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Shiller's saying they're not overvalued anymore. But watch out for "overshoot".
So, anyone looking yet?
January 1, 2009
With home prices down 30%, 40%, 50% and more, and back to 2000 levels, is it time to take a look?
Shiller's saying they're not overvalued anymore. But watch out for "overshoot".
So, anyone looking yet?
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81 comments:
Yes, I'm watching for RE bargains in the next 1-8 years.
I'm not sure when, but, I'm positioning myself.
It's going to be some precarious times.
I hope I'm ready.
We just bought a 3750 sf 2 story adobe home in The Albuquerque area. @ about 2000 levels. 1.5 ac with irrigation well, 4 car adobe garage-real nice. asking price was (2007-2008) $499,000. we paid $380,000, so 24% less. Locked @ 5% interest $0 down VA loan, the wife and "suzanne" said buy now or be priced out! I made her(wife) wait 36 months, and even though we still have some down side (I feel), this area was not nearly as bubbly as most. Most of Albuquerque(NM for that matter) is supported by federal jobs, and has mild weather sooo....though nervous it's a great house with not too much downside (trying to convince myself).
Here in DC the price to rent ratio is still out of whack.
Still renting a house that was valued at $700k tree years ago. I recently changed hands at $540k.
When it starts to go back UP, then it will be time to look--I'm not holding my breath!
Prices are still high here in the bay area. Homeowners are dlusional about what their houses are really worth.
Most of them think the market will pick up / turn around in the spring, instead, they will realize the market is dead as a doornail and they missed their chance to sell.
I am actually going to consider buying a house in 2010, but only if my area takes an additional 40% haircut.
Wish me luck!
keyser soze...I'm thinking of changing my name to Anton Chigurh...he was scarier than keyser!
Happy New Year To All
already bought a few months ago.For al you waiting I have some advice.do you know how many people are on the sidelines waiting for a bottom?Once the sheeple feel there is a bottom you are going to have a mad rush to buy.I like to buy weakness and not get too greedy.If an area is off 50% by waitng you are being greedy.If the house is worth it buy it.
Shiller's great.
the other guy (on the left) started out with "I've been talking with some Realtors..." and then i hit mute. why would ANYONE follow Shiller with that?!
Sure real estate prices have decreased a lot from THEIR PEAK PRICES, but it's still not a great time to buy (despite what the six percent realtors will tell us and the "financial experts" like Suze Orman, Melody Hobson, Paul Krugmann, etc...).
I live in Chicago so I can only speak for my marketplace. Here is a sample of the great deals that are out there:
1. A 1900 square foot house with 3 bedrooms and 2 baths, and a 2 car garage. It is a ranch house and it is 30 years old (very young by Chicago standards) but it is a total gut rehab. During the peak, this house sold for $620,000. Now, it is bank owned and it can be yours for $399,000. Here are the breakdown of the costs, add up the mortgage, property taxes, insurance, utilities and maintenance, and you will be paying $3400 to $3900 per year. Wow, what a bargain!
The so called best deals are the bank owned properties. But even they are not selling. Once the property prices come down to reality ($180,000 to $275,000) then it will make sense to buy.
In the above price range, one can buy a condo. We have about 80,000 to 110,000 condo units that were added to the real estate market during the bubble!
I want a house and I want a good price on it. I am still going to wait this out. I can't believe how much property values have crashed, but even though they are down, it's still not affordable.
Anonymous Anonymous said...
We just bought a 3750 sf 2 story adobe home in The Albuquerque area. @ about 2000 levels. 1.5 ac with irrigation well, 4 car adobe garage-real nice. asking price was (2007-2008) $499,000. we paid $380,000, so 24% less. Locked @ 5% interest $0 down VA loan, the wife and "suzanne" said buy now or be priced out! I made her(wife) wait 36 months, and even though we still have some down side (I feel), this area was not nearly as bubbly as most. Most of Albuquerque(NM for that matter) is supported by federal jobs, and has mild weather sooo....though nervous it's a great house with not too much downside (trying to convince myself).
January 1, 2009 12:40 PM
Sorry dude, you didn't get a great deal. So many people think they got a great deal simply because they are getting 50% to 60% off from prices at their peak.
This was a historical bubble and the greatest financial bubble in the history of finance! And you think it is over and you got a great deal.
Investors, be patient. Be patient. It will only make sense to buy when property values come back in line with the rent to own ratio and income to property value ratio. Until then, it won't make sense to buy.
Oh, yeah, New Mexico is so different. I have relatives who live in New Jersey, Florida, California, and North Carolina. You what every one of them said of this real estate crash, "oh, we are different from the other places".
Nope, way to many ARMs to reset in 2009. Way too many layoffs in 2008, more coming in 2009. These things take a while to effect the housing market.
No rush, in the best markets prices will stay flat for years, in the other markets, prices will continue a slow decline for years and years. 10 years from now prices will be no higher than they are now.
And I agree, the guy in NM did not get a deal. 2 years from now he would get that $380,000 house for $280,000.
"I was talking to some realtors...and they said that some people were coming in..."
Is this NBC or Lifetime?
My rent still is $500-$800/mo cheaper than owning my home (depending on how you slice), even after home has dropped 30%. Rent: $1400; price drop $500k to $350k. At $300k this house (30yr. on $240k at 5%) is still more $ than renting in a flat (or worse) market, and everyone expects further correction and overshoot ahead, anyway.
As far as the Albuquerque home buyer, You still bought at peak. Albuquerque is just now starting it's downfall. It's always been 1-2 years behind in all up's and downs. Unfortunatly it will fall more. Realtors in the New Mexico area are clueless to what a crash really is, stick them in Nevada for a year and see the attitude change.
uhhhh hate to say this but sacramento is on fire. At least below 250k. Funny they are all going 7 day close as is all cash. Once again the first time buyer cant compete. And I know unemployment is rampant in the area. We have lost in the last 6 months countless real estate, bank, mortgage and auto jobs. We have lost TJIF (wahhHh). Mervins, Linens and things, KB toys and other big name places. And we have a paltry home loan for 135K, but everything in that range is still a complete dump the bank wont approve OR its hitting the mls pending. Is that even legal? Oh and GOOD LUCK gettind something remptely close to a decent school! I mean we are looking at 3br 1ba 1100sf dumpers and still no go. Get this I wrote a letter to complain to Ahr~nold about the bailouts and his actions that have again set the investors as a step above the first time buyer. I got down and dirty. A well written letter sure to invoke tears. I get back the generic home debter consolation letter. WTF!!?
Not looking yet. Still observing. Coastal San Diego pricing is still a bit sticky. We're back to '03~'04 range.
Prices are down from the peak, but they're still well out of reach for the 'masses of buyers sitting on the fence'.
No hurries, no worries.
Metro New York is still bizarrely overpriced. I swear to God I wish I could upload some of the ads from my area for all of you to have a big laugh: the greedy sellers want $1.3M, $2.0M, and their granite kitchens Mcmansions have been sitting. So now they "haven't gotten their price", refuse to "give the house away", so lately they advertise "buy for $2 mil or rent for $2300". They'll even add "great investment opportunity". No joke. Who would ever buy with those numbers. And what stupid 6%'er would take that listing, they need to find someone as dumb as they are.
I thought metro NY would be lower by now, but the Wall Street money keeps it up, I think. With the no-questions-asked-bailout, I suspect they will stay artificially inflated for a while. So no, we will not consider trading up at this time.
" already bought a few months ago.For al you waiting I have some advice.do you know how many people are on the sidelines waiting for a bottom?Once the sheeple feel there is a bottom you are going to have a mad rush to buy.I like to buy weakness and not get too greedy.If an area is off 50% by waitng you are being greedy.If the house is worth it buy it. "
----------------------
Dude, YOU are in denial. There will never be a rush to buy... Do you live on the same planet as me?
Your point is just the opposite. There will be a mad rush to sell. That's the people that are WAITING on the sidelines. Get a clue.
Everybody who has not foreclosed, walked-away, or has gotten behind on their mortgage payments to get a better rate, will eventually try to sell their house when the "markets get better" or when one of the breadwinners or both loose their job. Some are just waiting for the "Spring Selling Season," for CLUELESS buyers like you.
Most people with houses know that they are stuck and will try to get out of it anyway they can when that "right time" comes...
In Portland, a house we lived in from 1990 multiplied by 4 times in 16 years. It is normal to double once in 15 years. According to zillow the current owner thinks the house is worth 100K more than when bought in 2006. NO,WE'RE NOT ANYWHERE NEAR A BOTTOM. That house is in an ordinary working class neighborhood, with some problem areas nearby...
Where have our ars** been?
Grandma PKK
Housing is toast across the nation.
Too many houses still, too many unemployed, too many people with cr*p wages and benefits.
As a home owner I'm sad to see something so basic as housing become such a mess.
We have a long way to go before the fundementals make sense for the average US tax-paying citizen again.
Sterling said:
"Your point is just the opposite. There will be a mad rush to sell. That's the people that are WAITING on the sidelines. Get a clue."
Have to agree. There's a home up the road from me where the owners are asking $900K for a catalogue modular 3-bed thing on .4 acre. sat on the market for a few months, no sale. Think they would have gotten a hint, huh? Nope: they are pissed, not chastened. Pulled it off the listings until 'the market improves'.
There's a disgusting local Realtor who recently published a half page ad saying 'How do you know we haven't already reached bottom??!" and says the 'all the bargains have already flown off the market!' . Yeah sure lady. But the delusional, or greedy, or desperate sellers cling to this bullshit: you know, if there's different opinions out there, typically folks will gravitate to what they want to hear.
For an investment or for a way of life?
As an investment it sucks because it is so illiquid.
As a way of life it is foolish because it is still cheaper to rent the same lifestyle.
Own commodities or companies that produce commodities.
.
I'm looking
but that's all.
.
The debt-to-GDP ratio is not high???
I thought debt was, in fact, used to pump up the GDP.
Live in the NY metro area. We were late to the crash. The layoffs on Wall St. will make us one of last to start a recovery.
.
For crying out loud
Don't ask a Realtor!
What do you think their going to tell you? Now is 'not' a good time!
I have been told,
"Now is the time",
We hit bottom,
better buy now before your priced out,
yes things are moving,
real estate only goes up,
this is the best deal you can get!
The seller is in no hurry"
Another party is interested in this property, so you better hurry!
yada yada
.
i remember that albq house at 80,000 new on Coors jnust 8 ears back and no wage increases and cash has earned an average 3 percent? yet your housing that my 3 percent money was loaned to you as 80,000? is now ? and you better not need another loan but uncle sams money making you housing welfare ? communist?????????/
Whenever pple ask me my opinion about the market, I have tell them this;
"The dream dies hard".
What dream, they ask.
It's different here.
This is our retirement.
Real estate only goes up.
Low interest rates make these prices reasonable.
Jobs are not a problem here - there are lots of Govt jobs here.
The Boomers all retire soon - they'll need to replace them with younger workers and the retirees will need smaller homes on golf courses and lakes.
There has never been a real depression in Post War America. There won't be one now.
Everyone wants to move here.
They're not making anymore land.
Add more if you'd like....
I wonder if condos will become more attractive as families lose houses and still can't afford them. Condo's ... property owners here in Tucson are still trying to sell all manner of them, especially the 50 year old "conversions". I ponder it sometimes, but to me it's the worst deal going - no freedom, lots of rules, all the costs, hard to build equity, many times not allowed to rent them out ... and then you're stuck living very close to someone you may not like. I wonder if you could find yourself living next to whole families in condos, maybe a few pitbulls for good measure, or would that never allowed be allowed by the CC&R?
every time one of the $300,000 phoenix houses come up for sale at $30,000 it sell as quick as can be and the next week is set up as flipper loot again? at 170,000,,,,,,,,,,,, yet i remember them at 54,000
There has never been a better time than NOW to buy a house -- PLEASE!
You heard it from old gloomy Gus Prof. Shiller! How about the ringing tone of confidence in his voice, eh?!? And that vote of confidence has been endorsed by CNBC, which has never been wrong in all the times it said the housing market is at the bottom!*
Prof. Shiller has told you that housing prices had their steepest ever drop in 2008, and everyone knows when something is going down FAST, it's a fact of nature that it STOPS DOING THAT and starts going up! Hasn't that happened every time your car started skidding down an ice-covered hill toward a busy intersection -- suddenly it magically goes in the direction you want it to!
Why, prices are where they were in 1999, which was in another century! It would violate the laws of physics for prices to go any lower -- you cannot go backwards in time! Homes simply cannot sell for what they were in 1998, or 1992, because people were riding dinosaurs then and spending coins made of giant rock wheels! Civilized life would not be possible if homes sold at the levels they did in such primitive years, so buy now!
After all, you're not going to lose your job! There will be no more big business failures in 2009 -- you heard it right there on CNBC!** There will also be no unexpected wars, hurricanes, currency fluctuations or other tumultuous events that could affect the housing market! We're done with that!
Remember, the low, low interest rates made available to big banks by the Federal Reserve will be passed along in low, low interest rates for home buyers! Any day now! By spring at the latest! OK, summer! Just get an ARM so you can automatically be taken advantage of by the new rates that are coming your way!
Yes, now is the best time to buy a house because we in the real estate industry have SO much time to devote to YOU, the potential buyer! No more arriving 45 minutes late to a showing; no more taking three other phone calls in the middle of a conversation with you; no more acting as if we're doing you a favor by showing you houses that are $50,000 more than you wanted to spend! We're sorry for that, we really, really are!
And so are our friends at the home loan finance office! They promise to clean off the chair in front of their desk that's gotten dusty because no one's sat in it for two weeks! They won't rush you through the paperwork! They don't have anything else to do, after all! And if you're a special customer, the good-looking secretary we kept on after firing the other three when business got slow, just MIGHT have something to sweeten the deal for you!**
So think about it, but don't think too long! We of the real estate industry say you should never think too long about buying a house, because the best time is NOW! Please?!?
* Technically speaking, the market IS at the bottom for that split-second in which the words were being uttered. For clarifiction of this concept, see Bill Clinton's definition of what the meaning of "is" is.
** Provided the boss is not banging her at the time.
Also they (condos) still seem to be extremely overpriced here. On the other hand, rents seem to be extremely high too, especially in a town that just seems to get uglier, where low wages are the norm for a good portion of the population, and crime is definitely on the increase.
RE dead cat bounce may be in progress. More bad news for RE by autumn as bailouts and massive spending/printing spur unintended consequences.
I certainly am watching, but prices have reached late 03 or early 04 levels here in the DC area.
Why buy when the prices are dropping? Every day you lose money. RE prices have a lot of inertia so stopping the overall decline will take time.
F*ck the REIC!
It seems that Robert Shiller is afraid of an overshoot correction. Why would anyone be against low housing prices? Wouldn't buyers want to buy below historical average price? Wouldn't the economy be better off if housing cost is at its historical lows compare to income?
An overshoot or over correction is a good thing!
Imagine on average we pay ~15% of income to service our houses/rental! Just imagine what we can do with the money we save!
Not yet. More deflation to come, and most sellers are in denial Re: what their home is now worth.
Plus, now is not the time to add more debt.
i remember that albq house at 80,000 new on Coors jnust 8 ears back and no wage increases and cash has earned an average 3 percent? yet your housing that my 3 percent money was loaned to you as 80,000? is now ? and you better not need another loan but uncle sams money making you housing welfare ? communist?????????/
What?? The house is in Los Lunas not the crap near coors blvd, anyway what are you trying to say? Folks you cannot build an ADOBE structure even with illegal labor at anywhere near $100/sf
January 1, 2009 12:40 PM
Sorry dude, you didn't get a great deal
====================================
So true.
It's like when you start in 1999 with a house that's worth $100,000. It goes up in "value" $100,000/yr every year, for 9 years. Then on the tenth year, 2009, the selling price drops and it gets put on the market for $499,999, and there is a bidding war with everyone trying to snatch up this "bargain" because the seller has cut the asking price in half on a house that should realistically be priced at $139,000 to begin with. Some bargain!
Oh, I also had to gag when that yo-yo said that he had "talked to some realtors." That bimbo actually had the guts to have him on with Shiller?
The out of state flipper across the street from me finally unloadeds his millstone Monday. He was trying to get 350-400% mark up on a property he owned for 5 years. I understand that with all settlement costs, that HE had to pay to get a buyer, he actually went in the hole. He's young (early 30's) and this will be a good learning lesson! The buyer's, a young couple with their first child, will also get a learning lesson with
1. 1-3 hour commute, one way. They both work in Balt/DC area.
2.Even being able to get to work. PA does NOT take care of its reads in winter time as opposed to Maryland.
3.The property tax bill on their "bargain.".
At a New Years Eve party I was talking to a clerk in the Recorder of Deeds office and he said that was the one thing that always told him whether buyers had done their home-buying "homework". If the average buyer even inquired about the property tax hit, it was rare. The dollar amounts get lost in the euphoria of purchase and shuffle of paperwork.It's only when April rolls around that the buyers find out that they should
have looked and bought elsewhere.
"Plus, now is not the time to add more debt."
Good point, lady Di.
Also, to anon in PHX. That is exactly what is happening - still trying to flip. I can't Believe some of the low prices in PHX. I met a guy whose brother just paid 50 percent off and is just holding it. Lives in FL. But you wonder is that really going to work out? Who will buy or rent these? What are these neighborhoods like? There is an awful lot of crime in southern AZ lately.
Maybe snowbirds and Californians will always come?
Not buying until 2011 at earliest. A few reasons
1) I live in the boston area and we haven't fallen as much as others. Yet
2) The next mortgage disaster: alt-a and option arms
3) Prices still out of whack with incomes and rents
Also, I should point out my interpretation of what Shiller said. He said that in some areas homes are not overpriced anymore. That only means that after the overshoot to the downside, in 10 or 20 years, in some areas, price levels will return to where they are now.
Although I think the guy in NM could have had a better deal if he had waited, $400k doesn't seem so bad for 4k square feet, 1.5 acres and a 4-car garage. Around boston, for $400k, you'd get at most a 1/10 acre with a 1800 square feet split-level about an hour away from downtown boston.
About the house in the ABQ area... Los Lunas is a tiny hick town about 30 miles from ABQ, hardly the same things as being in the city. Even with the development in the last ten years, there is no way that house is worht even half of what the guy paid. I like NM, but Los Lunas is like Elk Grove here in Sac'to (grew too fast, will fall hard)
Overshooting would be 2x income (avg). We're not even close to a bottom. Expect another 30% drop.
Happy New Year, Keith, and Soot & Ashes.
Your blog is very depressing. Bad news stories followed by scandals and economic collapse. Yet you barely scrath the surface of our corrupt leadership and society.
Why do you have to be so damn right?
All of the recent unemployment needs a few months before people are forced out of their homes. There are going to be huge amounts of foreclosures in the first half of 2009.
After the Option Arms reset over the next couple of years, I believe that the real estate market (residential) will remain flat for another 10 years. The only excpetion I can think of is if we go into hyper-inflation.
i won't even consider looking until this summer, and then we probably won't do it.
I DO look, I admit it, but still finding sellers' expectations too rich to make sense with the local job market.
If most households (with all adults working, an increasingly endangered concept) can bring in $20,000 to $50,000 a year, then housing can only cost $50,000 to $150,000. Nothing else adds up.
We all know what happened when bankers started doing the math more "creatively."
Don't we?
Let's also not lose sight of rent multiples as an excellent source of factual market feedback. Apartments rent for $500 to $1200 a month? House prices over $200K are therefore STILL stuck way off in Dreamland.
"Don't ask a Realtor!"
I know, ask a real estate attorney instead, I know one in C. Texas and he said we're gonna get the disaster everyone else has been getting......soon.
Maybe it's because they are working on contracts all day long and see the future before J-6 pack does. I just hope J-zinfandel doesn't loose her mind over this, they really are very pleasant when fantasy is soooo nice to them.
Here's a can of beens, bitch, now will you give me some love?
In Las Vegas, I may start snooping around. Won't put a single penny down on anything till the Option Arm wave has come ashore.
Just received a private invitation from The Donald to attend his Become a Billionaire seminar. May just pack my lunchpail and go. I'm just so honored. Must be on a loser list somewhere.
Happy New Year S&A!
Nope, not buying.
Been sitting on this CD for so long, waiting for the right time to buy, don't know if I even want to bother anymore. Seems like a lot of trouble. The CD goes up a little every month. Received a lot of outside grief for that decision but I just let it roll, few bucks here, few bucks there, all incoming.
I figure, come late '09 I may put an offer on something that adds up. If nothing adds up, I'll wait till late '10. Only going to be a lookie-loo the rest of the time.
Can't wait till those Option Arms start rotting; having shown up on the lenders' ledgers as "income" over the last 5 years, oh my, oh my. It's gonna manifest somehow, somewhere. The $700 Billion may already be gone.
Is it a good time to buy, because there are bargain out there.
It depends on what you considered a bargain.
The high end homes which were financial by Alt-A, Option Arms, NINJA loans with loan limits of above $417,000 have not dropped more then 5% to 10% and Shiller knows this.
Only low end homes which were financial by subprime loans with loan limits of $219,000 to $417,000 took the 30%, 40%, and 50% percent dropped last year.
These Alt-A, Option Arm, and NINJA won't start to recast until the middle of this years and the bulk of these loan won't recast until 2010 to 2011.
I've been looking. Out here (rural Alabama) you can still buy an honest 3 br. 2.5 ba. on acreage for 120k. It beats rent by about 40% per month. We did not have much speculation out here driving up prices.
"So, anyone looking yet?"
Yeah, I'm looking for houses for sale. It's pure comedy. The more homes I see for sale and the more people losing money the funnier.
No, God no, we have not hit the bottom yet. Sellers are still asking way too much for their properties. I looked on Craigslist and here in Chicago in a nice decent part of the city, people still want $700,000 for a brick Georgian (about 1600 square feet). Another wanted to sell his bungalow (about 2000 square feet) for a bargain basement price of $585,000.
Now, because the media has reported (especially CNBC and Fox Business News) that "now is a fantastic time to buy", some idiots/suckers are actually buying at these insane levels. For example, a 2000 square foot condo with one outdoor parking spot sold for $649,000. Imagine, you pay all of that money and you don't even get a freaking garage parking spot! I talked to the couple and they thought they got one hell of a bargain because the original listing price was for $1,150,000!
NO WE ARE NO WHERE NEAR THE BOTTOM. Wait till the Option ARM and interest only loans come due. Also, in many high priced areas of the city, people are no longer paying their mortgages (my cousin who works for a big bank is the source) because they feel that sooner or later the government will bail them out by reducing their principal or giving a favorable interest rate!
No we are not near the bottom. Here is a sample of some of the real estate advertisements from the Sunday issue of the real estate section from the Chicago Tribune. There are developers who are still trying to sell a 1200 square foot condo (the parking spot is an extra $35,000 to $60,000!). If you want a three bedroom condo that is about 2000 to 2400 square feet, then you better shell out $900,000 to $1.3M. I saw a lot of ads in which the developer is offering a 3.5% to 4.5% interest rates fixed for 30 years. I called them up and asked if the price can be lowered and the young woman/agent told me "well why would you want a lower price when you get such a low interest rate?"
Unbelievable, un-freakin-believable!!!
Yo sac'to Los Lunas about 17 mi to ABQ-a suburb, and the raw land in the "greenbelt" is running more than 150k/acre. Its green with cottonwood trees, alfalfa fields and chili farms. backwoods my arse!
But SUZANNE researched it!!!!!!!
We can do this.
This is special.
Going over to you tube, Happy New Year.
I have a flight scheduled to Naples on 1/25 to look at houses. Yes, when a 3 bedroom condo on the golf course, 2300 sq feet costs $75K, it's time to buy. I saw a 3 bedroom house, 2 car garage with pool for $135K.
And because I'm not one of these idiots who borrowed during high inflation, I've got cash.
Isn't deflation wonderful?
why are there so many losers on this blog?Keep renting you pos shack and bitching how life has passed you buy.Once a loser always a loser.Most of you dont have the money or the balls to buy a house.
It seems to me that in Tucson the low end stuff (modified chicken shacks) has come down, the high end stuff not so much. I will wait. Not sure I even want to live here anyway. Don't care for the 6 mos. over 100 degrees and the burglaries and gangbang style that are all the rage.
Where is that Nirvana where you can deal with the weather, there is some nature around, you can have a small garden, the people are civilized and considerate, you can walk or bike ride to get what you need, (you can speak the language too), the houses are adequate, maybe small ones, with big porches and sidewalks out in front. Where you know and can talk to your neighbor, but nobody is too much into your business, and yet people help each other if necessary. Where you don't have to hear barking dogs and "How do you know MY kids did it?" Where you can go safely to a park. Where schools are good and libraries are thriving. Where the taxes aren't too high. Where it hasn't been overdeveloped but people still have jobs and commerce exists. Where there are services and a good hospital nearby, and you don't have to be a millionarie to live there -ha. Is it anywhere in the USA?
Dream on ... I guess it doesn't really exist. Some places do come close though. I am going to be investigating them.
So latest thought. We need urban renewal. We need neighborhoods with town centers and stores in them. Like a lot of small towns all together. We need smaller, newer, more efficient houses. But for it to work, we need ... I hate to say it.. MORALS, education, and maybe even a little more spirituality. And we can't be the tower of Babel. It is only practical!
It may be time to look and/or buy in some markets, but there are clearly markets -- most of them -- that are still overvalued.
In NYC, p;rices have been coming down but they need to come down another 30% based on the Case Shiller Index. The detailed CS Index release from October shows that in the mid-90's the rate of house price appreciation was around 3.5% to 3.75% per annum up to 1999. From 2000, the rate increased dramatically due to the Wall Street money from housing. If you apply a 3.75% rate from 1999 though 2008, the CS Index for the New York Metro area should be at 136. The October report shows it's currently at 190. The differential is about 30%.
I'm waiting. No need to rush in. The market has a ways to go down here and it will, by a substantial amount.
Having said that, I did see today a 900 square foot one bedroom condo (or co-op) in a doorman building on the upper east side in the 80's (nice area) for $640k. Honestly, this is probably the best deal I've seen to date. As a comparison, someone in my building in Manhattan put his one bedroom, 835 square foot unit on the market at $770k.
Looks like one owner has seen reality while another is still in delusion-ville.
With the economy imploding and the alt-a's and option arm's resetting late next year and going until 2012 i think we'll be seeing significantly more downside.
As a side note: don't listen to anything CNBC has to say about housing. They have been wrong the whole way through this crisis, starting with their not even recognizing it a couple of years ago. As far as FoxBiz is concerned, they are more balanced but lately they have taken the side of the realtwhores and are doing more cheerleading...so watch out for them too.
Housing is dead. It will never be back. It can keep falling, or it can stabilize, but who cares. The bubble won't return. The over-supply is sickening and that will prevent any meaningful increase in prices for years or decades.
"All of the recent unemployment needs a few months before people are forced out of their homes..."
Layoffs are just getting started. Mr. Obama's housewarming gift will be the first monthly employment report with over a million job losses. Most people are unwilling to take on a $20,000 car loan today. It would take a lot courage to take on a mortgage. And there will be a lot more bank owned houses available in 2010.
"Shiller's saying they're not overvalued anymore."
I watched the whole thing, but I must've missed that part. Jeez Keith, you don't even get housing right any more.
BTW did I just describe Lake Woebegone?? OMG!!!
In Wednesday's Seattle newspaper there was an article saying that housing prices were back at 2006 levels.
Uh...sorry, but 'Emerald City' real estate prices still have a looooong way to fall.
That hissing sound you hear in the background is the housing prices deflating.
-Mammoth
You guys are very contradictory. Whenever Keith makes a post about Inflation, 90% of you agree that there will be massive inflation for various reasons. If this is the case, it make perfect sense to acquire debt at a low fixed interest rate.
But then, when Keith asks if it's time to buy, 90% of you say that you'd rather wait until 2012, or until things go down in price another 20%.
If you're looking at a property now at $300K, hoping it will drop to $240K in the next 2 years, you have to wonder what the interest rates will be like then. Based on what I've seen, and what I understand of economics, they are very likely to go up. So that $300K place at 5.75% = $1750/month
but wait for $240K @ 8% = $1760/month.
(At least you get to deduct more interest from your taxes).
For me, these are conservative numbers. As you know the government is trying everything in its power to stoke inflation. I think that they will overcorrect. Badly.
And the last point is kinda sentimental, at least for me. When renting, you don't care at all for the place, but when you own, it takes on a whole different meaning.
Patrat asks "Where can you go?"
Where I live:
There's a grocery store on the corner, two hotels across the street, an erotic shop across from the grocery store, an Italian place down the street from that, a department store ,subway, tram,bus terminal, 3 massive public parks all connected by bike paths, hospital, lots of private practices, car factory, 3 bathing facilities with saunas and much more. And that's just in my corner of this city!
It's also affordable when you don't waste money on a car.
Sadly it's not in America.
http://www.realtor.com/search/listingdetail.aspx?sby=1&pg=8&srcnt=257&sid=6a778a8c431c4a55903285552b7ab6d0&fhcnt=8&loc=calera%2c+al+35040&usrloc=calera%2c+al+35040&typ=1&fhpg=2&lid=1102265391&lsn=77
Lots of these houses in Alabama pretty cheap, but they are talking about a %322 increase in sewer bill.
Tell me again why anyone would want to buy a house in this climate?
You "own" your house but you always and forever have to pay taxes to a township or city which may or may not be bankrupt. Your taxes will increase forever. They will never go down and prop 13 type arrangements will soon be eliminated.
Tell me again why owning is so much better than renting.
I can leave when I want as a renter, I don't have to worry about upkeep, taxes, repairs, yardwork.
I'm not stressing about making mortgage payments and if my rent goes up, I can simply move to another place for market price.
I continue to watch but for entertainment purposes only. In St. Louis, there are some properties that I personally have seen for sale for two years and the prices have been lowered only by small cuts. There are two factors that will continue to drive prices lower here:
Continued weakness in employment/stagnant wages.
A return to regular standards in mortgage lending - mind you, I am not saying "OMG the bar is set oh so high to qualify for a mortgage standards". Just the usual tried and true standards that were the norm 15 years ago.
Most of these cry babies with a sob story for every unpaid medical bill or large cumulative balance of credit cards or multiple mortgages racked up on "investment rental property" are going to be squealing like pigs with a return to normal "credit, character, collateral, capacity standards" applied to their applications.
Smug Bastard
Hey Patrat -- that place you're wishing for? It actualy does exist. It's in a southern state, a city named Melbourne. Except it's in the state of Victoria, not Florida.
Seattle won't be "ripe" for "browsing" until at least late 2010. We are lagging the rest of the country. Potential MS and Boeing layoffs will devastate this area.
Also, CA still has a long way to go as housing prices are still way out of whack with salaries.
In general, the areas with the biggest bubbles will be the last places to reach bottom
saw a tv special about stockton cal. houses auctioning off 3 bd 3bth 2cg at 54,000 near farm foods?...what insanity could propel this new yorker to buy an apt in nyc for anything higher?
Has Shiller been bought off? Come to southern California -- 2000 price levels my ass!
Also, the crap that other countries continue to buy our worthless paper is not something to be proud of.
this "rich" one may be gonna buy a "crap shack" for 35,000 just to hedge my bets.........
Great stuff Keith,
I'm just saying one word here Keith. OVERSHOOT.
Dny
Hey Seattlemoose,
You forgot and left one out.
Starbucks will also have a nice round of layoffs in the next month or two.
Good!
My vanpool drives past their headquarters every morning and we're all F'ng tired of all those idiots who pass us and then slam on their brakes to stop in front of us to pull into Starbucks HQ.
These a-holes are always driving either BMWs, Volvos, Acuras, or some other pretentious SUV wanna-be like these.
A socially-conscious company? Give me a break! If they are truly sincere, then why aren't they carpooling, using public transportation, or driving a '60's VW?
Fvcktards!
-Mammoth
For every action (debt fueled housing euphoria), there will be an equal and opposite reaction (debt and housing ruvulsion).
Trust me I know, I lost money in a bubble once long ago...
- Newton
New York City, still finding apartments at $1,300psf. Lots of lofts around $2mil which was supported by Wall Street. Suspect they will drop by 50% and if jumbo mortgage rates come down from 7.4% to 5.4% things will get reasonable again. for now SELL.
Shiller is being dishonest and it's funny how none of you have caught on to it.
If you do not believe that the housing bubble was nationwide, check out the Bismarck Tribune this morning www.bismarcktribune.com for the link. See the story about the rise in home prices that exceeded the rise in wages - in Bismarck, North Dakota - to use a Seth and Amy phrase, in Bismarck... North Dakota... Really??? Wow! Really??? By the way, this morning it is a balmy 9 degrees there. Housing Bubble in Frostbite Falls.... Really???!!!???
Smug Bastard
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