Man, what will it take?
0% financing and 90% off sales?
A $10,000 tax credit from the government?
Maybe a free pizza?
Seriously, anyone getting tempted to go buy a home?
Mortgage Rate Hits 37-Year Low
The benchmark 30-year fixed-rate home mortgage in the U.S. fell to a national average of 5.17% this week, the lowest since Freddie Mac began its weekly rate survey in 1971.
With the Federal Reserve cutting its interest rates to near 0% and a continued decline in rates on the long-term Treasury notes that mortgages closely track, rates on other types of mortgages dropped again, though not as much as the 30-year.
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58 comments:
On the eve of hyperinflation, it looks like a great time to take on some debt. Especially at these rates!
Since houses are still over priced even after reductions of 30-30 percent, it's still not time to buy.
An example is where I live in Rhode Island. We have one of the highest unemployment rates in the country, and one of the highest tax rates in the country. In addition, at both the state and local levels, we are facing insurmountable budget deficits. There is talk of town, city and even state bankruptcy. The situation is so bad that we are the only state in the country to have gone down in population. People are fleeing the state every day. Despite this, we still have morons here who think they can sell their two bedroom, one bathroom ranch for $445,000. And they think this is a steal because only a few months ago they had put the house on the market for $525,000.
When these size ranches return to the $180,000 to $225,000 level, then I'll buy. And yes, these small ranches will return to these prices, although it may take until the Fall of 2009.
If you can't sell your house if you own one, you can't come up with a down payment of 20 percent. You might not be able to even if you can sell it. How many people have savings equallying that?
If you are worried about your job/or partner's job, you don't want to take on higher debt, since many have traditionally traded up. If the banks which are still lending (smaller), including credit unions, they are going to be more cautious about your situation.
So it's not just the value of your house.
And in fact houses went up much more than articles are saying over the last 12 years. If you just count the last 6-7 years, it's about doubled, but it doubled before that too.
People may want to unload all debt before committing to something like a house.
Getting back to let's say 1950's lending standards is going to be a rocky road.
Grandma PKK
12+ months of inventory in my market. Many sellers still want more than they paid at peak.
No sale.
Of course it's a good time to buy. If you feel like living in Watts that is.
For anyone wanting to bid on a HUD home, I have some info you need to know, it's from a book called, "Keys to buying foreclosed and bargain homes" (Barron's).
On page 102 chapter 35, on buying HUD homes - "Hud has a special program (Good neighbor initiative) whereby people in certain job positions can buy HUD homes at dicounted prices.
If you are a schoolteacher, a police officer, a firefighter, an emergecy technician, or an employee of a non-profit organization or local government agency, you may be eligible.
THE DISCOUNT IS SUBSTANTIAL-50 PERCENT OF THE HOME'S APPRAISED VALUE".
In other words folks, unless you are a government peon, it's pointless to bid on a HUD home. Why you ask(?), because they get halve-off, and we the taxpayers, pay the other halve, now isn't that precious?
Heres another thing the GOV is not taking into consideration. All of the potential buyers that are being destroyed via their credit rating due to Bankruptcy, Short sales and foreclosures. That is a very large portion of the buying market that has no shot for at least 7 years. Folks are just not coming thru the door to buy a house for some time. Even if rates go to 2%. Now if the government were to give a tax credit of 10% of the purchase price, that might help. But this will NEVER happen.
"Many sellers still want more than they paid at peak."
should read
Most sellers still want more than they paid at peak.
To be honest, I'm kinda tempted, but the smell of FEAR is still very strong out here. So I'm waiting.
Of course it's a good time to buy a house or condo. It's always a good time to buy a house or condo. Didn't you know that?
Did you not know that if you don't buy now, right this very moment, you will be priced out forever? You will never own a home if you don't buy this house at this price right this very instant.
No, I'm not buying now. Not with all the alt-a and option arm mortgages resetting in 2010 and 2011.
Where I would want to live, in boston's back bay, beacon hill, south end or charlestown, prices still need to come down another 20 or 30 percent to be in line with incomes. They've only dropped about 15%, even when you adjust for inflation.
My plan is to continue to grow my brokerage account through savings and speculation until at least November of 2010. I will not buy until unemployment shows a significant decline and average incomes show a significant rise.
Anonymous said...
"Many sellers still want more than they paid at peak."
should read
Most sellers still want more than they paid at peak.
December 19, 2008 2:42 PM"
AND
All sellers think their house is special (Bwa ha ha ha) right up to the point the Sheriff puts them to the curb.
America is SO Fucked and Broke too
Two factors are now in control of the housing market.
One is affordability, considering the cost of living for food, shelter, clothing, health care, insurance, taxes, and energy the vast majority of the public is tapped out. Most of us are just trying to survive the economic crises. How will we earn money in the future ... is my job safe? How much can I save while still trying to pay down my debt? How much will my necessities cost in the face of future inflation of the cost of living? Will the price of energy spike again? How about the cost of food?
The second factor is why buy now if the cost of housing might be cheaper in the future? Most of us are simply not interested in speculating.
Now that the teaser rates are gone and the belief in rapid housing appreciation has collapsed, just what aside from affordable prices will stimulate buying?
ella
Dear Paul..you said you wanted to increase your savings by speculation.
Doesn't the never ending parade of chicanery revelations worry you? That you can't outguess the game? Or are you in on it? If you are, would you mind, for the sake of the ordinary citizen, and of course you can do it anonymously, informing us what's the real game?
Grandma PKK
I am closing on my place on Jan 2 2009. There are some personal reasons that it makes more sense for me than others, but in general I beat them up on price, was able to negotiate everything (parking, waiving HOA for 24 months, covering closing costs). I have city views, I'll be 8 minutes (via train) from my office (and the offices of hundreds of other companies in my line of work), and the rentals weren't that much lower after my down payment. Since the dollar's evaporating debt and a fixed price seems better that uncontrolled rent.
The Powers will lower the qualifying
standard and allow 100% financing again at very low rates . This will be a re-spiking of the punch bowl and people will go for it in that they will have nothing to lose. Mark my word ,the Powers are headed for
making it possible for a unemployed person to buy a house .
Mid Hudson Valley NY
Prices are still way above real value.
In this area asking prices need to come down another 40% before anyone with a brain would consider buying.
remember house prices here, went up approx 300% between 2002 and 2006
they stopped going up but have not really adjusted to income afortability.
Banks are reporting mortgage activity is up. However, a huge portion of that is loans already in process being pulled from one bank and sent to another chasing a lower rate. It's the same few thousand loans running around.
The big problem is, few borrowers qualify for the really low rates do to all the new lending restrictions.
Banks are quoting a 5.00% fixed rate but you can only get that if your credit score is 740+ and you have at least 20% equity. That knocks out about 90% of borrowers. The rest end up with a rate closer to 6.25.
I won't buy at any price now.
Why?
Job uncertainty.
maybe that's making people hold off.
No way.
We still have a long way too fall yet, before housing prices are back to values that house debters can afford.
Many of the McMansions here in HB are still in the $1mil+ - $2mil+ range - they're not even worth half that amount.
Although the rates make it very tempting, real estate is still way overpriced.
Plan to wait this one out until all this deflation registers in the prices.
Will probably refi my home though.
Definitely not a time to buy. I agree with a recent post, those Alt A's resets are going to be telling. I live in SF and something like 70% or recent mortgages were financed with them -many coming due in the next year or two. Plus the other factor is, I want a stable neighborhood, and am willing to pay for that. I could get a "good deal" now I suppose but all those vacant homes and pending foreclosures filled w/ squatters would be awful. Not interested in shooting my way to my mailbox.
i'll take the free pizza and a lifetime supply of guiness.
i tried to buy a house from deutsche bank at 47% of their ask price 250/535. Their stk was around 30.
the realtor comes back and claims they turned down 500 cash, my bid was cash, and i would have to raise my bid. DB then sank to 22 and is now 36 all within the past 30 days. I need some honesty in the real estate business before i put my money on the line!
After I get evicted my credit will be hurt for 2-3 years due to foreclosure. I think I can time the market fairly well and get a good deal in 2011-2012. That's why it is best to walk away now even though my teaser rate does not adjust until 2010. I am down 30% with no money down, so it is a no- brainer. I talk to people in the exact same boat I am in, making less income than me, yet they are desperately trying to rework a deal to keep their houses. They either think prices in the area have not dropped 30%, or they think the next boom is right around the corner. My money is on walking and starting over.
We're not tempted to buy in the least. Waiting for 80-90% lower home prices here in the bay area.
Prices are not yet inline with wages.
rising unemployment is going to hamstring the housing recovery.
"In other words folks, unless you are a government peon, it's pointless to bid on a HUD home. Why you ask(?), because they get halve-off, and we the taxpayers, pay the other halve, now isn't that precious?"
Another benefit for those in Gov jobs making great salaries with crazy benefits and pensions. I can't wait for the private sector and small business owners to unwind over this shit.
Uncle Fred,
With all to respect to RI's idiocy, I put in my respective vote for CT for being the most overpriced state. I don't think our two areas are entirely different, as people in New England tend to have some other assets and can tread water a little longer than the new money that crashed in CA and NV. But as some point, even those with good credit and ability to pay are gonna start to walk when they get to be 300-500k underwater on their mortgage.
Having said that, what would it take me to get into the market? Probably nothing could do it right now, even if I found something I could afford,I believe values will probably overcorrect, resulting in some really good buys. Sucks to be you, homedebtors.
In most parts of the country, house prices have only come down 10-15% at best. Considering that the prices tripled over the last 10 years, prices have a long way to drop before I'm interested. 99% of sellers will never, ever drop their prices to realitic levels - it's the same as giving up on their retirement for good and admitting they will work until they die. Realistic prices result only from foreclosure. It will take a few years until the majority of houses in the country have been foreclosed on, and only then will the housing market stabilize and the economy start to recover.
Nope, don't want to buy a house.
I did when I first started hanging around the housing bubble blogs but the more I think about it, the less I like the idea.
If the shit hits the fan, my money and I are going to Costa Rica.
I bet some of those folks who were encouraged to buy a house by a free pizza now wish they held out for one with 'all the toppings'.
I'm laughing my ass off.
Gregg Swann
It was said in an earlier post to this topic:
"One is affordability, considering the cost of living for food, shelter, clothing, health care, insurance, taxes, and energy the vast majority of the public is tapped out. Most of us are just trying to survive the economic crises. How will we earn money in the future ... is my job safe? How much can I save while still trying to pay down my debt? How much will my necessities cost in the face of future inflation of the cost of living? Will the price of energy spike again? How about the cost of food?"
Soooo very odd!!!! Is this thinking a "new thing" in the homebuying world? Where was this process between year 2000 and 2007?? Hummmmmmmmm!
If it's $40,000.00, and you make $7.40 an hour flipping burgers, you still can't afford to buy a house. Sorry.
Grandma, yes, the never-ending parade of chicanery worries me. I don't like the system and I don't think ordinary people should have figure out macroeconomics in order to preserve the value they worked for. But I can't change the system.
I would gladly share insider secrets if I had any. I can only share the products of my mind and that product is of dubious merit.
So far, in general, I have been able to guess correctly on the direction of some publicly traded stocks. All I can do is keep trying.
I'm still guessing that house and condo prices are going to decline and that is why I'm not buying now.
My guesses are educated ones but they are still just guesses.
Ok...
I'm closing on a house in south florida on Jan 16 (Knock on granite countertop...).
Peak price was $300K, Buying for $138K.
Most people are anticipating a short bout of deflation, followed by massive inflation.
I can afford the payments, and my job is very secure, so it makes sense to me to take advantage of low rates and relatively low house pricing ( this house is back to it's 2001 price) and anticipate inflation to strike over the next few years, making my fixed debt easier to pay.
For me, it makes sense. Even if house prices go down an extra 10%, that's only $50 less per month in the grand scheme of things.
-lensam69
My husband and I had the choice of paying $1000/mo rent for 970 sq ft apartment OR 1175/mo total pymt for a 2100 sq ft home. Owner originally asked $190k. House was on the mkt for over a year. Final price: $143k. We put 3% down on FHA loan. Got a 5.5% rate for 30 year mortgage (which we will pay off in 15 or less.) Owner paid closing and other costs totaling $14k. We also qualify for the $7500 tax credit (15-yr/no interest loan).
Unload all debt, and then start thinking about getting another debt-trap for 30 -50 years.
That's my plan .. i'm gonna stick with it.
Not to mention that these days, buying a house looks more like a luxury to me, then a necessity.
Is it ever a good time to catch a falling knife?
If it's $40,000.00, and you make $7.40 an hour flipping burgers, you still can't afford to buy a house. Sorry.
Actually you can. $7.40 an our is $15400 a year. $40000 is less than 3*income. :)
Yes, you can buy a $40000 hours with $7.40/hour. The question is where to find a house like that???
I know many people making $7.40/hour but haven't seen a $40000 house yet. :)
Easy to find houses for under $40k. Where I grew up in Michigan as an example.
http://tinyurl.com/4n28o2
Plenty of good universities nearby and even a bit of culture.
Im glad I pursued a life outside, but areas like this are full of good people, and as long as you dont think you are too fancy to drink light beer a drive a rusty pick-up truck, its a fun place to live.
"Soooo very odd!!!! Is this thinking a "new thing" in the homebuying world? Where was this process between year 2000 and 2007??"
Thrown under the bus once the "debt is good" crowd came to town.
Houses were financed based on FICO scores and the promise of appreciation in the value of the house.
Seems as though the old tried and true methods of qualifying a buyer were useless. Volumes of loans were issued on the new methods. Securitized by Wall Street wizards and sold to suckers oops investors nationally and around the world.
Oh bad me, if they didn't invent new ways of issuing loans, there would have been no securitization and no Wall Street billions.
ella
60-75% off in Miami on foreclosure properties. Mostly slums. The good stuff is still way over priced @ about 30-40% off peak. When the Alt-A reset some better deals should hit the market. I am holding off.
How many of the ALT-A and Option ARM loans that will be recasting next year are above the $417,000 FHA loan limits.
http://www.mercurynews.com
/realestatenews/ci_11262768
Real estate professionals cite two primary reasons for the recent slowdown in the region's more affluent pockets.
One is the dramatic stock-market plunge that occurred in October, which derailed many prospective homeowners' hopes of buying anything, let alone expensive homes.
And the ongoing credit crunch means interest rates are still high for the large loans many buyers need to buy high-end homes.
Rates for loans of $417,000 or less may be 5 percent today. But a buyer who needs a loan of $650,000, for example, could be facing a rate of 7.5 percent.
Foreclosures began rising steeply last year as many subprime borrowers defaulted on loans they could not afford; foreclosures are at record levels now.
With the state and national economies weak and more job losses expected, many experts say foreclosures will increase in the coming year.
Mmmm...those pizzas look tasty, but until rates are at 2%, house prices have dropped another 20% and I get a 20K permanent tax credit, I am going to be a happy renter and not going anywhere NEAR the housing market!!
PEOPLE CANT AFFORD HOUSES AT THESE HUGELY OVERVALUED LEVELS--
It is that simply. Propping it up will never work.
HOUSES MUST COME DOWN IN PRICE!!
Screw these reported rate drops- they won't mean a THING!!
No one can afford them at these levels now, and unemployment is sky-rocketing.
Seriously, I think they will have to GIVE them away eventually, and due to the insurance, HOA and maintence costs, no one will even want them for FREE!
there seems to be good deals in the bubble states of fl, az, nv, and ca. so, i can see why people would buy in those places. however, they are risking things since prices could drop even a lot further; so they better be there for the long haul.
in other parts of the country it seems housing is still too high and must, and will, come down...no matter what the govt. tries to do to reinflate prices.
in my building in manhattan, which is both rental and condo, somebody put a 1 bedroom 835 square foot unit on the market for $770k. that's a 2006/2007 price! the owner must be mentally ill. i just laughed and shook my head when i saw the posting.
other places in manhattan are coming down but they still have a ways to go.
i agree with another poster (paul math?) who's saving and speculating...i'm doing the same. i'm day trading/speculating on various stocks and have made money on every trade i've made since october (knocking on wood right now). i'll just keep doing this for another year, build my down payment fund , and then take a look to see where prices have fallen. by this time next year we should know what effect the alt-a and option arm resets will have, if any.
House prices need to reflect incomes. Since apparently we are supposed to live in a society of $10 an hour jobs, prices will need to reflect that.
http://www.associatedcontent.com
/article/1315547
/alta_and_option_arm_loans_
may_bring.html
"Alt-A" and Option ARM Loans May Bring the Next Mortgage Crisis
First, what exactly are these two mortgage types? Well, an "Alt-A-Loan", or an alternative documentation loan, is a mortgage given to a borrower based only on their credit score. There is no need for income verification or a documentation of assets, thus allowing anyone with good credit to secure a loan. The only drawbacks, generally, are a higher interest rate than standard loan types and a longer processing time.
An "Option ARM" is a bit more dangerous though. Standing for Option Adjustable Rate Mortgage, "Option ARMs" entice buyers with extremely low initial interest rates into buying homes that are well above their budget. These initial rates, known as "teaser rates", can start as low as 1% but after a couple years time they readjust, often leaving borrowers with double their monthly mortgage expense.
Where the problem lies is, these "Alt-A" and "Option ARM" loans are beginning to reset. Now, homeowners are caught with an expensive home and no money to pay for it. Thus, they are beginning to default and foreclose on their once affordable "dream homes". Our country is about to see a bomb go off that we lit the fuse to only a few short years ago when the housing bubble was peaking.
Things to think about before purchasing a new house.
First how safe is your job.
http://www.570news.com
/news/international
/article.jsp?content=w1219125A
California Gov. Arnold Schwarzenegger ordered a state hiring freeze and payroll cuts Friday to conserve cash as the state struggles to deal with a $42-billion budget deficit.
The governor issued an executive order that requires state agencies to reduce payroll by 10 per cent, which could lead to massive layoffs. He also ordered the state's 235,000 employees to take two days off a month without pay, starting Feb. 1.
In a letter to state workers, Schwarzenegger said California must take emergency steps that will require sacrifices from everyone.
"It is imperative that state government look inside itself and be part of the solution," the governor wrote.
"We simply have no other choice."
when the largest generation recreates itself as if birth control pills had not reduced the population of buyers as in perhaps the smallest generation and peasant immigrants to buy that not included theory that supply and demand set price
rumor has it that that Rhode Island 180,000 is worth only 80,000 and not the 520,000 that was being asked if one buys housing rather than cheap loans....and the government will do its job once stated of selling affordable housing rather than cheap loans and slavery, which was a method of keeping the masses of peasants in line and control or er..on line? yet now prop up values to get the tax revenues.... duplicity...of purpose, but to bleed the masses moneys?
the market makes suckers of the largest amount of people posible and er...housing and stocks are not enough...perhaps and fear you not? government? no not again, those that trust government?
the average secular bear market lasts 17 years.................................................................................................................................................................................................................................................................................................................................................................................................................................................................................bored yet?
if those 500 trillion in derivitives are 10 years of the worlds total value of productions and are but bets made that the average, average householder would pay their mortgage that gamblers made worldwide why not count every lost fortune with each "walker" like tumbling dominos all trying to offload the hedge of their bets on bets to no buyers?
one house in forclosure may mean 100 times its value in derivitives evaporating? once upon a time one block in Tokyo was "valued" at the same as all the state of california.... any buyers of such manipulations we copied?
I'm waiting for it to cost $2000 a month to buy a house in LA, SF, NY, DC or any place I'd want to live. Even at 0% interest, it would cost more than that at these principal values. So I'll rent for the magic $2k a month number.
When I buy, I plan to make the largest possible down payment and then pay off the mortgage as quickly as possible.
Accordingly, a low price is far more important to me than a low interest rate.
I will not buy until prices return to 20th century historical norms. 1998 prices, adjusted for CPI inflation plus 2% (in other words about 40% above 1998 prices)would constitute a return to 20th century historical norms.
If prices never return to 20th century historical norms, I will simply never buy.
People here still are putting stuff up for insane prices, if their Realtwhores let them. There are homes right next to each other, one on the market for 450K with a foreclosure next door for 79K. Thing is, NEITHER ARE SELLING.
We're in contract and due to close next month on an efficent, affordable home (1200 sq)...and our mortgage, PITI, will be HALF what we're paying in rent now and we're in a CHEAP rental.
Mainly, anything for rent around here is a shum shum owned property that will foreclose soon anyway, and the average home rental is around 1200 a month. Apartments are hard to come by and the smallest studio starts at 600...so...no brainer for us.
Got a great price because the seller bought it in 1998, paid it off in full and didn't refi. She's in contract to buy a HUD home and can pay cash for it.
All depends on your situation...if it's cheaper to rent, rent. Cheaper to buy and you don't mind the hassle of owning, buy.
I would have waited until things fell even further, but my rent is just ridiculous and I want out.
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