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What happens to house prices in the not so bubbley parts of Merica?
invite response
2009 Nov 16, 11:16am 3,182 views 8 comments
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Everyone here thinks prices will drop like a rock at some point. Further than they already have, by large margins.
Also it appears that everyone believes the government is artificially holding prices up and trying to increase them to get things going again.
My take is that the government is doing everything it can to slow the drop in prices. Not stop it, not push it up, but just slow the process to allow people to become used to new housing prices. To allow everyone enough time to get used to their new situations and hopefully to prevent a huge sell off, that could artificially push prices well below where they reasonably should be, which could have a new set of adverse effects on the economy.
The saying in stocks, is to never catch the falling knife. Wait until the rebound starts, don't try and estimate the bottom.
When a business is going into bankruptcy and coming out you can make a killing or lose it all, the best time to buy is when it comes out and starts heading up again. You lose some of the massive gains, but lose much of the risk and still yield often better than average results.
The general theme is wait until you see a steady increase in values everywhere and know the bottom has been found, tested, retested, and appreciation has started again. We're still falling and testing the boundaries. Wait until we'rve seen a good solid year (or two) of gains before investing.
If the government has succeeded in finding a housing bottom, we'll see more stable prices next year and hopefully the next year some appreciation. If it hasn't been found, you've saved yourself a lot of heartache.
Yea, right. If the government HAS succeeded in artificially creating a "bottom," then we'll see more of the same: people paying way too much for a house and having a false sense of "wealth" so that they can extract this debt to get ever more into debt! Great formula for success and happiness.
pkowen
2009 Nov 17, 6:50am
The only place I can name where we've seen a bottom is possibly Detroit. But then, I suppose those $50,000 houses could go to $0.
Why would non-bubble areas suddenly become bubble areas?
Prices in those areas will either go up very slightly or go down very slightly over the long term. That's what a rational, stable housing market should look like. Homes should not swing like the stock market -- it's horrible for societal stability.
Why would non-bubble areas suddenly become bubble areas?
Prices in those areas will either go up very slightly or go down very slightly over the long term. That’s what a rational, stable housing market should look like. Homes should not swing like the stock market — it’s horrible for societal stability.
there is more and more building going on, and people are buying at what sound like inflated prices to me
we have jobs and a solid economy
8k free money
influx of new money to the area, seems like there's been more and more out of state plates around, and in many of these fancy new developements i see many new transplants
maybe bubble is the wrong word but the environment our economy is in and the actions of the gov't scare me that prices are going to actually rise here rather then fall,,,,,it's like we have to play catch up to the bubble war zones rather then let everything fall and overshoot on the downside :). devalued USD's don't help either
4X
2009 Nov 18, 2:50am
So you expect housing to continue it slide for the next 2 years....I was thinking the same thing.
I passed this post on to my wife, who has my **** in a chokehold in attempt to force me to buy our first home together. Apparently, we have 2 kids that need a backyard to play in.
dbdude1010
2009 Nov 18, 9:32am
I passed this post on to my wife, who has my **** in a chokehold in attempt to force me to buy our first home together. Apparently, we have 2 kids that need a backyard to play in.
@4X
Same thing here. We have two kids and another on the way. After selling our house in 2007, the wife pressured me for a year to buy the next one. She is now thanking me for standing my ground and not buying another. Our kids play in the backyard of our rental house...they don't know or care that the back yard is rented.
I'm waiting for house prices to at least revert back to the mean household income/price ratio, but thinking they will even go below that, if the past is any indication.
4X
2009 Nov 18, 2:35pm
Exactly, or at least to where they would be with current inflation levels, 3 times income and all those smart rules Patrick has posted.
I have been a reader of patrick.net for years, and wonder what the expectations are for house prices in the more conservative towns, that didn't participate in bubble mania so much. I bought around the same time that the credit rug was being yanked out from under us all, late summer '07. I know, terrible timing, months post peak. However, i was renting this place from an over leveraged landlord who was trying to save his financial self. The numbers worked for me and i guess that armed with patrick.net info, i might have scared him a bit into taking my offer. He listed it for what he figured was 'priced to sell', around 10% less then the comps my realtor friend pulled for this zip. Never once did he ask me to tidy the place up at all, nor did he do anything himself to prepare the property for sale. I really liked where i was at and the cheap rent, so i let the place go somewhat so to discourage any buyers. Amazingly the listing agent didn't seem to mind showing potential buyers a messy house with an overgrown landscape. They dropped the price twice in less then two months, and when i hadn't seen anyone come to look for a couple weeks, i approached him with the 'how much do you need to get out of this' proposition. Oddly it was exactly 3x my income and he seemed happy to be relieved of his debt, and i cautiously entered house debtorship.
So what i'm wondering is, will the gov't reactions to this pickle we're in, cause house prices in non bubble areas to rise further, or is everything everywhere still going to fall? It seems like they are determined to make this the floor for house prices, and they wouldn't think twice about squashing us all in the process. Unemployment is inescapable, but we still have real jobs here, manufacturing jobs, and while we passed by on the earlier growth mania, business seems to be booming and my once quiet town is now looking like the rest of Sprawlville. I have noticed an obscene amount of FSBO's where the sellers use the type of FOR SALE signs you would seen on a91 Honda, and if that's the case nationwide many of the housing bears on these blogs might be underestimating the kind of inventory that is out there. The reason i ask is because i'm deciding on where to go with my savings, i had always intended on playing landlord myself, and if the gov't is giving away free money, risk free, at very low interest rates i am ready to start shopping for a rental. If you can't beat um, join um?
#housing