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Are today's homebuyers tomorrow's bagholders?
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2014 Jul 17, 12:13am 1,486 views 7 comments
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hanera
2014 Jul 18, 5:10pm
If you buy now, most likely. Contrary to some bulls here, I believe you can get cheaper prices in 2015. Good to revisit this thread next year.
If you buy now, most likely. Contrary to some bulls here, I believe you can get cheaper prices in 2015. Good to revisit this thread next year.
Maybe, but you better have your timing right. Otherwise, you will end up like Patrick who in 2003 told everyone to sit back and wait for that 600K house to be 300K before they buy
http://web.archive.org/web/20030804110639/http://patrick.net/housing/crash.html
Granted, prices in some areas (not on the peninsula) prices did crash 50% but they had 2-3 years more of rising prices such that the vast majority of 2003 waiters were sorely mistaken as its now 11 years later, and (at best) prices crashed back down to the same 2003 prices they passed on years earlier.
Thus, if people who are expecting a decent crash don't have their timing right, I think the future of the patnet bears will be something like this:
EVENT & PATNET COMMENT
2012 Prices 500K Don't buy now, prices are gonna CRASH!
2013 Prices 515K Don't buy now, prices are gonna CRASH!
2014 Prices 530K Don't buy now, prices are gonna CRASH!
2015 Prices 560K Don't buy now, prices are gonna CRASH!
2016 Prices 600K Don't buy now, prices are gonna CRASH!
2017 Prices 640K Don't buy now, prices are gonna CRASH!
2018 Prices 700K Don't buy now, prices are gonna CRASH!
2019 Prices 740K Don't buy now, prices are gonna CRASH!
2020 Prices 570K SEE I TOLD YOU SO!!!!!!!!!
John Bailo
2014 Jul 19, 2:23am
I was looking at a house that was selling for a certain price, but it seemed way too high. (Of course they are all "selling like hotcakes").
I told my realtor I wanted to lowball it because I didn't think it was much of a value.
She said that if I did that they would be "insulted" and not deal with me. She said she would use a computer program to perform a competitive market analysis to see what the fair market value is based on other sales.
It came back with an average price that was over 10% lower, and a minimum price that was 20% lower. She said I should start bidding at the average price. I asked why wouldn't I start at the minimum price. She brushed me off with a "whatever", and I decided to keep looking.
Well, wouldn't you know that the other day I get a listing in email from her and it's that same house...with the listed price lowered by about 12%!
I think there's a folie à deux going on in housing and if more people questioned these high valuations the whole house of cards might fall - to fair valuations!
Strategist
2014 Jul 19, 4:40am
2019 Prices 740K Don't buy now, prices are gonna CRASH!
2020 Prices 570K SEE I TOLD YOU SO!!!!!!!!!
Uh...you're off a wee bit.
2020 Prices 730K SEE I TOLD YOU SO!!!!!!!!!
John Bailo
2014 Jul 19, 6:37am
it's business.
It's not business, it's anti-business...properties aren't selling at the elevated prices except to the fewer and fewer people (with cash) that are price insensitive.
These houses are like ageing bachelorettes holding out for a tuxedoed Mr. Right to come along with a million dollars and perfect smile. It's time to give it up to the middle aged dude with a steady paycheck...for a reasonable return.
http://ochousingnews.com/blog/todays-homebuyers-tomorrows-bagholders/
Today’s high home valuations are only justified by record low interest rates. Will today’s buyers become bagholders when interest rates rise?
Will rising mortgage rates cause house prices to crash again? It’s a valid question, and a valid concern for today’s homebuyers. Nobody wants to be an underwater bagholder trapped in a debtor’s prison awaiting lender approval of a sale to move on with their life. At a minimum, the prospect of rising rates curbing appreciation should temper buyer’s enthusiasm toward making a fortune on home-price appreciation.
How likely is it that rising mortgage rates will cause house prices to tumble? Let’s look at the possible scenarios.
We’ve already seen that higher house prices caused a decline in sales volumes this year. The lack of affordability products is preventing lenders from inflating another housing bubble, but it’s also pricing out marginal buyers, and with weak job and wage growth, there aren’t enough buyers to sustain last year’s sales volumes. This has also kept mortgage rates low as lenders keep the cost of borrowing down to facilitate any sales at all.
Source: http://ochousingnews.com/blog/todays-homebuyers-tomorrows-bagholders/#ixzz37jdGFkE8
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