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alstry (34.92)

Are We Nuts?????????

Recs

18

March 24, 2008 – Comments (13)

WASHINGTON (MarketWatch) -- Boosted by a record decline in prices, the U.S. housing market showed signs of stability in February, with sales of existing homes rising modestly for the first time in seven months and inventories falling, the National Association of Realtors reported Monday.

“The median sales price plunged to $195,900, down 8.2% from a year earlier, the largest price decline recorded since the Realtors began tracking both single-family homes and condos in 1999. Prices of single-family homes fell 8.7% in the past year, also the most since the records began in 1968.”

“Sales of condos are down 29.7% in the past year. Inventories of unsold condos rose 14% to 604,000, a 13-month supply.”

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B120F1E6F%2D4B0D%2D4925%2DBB9B%2DFB0C6F7573E6%7D

In a non event month, everyone is happy because sales have "stablized" because of record price discounting.  How many of these homes were foreclosure sales?  In CA, in some areas it was the majority.  Not only that, defaults are continuing to rise meaning more foreclosures are on the way.

For illustrative purposes only, what if we discounted houses to $1 each, simply so people would assume the property tax, maintenance fee, and insurance responsiblity......how much of an improvement would we have seen in unit volume then?

By the way, don't be suprised if this actually happens in the next six to nine month as a whole bunch of new condos are delivered.  In Florida right now, you can rent a quality condo for cheaper than the monthly mainanence, insurance, and property tax cost.

Don't be surprised if a $1 house or condo comes your way..........

13 Comments – Post Your Own

#1) On March 24, 2008 at 5:10 PM, rbenesh (96.51) wrote:

This is the same group that funds television ads here in California that state that the price of a home doubles on average every 10 years, so I take anything they say with a large grain of salt.

I gave you a rec - I like the idea of a $1 house or condo!!!

 

                                                                    Rich  

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#2) On March 24, 2008 at 5:12 PM, EScroogeJr (< 20) wrote:

$1 houses? That would be terrific. In every hunting-and-gathering society, 100% homeownership rate was taken for granted. In every slave-owner society and in every feudal society, a nearly 100% ownership rate was also taken for granted. It's only the moden capitalist society that is obscessed with inventing false reasons why it should not be taken for granted.

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#3) On March 24, 2008 at 5:31 PM, alstry (34.92) wrote:

Becareful what you wish for, it may come true.

Assume you own a $30 million dollar yacht.  Many people not familiar with owning such large toy are not aware of the carrying costs that comes along with such an animal.  A yacht is an aligator that luvs to eat and eat and eat.  After factoring cost of crew, fuel, and maintenance(slip fees, insurance, ect....), one is often looking at about 15% of the purchasing price, or in this case about $4.5 million per year simply to maintain and not factoring depreciation.

Now if someone were going to offer you that yacht, on condition that you keep it for five years, would you take it for $1?

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#4) On March 24, 2008 at 5:53 PM, EScroogeJr (< 20) wrote:

Yes, I would. I would then cancel insurance, fire the crew, and sell the yacht to a junk yard for a sum considerably greater than $1. Now, responding to your real question (I presume the "yacht" to be a euphemism for an overpriced house), yes, I would happily buy your house for $1 as well. Then I would cancel the insurance, because I'm not that much worried about losing $1, honestly pay my property tax in the amount of 1.5% of $1, and order just enough fuel to heat a 400 ft^2 room, leaving the remaining 2600 ft^2 cold, becuase this is just about the footage that I need. Then I would use some $15,000 a year saved on renting to buy some good dividend-paying stocks from you, which you'll be willing to sell me quite cheaply once your house ATM dries up.

:):):) 

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#5) On March 24, 2008 at 6:00 PM, alstry (34.92) wrote:

First of all, you can't avoid the maintenance fees.  Many associations, including homeowners associations require you to insure the dwelling and show proof of insurance, and third, the municipality will tax you whatever they need to tax you, even if they have to raise the mil rate.

Keep living in fantasy land, nice try though.

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#6) On March 24, 2008 at 6:06 PM, alstry (34.92) wrote:

HOW BAD WILL THIS GET...................

By Nick Carey

CLEVELAND (Reuters) - As hundreds of thousands of American home owners fall behind on their mortgage payments, more people are turning to short-term loans with sky-high interest rates just to get by.

While figures are hard to come by, evidence from nonprofit credit and mortgage counselors suggests that the number of people using these so-called "pay day loans" is growing as the U.S. housing crisis deepens, a negative sign for economic recovery.

"We're hearing from around the country that many folks are buried deep in pay day loan debts as well as struggling with their mortgage payments," said Uriah King, a policy associate at the Center for Responsible Lending (CRL).

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#7) On March 24, 2008 at 6:12 PM, AnitaJay52 (< 20) wrote:

 

We haven't seen how bad it can/will get...yet....

I love the fact that rules changed for these payday loan places, requiring more disclosure on their parts...but the damage has been done.  Folks robbing Peter to pay Paul...and then getting sucked into a never-ending loop...

 

 

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#8) On March 24, 2008 at 7:05 PM, EScroogeJr (< 20) wrote:

Ridiculous. First, as long as you pay the economically justifed prices, maintenance fees are just incomparable with rental rates. For instance, here in NY, you expect common changes for a condo to be around $200-300, when renting the same condo would cost $1800-2000. Second, if the house costs $1, how much does it cost to insure a $1 worth of property against fire or $0.80 mortgage balance against default? Third, even if you add in municipal taxes based on current values, your ownership costs are still far smaller than rent. And fourth, with houses costing $1, why would you need your stupid homeowner association anyway? It was invented to support your property value, but when there is nothing left to support, it becomes a major pain in the a...s as far as you're concerned, forcing you to shell out some $300 a month for the maintenance work you don't really need. You will be the first one to vote to dissolve your association, and then there will be no one to bother me with ridiculous common charges and insurance requirements or to tell me how often I should mow the lawn. And even if that homeowner association refuses to die, I can always buy another house in a place where this abomination does not exist, and as long as your $1 house is making the database pleasant to look at, the price I have to pay will be very, very reasonable.

:):):) 

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#9) On March 24, 2008 at 7:16 PM, alstry (34.92) wrote:

Not to burst your bubble along with the housing bubble.  In FL, you can rent a $750K condo in a nice area for around $1500-$1800 per month.

The tax on that condo is about $8K per year.   Assoc. fees are about $8K per year.  Insurance on that condo is about $8K per year or about $2K per month.

Would you buy that condo as an investor for $1?  Welcome to realty reality.

Simply hasn't gotten to NY.......yet.  You can confirm these numbers with FloridaBuilder.

 

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#10) On March 24, 2008 at 7:53 PM, abitare (31.77) wrote:

Housing Bubble vs. Great Depression Quotes

 

 

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#11) On March 24, 2008 at 8:43 PM, EScroogeJr (< 20) wrote:

You are missing the point. Would you, as a member of the association, vote to pay 8K a year to "maintain" a $1 property? Why would you do that? To make sure it doesn't drop another 12 cents? Try to understand it: not every question makes sense. It's like asking "if I milk a goat, how much would the milk sell for?". As soon as house prices approach their self-cost, your homeowner associations and mandatory insurance fees will disappear faster that you finish your cigar.

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#12) On March 24, 2008 at 9:03 PM, EScroogeJr (< 20) wrote:

"milking a goat" should be read like "milking a bull". By the way, your Florida condo example is perfectly realistic (I presume you're talking about Miami or Orlando). The price is just a notch higher than what you would pay in Brooklyn or Queens for a semi-decent 2-bedroom, and to a Manhattenite, it would give no sticker shock whatsoever. But direct comparisons are difficult because NY has so few condos. Its apartment stock is essentially made up of coops, which are entirely different beasts.

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#13) On March 24, 2008 at 9:49 PM, FourthAxis (< 20) wrote:

Hmmmm.  Some good points.  Interesting applicaton of the concept.  If carrying property becomes a major liability interesitng things could happen.  Reminds me of the Wired article Free! Why $0.00 Is the Future of Business in a bad, bad way. 

 

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