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Customer Discussions > Politics forum

Maybe no housing rebound for a generation: Shiller


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Showing 51-75 of 77 posts in this discussion
In reply to an earlier post on Apr 30, 2012 10:08:05 PM PDT
I was just saying this the other day....we should not expect our house to go up in value...so we need to be prepared to reside within for at least another 15 years, for the mortgage balance to drop down enough where it's sellable, minus commissions, minus reroofing, minus the foundation work....

In reply to an earlier post on Apr 30, 2012 10:21:48 PM PDT
Intrepid says:
Do you think a major recession stops in 2 years? Not one that was as massive that GM lost 97.5% of its value in 1 year

===========================

just picking a GM comment to add the following. not challenging your post.

I seem to remember some people arguing (not you) in favor of the government bailing out GM and Chrysler because it also helped all the down line suppliers.

Yet barely 2 years from the crisis and the union just can wait to get at the money. The union at Dakkota Integrated Systems, a Chrysler supplier, went on strike and it caused a Chrysler plant in Canada to shut down for a few hours.

It looks like the Unions want to do business as usual... the same business that sank the two companies in the first place. But the new head of Chrysler isn't going to have it.

Marchionne told reporters on Monday morning in Detroit, that he had "zero empathy" for the striking CAW workers, at a Dakkota Integrated Systems plant near the Windsor assembly plant.

"This is not the way to get things done," Marchionne said, adding "if this is an indication" of the relationship between the CAW and Chrysler, "then we're in for a very difficult round of negotiations."

http://www.reuters.com/article/2012/04/30/chrysler-canada-idUSL1E8FU8BN20120430

Chrysler actually paid of it's government loans by borrowing from institutional investors. The union got bailed out and it seems they can't wait to business as usual. For now, it looks like it isn't going to happen.

Posted on Apr 30, 2012 10:27:55 PM PDT
M. Emrich says:
On June 11th there will be a new FHA streamline refi that will allow people that are under water in their homes to refi at current rates no matter the value of their home.

With historically low interest rates our children will be able to afford a home again. Instead of when for almost a decade there was almost no such thing as a starter home. People were moving up by selling at ridiculous price and moving up at ridiculous prices. But people getting started in life were looking at ridiculous prices or awful locations and properties if they wanted home ownership.

Our children won't benefit from equity due to appreciation, but they will be able to have home ownership at less than market rents with a deduction and the ability if they so desire to pay off their home rather quickly. They will live simply but will be able to achieve the American dream until a Republican moves back into the White House and manages to screw everything up.

Posted on Apr 30, 2012 11:22:12 PM PDT
Shiller is a respected Economist and so what he says is based on considerable knowledge. however, he is an economist and only takes part of the picture into account.

In reply to an earlier post on May 1, 2012 4:23:05 AM PDT
A customer says:
"With historically low interest rates our children will be able to afford a home again"

Hold on there champ! Those who fell for Obama's 8k rebate to buy houses in 2010
and put 20% down payments up, are now under water. As of yesterday, 43% of all
homes in America with a mortgage are under water. The forecast for home prices to
rise, not for another generation.

Keep your money in the bank!

Posted on May 1, 2012 7:50:44 AM PDT
M. Emrich says:
Superman, What you say is absolutely true about the equity situation, but at these low interest rates you can get a very nice home for well under what you would pay in rent right now. If you want (I would not recommend it unless you have zero other debt), pay it off in 15 years and still be probably paying a market rent. Now you owe zero. Gotta be some equity there.

I am sure you understand that the majority of the front end of a loan is interest even at 4%. So the prices don't rise, big deal. These new owners are still paying less than they would renting. Have a deduction, and in a few years they will have equity, but moreover because of lower prices and lower rates they will have a paid off home in the not too distant future at a very affordable payment.

Posted on May 1, 2012 12:18:37 PM PDT
Suze says:
I'm not underwater, my house is worth more than I paid for it 10 years ago. It will be paid off soon....

Rents in my area start at about $1,500 a month. I would rather own my own house. If you have the down payment and a secure job/income, I recommend buying.

Make sure you can afford it, there are upkeep expenses involved with a house. Prices will eventually rise. I recommend buying a reasonably sized house. Don't stretch to buy a McMansion.

Unless you prefer renting, buying is the way to go.

In reply to an earlier post on May 1, 2012 2:27:15 PM PDT
Susie says:
I'm not underwater, my house is worth more than I paid for it 10 years ago. It will be paid off soon....

Rents in my area start at about $1,500 a month. I would rather own my own house. If you have the down payment and a secure job/income, I recommend buying.

================

my friend started to panic as her house continued sinking under water. She wanted to do a short sale. I stopped her by pointing out that, including her interest deduction, she is paying a few hundred dollars below rents in many areas... and for places half ad nice as hers.

Too many people jumped out of the market just as stupidly as they jumped in.

In reply to an earlier post on May 2, 2012 9:25:14 AM PDT
A customer says:
"Unless you prefer renting, buying is the way to go."

Join the other 43% who are under water? You really are a Kool-Aid drinker.

Posted on May 2, 2012 9:51:16 AM PDT
Suze says:
http://www.northjersey.com/realestate/144272395_N_J__housing_market_recovering__appraiser_says.html

MONDAY MARCH 26, 2012, 4:40 PM
BY KATHLEEN LYNN
STAFF WRITER
THE RECORD
PAGES: 1 2 > DISPLAY ON ONE PAGE | PRINT | E-MAIL
New Jersey's housing market is recovering, and this spring's home-selling season will be the liveliest in four years, appraiser Jeffrey Otteau said Monday.

AP FILE PHOTO
Otteau predicts that home prices will be flat this year, after falling almost 5 percent statewide last year, and will not return to their 2006 peaks until 2020.
"We are at a turning point in the housing market and the economy," said Otteau, who tracks the statewide market from his office in East Brunswick and whose forecasts are widely followed. "The bounce in home sales [in January and February] is nothing short of astounding." He said sales are up about 30 percent in the first two months of the year, compared with last year.

But that doesn't mean sellers can hike their asking prices, Otteau said. With incomes flat and banks cautious about lending, buyers will be unwilling or unable to pay inflated prices, he said.

"Homes that are overpriced will not sell," he said.

Otteau predicts that home prices will be flat this year, after falling almost 5 percent statewide last year, and will not return to their 2006 peaks until 2020.

Otteau's forecast, before an audience of real estate agents in East Hanover, came on the same day that the National Association of Realtors reported that its index of pending home sales rose more than 9 percent from a year earlier. Pending sales are those in which a contract has been signed, but the deal has not closed.

Otteau said that Garden State home buying will be fueled this year by an energized job market, as well as more affordable home prices and mortgage rates below 4 percent. Average New Jersey home prices have fallen 26 percent from the market peak in 2006, and are back to 2003 levels, he said.

There's pent-up demand among potential buyers, who have waited four or five years because they were insecure about their jobs or worried that home prices would fall further, Otteau said. And rising rents mean that many households will soon decide it's better to buy than rent.

But he warned: "This improvement is not a return to the market frenzy we saw back in 2005."

********************

So, in other words if you bought a home in 2003 you are most likely at the price you entered the market at.

If you have the cash (20% down payment) you are better off buying a small starter home in a good neighborhood then renting. Eventually prices will start going up again. The job market is recovering.

I don't know how the market is doing in the other hard hit states such as Nevada, Arizona, Florida and California.

In reply to an earlier post on May 2, 2012 10:16:06 AM PDT
A customer says:
Why lie? Unless your income comes from real estate.

"Grim Housing Data Shows We Have Not Hit Bottom

"March 29, 2012 - We've still got millions of foreclosed homes waiting to come on the market, so we're not going to see any dramatic rebound in house prices," cautioned Paul Ashworth, chief economist at Capital Economics. He predicts over the next few months that home prices will slowly start to rise, which will slowly nudge homebuyers back into the market and lead banks to start loosening lending criteria. "But property is a slow-moving asset, unlike stocks or equity where things can go up or down ten percent in a day. We're not going to get a rapid rebound after the housing bust we just went through."

Other economists expect home prices to plunge further. "Our view is that foreclosures, excess supply, and weak demand will drive home prices as measured by the Case-Shiller indices down at least another 5 percent," said Patrick Newport, a U.S. economist with IHS Global Insight. "

http://www.thefiscaltimes.com/Articles/2012/03/29/Grim-Housing-Data-Shows-We-Have-Not-Hit-Bottom.aspx#page1

In reply to an earlier post on May 2, 2012 10:17:27 AM PDT
A customer says:
"The job market is recovering."

Do you even read the news? Job market is the worst since the great depression.

In reply to an earlier post on May 2, 2012 12:35:07 PM PDT
Superman ™ says:
"Unless you prefer renting, buying is the way to go."

Join the other 43% who are under water? You really are a Kool-Aid drinker.
===================

I thinks markets are close to bottom. with rates low, now is a good time to buy, especially in cities like los Angeles where rents are through the roof.

In reply to an earlier post on May 2, 2012 12:39:26 PM PDT
Susie says: and will not return to their 2006 peaks until 2020.
------------------
this is good

someone buying now might double their equity. someone under water will be back to even. and ten more years and they should have a nice increase in equity. People will simply have to get use to staying in a home a bit longer than the 5-7 year average turnover. My grandparents lived in their home 50 years.

In reply to an earlier post on May 2, 2012 12:43:32 PM PDT
Superman ™ says:
"The job market is recovering."

Do you even read the news? Job market is the worst since the great depression.
=======================

some people (if you know who i mean ;) think Europe is doing great. Talk about not reading the news.

In reply to an earlier post on May 2, 2012 1:22:24 PM PDT
Intrepid says:
If you are underwater it means you owe more than the house's current market value. What you paid relative to the current value matters and partly depended on when you bought. Obviously buying just before the bubble burst would have been a mistake. If you bought a while back and are close to purchase price, then moving is iffy.

Renting means zero equity and no tax deduction. Buying in some markets *today* still is compelling. It would not mean the buyer is underwater. It might not move up (or down) much for a generation as the OP points out. Why? Boomers did not make as many babies as their parents so demand will fall. That is also why the predictions of hyperinflation were predictably wrong and I still find it surprising that so many business writer did not see what would predictably happen. So many CPA's were off in their projections for the last 3 years by a mile.

Houses should not be looked at as investments for most folks unless they are competent in repairing a fixer upper. For most folks, it is more prudent to think of it as shelter and not an investment for retirement. Too many boomers made that mistake without good reason: You still have to live somewhere. To be forced to move into something smaller or have a reverse mortgage to live on is not a happy choice.

In reply to an earlier post on May 2, 2012 1:29:51 PM PDT
Superman,
Are you buying a house for a place to live, or as an investment? If you are looking for a place to live, buying a house or condo is almost always a better deal than renting. Regardless of what the market does, at the end of the mortgage you have a place to live free and clear and your kids have an inheritance. As usual people got caught up in the bubble and started beliving that prices would always rise. I'm in my late fifties and I've seen this process happen multiple times in my lifetime. The only real difference this time was that the banks figured out a way to lend money without risk to uncreditworthy borrowers.

In reply to an earlier post on May 2, 2012 1:57:22 PM PDT
Suze says:
I think it depends on which market you happen to be in. I'm in NJ, I really don't see prices going much lower at this point. Builders are starting to put up new homes, and they are selling them. So imo this means that the prices are going to slowly start to rise. Of course we might have another recession in the future. No one knows what the future holds.

If I were a first time home buyer with some money lying around, say $50,000 I would look into buying a home in a good neighborhood with good schools and job opportunities. I would rather own a house then live in a rental. You are better off buying a modest home in a good neighborhood than throwing away your money every month on rent. Rents are around $1,500 a month I believe.

Look into buying a condo or a small house.

In reply to an earlier post on May 2, 2012 2:01:05 PM PDT
Last edited by the author on May 2, 2012 2:03:11 PM PDT
Suze says:
My mother bought a house in 1966 for $29,000 in NYC it's worth much more than she paid for it. She has been living in it for about 47 years.

I would say she was much better off buying than renting for the past 47 years.

She had a brother who lived in a rent controlled apartment. His life savings when he died was under $100,000. He lived frugally his whole life.....he was about 83 years old when he died.

She is worth much more than her older brother was worth when he died.

Buy now and hold on to your home for many years and you will be better off in the long run, imo.

You will never see these interest rates again, they will eventually go up.

When I bought a house in 1987 my interest rate was 10% on a 30 year fixed rate mortgage. I had to refinance to get the rate down to 7% before we finally sold it.

In reply to an earlier post on May 2, 2012 5:09:30 PM PDT
C. Batty says:
I support local companies that pay living wages.

In reply to an earlier post on May 2, 2012 8:04:41 PM PDT
A customer says:
"Are you buying a house for a place to live, or as an investment?"

I own many apartments & shopping centers that are paid for. I am from a family of nationwide builders.

Yes, you can buy houses cheaper then you can build them right now. The point i was making was Obama's 8k buyer incentive in 2010. The 8k was addeed to the national debt for the folks to pay back.

Now, those who put 20% down in 2010, received the 8k from Obama, are now under water. Prices in 2010 where already down 40 to 50% from the high. Prices are expected to keep falling with the millions of new foreclosures added to the millions of empty foreclosures not even on the market (gray foreclosures the banks call them).

Housing experts don't expect a recovery for a generation. Forigners are here in America buying foreclosures as investments. You know, slum lords, so you know what will happen to the neighborhoods, decay.

That is the point I was making. Without economic growth & new jobs, we are headed off the cliff, no reason to sugar coat it, it's the fact. No time to point fingers, it's time to figure out how to stimulate economic growth & jobs.

In reply to an earlier post on May 2, 2012 8:51:31 PM PDT
Intrepid says:
No matter just pre-bubble or now, one always has to look at the overall situation - the economics of the region, the desirability of the location, and demographic trends in a neighborhood.

The 8K was a macroeconomic strategy to restart nonexistent lending. I think that was clearly needed. It happened to help some buyers like a bridge loan while money was very tight (nearly frozen Dec 2008). But it was up to the individual buyer to do due diligence and buy in the *right location*. Not one that was overpriced and headed off a cliff. No one hand holds us for such choices no matter the economy. If they bought in a neighborhood that has appreciated, I doubt they would say it was the government doing it for them. So if they miscalculated it also was not the government's fault.

I have tracked folks homes that have lost 300K since 2007 and others that have held steady. My own boss bought a foreclosure some years back and remains $400K ahead. Mine stabilized and while appraised value is now far off peak it is still above what it listed for at purchase (mortgage payments aside). It all has to do with desirability of the neighborhood. The adage Location Location Location still holds true. Knowing locations well is one reason why your family is successful.

In reply to an earlier post on May 2, 2012 9:12:53 PM PDT
Superman,
I was trying to make the point that many people bought houses for the wrong reason. A house is someplace to live, not an investment unless you have the money to invest.

In reply to an earlier post on May 3, 2012 2:55:40 AM PDT
Last edited by the author on May 3, 2012 6:45:33 AM PDT
C. Batty says:
I support local companies that pay living wages.
------------------------
do you grill their employees to see if they pay a living wage?

'
'
edit. You are trying. I have to be fair. I add. you should be commended for your efforts.

In reply to an earlier post on May 3, 2012 7:19:24 AM PDT
A customer says:
Actually, all my life, renting was cheaper then owning (when you add in all the cost of owning). What made owning attractive was the tax deduction, but you needed 20% for down payment.
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Initial post:  Apr 29, 2012
Latest post:  May 4, 2012

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