have been depressed. So, viola! We are experiencing a tremendous uptick in our market”
“ The National Association of Realtors' economists do realistic forecasts based on many factors including financial market stats, political influences, etc., in addition to property sales data. http://www.realtor.org In the years that I have been a Realtor, I have never known these forecasts to be far off, and the indications are that most markets will recover slightly by the end of the year, and that almost all markets will be on an upward price swing by mid 2009. “
“Why SHOULDN'T someone buy in the this market. The decline in housing prices and values in SOME areas of the country was not caused by consumers or Realtor's, it is an effect of the news media railing on it, and the banks making poor chooses with it's "creative financing" practices. It is still a Fact that home values double every 10 years, which is only a 7% increase year over year…”
“The real estate market is great for home buyers! Tons of choices, deals and great rates to finance. Buy, buy, buy!”
Realtyexex,
Boston was one of the first markets to feel the downturn. Look at the monthly C-S numbers going back through 2005.
Boston was one of the first markets to feel the downturn. Look at the monthly C-S numbers going back through 2005.
Lisa,
I think in 6 months you will look back and see that the market has not yet bottomed. I really hope I am wrong, but there is just no way that tighter lending criteria is not going to reduce the buying pool and therefor bring down prices. Here in Boston we have posted positive median price increases for at least three consecutive months (according to the latest C-S report). But, the feeling here is that the trend will reverse because of the lending void.
Also, Florida is a different animal than the rest of the country, or at least most of it. A large portion of Florida's homes are in developments. These properties are subject to assessments to cover the costs of the developments and as people foreclose, there are fewer people to make these payments. Many people are afraid to buy a home in these developments, for any price, out of fear of being hit for high dollar special assessments. I don't know how you fix this problem. You need the gym/pool/landscaping too look nice if you want to attract new buyers, but you need money to pay for these items until you get the new residents in to pay for it. If you let these items deteriorate, you won't get new residents. Really an interesting problem.
I think in 6 months you will look back and see that the market has not yet bottomed. I really hope I am wrong, but there is just no way that tighter lending criteria is not going to reduce the buying pool and therefor bring down prices. Here in Boston we have posted positive median price increases for at least three consecutive months (according to the latest C-S report). But, the feeling here is that the trend will reverse because of the lending void.
Also, Florida is a different animal than the rest of the country, or at least most of it. A large portion of Florida's homes are in developments. These properties are subject to assessments to cover the costs of the developments and as people foreclose, there are fewer people to make these payments. Many people are afraid to buy a home in these developments, for any price, out of fear of being hit for high dollar special assessments. I don't know how you fix this problem. You need the gym/pool/landscaping too look nice if you want to attract new buyers, but you need money to pay for these items until you get the new residents in to pay for it. If you let these items deteriorate, you won't get new residents. Really an interesting problem.
Nicolas,
Why is the interest rate in your "Now" example 6.88%? A conforming loan with 20% down should be able to get a loan less than 6%.
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I apologize. I read the article and found this:
Those whose credit scores are high enough to qualify for a mortgage will likely pay more. Fannie Mae and Freddie Mac, which set the lending criteria for most loans, in November will require a 740 score, up from 680 for buyers to escape a surcharge that ultimately increases their interest rate.
As a result, the 33 million Americans whose scores fall between 680 and 740 (roughly 20% of adults with credit histories) may have to pay half a percentage point more to borrow. On a $300,000, 30-year loan, that would add about $100 to a buyer's monthly payment.
Why is the interest rate in your "Now" example 6.88%? A conforming loan with 20% down should be able to get a loan less than 6%.
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I apologize. I read the article and found this:
Those whose credit scores are high enough to qualify for a mortgage will likely pay more. Fannie Mae and Freddie Mac, which set the lending criteria for most loans, in November will require a 740 score, up from 680 for buyers to escape a surcharge that ultimately increases their interest rate.
As a result, the 33 million Americans whose scores fall between 680 and 740 (roughly 20% of adults with credit histories) may have to pay half a percentage point more to borrow. On a $300,000, 30-year loan, that would add about $100 to a buyer's monthly payment.
Nicolas,
Why is the interest rate in your "Now" example 6.88%? A conforming loan with 20% down should be able to get a loan less than 6%.
Why is the interest rate in your "Now" example 6.88%? A conforming loan with 20% down should be able to get a loan less than 6%.
John, I agree that we are nowhere near the bottom, but not because of what past downturns have told us. This is very different from past real estate downturns as it was winding down and starting to level off just as a massive worldwide economic downturn started to brew.
The pool of potential buyers is drying up quickly as lending conditions deteriorate. Sure, a well qualified buyer with 20% down can get a great loan. But, what percentage of total buyers do these buyers represent?
The only positive development for the real estate market is that interest rates are not going to increase at the levels most people had previously estimated. The market was expecting the fed to increase rates starting in November and continuing for a well over a year. While I know that mortgage rates are not tied to the fed rate, many adjustable mortgages are tied to Prime, and Prime is based on the fed rate.
The pool of potential buyers is drying up quickly as lending conditions deteriorate. Sure, a well qualified buyer with 20% down can get a great loan. But, what percentage of total buyers do these buyers represent?
The only positive development for the real estate market is that interest rates are not going to increase at the levels most people had previously estimated. The market was expecting the fed to increase rates starting in November and continuing for a well over a year. While I know that mortgage rates are not tied to the fed rate, many adjustable mortgages are tied to Prime, and Prime is based on the fed rate.
The valuation of these assets is a large part of the problem, but one reason many of these assets continued to be valued so high despite the rise in delinquencies is because they were insured. Nobody predicted that the insurers would not be able to make good on their commitments. The insurance is also one reason the these securities were rated so high by Moody's and others.
It is not hard to understand why these assets were overvalued when you look at the ratings and insurance. It just took a while for delinquencies to impact the tranches at the high end of the waterfalls. When that happened, and the insurance companies balked, the market panicked and there was no longer a rational market to value them. You had securities where 20% of the mortgages that backed them were defaulting, but the investment community was valuing the security at 20% rather than something closer to 80%. The same "toxic" assets that the gov't will probably pay something close to 40% for (through reverse auction) were selling for 20% a few months back.
I read a draft of the agreement last night, and I assume it was pretty much the same as the one that was voted down today. The agreement appeared to have too much beaurocracy attached to it, but it was at least a placebo to calm the market. In the mean time, the feds have opened the flood gates with low interest cash, so hopefully that will buy us a few days.
It is not hard to understand why these assets were overvalued when you look at the ratings and insurance. It just took a while for delinquencies to impact the tranches at the high end of the waterfalls. When that happened, and the insurance companies balked, the market panicked and there was no longer a rational market to value them. You had securities where 20% of the mortgages that backed them were defaulting, but the investment community was valuing the security at 20% rather than something closer to 80%. The same "toxic" assets that the gov't will probably pay something close to 40% for (through reverse auction) were selling for 20% a few months back.
I read a draft of the agreement last night, and I assume it was pretty much the same as the one that was voted down today. The agreement appeared to have too much beaurocracy attached to it, but it was at least a placebo to calm the market. In the mean time, the feds have opened the flood gates with low interest cash, so hopefully that will buy us a few days.
John, Ryan,
I have been doing a lot of research on this bailout, and here is one question I am struggling with. If the gov't spends $700 billion (and I understand that the number could end up being somewhat less), and buys assets at fair market value (likely determined through reverse auction), who will the eventual buyers be? If we assume that the gov't purchases the "toxic" assets at an average of $0.40 cents on the dollar (random number), and that in a couple of years the market becomes more rational and the housing market stabilizes, the gov't will look to sell these assets off for $0.40+.
In order to sell these assets off, it is likely that the buying pool will need to consist of several of the companies that participate in the bailout. The gov't has to make sure that 1) new regulations don't prevent these companies from being able to invest in these securities again, and 2) that these companies would be interested in purchasing the same type of assets that got them into the trouble they are in.
What about pension funds? They were huge buyers of mortgage backed securities. If new regulations prevent them from buying these securities in the future, who is going to take their place among the potential buyers.
I am in favor of the bailout because of the economic impact of it not passing, but at the same time want to make sure that someone is looking at the end game here.
I have been doing a lot of research on this bailout, and here is one question I am struggling with. If the gov't spends $700 billion (and I understand that the number could end up being somewhat less), and buys assets at fair market value (likely determined through reverse auction), who will the eventual buyers be? If we assume that the gov't purchases the "toxic" assets at an average of $0.40 cents on the dollar (random number), and that in a couple of years the market becomes more rational and the housing market stabilizes, the gov't will look to sell these assets off for $0.40+.
In order to sell these assets off, it is likely that the buying pool will need to consist of several of the companies that participate in the bailout. The gov't has to make sure that 1) new regulations don't prevent these companies from being able to invest in these securities again, and 2) that these companies would be interested in purchasing the same type of assets that got them into the trouble they are in.
What about pension funds? They were huge buyers of mortgage backed securities. If new regulations prevent them from buying these securities in the future, who is going to take their place among the potential buyers.
I am in favor of the bailout because of the economic impact of it not passing, but at the same time want to make sure that someone is looking at the end game here.
Aj,
This bill will pass by the end of the week anyways, if not the end of the day. There will be a few tweaks to make 26 reps change their votes, and off to the Senate it will go.
I agree with you that this is not going to solve the long-term problems, which I see as 1) as a country we are less valuable and important to the rest of the world, and 2) we have leveraged our future to a non-repairable degree. We have increased the national debt well beyond our ability to repay without significant economic growth, and because we have shifted away from any tangible activity in this country that economic growth is not going to happen.
This bill will pass by the end of the week anyways, if not the end of the day. There will be a few tweaks to make 26 reps change their votes, and off to the Senate it will go.
I agree with you that this is not going to solve the long-term problems, which I see as 1) as a country we are less valuable and important to the rest of the world, and 2) we have leveraged our future to a non-repairable degree. We have increased the national debt well beyond our ability to repay without significant economic growth, and because we have shifted away from any tangible activity in this country that economic growth is not going to happen.
Carl,
I feel better now that I know you were kidding. There are many people who actually believe that an idea similar to what you are talking about would be good for the country. They forget that when a bank sells a mortgage at 7%, that mortgage gets put into a large pool of mortgages. So, if a pension fund now owns a large pool or mortgages with 7% interest rates, and are then told that the rates are now 4.75%, that pension fund would get crushed! The impact to investors would be worse with an large interest rate deduction (and 2.25% is a huge interest rate deduction) than it would be with an increase in foreclosures.
We don't need bailouts. We need the excess to fall out of the market. When times are good, people love capitalism, but capitalism means that only the strong survive. If we make everybody survive, that it is not capitalism, it is socialism. I can probably live with either, but not a combination of the two.
I feel better now that I know you were kidding. There are many people who actually believe that an idea similar to what you are talking about would be good for the country. They forget that when a bank sells a mortgage at 7%, that mortgage gets put into a large pool of mortgages. So, if a pension fund now owns a large pool or mortgages with 7% interest rates, and are then told that the rates are now 4.75%, that pension fund would get crushed! The impact to investors would be worse with an large interest rate deduction (and 2.25% is a huge interest rate deduction) than it would be with an increase in foreclosures.
We don't need bailouts. We need the excess to fall out of the market. When times are good, people love capitalism, but capitalism means that only the strong survive. If we make everybody survive, that it is not capitalism, it is socialism. I can probably live with either, but not a combination of the two.
A central bank offers every existing mortgage a swap for a 4.75 rate on existing balances, and new mortgages for buyers, stimulating the housing market, creating jobs at every level. Uncertainty flies out the window, solvency returns. Barney, let's go!
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You were probably kidding, but in the event that you were not ... New mortgages for buyers...that is what got us into this mess. Qualified buyers with sufficient down payments are finding great mortgages at low rates. That part of the problem has been fixed. And how does a new mortgage create jobs?
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You were probably kidding, but in the event that you were not ... New mortgages for buyers...that is what got us into this mess. Qualified buyers with sufficient down payments are finding great mortgages at low rates. That part of the problem has been fixed. And how does a new mortgage create jobs?
Rest assured that a recent report from our National Association of Realtors has stated that the prices of homes has reached its platteu of declining prices and will remain steady for about another year.
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Annette, I don't think that a report from the NAR is going to help anyone rest assured. They do not have a very good track record when it comes to predicting market bottoms. I have nothing against the NAR, but their economists' track record is very embarrassing.
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Annette, I don't think that a report from the NAR is going to help anyone rest assured. They do not have a very good track record when it comes to predicting market bottoms. I have nothing against the NAR, but their economists' track record is very embarrassing.
July 31 (Bloomberg) — Former Federal Reserve Chairman Alan Greenspan said falling U.S. home prices are “nowhere near the bottom” and the resulting market turmoil isn’t showing signs of abating.
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Sadly, not a man who has too much credibility at this time.
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Sadly, not a man who has too much credibility at this time.
If you buy a home right now you are losing 5.70 cents per hour every hour you own the home and would have done so for the last 2 years. If you sleep 8 hours then you will have lost 45 dollars.
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Your foot is a little to heavy on the gas pedal there. 8 hours is 46 cents. Still not good, but better than $50k a year.
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Your foot is a little to heavy on the gas pedal there. 8 hours is 46 cents. Still not good, but better than $50k a year.
How will Realtors® cook their Romen noodles come wintertime? The granite countertops don’t produce heat on their own…
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Actually...from yesterday's New York Times:
But with increasing regularity in recent months, the Environmental Protection Agency has been receiving calls from radon inspectors as well as from concerned homeowners about granite countertops with radiation measurements several times above background levels. “We’ve been hearing from people all over the country concerned about high readings,” said Lou Witt, a program analyst with the agency’s Indoor Environments Division.
“It’s not that all granite is dangerous,” said Stanley Liebert, the quality assurance director at CMT Laboratories in Clifton Park, N.Y., who took radiation measurements at Dr. Sugarman’s house. “But I’ve seen a few that might heat up your Cheerios a little.”
http://www.nytimes.com/2008/07/24/garden/24granite.html
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Actually...from yesterday's New York Times:
But with increasing regularity in recent months, the Environmental Protection Agency has been receiving calls from radon inspectors as well as from concerned homeowners about granite countertops with radiation measurements several times above background levels. “We’ve been hearing from people all over the country concerned about high readings,” said Lou Witt, a program analyst with the agency’s Indoor Environments Division.
“It’s not that all granite is dangerous,” said Stanley Liebert, the quality assurance director at CMT Laboratories in Clifton Park, N.Y., who took radiation measurements at Dr. Sugarman’s house. “But I’ve seen a few that might heat up your Cheerios a little.”
http://www.nytimes.com/2008/07/24/garden/24granite.html
Ryan,
I also want to thank you for your original question. I disagree with a lot of what has been said on this topic, but believe that everyone that has posted actually believes what they are saying. It is great to have a so many proxies of the market's players, and in many cases, non players.
I also want to thank you for your original question. I disagree with a lot of what has been said on this topic, but believe that everyone that has posted actually believes what they are saying. It is great to have a so many proxies of the market's players, and in many cases, non players.
Thanks Ryan,
I see what you are saying, but I disagree. You are saying, I think, is that if you are the first to realize that homes in a particular region have decreased from $200k to $100k, and you are able to secure a house at $100k, than you are at no disadvantage when the median price reaches $200k. I believe that all homes in a region are disadvantaged by a decrease in median home prices. In your hypothetical, if you were to sell today, potential buyers would have the current medial home price in mind when viewing your price. They would then add or subtract from the median based on your neighborhood, home characteristics, etc... But, even if you had paid $100k six months ago, and sold soon after, potential buyers would have a different median price in mind and would start their analysis from that point.
I see what you are saying, but I disagree. You are saying, I think, is that if you are the first to realize that homes in a particular region have decreased from $200k to $100k, and you are able to secure a house at $100k, than you are at no disadvantage when the median price reaches $200k. I believe that all homes in a region are disadvantaged by a decrease in median home prices. In your hypothetical, if you were to sell today, potential buyers would have the current medial home price in mind when viewing your price. They would then add or subtract from the median based on your neighborhood, home characteristics, etc... But, even if you had paid $100k six months ago, and sold soon after, potential buyers would have a different median price in mind and would start their analysis from that point.
Ryan,
I think I understand your question, though I may be wrong. But, if I am right and you are saying that the first person that realizes what homes in a particular region are worth will suffer if he buys before others realize the same. The answer is yes, they will suffer. The reason is because when the first buyer buys he is is perceived as getting a "bargain" as others believe he was able to pay less than his house is worth and could sell it at a profit. That "profit" is eroded as each house is sold closer to the amount paid by buyer "A".
Owners of all homes in a particular region suffer when the median price falls.
I think I understand your question, though I may be wrong. But, if I am right and you are saying that the first person that realizes what homes in a particular region are worth will suffer if he buys before others realize the same. The answer is yes, they will suffer. The reason is because when the first buyer buys he is is perceived as getting a "bargain" as others believe he was able to pay less than his house is worth and could sell it at a profit. That "profit" is eroded as each house is sold closer to the amount paid by buyer "A".
Owners of all homes in a particular region suffer when the median price falls.
Real Estate has never gone down in value over a 10 year period.
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This was not true in the Greater Boston area for many people that bought in the last 80's and sold in the late 90's.
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This was not true in the Greater Boston area for many people that bought in the last 80's and sold in the late 90's.
I have to agree on the entertainment part because there is no changing anyones mind on this thread. I enjoy hearing the reasons people give for not buying as well as the ones they give for buying. Also, people are pretty good at posting new "news" as it comes out, such as the C-S index or the NAR reports. There are also a lot of the scare tactics that are to be expected "Buy now so you don't miss the bottom!" or "Don't miss the low interest rates!" or, most recently, "Do you want to buy when the fever is high and the market is at its peak?"
It is all entertainment but it I do enjoy when people put just a little thought behind their points and leave me learning something new.
It is all entertainment but it I do enjoy when people put just a little thought behind their points and leave me learning something new.
If asked the question today - July 11th - "why should someone buy in this market", the only answer I could give is "they should not". The following factors tell me that nobody should be making a large purchase without waiting a little while to see what is going to happen:
1) Gas at $4.00+ per gallon
2) Iran testing missiles twice this week
3) Israeli warplanes practicing in Iraq
4) Iran threatening to block oil shipment from Gulf if attacked
5) Fanny and Freddy tanking, possibly needing Federal assistance/bailout
6) Stock market at risk of falling below 11,000 (currently at 11,062 and down 166 on the day)
7) Presidential candidates talking about modifying or eliminating mortgage interest deduction
1) Gas at $4.00+ per gallon
2) Iran testing missiles twice this week
3) Israeli warplanes practicing in Iraq
4) Iran threatening to block oil shipment from Gulf if attacked
5) Fanny and Freddy tanking, possibly needing Federal assistance/bailout
6) Stock market at risk of falling below 11,000 (currently at 11,062 and down 166 on the day)
7) Presidential candidates talking about modifying or eliminating mortgage interest deduction
More interesting reasons why trust in RE agents is reaching new lows.
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Wasn't this article about a mortgage broker?
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Wasn't this article about a mortgage broker?
Gene Pool, what Richard said was "Realtors are constantly telling people to ignore downside risk, they're telling everyone to buy, be they short-term or long-term buyers." He is not saying that any realtors on this board have specifically told buyers that now is a good time to buy a home for a short term investment, but that realtors are flat out saying that now is a good time to buy without advising them that this is only the case if they plan to hold the property for the long term, or even asking them what their plans are for the property they may buy.
Personally, I don't care. I consider a realtor's role to be finding me the home I want and helping me get it for the best price right now. I don't consider a realtor to be attorneys, financial advisers, tax experts, economists, contractors, bankers, etc... I would not ask a realtor how much it will cost to take down a wall, replace a roof, condex a building, etc... I wouldn't ask a realtor to predict what interest rates will do in the future, what the housing market will be like in two years, what neighborhoods will be "up and coming", etc...
People have got to start growing up and taking some responsibility for their own actions. So people believed a real estate agent that was predicting the future. And now, they are shocked, and angry, to find out that that agent did not, in fact, have the ability to predict the future.
Personally, I don't care. I consider a realtor's role to be finding me the home I want and helping me get it for the best price right now. I don't consider a realtor to be attorneys, financial advisers, tax experts, economists, contractors, bankers, etc... I would not ask a realtor how much it will cost to take down a wall, replace a roof, condex a building, etc... I wouldn't ask a realtor to predict what interest rates will do in the future, what the housing market will be like in two years, what neighborhoods will be "up and coming", etc...
People have got to start growing up and taking some responsibility for their own actions. So people believed a real estate agent that was predicting the future. And now, they are shocked, and angry, to find out that that agent did not, in fact, have the ability to predict the future.
I really do believe that we are in for the perfect storm right now. I am say this despite the fact that I bought a house in March (and I really do love the house).
The European banks are meeting tomorrow and they will raise interest rates. That will bring the US dollar down further, and because oil prices are tied to the dollar, it will bring oil prices up. We could see $150 a barrel on the 4th of July (on the London exchange). We will not raise rates until after the election, but when we do it will a half point at a time for the first few meetings, sending the bond market into chaos. China just increased the price that its citizens pay for oil, and that will find its way into any products manufactured in China. We are barely in July, and I am hearing people talk about how they will heat their home this winter. To top it off, the babyboomers are just starting to retire, so here comes the social security crisis that no politician will talk about as they fear upsetting older voters.
When people decide what they can afford to pay for a house, they normally start with all other expeses and see what is left. And, when lenders look at what to lend, they look at other obligations in comparison to the mortgage. Other costs are going to go up, leaving less and less cash flow for mortgage payments. At the same time, rents are going down in many markets.
I am usually an optimist (really, I am), but we are entering a dark place right now and I don't see any way it can get better in the near term.
The European banks are meeting tomorrow and they will raise interest rates. That will bring the US dollar down further, and because oil prices are tied to the dollar, it will bring oil prices up. We could see $150 a barrel on the 4th of July (on the London exchange). We will not raise rates until after the election, but when we do it will a half point at a time for the first few meetings, sending the bond market into chaos. China just increased the price that its citizens pay for oil, and that will find its way into any products manufactured in China. We are barely in July, and I am hearing people talk about how they will heat their home this winter. To top it off, the babyboomers are just starting to retire, so here comes the social security crisis that no politician will talk about as they fear upsetting older voters.
When people decide what they can afford to pay for a house, they normally start with all other expeses and see what is left. And, when lenders look at what to lend, they look at other obligations in comparison to the mortgage. Other costs are going to go up, leaving less and less cash flow for mortgage payments. At the same time, rents are going down in many markets.
I am usually an optimist (really, I am), but we are entering a dark place right now and I don't see any way it can get better in the near term.
Zack pointed out, quite correctly, that many RE agents lie and distort the probability of a home reaping significant financial rewards,
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I think that at some point there has got to be a little "buyer beware" here. I have a few friends that are realtors, and despite my negative view of the housing market, they believe it will come back in the next 6 months. I argue until I am blue in the face, but I can't win. And it is not because these guys are trying to put one over on me, but because they are just very optimistic about the market and have all the faith in the world that homes purchased today will go up in value. What I am saying is, don't use a realtor to help you decide if a house is a good investment, use a realtor to help you find and negotiate the best possible price for the house you want right now.
To believe that the realtor has any more insight into the future than you do is just dumb. Go ask sales person if now is a good time to buy their product, whatever that product may be, and a good percentage will tell you "yes." Ask a car salesman (and I only use this comparison because it is a high dollar purchase that most people are familiar with) if now is a good time to buy an F-150, and I have no doubt that they really believe it is. Ask an investment banker if now is a good time for a stock offering, you will find many that can find a way to argue in favor.
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I think that at some point there has got to be a little "buyer beware" here. I have a few friends that are realtors, and despite my negative view of the housing market, they believe it will come back in the next 6 months. I argue until I am blue in the face, but I can't win. And it is not because these guys are trying to put one over on me, but because they are just very optimistic about the market and have all the faith in the world that homes purchased today will go up in value. What I am saying is, don't use a realtor to help you decide if a house is a good investment, use a realtor to help you find and negotiate the best possible price for the house you want right now.
To believe that the realtor has any more insight into the future than you do is just dumb. Go ask sales person if now is a good time to buy their product, whatever that product may be, and a good percentage will tell you "yes." Ask a car salesman (and I only use this comparison because it is a high dollar purchase that most people are familiar with) if now is a good time to buy an F-150, and I have no doubt that they really believe it is. Ask an investment banker if now is a good time for a stock offering, you will find many that can find a way to argue in favor.
but extremely high inventory (10+ months) means something totally different.
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IMO the extremely high inventory rates are due to unrealistic sellers. And I don't mean people who won't accept lowballs, I mean people priced 50,000 to 100,000 over what they should be who don't even counter.
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JR, isn't that the same point that Nicholas is making? Because inventory is so high, it indicated more than just a down market, it also indicates that the inventory will not be absorbed without sellers initiating a mark down in prices.
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IMO the extremely high inventory rates are due to unrealistic sellers. And I don't mean people who won't accept lowballs, I mean people priced 50,000 to 100,000 over what they should be who don't even counter.
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JR, isn't that the same point that Nicholas is making? Because inventory is so high, it indicated more than just a down market, it also indicates that the inventory will not be absorbed without sellers initiating a mark down in prices.
Nine more days until the MRIS (NAR) statistics become available for the Maryland Area. Just from general news about the construction industry and other market reporting I am expecting another price slide for Metro DC which is one of the 10 and 20 city indexes for C/S.
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Not going too far out on a limb there. I would say the odds of a price slide are about the same as the odds for Big Brown to win the Belmont.
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Not going too far out on a limb there. I would say the odds of a price slide are about the same as the odds for Big Brown to win the Belmont.
Manny,
I bought recently, mainly because I needed a house for my wife and kid and there were no suitable rentals in the school district I wanted. But, I am fully on board with your assessment of the market. We are going to see interest rates rise quickly, pretty much 0.25% at every Fed meeting from December on. That will not immediately impact the 10 Year Treasury (from which 30 year mortgage rates are derived), but it will get there. Home prices will have to go down at the same time as there is I believe that there is a specific buyer pool for every home, and the only way to sell that home is to price it in line with the cash flow of that buyer pool. For example, if your buyer pool can afford a $3000 per month mortgage, and your home is currently in that range (assuming 10-20% down, good credit, etc...), you will have a hard time selling it when the interest rates bring the monthly payments to $3500.
I think we will see a situation like the 1970's, where high interest rates meant cheap housing. And then (crossing fingers) if there is another period of wealth in the future (like the 1980's), interest rates will come down and home values will go up very quickly to account for the additional cash flow of perspective buyers.
If you have an adjustable mortgage, and have a chance to lock it at a decent rate (
I bought recently, mainly because I needed a house for my wife and kid and there were no suitable rentals in the school district I wanted. But, I am fully on board with your assessment of the market. We are going to see interest rates rise quickly, pretty much 0.25% at every Fed meeting from December on. That will not immediately impact the 10 Year Treasury (from which 30 year mortgage rates are derived), but it will get there. Home prices will have to go down at the same time as there is I believe that there is a specific buyer pool for every home, and the only way to sell that home is to price it in line with the cash flow of that buyer pool. For example, if your buyer pool can afford a $3000 per month mortgage, and your home is currently in that range (assuming 10-20% down, good credit, etc...), you will have a hard time selling it when the interest rates bring the monthly payments to $3500.
I think we will see a situation like the 1970's, where high interest rates meant cheap housing. And then (crossing fingers) if there is another period of wealth in the future (like the 1980's), interest rates will come down and home values will go up very quickly to account for the additional cash flow of perspective buyers.
If you have an adjustable mortgage, and have a chance to lock it at a decent rate (
Is there such a thing as market equilibrium?
Here in the Boston area we have heard for years that we are losing our young professionals from out colleges and universities because they can not afford housing. At what point does the demand from these young professionals counter other market forces? What I mean is, were the reports true that these young professionals from Harvard, MIT, etc... want to stay in Boston but can not afford it? If so, wouldn't there be a equilibrium point where they can stay and demand for housing in the area picks up?
Here in the Boston area we have heard for years that we are losing our young professionals from out colleges and universities because they can not afford housing. At what point does the demand from these young professionals counter other market forces? What I mean is, were the reports true that these young professionals from Harvard, MIT, etc... want to stay in Boston but can not afford it? If so, wouldn't there be a equilibrium point where they can stay and demand for housing in the area picks up?
What exactly doesn't make sense? The index ws at 100.0 in January 2000. If it went up at 2% annually for 8 years, it would be at 117. I hadn't used out a calculator to do the compounding since i thought it would round down, but I don't think 117 vs 116 is the difference you're thinking of. all I did was say 1.02^8 = 1.17.
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That's all I ask, that you compound. Though I don't think that 2% annually is being generous. Here in Boston we are averaging a little over 4% annually since 1987 according to CS. That includes such bad years as 1991 (-10%) and good years as 2001 (+18%).
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That's all I ask, that you compound. Though I don't think that 2% annually is being generous. Here in Boston we are averaging a little over 4% annually since 1987 according to CS. That includes such bad years as 1991 (-10%) and good years as 2001 (+18%).
Now, what makes that amusing is that the index started being tracked in January 2000 at 100. So from Jan 2000 to August 2004, it went up 69%. Are you really trying to claim that we're back to pre-bubble levels? If you assign a very generous 2% growth rate to housing, it should be at 116 right now ... When it gets there, then you can tell me its back to pre-bubble and not look ridiculous..
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I am not sure your math makes any sense at all.
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I am not sure your math makes any sense at all.
Nicolas, do you think anyone other than the most virulent agent haters will believe this story
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JR, I think the more important question is "do you think anyone other than the most virulent agent haters will care about this story". What is the point here? That someone gave your former sister-in-law a chance, tried to do what they could to help her success, and in the end it didn't work out? There are many real estate professionals being fired in this market, just as there are many carpenters, electricians, loan officers, etc...
Is someone really going to be able to use that story to help answer the question "Why should someone buy in this market?"
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JR, I think the more important question is "do you think anyone other than the most virulent agent haters will care about this story". What is the point here? That someone gave your former sister-in-law a chance, tried to do what they could to help her success, and in the end it didn't work out? There are many real estate professionals being fired in this market, just as there are many carpenters, electricians, loan officers, etc...
Is someone really going to be able to use that story to help answer the question "Why should someone buy in this market?"
give it up these people are just haters, just make sure to email the Realtors you know and tell them to stay away from this site.
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You are going to find this on most real estate boards. There are always going to be people that think your service is useless. If you are making good money, then let the criticism fall on deaf ears as the money shows that somebody values what you do. The only alternative is to go to a site like activerain.com where everything you say is praised by 10-20 other realtors.
I look at the real estate profession the same way I do any other, there are times you need professional help and times you do not. I will attempt to fix a sink, but will hire a plumber to move a gas line. I will paint my living room, but will hire a painter to paint the more difficult areas. And, to use analogies that people on this board seem to love, there are contracts I will sign by myself and others that I will have reviewed by a lawyer. There are injuries and sicknesses I will treat myself, and ones that I will seek professional help for.
I did not use a realtor to purchase my last house. I knew the market very well. I knew what every house in the neighborhood had sold for in the last year, I knew the school system, I talked to the local selectmen, asked questions to local policemen, etc... The house came on the market and I made an offer through an attorney. I knew the contingencies that I wanted included in the offer, and I had them added and they were agreed to. At the end of the day both sides were happy with the transaction. However, if I were moving to a new town that I was not as familiar with, there is no question that I would hire a local real estate agent to help me with the process.
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You are going to find this on most real estate boards. There are always going to be people that think your service is useless. If you are making good money, then let the criticism fall on deaf ears as the money shows that somebody values what you do. The only alternative is to go to a site like activerain.com where everything you say is praised by 10-20 other realtors.
I look at the real estate profession the same way I do any other, there are times you need professional help and times you do not. I will attempt to fix a sink, but will hire a plumber to move a gas line. I will paint my living room, but will hire a painter to paint the more difficult areas. And, to use analogies that people on this board seem to love, there are contracts I will sign by myself and others that I will have reviewed by a lawyer. There are injuries and sicknesses I will treat myself, and ones that I will seek professional help for.
I did not use a realtor to purchase my last house. I knew the market very well. I knew what every house in the neighborhood had sold for in the last year, I knew the school system, I talked to the local selectmen, asked questions to local policemen, etc... The house came on the market and I made an offer through an attorney. I knew the contingencies that I wanted included in the offer, and I had them added and they were agreed to. At the end of the day both sides were happy with the transaction. However, if I were moving to a new town that I was not as familiar with, there is no question that I would hire a local real estate agent to help me with the process.
Cook county from 2007 to 2008 is down 4%. Cook county includes all of Chicago. Chicago is down 4%.
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This is significant. If Chicago lost 4% from 2007 to 2008, and is now losing 2.5% per month, than you are saying that the next year will be 6 times worse than last. As I said, if your analysis is right, and home values are dropping 2.5% per month, than nobody will tell you that now is a good time to buy.
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This is significant. If Chicago lost 4% from 2007 to 2008, and is now losing 2.5% per month, than you are saying that the next year will be 6 times worse than last. As I said, if your analysis is right, and home values are dropping 2.5% per month, than nobody will tell you that now is a good time to buy.
Nicolas,
If you really believe that homes in your area are losing value at the tune of 2.5% per month, than nobody would advise you to buy. Given your example, a $500,000 house today would be worth $378,000 a year from now. It would cost you about $86,000 in the first year (assuming 10% down, $4k taxes and $2,700/month mortgage payments). You can rent a similar property for less than that and wait out the market.
I am thankful that we here in the Boston area are not seeing anything close to 2.5% monthly declines.
If you really believe that homes in your area are losing value at the tune of 2.5% per month, than nobody would advise you to buy. Given your example, a $500,000 house today would be worth $378,000 a year from now. It would cost you about $86,000 in the first year (assuming 10% down, $4k taxes and $2,700/month mortgage payments). You can rent a similar property for less than that and wait out the market.
I am thankful that we here in the Boston area are not seeing anything close to 2.5% monthly declines.
No point missed.
We are at the point of leveling off now.
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In what market?
We are at the point of leveling off now.
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In what market?
Christine,
I think you are missing the point of the argument that is being made by the "bad time to buy" crowd, though I can understand why as nobody can expect you to read 1200+ entries.
The facts that are undisputed, or appear to be undisputed are:
1. You are not building equity when you rent
2. Mortgage interest rates are very low right now
3. This is a buyers market
4. The real estate market is not national, it varies by region
The large point that remains in dispute is whether we are at, or near, the bottom of the market. If we are at the bottom, then now is a good time to buy. If we are not at the bottom, and the property will continue to lose value, then now may not be a good time to buy.
I think you are missing the point of the argument that is being made by the "bad time to buy" crowd, though I can understand why as nobody can expect you to read 1200+ entries.
The facts that are undisputed, or appear to be undisputed are:
1. You are not building equity when you rent
2. Mortgage interest rates are very low right now
3. This is a buyers market
4. The real estate market is not national, it varies by region
The large point that remains in dispute is whether we are at, or near, the bottom of the market. If we are at the bottom, then now is a good time to buy. If we are not at the bottom, and the property will continue to lose value, then now may not be a good time to buy.
Great reply Chris, always interesting to hear an analysis of a group by one of their own.
I have only seen one lender offer the 80/20 loan. Most lenders will not pick up the 20% portion of the loan unless it is at crazy interest rates. The first 80% went for 6.5% and the other 20% went at 7.9%.
My credit card has cheaper rates then 7.9% right now.
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This is a tough standard to apply to 30 year mortgage rates. I have 0% interest on one of my credit cards, but I don't have $450,000 in availability.
In March of this year I bought a fixer-upper. For me that meant a small down payment as I wanted to have cash available to pay for improvements. I put 5% down, took an 80% at 5.625% and the other 15% at 8.0%. 8% is a high interest rate, and I know that. The idea was to keep cash on hand to pay for improvements, and since then I dumped what I had left into the 8% loan. I pay double the payment on the 8% each month and plan to put large chunks of cash into it each year, including tax refunds. By segregating the loans, i can look forward to paying off the small, higher interest loan, and freeing cash flow for other purposes. For me, this was the best course of action.
My credit card has cheaper rates then 7.9% right now.
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This is a tough standard to apply to 30 year mortgage rates. I have 0% interest on one of my credit cards, but I don't have $450,000 in availability.
In March of this year I bought a fixer-upper. For me that meant a small down payment as I wanted to have cash available to pay for improvements. I put 5% down, took an 80% at 5.625% and the other 15% at 8.0%. 8% is a high interest rate, and I know that. The idea was to keep cash on hand to pay for improvements, and since then I dumped what I had left into the 8% loan. I pay double the payment on the 8% each month and plan to put large chunks of cash into it each year, including tax refunds. By segregating the loans, i can look forward to paying off the small, higher interest loan, and freeing cash flow for other purposes. For me, this was the best course of action.
What is making these loans attractive right now is that lenders have tightened credit lending standards. They want you to bring 10-20% to the table to secure better then FHA interest rates. If you live in a "declining market" you need 15-25% down payments.
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My understanding has been that if you put less than 20% down, you need to purchase PMI. The way around that has always been to take out two loans, one for 80% of the purchase price and the other for 20% less the down payment. Has the 20% requirement changed?
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My understanding has been that if you put less than 20% down, you need to purchase PMI. The way around that has always been to take out two loans, one for 80% of the purchase price and the other for 20% less the down payment. Has the 20% requirement changed?
I still maintain that step 1 has become a huge barrier too. I am finding it hard to justify buying a home with sliding house prices and costly poor-quality loans.
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I disagree on the costly poor-quality loans. If you have good credit and at least 10% to put down, you should be able to get a mortgage at a good rate.
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I disagree on the costly poor-quality loans. If you have good credit and at least 10% to put down, you should be able to get a mortgage at a good rate.
Oh right! No worries about saving 20% down and actually having to prove they can afford payments, no problem with fuel and grocery prices while they're trying to save, not a thought about keeping their jobs. I'd say the RE agent "industry" is just about the biggest problem in the entire world! Iraq PALES by comparison. Nicholas, you're nothing but another Tman, a gnat buzzing around spouting the same phrases over and over cause ya think if you keep repeating them, it makes them true!
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JR, you and I don't always agree, but I agree with you here. There is a difference between bringing new, relevant facts to the table (not onces that tell us what we already know), and just instigating.
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JR, you and I don't always agree, but I agree with you here. There is a difference between bringing new, relevant facts to the table (not onces that tell us what we already know), and just instigating.
Manny,
The gas prices can impact either way, and it may be a gamble to determine what it will hurt more, the rental or housing market. Gas prices cause almost everything to go become more expensive, and that will result in land lords increasing rents. Gas prices certainly impact the amount of money one has available to spend on a house, and that will impact home prices. If home prices remain low, and gas prices push up the cost of new construction, I don't know how any builder will be able to afford to complete construction of new projects.
What do you think the impact will be to homes within 10-15 miles of key job centers, meaning commutes that take one gallon of gas or less. My guess is that these areas will benefit at the expense of the outer suburbs, but not enough in the near term to see positive changes in sales volume.
The gas prices can impact either way, and it may be a gamble to determine what it will hurt more, the rental or housing market. Gas prices cause almost everything to go become more expensive, and that will result in land lords increasing rents. Gas prices certainly impact the amount of money one has available to spend on a house, and that will impact home prices. If home prices remain low, and gas prices push up the cost of new construction, I don't know how any builder will be able to afford to complete construction of new projects.
What do you think the impact will be to homes within 10-15 miles of key job centers, meaning commutes that take one gallon of gas or less. My guess is that these areas will benefit at the expense of the outer suburbs, but not enough in the near term to see positive changes in sales volume.
The quirks in housing data don’t stop there. The Commerce Dept. recently reported that sales of newly constructed single family homes rose in April for the first time in half a year. Sounds great right? Wrong. Buried in the data is the fact that the prior six month’s data were revised downward, so it made the comparison look a lot better.
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This is illogical. The fact that sales of newly constructed single family homes rose in April is diminished by the fact that March numbers were revised downward. Either April sales rose or they did not.
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This is illogical. The fact that sales of newly constructed single family homes rose in April is diminished by the fact that March numbers were revised downward. Either April sales rose or they did not.
I was playing with the rent-buy model that was included with the article (See link below). Based on the Case-Schiller reports, median home values have increased an average of 4.2% annually in Boston since 1987. Does anyone have a good source for average annual rent increases over that time?
Based on an average increase in home values of 4%, and an average increase in rents of 3% (conservative, based on NY rent control figure), the model shows that buying is better than renting after 2-3 years for me. I am curious to hear what results others get.
Based on an average increase in home values of 4%, and an average increase in rents of 3% (conservative, based on NY rent control figure), the model shows that buying is better than renting after 2-3 years for me. I am curious to hear what results others get.
Relevant article from the New York Times:
"Time to Buy? The Conversion of a Committed Renter"
"Time to Buy? The Conversion of a Committed Renter"
Ryan,
I am familiar with that article, and thought it was very interesting. Since reading it, I have been thinking about the idea of the "one gallon commute", meaning homes within 10-15 miles of major business centers. I having been looking for any data that suggests that communities within the one gallon commute range have realized increased home sales at the expense of communities outside that range. I would expect to see realtors start listing driving range in their house listings, e.g. "less than 10 miles from Boston".
I am familiar with that article, and thought it was very interesting. Since reading it, I have been thinking about the idea of the "one gallon commute", meaning homes within 10-15 miles of major business centers. I having been looking for any data that suggests that communities within the one gallon commute range have realized increased home sales at the expense of communities outside that range. I would expect to see realtors start listing driving range in their house listings, e.g. "less than 10 miles from Boston".
"The nominal price declines aren't as spectacular as they would be if we didn't have so much inflation," Schiff said. "Houses are becoming a less valuable asset relative to the cost of living."
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I agree with this, and this is one of the reasons why I selected the house I recently purchased. I don't, and never really have, consider a house as an investment. It is a place to live. I found where I wanted to live, and was able to purchase it at price that made sense in terms of monthly cash payments. My belief is that we are going to see large scale inflation in all areas of the economy, and I was interested in locking in what is currently my largest monthly expense.
I bought in a neighborhood that has held its values over the last few years, but I not naive enough to think that my house is not at risk of declining in value. But, as I mentioned, I didn't buy it as an investment, I bought it as a place to live and raise my kids. I also knew that when I bought my car I that it would go down in value. I could have waited out the economy a little longer and hoped that car prices would come down as demand decreases, but I bought what I wanted and understood the risks associated with it.
If in 10 years the value of my house is less than what I paid (as my parents house was when they sold in 1996 after buying in 1986), I can only hope that I look back fondly on the time spent in the house. I will count on other investments to provide for my families future. If the house increases in value, and at an amount that exceeds inflation, that's great. But I don't want to have to count on it.
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I agree with this, and this is one of the reasons why I selected the house I recently purchased. I don't, and never really have, consider a house as an investment. It is a place to live. I found where I wanted to live, and was able to purchase it at price that made sense in terms of monthly cash payments. My belief is that we are going to see large scale inflation in all areas of the economy, and I was interested in locking in what is currently my largest monthly expense.
I bought in a neighborhood that has held its values over the last few years, but I not naive enough to think that my house is not at risk of declining in value. But, as I mentioned, I didn't buy it as an investment, I bought it as a place to live and raise my kids. I also knew that when I bought my car I that it would go down in value. I could have waited out the economy a little longer and hoped that car prices would come down as demand decreases, but I bought what I wanted and understood the risks associated with it.
If in 10 years the value of my house is less than what I paid (as my parents house was when they sold in 1996 after buying in 1986), I can only hope that I look back fondly on the time spent in the house. I will count on other investments to provide for my families future. If the house increases in value, and at an amount that exceeds inflation, that's great. But I don't want to have to count on it.
Good Wall Street Journal opinion piece on why the proposed housing bail out would not help the broader housing market.
Dave,
Do you believe that it is a good idea to wait 1 year before buying?
Do you believe that it is a good idea to wait 1 year before buying?
I just want to caution people who are mentioning the real estate interest tax deduction as one of the reasons to buy rather than rent. This deduction may not be around for long. President Bush's economic advisers have recommended that congress do away with the deduction. Obama is in favor of eliminating the deduction, and McCain has suggested putting the suggestions of Bush's economics team to an "up or down" vote as a package. A tax credit that is equal for all has been suggested as an alternative.
I am a fan of this deduction, but understand that it may not be long lived.
I am a fan of this deduction, but understand that it may not be long lived.
Concerning sale price, I have been active in real estate for over 30 years, and there have been very few times I have seen a seller voluntarily adjust their price with "the buyer could afford the payment" as motivation.
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Well, it is happening now. Sellers are adjusting their prices to market, and market is determined by what people can and are willing to spend on a property, and what lenders are willing to lend to buyers. If the average buyer for a starter home in a community can afford $300,000, or can only borrow at levels up to that amount, then sellers will eventually adjust to that. Market prices are determined by what a willing buyer will pay, and if the willing buyers have less resources, market prices go down.
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Well, it is happening now. Sellers are adjusting their prices to market, and market is determined by what people can and are willing to spend on a property, and what lenders are willing to lend to buyers. If the average buyer for a starter home in a community can afford $300,000, or can only borrow at levels up to that amount, then sellers will eventually adjust to that. Market prices are determined by what a willing buyer will pay, and if the willing buyers have less resources, market prices go down.
Dave,
I do believe that you will be able to purchase property at a lower price in six-twelve months. I am not sure why it is necessary to either buy now or wait three years, there is a lot of time in between.
Regarding interest rates, I would rather pay a lower price for a house and and get a higher interest rate, than I would the opposite. Plus, if interest rates go up by a significant amount, housing prices will have to go down more. A starter family makes a finite amount of money. If someone wants to upgrade from their starter house to a bigger house, they have to sell their starter house. If interest rates go up, sellers can either lower their price to keep payments at the level that is affordable to buyers, or they can let their houses linger on the market.
I do believe that you will be able to purchase property at a lower price in six-twelve months. I am not sure why it is necessary to either buy now or wait three years, there is a lot of time in between.
Regarding interest rates, I would rather pay a lower price for a house and and get a higher interest rate, than I would the opposite. Plus, if interest rates go up by a significant amount, housing prices will have to go down more. A starter family makes a finite amount of money. If someone wants to upgrade from their starter house to a bigger house, they have to sell their starter house. If interest rates go up, sellers can either lower their price to keep payments at the level that is affordable to buyers, or they can let their houses linger on the market.
Caren,
I rented for a while in Massachusetts, and didn't really have to do any upkeep. The driveway was plowed, the house was painted, and if anything broke, the landlord had to fix it. If I wanted to repaint an interior room, that was my responsibility, but if the house needed painting it was the owners. I understand that the owner tries to include the taxes as part of rent, but that is not very easy to do. If I was paying $1500 a month in rent, and taxes went up $600 a year, the owner would have a hard time passing the entire $600 on to the tenant. The owner could tell me that they wanted to charge me an additional $50 a month, but if I said "no", the owner had to accept my answer or try to find a new tenant, pay a real estate commission (usually at least half of one month's rent, often a full month) repaint the interior of the house, etc... Really any increase in owner costs can only be passed on to the tenant when vacancies are very low.
I rented for a while in Massachusetts, and didn't really have to do any upkeep. The driveway was plowed, the house was painted, and if anything broke, the landlord had to fix it. If I wanted to repaint an interior room, that was my responsibility, but if the house needed painting it was the owners. I understand that the owner tries to include the taxes as part of rent, but that is not very easy to do. If I was paying $1500 a month in rent, and taxes went up $600 a year, the owner would have a hard time passing the entire $600 on to the tenant. The owner could tell me that they wanted to charge me an additional $50 a month, but if I said "no", the owner had to accept my answer or try to find a new tenant, pay a real estate commission (usually at least half of one month's rent, often a full month) repaint the interior of the house, etc... Really any increase in owner costs can only be passed on to the tenant when vacancies are very low.
AJ,
If people find a place that they want to live in, are comfortable with the neighbors, neighborhood and landlord, there is nothing wrong with renting. They should invest the difference between the rent and a mortgage just to protect themselves for retirement.
I don't think that most people primarily think of a home as an investment as there are too many variables. In Massachusetts, you can buy a house now with little knowledge of what the real estate taxes will be 3 years down the road. There are provisions in place that limit property tax increases, but voters can override them. It is very hard to predict upkeep costs. It is hard to forecast the quality of the local schools down the road, and they are a large driver property values here. People buy a house because they like the freedom of owning the place they live in.
When someone buys a house for $300,000 and sells it for $400,000 ten years later, they often say they made $100,000 on the house. They rarely subtract the real estate taxes, upkeep (landscaping, painting, maintenance, etc...) and all other costs that would not be associated with a rental, when they calculate a gain/loss.. This would be part of the calculation if the home were truly looked at as an investment.
If people find a place that they want to live in, are comfortable with the neighbors, neighborhood and landlord, there is nothing wrong with renting. They should invest the difference between the rent and a mortgage just to protect themselves for retirement.
I don't think that most people primarily think of a home as an investment as there are too many variables. In Massachusetts, you can buy a house now with little knowledge of what the real estate taxes will be 3 years down the road. There are provisions in place that limit property tax increases, but voters can override them. It is very hard to predict upkeep costs. It is hard to forecast the quality of the local schools down the road, and they are a large driver property values here. People buy a house because they like the freedom of owning the place they live in.
When someone buys a house for $300,000 and sells it for $400,000 ten years later, they often say they made $100,000 on the house. They rarely subtract the real estate taxes, upkeep (landscaping, painting, maintenance, etc...) and all other costs that would not be associated with a rental, when they calculate a gain/loss.. This would be part of the calculation if the home were truly looked at as an investment.
Did Caren just give herself a "best answer" designation? Odd.
Richard,
A lot of investment bankers are CFA's, or at least a lot of my friends that are investment bankers are, and investment bankers made a great deal of money recommending and/or structuring the many transactions that took place during the internet boom. Billions of dollars were spent on companies that had no income and no immediate plans to change that. Sure those deals made some sense at the time, and it could be argued that the companies were worth even more than the multiples that were paid, but years later those deals looked pretty bad.
A lot of investment bankers are CFA's, or at least a lot of my friends that are investment bankers are, and investment bankers made a great deal of money recommending and/or structuring the many transactions that took place during the internet boom. Billions of dollars were spent on companies that had no income and no immediate plans to change that. Sure those deals made some sense at the time, and it could be argued that the companies were worth even more than the multiples that were paid, but years later those deals looked pretty bad.
Elvis,
I don't think the argument (at least the rational one) is that Realtors should talk potential clients out of buying. I think it is that Realtors should not encourage buyers to purchase a home beyond their means. I want to point out that I only believe that this is a valid argument if you know your buyer's means. If you are presented with a pre-approval letter than says $500,000 and the buyer never says anything other than "I can spend up to $500,000", then by all means show them houses valued up to $500,000. But if you come to learn that they buyer makes $75,000, or the buyer says "I got approved for $500k, but we are looking to stay in the $$350-$425k range", then I think it would be irresponsible to show that buyer homes valued at $500k without even a "don't forget that there will be costs in the future, so you may want to look at a lower priced home", or "are you planning on going with a fixed or an adjustable rate mortgage?" and then offering some advice from the experiences you have gained over the years. If the buyer insists, then by all means show them what they want. You are in this to make a living and the buyer understands that.
I don't think the argument (at least the rational one) is that Realtors should talk potential clients out of buying. I think it is that Realtors should not encourage buyers to purchase a home beyond their means. I want to point out that I only believe that this is a valid argument if you know your buyer's means. If you are presented with a pre-approval letter than says $500,000 and the buyer never says anything other than "I can spend up to $500,000", then by all means show them houses valued up to $500,000. But if you come to learn that they buyer makes $75,000, or the buyer says "I got approved for $500k, but we are looking to stay in the $$350-$425k range", then I think it would be irresponsible to show that buyer homes valued at $500k without even a "don't forget that there will be costs in the future, so you may want to look at a lower priced home", or "are you planning on going with a fixed or an adjustable rate mortgage?" and then offering some advice from the experiences you have gained over the years. If the buyer insists, then by all means show them what they want. You are in this to make a living and the buyer understands that.
Lori,
I am sorry to say it and join the negative crowd here, but your answer just doesn't make any sense. How do you know that real estate will not be even cheaper in 3-6 months? I am not saying it will be, though many economists are. And a blanket statement that the real estate market is better than the stock market is just misleading. Over how many years? In what geography? Based on what? You are in Atlanta. I don't know about Atlanta, but here in Boston if you bought a house in the last 80's and sold in the late 90's, you were lucky to break even in some markets. The stock market vastly outperformed the housing market over that time. If you look over the last 3 years I would bet that that stock market outperformed the housing market in many places. I am not saying you are wrong, just that a blanket statement is irresponsible for someone holding themself out as a real estate professional.
I am sorry to say it and join the negative crowd here, but your answer just doesn't make any sense. How do you know that real estate will not be even cheaper in 3-6 months? I am not saying it will be, though many economists are. And a blanket statement that the real estate market is better than the stock market is just misleading. Over how many years? In what geography? Based on what? You are in Atlanta. I don't know about Atlanta, but here in Boston if you bought a house in the last 80's and sold in the late 90's, you were lucky to break even in some markets. The stock market vastly outperformed the housing market over that time. If you look over the last 3 years I would bet that that stock market outperformed the housing market in many places. I am not saying you are wrong, just that a blanket statement is irresponsible for someone holding themself out as a real estate professional.
Wow, 300 replies to an opinion question.
There will not be any agreement. Now is a good time to buy because buyers have the leverage. But, there is always the chance that the market will fall further, and that would be an even better time to buy. Unless, of course, you need a house now.
If you buy now you are in a better position than if you bought in any of the past couple of years. That is a pretty good thing. Good luck.
There will not be any agreement. Now is a good time to buy because buyers have the leverage. But, there is always the chance that the market will fall further, and that would be an even better time to buy. Unless, of course, you need a house now.
If you buy now you are in a better position than if you bought in any of the past couple of years. That is a pretty good thing. Good luck.
Patrick,
I don't think anyone would argue with you that you would be better off waiting a while to buy if you can. I think (or at least I hope) what people are saying is that if , for any reason, you need a house now, and you plan to live in the house for the long term, it is not a bad time to be buying. Prices are lower than they were a year ago, there are a lot of houses to chose from and interest rates are still very low.
I don't think anyone would argue with you that you would be better off waiting a while to buy if you can. I think (or at least I hope) what people are saying is that if , for any reason, you need a house now, and you plan to live in the house for the long term, it is not a bad time to be buying. Prices are lower than they were a year ago, there are a lot of houses to chose from and interest rates are still very low.
However, if the comps show the house should be priced at 999,000 and it's listed at 949,000, it IS priced below market value. ;)
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Or, it is possible that the comps are off. It is not uncommon to have two different realtors put together different comps.
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Or, it is possible that the comps are off. It is not uncommon to have two different realtors put together different comps.
Ryan,
Good question. I can't answer why someone should buy in this market, but I can add to the discussion by telling you why I did buy in this market. My wife and I were renting in a small place and our infant daughter was getting ready to start crawling. We new that we needed a bigger space.
We wanted a single family home in a nice neighborhood. We looked around, but none of the neighborhoods we wanted had rentals available. We considered the negatives of buying, specifically the state of the housing market. My wife and I both believe that the market is going to fall further. For that reason, we made sure to look only in neighborhoods with very good elementary schools. This allowed us to be confident that we could stay in the house for at least 10 years if for some reason we were not able to sell the house. Also, our thinking was that if our house does not go up in price, or even reduces in value, we would be able to get into our next house at a similar point in its value cycle.
My rent in my old place was about $1500 a month. Our new house is much bigger, but with insurance and taxes is also about double the monthly cost. My wife and I decided that we were willing to pay more to have our own home in a nice neighborhood with good schools.
A rising home market would be great, but we were not willing to wait for one to come around.
Good question. I can't answer why someone should buy in this market, but I can add to the discussion by telling you why I did buy in this market. My wife and I were renting in a small place and our infant daughter was getting ready to start crawling. We new that we needed a bigger space.
We wanted a single family home in a nice neighborhood. We looked around, but none of the neighborhoods we wanted had rentals available. We considered the negatives of buying, specifically the state of the housing market. My wife and I both believe that the market is going to fall further. For that reason, we made sure to look only in neighborhoods with very good elementary schools. This allowed us to be confident that we could stay in the house for at least 10 years if for some reason we were not able to sell the house. Also, our thinking was that if our house does not go up in price, or even reduces in value, we would be able to get into our next house at a similar point in its value cycle.
My rent in my old place was about $1500 a month. Our new house is much bigger, but with insurance and taxes is also about double the monthly cost. My wife and I decided that we were willing to pay more to have our own home in a nice neighborhood with good schools.
A rising home market would be great, but we were not willing to wait for one to come around.
The_Bayou answered:
if you plan to keep your home for a minimum of five years you will most likely be fine...
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Where does that logic come from? There have been several ten year period when you would have sold for less than you bought. In the Northeast an example would be buying in the late 1980s and selling in the last 1990s. I certainly would not want to have been in a situation where I bought in 2005 and plan to sell in 2010. Financial advisors know not to give unsubstantiated hope to investors (don't worry, hold onto that Lehman Brothers stock for at least 5 years and you will be fine....especially with the price being so low now...) but real estate agents don't hesitate to do so.
Just tell people not to consider their house an investment, but rather a place to call home. There is nothing wrong with your largest expense being the place you raise a family.
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Where does that logic come from? There have been several ten year period when you would have sold for less than you bought. In the Northeast an example would be buying in the late 1980s and selling in the last 1990s. I certainly would not want to have been in a situation where I bought in 2005 and plan to sell in 2010. Financial advisors know not to give unsubstantiated hope to investors (don't worry, hold onto that Lehman Brothers stock for at least 5 years and you will be fine....especially with the price being so low now...) but real estate agents don't hesitate to do so.
Just tell people not to consider their house an investment, but rather a place to call home. There is nothing wrong with your largest expense being the place you raise a family.
The_Bayou answered:
Gary, that is a tough one. If the seller relied on your advice when setting the price initially, they probably assumed you had a reason for setting that listing price. So, at one point they trusted you. You now need to show them data that indicates how much the market has fallen since you agreed on the original price.
I find that a lot of Realtors are agreeing to list homes at price points where they are unlikely to sell. Once you set the ceiling, it is a lot harder to bring the price down to market.
I find that a lot of Realtors are agreeing to list homes at price points where they are unlikely to sell. Once you set the ceiling, it is a lot harder to bring the price down to market.
The_Bayou answered:
Based on recent sales in the neighborhood, it looks like my house in Greater Boston is declining in value, but not at the same rate as the local market. Greater Boston fell 5% this year. It looks like my house would have fallen slightly less.
The_Bayou answered:
UTerms is good if there are potential buyers for your area. It is a reverse prospecting website that allows potential buyers to describe the house they would like to buy, and then home owners or agents to contact them if they are aware of a matching property.
If you find a potential buyer that is looking for a type of property that you are either listing or know about, you contact the buyer through the site.
If you find a potential buyer that is looking for a type of property that you are either listing or know about, you contact the buyer through the site.
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