Housing market, esp. SoCal?

[LiveFree79]

What do you guys feel the future of housing prices will be a year out? Specifically CA/SoCal? I'm renting a townhome right now. My landlords are upside down and need to sell. They are offering us a no money down type of deal. I told my fiance that the market will continue to go down. And we'd be better off waiting another 6mos-1 year. What should we think about when deciding what to do? I realize inflation is going to get much worse. We both have secure jobs so that's not an issue. Property taxes might go up? We've been looking for over a year. And thankfully ever few months up to now we said well let's just wait a few more months and see what happens. If we would have bought last year we would have already lost a lot in equity. Don't want to be in that scenario if we buy too soon again.

 

[heavenlyboy34]

What do you guys feel the future of housing prices will be a year out? Specifically CA/SoCal? I'm renting a townhome right now. My landlords are upside down and need to sell. They are offering us a no money down type of deal. I told my fiance that the market will continue to go down. And we'd be better off waiting another 6mos-1 year. What should we think about when deciding what to do? I realize inflation is going to get much worse. We both have secure jobs so that's not an issue. Property taxes might go up? We've been looking for over a year. And thankfully ever few months up to now we said well let's just wait a few more months and see what happens. If we would have bought last year we would have already lost a lot in equity. Don't want to be in that scenario if we buy too soon again.

Housing is really bad here in AZ. I expect values to drop over the next year as the economy worsens and people can no longer get easy loans to "buy" more house than they can actually afford. It will be good for "real estate investors" (usually out of state folks taking advantage of the mess).

Just my 2 cents.

 

[Brian4Liberty]

What do you guys feel the future of housing prices will be a year out? Specifically CA/SoCal? I'm renting a townhome right now. My landlords are upside down and need to sell. They are offering us a no money down type of deal. I told my fiance that the market will continue to go down. And we'd be better off waiting another 6mos-1 year. What should we think about when deciding what to do? I realize inflation is going to get much worse. We both have secure jobs so that's not an issue. Property taxes might go up? We've been looking for over a year. And thankfully ever few months up to now we said well let's just wait a few more months and see what happens. If we would have bought last year we would have already lost a lot in equity. Don't want to be in that scenario if we buy too soon again.

Bottoms usually last for a while. We are still in a downward trend. Could take several years just to hit bottom...

 

[smithtg]

What do you guys feel the future of housing prices will be a year out? Specifically CA/SoCal? I'm renting a townhome right now. My landlords are upside down and need to sell. They are offering us a no money down type of deal. I told my fiance that the market will continue to go down. And we'd be better off waiting another 6mos-1 year. What should we think about when deciding what to do? I realize inflation is going to get much worse. We both have secure jobs so that's not an issue. Property taxes might go up? We've been looking for over a year. And thankfully ever few months up to now we said well let's just wait a few more months and see what happens. If we would have bought last year we would have already lost a lot in equity. Don't want to be in that scenario if we buy too soon again.

there are MUCH cheaper places to live than SoCA. Im in Houston, but in most of texas you can buy a nice home for 70-100 per square foot. like 3000 sq ft for 250K. do a search on realtor.com if you dont believe me. Plenty of jobs here too. If you want the epitomy of the bubble stay where you are. If you want a semi (but not bullletproof) investment move to TX. You can lose 100K here too, but you could lose 300K there. Besides do you really want to eat ramen noodles for the rest of your life?

 

[nodope0695]

My first instinct would be to get the hell outta Southern California!

But I've heard the talking mouths on the radio saying that soon the prices on houses will go down if for no other reason than so the banks can get rid of them...also, the lowering of the prices would better reflect their true value, and not some inflated price like they have been. But thats only what I've hear...Damn it Jim, I'm an aviation electrician, not a slum lord!

 

[azminuteman]

Housing is really bad here in AZ. I expect values to drop over the next year as the economy worsens and people can no longer get easy loans to "buy" more house than they can actually afford. It will be good for "real estate investors" (usually out of state folks taking advantage of the mess).

Just my 2 cents.

Where in AZ is it bad for you? Prescott?
28 closed sales last week where I live, $500,000 median price.
That's a good trend.

 

[theoakman]

Where in AZ is it bad for you? Prescott?
28 closed sales last week where I live, $500,000 median price.
That's a good trend.

spare us the BS "my town is different" crap. Arizona real estate is down 20.8% for the year. That's the 2nd worst in the nation behind Las Vegas, which is down 22%.

http://money.cnn.com/2008/04/29/rea...fall_deepens/index.htm?postversion=2008042914

and that's real data based on EVERY house sale in the state the past year. But I agree, that's a good trend. Lower prices are better for the American people.

 

[LiveFree79]

there are MUCH cheaper places to live than SoCA. Im in Houston, but in most of texas you can buy a nice home for 70-100 per square foot. like 3000 sq ft for 250K. do a search on realtor.com if you dont believe me. Plenty of jobs here too. If you want the epitomy of the bubble stay where you are. If you want a semi (but not bullletproof) investment move to TX. You can lose 100K here too, but you could lose 300K there. Besides do you really want to eat ramen noodles for the rest of your life?

I'm in no position to move to another state right now. I make good money here in SoCal. Just started a new job as well. Friends are here now etc. I spent 7 years in CO before here. Tired of moving. But thanks for the reply. No offense either but the only place I really see myself living in Tx is Austin.

 

[smithtg]

I'm in no position to move to another state right now. I make good money here in SoCal. Just started a new job as well. Friends are here now etc. I spent 7 years in CO before here. Tired of moving. But thanks for the reply. No offense either but the only place I really see myself living in Tx is Austin.

austin - good town.

I fully respect your decsision esp. with just starting a new job, but in but really think how to define "good money" Think of you income as a % of your home value or house payment (inclu taxes). Since this is most peoples largest expense to me this is a reasonable measure of your ability to save for the future Everyone has other expenses, but to me most of the others 'normalize' out - like food, insurance, and even taxes to some degree. Of course i have seen west coasters move to TX and buy a huge house because 'thats what they would pay in CA" just to justify having something oversized. Stay the same size, pocket the difference....

 

[smithtg]

Where in AZ is it bad for you? Prescott?
28 closed sales last week where I live, $500,000 median price.
That's a good trend.

who pays a half million for a house anyway? What income level is that person at? 100K, 300K? 50K? This has always perplexed me.... and we wonder why the market demanded subprimes, ARMs and nobody in America saves a damn thing. I can see someone who "maybe" rolled that paper equity from their last overpriced home sale into another home, but why even do that? borrow, borrow, borrow...

 

[theoakman]

who pays a half million for a house anyway? What income level is that person at? 100K, 300K? 50K? This has always perplexed me.... and we wonder why the market demanded subprimes, ARMs and nobody in America saves a damn thing. I can see someone who "maybe" rolled that paper equity from their last overpriced home sale into another home, but why even do that? borrow, borrow, borrow...

answer: no one. That post was pure BS. Arizona's median prices are way down to almost reasonable levels. They had huge drops throughout the state. While the decline is huge, the bright side is, it may soon be a good time to pick up some real estate if you live in Arizona. With the giant drops and low interest rate, if you can lock up a home for 180k, like the article below says, and safely make payments for the next couple of years, you are in a good spot. 180k is affordable and once the massive inflation hits, you'll be paying off that mortgage with pocket change. That doesn't mean the prices won't decrease further in the next year. They probably will.

http://www.azcentral.com/arizonarepublic/business/articles/2008/10/29/20081029biz-catherine1029.html

For other states like NY/NJ, the real estate market has yet to see the huge price declines and they are coming. There's no point in diving into that market for a while. But people who claim that their real estate is holding up while their state is showing the largest declines in the nation are lala land.

 

[sdczen]

Don't buy right now unless you have an ample supply of money and want to hold onto the property for 30 years.

Property prices are still going down at a VERY steady rate. A bottom in housing prices will be somewhere close to where the prices were between the years of 1996 - 2000.

The old mortgage lending standards are coming back. That means you need a 20% down payment. Also, standard mortgage lending is: The home mortgage cannot exceed more than 4 times (4x) your yearly salary. Example: If you make 50K a year, you can afford a 200K mortgage (with 20% down). Also, remember if you have a lot of debt, that number goes down significantly. Your debt-to-income ratios have to be fairly low.

My 2c...

 

[smithtg]

Don't buy right now unless you have an ample supply of money and want to hold onto the property for 30 years.

Property prices are still going down at a VERY steady rate. A bottom in housing prices will be somewhere close to where the prices were between the years of 1996 - 2000.

The old mortgage lending standards are coming back. That means you need a 20% down payment. Also, standard mortgage lending is: The home mortgage cannot exceed more than 4 times (4x) your yearly salary. Example: If you make 50K a year, you can afford a 200K mortgage (with 20% down). Also, remember if you have a lot of debt, that number goes down significantly. Your debt-to-income ratios have to be fairly low.

My 2c...

yes the old lending standards at least somewhat made sense. The bank is still making money hand over fist, but at least it keeps home prices reasonable.

Good example is an in-law who got on a mumbo-jumbo loan that the payment about more or less doubled 3-4 years after they bought the home in 2000ish. What was sad was bro-in-law works in insurance and underwriting... kind of ironic
But when they first bought the thing, I said "no way they can afford that!" I had another friend "borrow" his down payment. Seriously, two loans, one for 80% (30 yr) the other for 20% (10 yr). He sold before the down cycle but still was upside down after living there three years.

 

[Zippyjuan]

I am in SoCal and think things will still go down from where they are here. The good thing about property taxes was Proposition 7 which limits increases in property taxes to no more than 2% a year (unless you sell the home- then its value is upped to the new selling price) so that will not increase much. If you go with another townhouse or a condo, you may have to pay homeowner's fees which should be included in your budget.

How long do you intend to live in the house? If you may move in say the next five years it would not be worth it to buy today- especially with the price differences between buying and renting. The longer you live in it- the more sense it makes.

But if you do have the money and find a place you like and can afford it may work to buy it now. You will be paying housing expenses anyways- whether you buy or continue to rent- so it may make sense to have that money going towards paying off a mortgage (and gaining some of the value of the house- an asset you can later sell if you have to) instead of paying someone else's mortgage and getting nothing (beyond a roof over your head) for it.

 

[azminuteman]

answer: no one. That post was pure BS. Arizona's median prices are way down to almost reasonable levels. They had huge drops throughout the state. While the decline is huge, the bright side is, it may soon be a good time to pick up some real estate if you live in Arizona. With the giant drops and low interest rate, if you can lock up a home for 180k, like the article below says, and safely make payments for the next couple of years, you are in a good spot. 180k is affordable and once the massive inflation hits, you'll be paying off that mortgage with pocket change. That doesn't mean the prices won't decrease further in the next year. They probably will.

http://www.azcentral.com/arizonarepublic/business/articles/2008/10/29/20081029biz-catherine1029.html

For other states like NY/NJ, the real estate market has yet to see the huge price declines and they are coming. There's no point in diving into that market for a while. But people who claim that their real estate is holding up while their state is showing the largest declines in the nation are lala land.

From your same source:
http://www.azcentral.com/realestate/homes.php
for zip code 85255
The heads should be County, Week Ending, # homes sold, median price, last 4 weeks, same time last year

Maricopa 09/26/2008 28 $655,000 76 $725,000 75 $772,500
Maricopa 09/19/2008 14 $722,189 62 $742,189 70 $754,750
Maricopa 09/05/2008 21 $715,000 75 $650,000 76 $851,424
Maricopa 08/29/2008 14 $600,000 70 $595,000 80 $814,121

85253 is inline with stats

Everything is basically down 2/3rds from last years inflated sales

 

[theoakman]

From your same source:
http://www.azcentral.com/realestate/homes.php
for zip code 85255
The heads should be County, Week Ending, # homes sold, median price, last 4 weeks, same time last year

Maricopa 09/26/2008 28 $655,000 76 $725,000 75 $772,500
Maricopa 09/19/2008 14 $722,189 62 $742,189 70 $754,750
Maricopa 09/05/2008 21 $715,000 75 $650,000 76 $851,424
Maricopa 08/29/2008 14 $600,000 70 $595,000 80 $814,121

85253 is inline with stats

Everything is basically down 2/3rds from last years inflated sales

Well, then you basically agree that the real estate market is bad because it's going down much more. I suggest you brush up on your math though. 2/3 of 772K is 514k. To be down 2/3 would been ur hovering around 250k median sales price.

 

[jm1776]

Historically asset bubble spikes are symmetrical. That is, the duration of the downturn is roughly equal to the duration of the run up. That puts the housing bottom unlikely until at least 2012, possible 2014.

A chart of the NASDAQ .com bubble spike is a good recent example.

 

[seapilot]

Where in AZ is it bad for you? Prescott?
28 closed sales last week where I live, $500,000 median price.
That's a good trend.

There is a trick that realtors are using to make the sale price look higher than it really is. They put on the purchase agreement the price of 500K but in the "other section" the realtor will put a "credit" at closing. The credit could be anywhere from 20K or 100K tword the down payment depending on the agreement.

This makes the apprasial of the houses stay high, countys keep thier taxes up, and other houses for sale in the area dont have to come down on price because X house sold for thousands less. Sneaky but its going on all over right now.

Example is house priced at 500K. Buyer offers 450K, seller agrees but will give a 50K credit toward the down payment at closing so the price recorded that the house sold for 500K goes to public record. Median house prices in the area stay high.

IMO all houses are selling for less than asking price right now. They probably will fall another 10percent or to 2003 levels asking prices. The real prices that people are paying for those houses is not being told publicly otherwise asking prices would collapse to lower levels. Bottoms can only go so low on DESIRABLE properties until inflation dictates the houses real replacement value.

 

[dannno]

there are MUCH cheaper places to live than SoCA. Im in Houston, but in most of texas you can buy a nice home for 70-100 per square foot. like 3000 sq ft for 250K. do a search on realtor.com if you dont believe me. Plenty of jobs here too. If you want the epitomy of the bubble stay where you are. If you want a semi (but not bullletproof) investment move to TX. You can lose 100K here too, but you could lose 300K there. Besides do you really want to eat ramen noodles for the rest of your life?

I'd rather eat ramen in so cal than filet mignon in Houston... just personally..

 

[seapilot]

http://mysite.verizon.net/vodkajim/housingbubble/

good chart here with housing inflation and nominal prices. With inflation ajusted 2003 prices are getting closer.