Use access key #2 to skip to page content.

Housing Slumps. Who's Surprised?

Recs

5

June 25, 2007 – Comments (7)

Not me.

With apologies to Homer Simpson's Jack Nicholson impression, "No free money and no quick flip makes homeowners ... something, something ..."

"Drop prices?" Don't mind if they do.

Data released today by the National Association of Realtors (NAR) shows that home prices are plummeting just as sales are flagging. In other words, it's exactly as some of us bubble-bursters have been predicting for a while. Too much supply and not enough demand moves the needle firmly in the opposite direction of what the majority of (delusional) Americans seem to think. Houses are worth less now than they were. Fewer are selling. This goes hand in hand, and I don't think we've seen anything yet.

7 Comments – Post Your Own

#1) On June 25, 2007 at 4:35 PM, DenisHancock (< 20) wrote:

I loved the fact that the #2 sponsored link after your post was the following:

Mortgage Rates at 3.0% - Refinance Now!
$150,000 loan for $391/month - refinance, home equity and purchase.

Report this comment
#2) On June 25, 2007 at 5:06 PM, QualityPicks (24.85) wrote:

Yep, I'm surprised at how calmed most of my friends are regarding house prices. They feel comfortable, because they got in at a decent time in the market and have some big cushions in equity.

They can make their monthly payments fine, so in that respect, they are fine. But many won't. I wonder how many of them are counting on that equity as part of their retirement plan. Many of them have a sense of being wealthy because of all that equity. I also felt wealthy during the tech bubble years. But almost all that "wealth" evaporated. I think we might see something similar with housing. I'm expecting prices in my area to go back to 2002 prices, or some 30% lower.

I still remember a friend recomended me a negative amoritization loan in 2005. I politely said "are you crazy?" and he said "they aren't that  bad. They actually make sense because your home appreciates faster than what you owe."  To his credit, I have to say he made a ton of money by upgrading his house every two years or so. He now has a 1.2 million dollar house and started with a 350k house.

Just now, this very same friend after seeing the market slowdown, inventories increase, etc. still doesn't think that a 30 year fixed mortgage makes a lot of sense.  He tells me "80% of people move after 5 or so years to a bigger house, so it doesn't make sense to have a bigger payment". I said "that makes sense and it's easy to do when prices are going up, but right now, I really think they will fall 20% or more in the next few years". He looked at me and politely said "Are you crazy?" :)

In the next few years, I guess, I might be able to see whom of my friends were swimming naked. The ones that didn't have real wealth other than the equity of their homes will be back were they were. The ones that borrowed heavily against it, migh be in worse shape. The ones that jumped in at the end of the boom will be seriously stuck (I already have a friend in SD down 20%, and they have an interest only loan).

 

Report this comment
#3) On June 25, 2007 at 8:50 PM, TMFBent (99.81) wrote:

Yeah, gotta love what we'll do to pay the bills. Sometimes, we run this thing trying to get people to buy property in Costa Rica. Talk about picante. 

I loved the fact that the #2 sponsored link after your post was the following:

Mortgage Rates at 3.0% - Refinance Now!
$150,000 loan for $391/month - refinance, home equity and purchase.

Report this comment
#4) On June 29, 2007 at 8:08 PM, krauter2 (< 20) wrote:

I agree the housing is down but you have got to be kidding me talking about plummeting prices when your own article says it is down 2.1% over last year.  I hardly think we would call a drop in the stock market plummeting if it dropped the same amount.  Double standards are wrong.  Yes we are still going to see more drops but report honestly and consistently.  I have 3 rentals which are all up substantially.  If the market dropped 30% I would still be at a breakeven point.  I don't know if the stock market dropped that far if many could say the same.  Thanks.

 

Report this comment
#5) On June 29, 2007 at 10:19 PM, krauter2 (< 20) wrote:

I agree the housing is down but you have got to be kidding me talking about plummeting prices when your own article says it is down 2.1% over last year.  I hardly think we would call a drop in the stock market plummeting if it dropped the same amount.  Double standards are wrong.  Yes we are still going to see more drops but report honestly and consistently.  I have 3 rentals which are all up substantially.  If the market dropped 30% I would still be at a breakeven point.  I don't know if the stock market dropped that far if many could say the same.  Thanks.

 

Report this comment
#6) On July 02, 2007 at 12:11 PM, zygnoda (26.82) wrote:

I've seen the costa rica adds.  Better start buying! 

Report this comment
#7) On July 02, 2007 at 2:06 PM, bluejonnyd (21.48) wrote:

Hey, Costa Rica's a nice country.  Great mountains, rainforest, beaches.  Relatively stable politically for a third-world country too.  I can see there being some real allure to Costa Rican land.

Report this comment

Featured Broker Partners


Advertisement