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When did rates go 'through the roof' making variable rates unaffordable. Rates didn't go through the roof, people with silly teaser loan initial rates got reset to where they should have, subprime nightmare.
Low rates made those "teaser" loans possible. You can still get the teaser rates today if you want.
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Rates went down and the market is correcting? where? Rates didnt 'go' down, the fed has been artificially keeping them down to try to put a floor under the crash of subprime and other markets and ease the crashing, but it helped little.
Housing prices have went down in some areas by almost 50%. If that is not a housing correction I dont know what is. Due to rate drops those houses are seeing a slight stabilization in decline. The banks are super cautious right now that is why you can get a loan. If you are in a heavily declining area your LTV is dropped by 15% by some banks requiring BIG down payments.
The problem is just like in every other crisis people will try to use it to their advantage. The housing market on LI will never plumet to the point where huge colonials on the water go for 300K. Housing hasnt been affordable on LI for 30 years and wont become any better anytime soon. This is why people move out of the state. There are areas on LI where you can buy affordable housing but of course these areas are not "Suitable" for most LIers.
LIers are spoiled, they want great school districts and secure neighborhoods. Those things cost high tax dollars. You will never get it all unless you are semi successful. SEMI successful. If you make a career at BK you are not going to afford a house in most good areas of LI. Its just not going to happen.
Id love to live in Manhattan. I cant afford it. Crying about it isn't going to help either. I can go live in the Bronx if I want. Washington Heights for sure. Maybe even a "Cheap" apartment in some areas of Manhattan, but I will never have the best of what it has to offer because I cant afford it.
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Rates have been historically low during the bubble yet housing continues to slide. Affordability dictates housing. People who want to trade up in existing houses will want to do so in times of lower interest rates since they are getting more for their exiting home and using it to buy another so its a good deal, but you need a new buyer to buy the starter home and get the ball rolling and when prices escalate, they cant afford the initial purchase. 500,000 at 6% vs 1,000,000 at 1% ... not the same. First of all coming up with the downpayment on the higher value becomes prohibitive, secondly, an informed buyer knows that buying at very low rates is a danger and when rates go back up they will be in the hole and can never refinance at the lower rate.
The rates haven't been lower than in 40 years or something like that. The bubble burst. Housing increases in a stable market by about 4% a year. If you cant afford a house today, changes are unless you change your financial situation you wont next year either.
Fixed rates are very low. We are not talking about variable rates. That is why everyone is foreclosing right now.
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The bubble isn't due to rates (well partially it is), but its more due to legislation. The capital gains removal for housing made flipping a possibility and causes more speculation which is not good. It encourages lenders to say, here take this crazy loan at 1/10 the normal monthly payment and then flip the house in 2 years before the reset and after is has made gains and you are in the clear (everybody is doing in, come on). But more importantly is the deregulation of the banking industry. Laxed lending standards resulted in all kinds of wacky leveraged high risk loans to people who should have never gotten them and then the risk was packaged into fake securities. NINJA loans, zero down, negative amortization option arms, these people never had a chance, crazy stuff. It was basically fraud.
I see. Its a game of blame for you. You want to blame the banks for peoples dumb purchasing practices. Ever hear of the term if its to good to be true it probably is. These people apparently didn't. The people who used those programs are the same people today crying housing is to expensive on LI. They couldnt afford it then and they cant afford it now. At least they cant afford the lifestyle they want. There are options on LI, but people don't want to talk about those unless its a non minority neighborhood and a top 100 school. Sorry, you cant have it all. I cant, why should they?
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All of this is still not the most important thing. Despite the cause/reason, one thing that is unavoidable to see is that LI housing is still unaffordable to the average home buyer based on traditional affordability standards that are healthy. This is a simply fact that should be stated, then restated, and stated again in every discussion on this matter but is often overlooked
What should be stated is a middle class home in a middle class neighborhood isn't affordable to a lower to middle class family. Like I said, there are many options on LI that people don't want to talk about because it doesn't suit their argument. Of course we want whats best for our kids and ourselves. But there is a time where you say "I cant afford that" and move or "I guess this will have to due for now" until you can get a better job.
Thats the way it is according to ProPain.
Edit: By the way, I think it should be stated what these morons did with their "Subprime" money and variable rates. They took a house they couldn't afford before at normal rates and purchased it. Good for them. Then they ripped the roof off and dumped another 250K into it making it a MC Mansions. Those are the houses that are going under. Those are the people. I'm sorry, I have no sympathy for greed.
Low rates made those "teaser" loans possible. You can still get the teaser rates today if you want.
1) I agree with you that people who made this silly loans get no sympathy.
"teaser" loans can be set to whatever the bank wanted, if the 30 yr fixed rate was higher they can still offered a low teaser loan.
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Originally Posted by propain
Housing prices have went down in some areas by almost 50%. If that is not a housing correction I dont know what is. ... Housing hasnt been affordable on LI for 30 years ...
Arn't we talking about long island. Agreed CA, Miami, Arizona and vegas had massive corrections. LI has had minor corrections and is still out of whack based on standard affordability measures.
In 2000, the ratio of wages to house value was about 3x income. In 2005 that number climbed to nearly 6x income. Housing was much more affordable in 2000. Do you not agree that their was a bubble on LI and that it is still inflated above where it would have been if the bubble never happened?
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Originally Posted by propain
I see. Its a game of blame for you
. Its not a blame game for me. You blamed rates for the bubble, I proposed an alternate idea. If the industry was not deregulated and banks did not over leverage themselves, this problem would not have happened. Its triple blame, the legislature should not have never deregulated the industry with glass-steagall repeal, the banks were stupid for taking on the risk and it is their fault, and they should go under for the risk not panning out, but are getting bailed out, its also the fault of consumers that clearly had no right buying. But for some of those consumers it actually didn't matter anyway because how did it really effect them? They weren't going to be able to buy a house pre-bubble based on practical standards anyway so they got 5 years of low cost nice housing and now are just back to renting again, it was basically free money for them for the time.
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Originally Posted by propain
What should be stated is a middle class home in a middle class neighborhood isn't affordable to a lower to middle class family.
The average household income on LI is roughly 100K. So the average middle class house should be roughly 350K based on bank standards of affordability. To even get a loan you would have to meet these standards in the past, this in itself should prohibit buyers from buying the currently inflates housing but low down payment and lax standards allow for continued unadvised leverage in housing. Currently, we are above 350K median prices. I am not claiming waterfront homes should be 300K, but average houses in middle of the road to above average neighborhoods should be in the 300-400 k range, but most in this range are foreclosures, have problems, or need a lot of work and there is still a way to go to get to affordability.
In 2000, the ratio of wages to house value was about 3x income. In 2005 that number climbed to nearly 6x income. Housing was much more affordable in 2000.
The average household income on LI is roughly 100K. So the average middle class house should be roughly 350K Currently, we are above 350K median prices. I am not claiming waterfront homes should be 300K, but average houses in middle of the road to above average neighborhoods should be in the 300-400 k range
I think we are back to 2000 prices. I believe in suffolk, the average home is just below $340k, and Nassua is about $390k. While there are some unrealistic priced houses on the market, i believe we have seen prices drop back to 2000 levels again.
I think we are back to 2000 prices. I believe in suffolk, the average home is just below $340k, and Nassua is about $390k. While there are some unrealistic priced houses on the market, i believe we have seen prices drop back to 2000 levels again.
Those are median closing prices. It could just be that the only homes that are being sold are the ones that are priced well below what others are asking or have been discounted, or a lot of fixer uppers. If you actually get out and start looking, it seems that you quickly escalate above 400K for nice average housing, what probably most buyers are looking for, just a guess. Its seems there are a lot of fixer uppers or 'other problem houses' on the market now (actually this is the initial point of this thread) and other sellers are holding back. Starter homes and fixer uppers should be below median prices but might be driving the market. Still a lot of the market for average nice 3-4 bed 2 bath homes are priced above the 400's and into the 500's in many neighborhoods.
I should qualify that I am strictly speaking of Nassau as that is where my interest is and I don't really pay much attention to Suffolk. Nassau seems to still be overpriced in my opinion. Suffolk might be a different story, someone else with more experience on looking in Suffolk might comment on affordability there.
Those are median closing prices. It could just be that the only homes that are being sold are the ones that are priced well below what others are asking or have been discounted, or a lot of fixer uppers. If you actually get out and start looking, it seems that you quickly escalate above 400K for nice average housing, what probably most buyers are looking for, just a guess. Its seems there are a lot of fixer uppers or 'other problem houses' on the market now (actually this is the initial point of this thread) and other sellers are holding back. Starter homes and fixer uppers should be below median prices but might be driving the market. Still a lot of the market for average nice 3-4 bed 2 bath homes are priced above the 400's and into the 500's in many neighborhoods.
I should qualify that I am strictly speaking of Nassau as that is where my interest is and I don't really pay much attention to Suffolk. Nassau seems to still be overpriced in my opinion. Suffolk might be a different story, someone else with more experience on looking in Suffolk might comment on affordability there.
My point exactly. Mid 3's at 5%. You wont find a better deal buying a home on LI.
You can buy a home on LI. You just cant buy into the expensive areas without paying some serious money and even if you do, you are paying for the area, not the house. A crappy cape in Massapequa is 350K. Massapequa is a great SD and neighborhood. How is this not affordable???
I purchased my home 9 years ago and it cost 400K. I have since sunk 300K into it over that time. My house 2 years ago appraised for 900K. Now id be lucky to get my investment back. Enough is enough with the price drops!
My point exactly. Mid 3's at 5%. You wont find a better deal buying a home on LI.
You can buy a home on LI. You just cant buy into the expensive areas without paying some serious money and even if you do, you are paying for the area, not the house. A crappy cape in Massapequa is 350K. Massapequa is a great SD and neighborhood. How is this not affordable???
I purchased my home 9 years ago and it cost 400K. I have since sunk 300K into it over that time. My house 2 years ago appraised for 900K. Now id be lucky to get my investment back. Enough is enough with the price drops!
While I understand peoples concerns about their own well being, it's hilarious how wishful thinking clouds common sense. Your house appraised 2 years ago near the highest peak of a ridiculous real estate bubble.
I bought a condo in 2006 right around peak...I see what people have sold for in my complex. I know that I will lose 20-25k if I sold today. It sucks, but it is what it is. There's a difference between what individual people want and what is actually happening.
350k is not affordable unless the household income is 150k a year... and many people cannot afford that because they cannot count on the significant other's income unless the SO is a teacher
My point exactly. Mid 3's at 5%. You wont find a better deal buying a home on LI.
You can buy a home on LI. You just cant buy into the expensive areas without paying some serious money and even if you do, you are paying for the area, not the house. A crappy cape in Massapequa is 350K. Massapequa is a great SD and neighborhood. How is this not affordable???
I purchased my home 9 years ago and it cost 400K. I have since sunk 300K into it over that time. My house 2 years ago appraised for 900K. Now id be lucky to get my investment back. Enough is enough with the price drops!
Massapequa is not an exclusive super great area, I would say its an average area on LI.
Do a search on MLS. Out of 215 homes in Massapequa school district there are exactly 8 for sale under 350k. Then go look at those 8 and many of them are on a main road or need work, etc. The majority of homes there are pushing 400's and well upwards of that which is well above where they would have been pre-bubble. There are reasons for why prices should drop more, those are historic reasons of affordability that we are well above. Check the case shiller housing index, we are still way above where we should be and now NY is the most expensive housing in the country since the most 'bubbly' states had massive declines. There are no real reasons given why prices should stabilize or climb, usually some kind of gut feeling, most likely wishful homeowners that will believe that which suits their interest of overinflated housing and the NAR lobby pumping millions of dollars into advertising and politicians accounts.
Here is what I am talking about
Here is property sharks neighborhood price history for a roughly 1600 sf home in massapequa.
2009 $425,000
2008 $440,000
2007 $463,500
2006 $485,000
2005 $479,000
2004 $440,000
2003 $400,000
2002 $345,000
2001 $295,000
2000 $268,000
1999 $235,000
Now start at 1999. Increase that value by 3.5% a year which is what housing has historically appreciated at (without a bubble) and you get 2009 price should be 331,000. Even if we were to use 4.5% yearly appreciation it puts us at 365,000 ... not the 425,000 shown here.
just for information purposes, here are the 7 years prior to 1999
1998 $219,000
1997 $192,000
1996 $190,000
1995 $186,000
1994 $184,000
1993 $177,000
1992 $182,000
If you bought a house in 1992 and sold in 1997 (you gained 10,000 in value). If you bought in 2000 and sold in 2005 (you gained 210,000, how is that sustainable)
Prices should drop, homes are not very affordable. Whether that actually happens or not remains to be seen and is not a guarantee but to brush it off and ignore its possibility is to ignore the data in front of your face.
Massapequa is not an exclusive super great area, I would say its an average area on LI.
Do a search on MLS. Out of 215 homes in Massapequa school district there are exactly 8 for sale under 350k. Then go look at those 8 and many of them are on a main road or need work, etc. The majority of homes there are pushing 400's and well upwards of that which is well above where they would have been pre-bubble. There are reasons for why prices should drop more, those are historic reasons of affordability that we are well above. Check the case shiller housing index, we are still way above where we should be and now NY is the most expensive housing in the country since the most 'bubbly' states had massive declines. There are no real reasons given why prices should stabilize or climb, usually some kind of gut feeling, most likely wishful homeowners that will believe that which suits their interest of overinflated housing and the NAR lobby pumping millions of dollars into advertising and politicians accounts.
Here is what I am talking about
Here is property sharks neighborhood price history for a roughly 1600 sf home in massapequa.
2009 $425,000
2008 $440,000
2007 $463,500
2006 $485,000
2005 $479,000
2004 $440,000
2003 $400,000
2002 $345,000
2001 $295,000
2000 $268,000
1999 $235,000
Now start at 1999. Increase that value by 3.5% a year which is what housing has historically appreciated at (without a bubble) and you get 2009 price should be 331,000. Even if we were to use 4.5% yearly appreciation it puts us at 365,000 ... not the 425,000 shown here.
just for information purposes, here are the 7 years prior to 1999
1998 $219,000
1997 $192,000
1996 $190,000
1995 $186,000
1994 $184,000
1993 $177,000
1992 $182,000
If you bought a house in 1992 and sold in 1997 (you gained 10,000 in value). If you bought in 2000 and sold in 2005 (you gained 210,000, how is that sustainable)
Prices should drop, homes are not very affordable. Whether that actually happens or not remains to be seen and is not a guarantee but to brush it off and ignore its possibility is to ignore the data in front of your face.
But my neighbor sold his 3 bedroom cape in 2006 for 450K!!!
It seems that current home owners forget that history didn't start in 2002.
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