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No. What it is saying is that the national average has 25% to drop to get to baseline levels of appreciation. So what this means is that some areas will drop a lot and some won't. It is a national average, not a local average.
Not only is it a national average it is an indexed average so not all metros are represented. This makes his statement even more troubling to me. Would you say that Buffalo, NY has another 25% to drop. Kind of funny that it was one of the areas that still had appreciation during 2008. Also the index does not cover places like Houston, Texas that at this point have not, by definitions standards, entered a recession. Houston is also one of those markets that saw an increase in values of the median home sale price devided by the median square footage which is how appreciation rates should be quoted in the media.
Don't listen to the news or to major media in getting your information, find someone who will make sold data available to you and is capable of doing a rental equivalency calculation to determine if prices are over inflatted versus rents.
Not only is it a national average it is an indexed average so not all metros are represented. This makes his statement even more troubling to me. Would you say that Buffalo, NY has another 25% to drop. Kind of funny that it was one of the areas that still had appreciation during 2008. Also the index does not cover places like Houston, Texas that at this point have not, by definitions standards, entered a recession. Houston is also one of those markets that saw an increase in values of the median home sale price devided by the median square footage which is how appreciation rates should be quoted in the media.
Don't listen to the news or to major media in getting your information, find someone who will make sold data available to you and is capable of doing a rental equivalency calculation to determine if prices are over inflatted versus rents.
Didn't you hear? He's the "economy GOD", especially when it comes to RE. I do wonder, however, where he lives and what he considers "market value" on his home that has another 25% to fall. Funny, funny man! Wait, I bet he's not talking about "his area". Geeze, his crystal ball must be HUGE!
Not only is it a national average it is an indexed average so not all metros are represented. This makes his statement even more troubling to me. Would you say that Buffalo, NY has another 25% to drop.
He made it clear that he would not "say that".
Buffalo never experienced the bubble, so there's really nothing to 'pop' there. House prices are very reasonable there -- you can get a starter for about 100k, and something quite nice for 200k.
But this is a red herring -- it is not representative of what has happened in the market overall.
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Don't listen to the news or to major media in getting your information, find someone who will make sold data available to you and is capable of doing a rental equivalency calculation to determine if prices are over inflatted versus rents.
Some of the people quoted in the news are perfectly capable of doing this analysis.
He lives in New Haven, Conn. The Zestimate for his house is 600k, and actually according to Zillow, it's gained 7k of appreciation in the last 30 days.
Just curious, where do you live where it is cheaper to buy than to rent, or even close to it?
Here, for $2,500/month you can have your pick of rental houses selling for $1 million or more.
I have 2 homes. One of my houses is in Howard County, MD. One of the top 5 richest counties in America. You can get a nice home for 550-700K in the county. The local school district is amazing. Less than 2% of the kids even qualify for reduced/free lunch. More than 85% go to college. Local High school has a 97% graduation rate.
If they put down 20%, than their mortgage would be around $3k give or take. The rental Townhouses go for $2500-2900. The rental Single Family houses go for $3000-3500. So it makes sense to purchase a home.
I just think people have no teeth in the game. They want to put so little money down when purchasing a home. It's like buying a car. People say there's a credit crunch and some guy can't get a 8K car because he doesn't even have a $1000 downpayment. Well, people shouldn't be buying homes unless they have a significant downpayment. I'm not saying 20%, but I'm saying they should have at least 5-10%.
Yeah, in Florida my friend rented a million dollar home for "only $2700" Guess what happend? His landlord got foreclosed and now he has to look for another rental house for him and his wife and 2 kids. His wife does not want to live in an apartment "while" they wait out the market. Just becareful of these million dollar rentals for only $2000-2500. The math does not make sense and these homes are most likely to get foreclosed because the landlord is essentially taking your money and not paying the mortgage payments.
If they put down 20%, than their mortgage would be around $3k give or take. The rental Townhouses go for $2500-2900. The rental Single Family houses go for $3000-3500. So it makes sense to purchase a home.
I don't agree with the line of thinking that says putting 20% down is a non-factor in determining buy vs. rent. I think there's a huge opportunity cost for that money.
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I just think people have no teeth in the game. They want to put so little money down when purchasing a home. It's like buying a car. People say there's a credit crunch and some guy can't get a 8K car because he doesn't even have a $1000 downpayment. Well, people shouldn't be buying homes unless they have a significant downpayment. I'm not saying 20%, but I'm saying they should have at least 5-10%.
I totally agree with that. I think people should have to put down something substantial, 5%, 10%.
But for me, the reality is that prices around here still reflect that 'easy credit'. I think it would be exceptionally bad timing to put 20% down right now, in a time of market transition.
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Yeah, in Florida my friend rented a million dollar home for "only $2700" Guess what happend? His landlord got foreclosed and now he has to look for another rental house for him and his wife and 2 kids. His wife does not want to live in an apartment "while" they wait out the market. Just becareful of these million dollar rentals for only $2000-2500. The math does not make sense and these homes are most likely to get foreclosed because the landlord is essentially taking your money and not paying the mortgage payments.
I hear you. Florida, I see where that is a risk. Where I am, it is not that way. The math works better because people in this area have very high home equity rates. Other markets were where the crazy lending took place, we just happened to be a cheap coastal market where you could sell your Florida, NOVA, or Maryland house and buy three of them here.
I hear you. Florida, I see where that is a risk. Where I am, it is not that way. The math works better because people in this area have very high home equity rates. Other markets were where the crazy lending took place, we just happened to be a cheap coastal market where you could sell your Florida, NOVA, or Maryland house and buy three of them here.
And that's a problem especially in WNC....those cash rich buyers didn't care what they paid for a property during the bubble years. Bought up the affordable housing, drove the locals further out because they were now priced out of the market but still expected them to provide all the services they required.
The problem today is it's now 1:1 ratio vice 1:3 but housing affordability for his region is damaged beyond repair.... it is going to take a long time to recover.
The younger folks who grew up in this region but left due to housing unaffordability will not be coming back...there are very limited opportunities available to them.
Other areas of NC (Fayetteville area) weathered this burst somewhat better albeit they are hurting.
Unless you are connected to the military, why would you want to live in Fayetteville?
Thanks.
And yeah, Silverfall has it right. He's talking national. Of course some will then dismiss this and persist in the belief that their home/area is different.
And in my experience folks in the biggest bubble areas are especially prone to this.
We ticked a lot of neighbors off when we sold in AZ in 2007. Why? Because we priced ahead of the market.
You wouldn't believe how many people said we were "giving the house away" and we should "hold on and wait for the market to turn around." Good thing we didn't listen.
Sheesh, from 2000 to 2006 prices more than doubled in our neighborhood. No one complained about that, but it was a different story when prices started to correct.
I have been following some other homes that sold for 1.5 mil in 2005, that Zillow now has at $750,000. SW Florida is a train wreck.
It stands to reason that the areas that saw the largest jumps in a very short period of years, mainly the sunbelt states where houses were being flipped in a few months, doubling and more the profits that people were making are going to have the biggest and largest falls back to a more realistic value. I sold my home in North Port just after Hurricane Katrina and I got out of the market just in the nick of time with a tidy profit on a home that I owned for over 15 yrs. The thing that is hurting Florida as much or more (and you dont hear much about it) is the on going HUGE HIT the cost of homeowners insurance is taking. Not too many people can afford $4000 a year insurance premiums on a ranch style home. I can only imagine what the mega mansions must have to pay!
Our market here does not vary that much, we basically sell the same number of homes year in, year out. Our values go slow and gradually up. We have experienced a decline to be sure, but its a slower decline as well. With the huge layoffs we experienced last year, we are hanging on, hopeful that we wont drown in foreclosures and short sales.
In MA, there was an increase in sales in Dec but it seems to have slowed down. I'm watching homes leave my mls lists only to pop back up a week later. I wonder if that's a matter of financing. Also, some homes on my list, that were up at 270k, are now in the 220k range. That's quite a difference in only a month or so. MA is one of the states where a huge bubble ocurred. Although, I don't think we'll ever come down to be comparable with most other states.
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, especially when it comes to RE. I do wonder, however, where he lives and what he considers "market value" on his home that has another 25% to fall. Funny, funny man! Wait, I bet he's not talking about "his area". Geeze, his crystal ball must be HUGE!
