SkyHigh

Once the mortgage pipeline get going again this market will find a floor. There are buyers out there but they can not get loans right now. The Fed propped up the mortgage markets with 200 Billion last week. By the end of the summer things will begin to flatten out in the housing market.

The next act will be inflation. Houses cost a lot to build. When gas goes up so does the price to build. Speculators had a huge effect in some markets but their effect certainly is not nation wide. Many parts of the country did not experience a housing bust at all.

Prices will return to normal. Expensive and getting more expensive.

SkyHigh

DYNASTY HVY

Not now !maybe later

daytonaflyer

Sorry, but the only large areas of the country that didn't experience a housing bust were the ones that didn't experience exponential increases in pricing between 2003-2007 (like Texas, and some of the south and midwest) and areas where restrictions on building and expansion limited the number of homes available for purchase like Portland, OR and Seattle.
Not coincidental, most large cities in Texas and many areas of the country which are still reasonably priced are now experiencing a mini-boom and they too might eventually suffer a price correction. You can thank the greedy real estate investors who buy a house, raise the price and then sell all too frequently for most of this.
For the rest of the country: both coasts, some of the middle, the northeast, and eventually the northwest, the housing prices are still ridiculously inflated and will continue to adjust lower to where they should be. They might even adjust far lower than what is expected because of the severe lack in confidence in the entire real estate industry and the inability of former people to secure financing to purchase property.
That's what I'm waiting for; then I'll purchase a nice house at a reasonable price and not before.

StraightShooter

I don't mean to be rude, but this is wrong.

My wife and I made 150,000 last year. So does that mean I should not buy anything more than 450,000?????

If I bought a 400,000 dollar home, I would be bankrupt in 6-12 months due to the cost of utility bills. Gas is outrageous now. Homes are heated on Gas.

Look....Never, Never, Never (3 times for impact) buy a home unless you can:

1-Put 20% Down
2-Have a 15 Year mortgage
3-Get a Fixed rate mortgage
4-Able to pay it off in a few years

Number 1 is so if you get furloughed, or find the need to move you have wiggle room in your price. Without 20% equity from the start, your locked into a mortgage for a few years. If put down 10,000 dollars on a 250,000 dollar house here's what can happen. Say next year, your airline mergers, close, displaces you or whatever and you then have to move. The realtor expenses will cost you 6% which is 15,000 dollars, you then due to market trends pay for closing costs and 1,000 dollars in allowances (painting)also. You will then have to come up with 10-15000 dollars out of your pocket...JUST TO SELL YOUR HOUSE. That's scary.

Number 4 is because this industry is so wildly unstable, get that dag-on house paid off as fast as you can so you can create your own stability. Just imagine if you didn't have any debt payments to make and then you got furloughed. You could go manage a restaurant making 30,000 and do absolutely just fine. Your kids would have food on the table, be clothed and have a very normal life on that income..............if: you were debt free.

Don't let debt ruin your life like it has my siblings. They are now living in slavery working all day everyday just to barely make enough to scrap by so the bank wont foreclose on them. They bought all the house they could and now suffering until their house will sell. They bought with only a 3% downpayment and thought, buy up as much as they can. It's ruined their life now.

PROVERBS 22:7 "The debtor is slave to the lender."

Led Zep

I was going to post my thoughts on this topic, but StraightShooter beat me to it.

Reread the above quote several times, and pay particular attention to number 4. It is nice to have a house where guests say "wow" when they walk in. It is even nicer when your friends say "WOW!" when you tell them the house is paid for after they ask how much your mortgage is.

And never forget this either:
When you owe someone money, you must go to work because of them.

StraightShooter

Led Zep,

Do you have a paid for house???

I have a year to go and mine will be paid for. I bet it's a great feeling to make that last and final payment! Without coming off snobby, how do you say your debt free? Some people will hate you guts if you tell them that.

Led Zep

Hi Straight,

I still have 2 years until the house is paid for. Looking at the way I phrased what I wrote, it does appear that mine is paid for now. Purchased my house using the ground rules you listed and have been investing and saving money. As the principal comes down and what I'm saving increases, I'll be able to pay it off when they meet in the middle. I estimate it to be in 2011, and that is based on my base pay and nothing extra.

Not snobby at all. For two years my wife and I cut the budget down to the bare minimums and followed Dave's baby steps outlined in the Total Money Makeover. We paid off everything we owed except for the mortgage. Technically we are debt free except for the house.

The walk wasn't very easy to do and the road definitely felt uphill most of the way. But all of that sacrifice is well worth it the day that last payment is made and you can now begin paying yourself instead of someone else.

You are correct. I normally do not say anything because it is very personal on both ends of the conversation. The only time I bring it up is when there is an opportunity to help someone, and that someone is usually a friend or family member. I'm able to sympathize with much of one's struggle because I've been there as well. At the same time, I'm able to offer support, encouragement and helpful advice if they are motivated to get out of debt. It's rewarding when you finally are out of debt, but I find it even more rewarding when you can help someone else do the same - especially when they are able to avoid a mistake or mistakes I have made in the past.

cfii2007

Home prices are LOWER now, but were overpriced in many areas to begin with.

SkyHigh

They have already fallen a lot in most areas of the country. Eventually the market will begin to recover. There are already articles out there cautioning that buyers shouldn't wait too long.

SkyHigh

TimSmith

I guess we all know what business Sky went into after leaving flying: real estste! The only people predicting a floor in the market this year are the ones who said prices would go up this year, i.e. the National Association of Realtors. They have been cheerleading their outlook while burying their head in the sand because real estate agent is a mighty lonely job right now. Not enough clients and definitely not any influx soon. Year 2000, average price of 2000 square foot home = $139K. 2007 average price 2000 square foot home= $229K. Folks, the reason for the demand was cheap money to people who couldn't afford the house they were bidding up the price on. Banks will weather the bad loans this time, but if they go to business as usual, the next round of bad loans will bankrupt them. Housing prices are local, but until the average price is within reach of the average wage earner, there isn't going to be a "floor."

Buy a house to live in, not as an investment. While some have made out extremely well in the housing bubble, other investments outperform real estate consistently unless you have dual usage and purpose for the property while owning it. You got to live somewhere, so if you sell that fancy house for lots of money, just means you have to spend lots of money on the next house and you are no better off.