Bubble Consensus Grows As Buyers Market ‘Deepens’
Inman News reports that the consensus is growing on the housing bubble. “Seven in 10 consumers expect a housing bubble to burst in the United States in the next year, while only a small portion expect housing prices to decline 5 percent or more, according to the latest Gallup survey. Seventy-one percent of surveyed consumers said a bubble burst is likely, while 24 percent say such a housing bubble is not likely. In contrast, a much smaller number of consumers, 32 percent, expect the collapse of a housing bubble within their own area in the next year, and 65 percent say it is not likely.”
“This year, about half of all Americans, 53 percent, recognize the term ‘housing bubble’ without explanation, up from 35 percent a year ago.”
“‘When the time is extended to three years, 42 percent say such a situation is likely in their area, and 56 percent say it is not, according to the survey. In May 2005, a similar question found a slightly less pessimistic view, with 37 percent of consumers expecting a housing bubble and collapse within the next three years and 61 percent saying that was not likely.”
And from Knight Ridder. “Unsure whether to buy a home now or wait? If you wait, mortgage rates could go higher. Right now, inventories are growing and houses are sitting unsold longer.”
“‘Buyers are not having to make multiple offers. Days on market are increasing. Those are all good signs for buyers,’ said Thomas Early, a spokesman for the National Association of Exclusive Buyer Agents. ‘It means negotiating strategies change. They can be much more aggressive.’”
“Early’s group represents buyers. He thinks buyers are in the driver’s seat now and that rates won’t climb much higher. But there could be an advantage to waiting.”
“‘For consumers, it may be waiting to see how the market shakes out a bit before deciding to buy at a price that’s at the top of the market, particularly if they have to stretch to do that,’ said Allen Fishbein, of the Consumer Federation of America. The potential payoff to waiting is that rates may hold steady while the pool of available houses grows, deepening a buyer’s market.”
‘In contrast, a much smaller number of consumers, 32 percent, expect the collapse of a housing bubble within their own area in the next year, and 65 percent say it is not likely.’
Something the HB blogger figured out months ago.
kind of reminds of how something like 75% of drivers believe that their driving skills are above-average
Yes, as I stated yesterday most home owners think thier home or local area is special and wont go down even if they think the rest of the country will.
When I used to sell RE years ago sellers all thought they could get more for thier home than the comps because thier home was special and 1 buyer would come along that would fall in love with thier home and have to have it even at the higher price. Typical sellers.
And a recent survey showed hat 84% of cell phone users think other cell phone users are really annoying. The problem is always the other guy. Which of course contributes to bubbles in the first place: everyone thinks they’re making a smart decision even when they can see everyone else being stupid.
Also, presumably people’s willingness or ability to see the bubble may depend on point of view: someone with little interest in the current market (say if they’ve owned for a long time with no intent to sell). What really matters is the percentage of potential buyers (people looking to buy in the next few years) think prices are going to fall and they’re better off if they wait.
Are oil prices the straw that breaks the Camel’s back?
Petrol hikes fueling bankruptcy- Australia
For those of you thinking ‘what are they complaining about’ when you read:
We’re talking about $2 by the end of the year in terms of petrol prices
that’s the per litre price. $7:50 a US gallon :(. (Alright, yes, they are smaller dollars but that’s what’s in my pay packet.)
Damn right they are…I just read about a guy who won a “longest commute” contest in CA…340 miles round trip.
Said he didn’t mind it….time will tell (snicker)
Boston news ran a story last night how business is booming at pawn shops as people hawk their possessions to fill the gaz tank.
But WTF…gaz was $8.50 per gallon when I was in the UK on holiday last fall.
Get ready fat, obese America…your turn has come.
http://news.yahoo.com/news?tmpl=story&u=/060420/480/la11304202125
(sarcasm alert) It’s obvious that the rise in oil prices is not inflationary whatsoever. In fact, it is good for every single stock in the stock market. The proof of this is that even though oil is hitting new highs every day, the Dow Jones Transportation Index — delivery services, airlines, truckers, railroads, and cargo shippers — is not only not falling, but is also at all-time highs — it’s up fifty per cent in six months! Now I ask you, which makes more sense, the official line from our trustworthy government statisticians that inflation is not a problem, which you can also see with your own eyes, or the rantings of some nameless amateurs in some random “blog” about stock market manipulation via please-don’t-call-it-M3 injections?
To the buyers… Make your purchase based on your monthly cost of a fixed 30yr / 15 yr mortgge. If you can’t afford a $500,000 house price @ 6.5%, and you wait until rates go to 7%? then maybe you can afford 7% @ $420,000…there is NO reason to feel rushed to “catch a falling knife”, the home price will adjust accordingly.
While on the other hand a true American patriot should buy now go into debt for the good of the Country, home builder, & tax man, lest we forget the war effort…at your own detriment, expense and sanity!
Yes, by all means, go into debt for the good of the country.
Just as we were told by our President immediately after 9/11 to “go out and shop”.
Wow. Was I a fool. Before then I never realized how important shopping was to our economy.
Now it’s not just shopping, you’ve got to go into DEBT shopping for everything to keep spinning.
Bush told Hu Jintao today that Chinese consumers need to pick up the slack and start spending some of those savings.
Do you feel used?
Johnny Rotten-SF, 1979 ??
“Seven in 10 consumers expect a housing bubble to burst in the United States in the next year, while only a small portion expect housing prices to decline 5 percent or more…”
In SF, mostly acquaintances, say they believe prices “are high”, no one says “bubble” - and very few, not even a majority of renters I know, really say that prices might go down.
The favorite word is still “flat.”
That’s interesting to me because if that PMI Group study of several quarters ago can be believed, the rent and home price “imbalance” would right itself in 2011 or 2012 in SF if houses were “flat” between the date of the study and that future date.
Of course, if I recall, their analysis occurred when SF prices were maybe $100K lower (?) than the present.
Now that I think about it, PMI was talking 2014… basing “Fundamental Market Value” for houses on PE calculations and on computations of future “Fair Market Rent” by applying an “inflation” factor to rents.
I just looked and based on that analysis - houses in 2014 in SF would be estimated to be priced at $656K. Today, the median house in SF is around $750K, if not more.
See page 8 for the Table I’m talking about (as well as others):
http://www.pmigroup.com/lenders/media_lenders/pmi_eret05v2s.pdf
Or:
http://tinyurl.com/k99q2
[I hope this does not double post]
See page 8 for the table I’m talking about (and other pages, too):
http://www.pmigroup.com/lenders/media_lenders/pmi_eret05v2s.pdf
Or:
http://tinyurl.com/k99q2
The bigger the bubble the louder the denial. You got to understand a bursting bubble will repudiate the decisions these people have been making for years. That’s a tough ego hit to get past.
Well said..
Ditto — Robert’s is the succinct type of expression that I add to a small collection and carry in my planner or wallet, for times when someone truly wants to discuss bubble issues and results..few though those times may be.
Those truly stung are going to be among those 65% that don’t think there is a bubble in their area, and buy a new home before selling their own, and finding themselves with the choice of a) two mortgages for a while or b) dropping the price on the old home and having more debt on the primary residence.
Not a pleasant choice.
Everyone in the NY area who is in their right minds knows home prices are unsustainably high. A snippet on the weakening home sales market in the Hamptons rom Newsday yesterday:
“There’s a precipitous increase in houses renting this year,” said broker David Zazula of Devlin McNiff Real Estate, who added that some people are favoring rentals as they anticipate softening in the market. “I expect the feeding frenzy to continue right up until Memorial Day and through June.”
http://www.newsday.com/business/local/longisland/ny-bzrent0419,0,4147490.story?coll=ny-top-headlines
When these morons who bought dumps worth $150,000 a few years ago for a million are crying povery, I hope nobody helps them.
The exodus from the entire NY area has begun.
“In contrast, a much smaller number of consumers, 32 percent, expect the collapse of a housing bubble within their own area in the next year.”
32% of consumers expecting a collapse is iserious numbers. It’s practically 1/3 expecting a collapse.
simmsays…
http://www.AmericanInventorSpot.com
I repeat from an earlier posting, not until people are gagging real estate will it be time to buy!
2012
2008
Actually, yes, people will be gagging real estate by 2008.
But “near bottom” won’t be until several years later.
IMO.
(Sorry for all these little comments)
little comments
$5.00 fine
…and fifty lashes with a wet noodle.
Hah - You youngsters dont even know what a wet noodle is!!
What is a wet noodle?
well… I looked at the price reduced list that I posted… there are houses that are selling now for double what they bought it for 5 years ago… that makes no sense to me. There is no house that is worth double in just five years time… at least not to me there isn’t… that is just ridiculous.
It is not a buyer’s market yet… and it won’t be until the market returns fully to a normal rate of appreciation and these fat pigs give up their ill gotten gains.
Further, my local paper still has advertisements from realtwhores proclaiming that now is the time to get into this HOT SELLERS MARKET…. so the party isn’t over, despite the inventory ballooning and the sales trickling to a drip… and the price reduced list growing every day.
Would it were that simple-reparations for the spoils of economic warfare. Unfortunately this about wealth transfer and the destruction of “we, the people” through the failed experiments of the last 25 years to deregulate commerce.
Amen.
baltimorehousing.blogspot.com
Athena, Re home value doubling in 5 years.
My first home: purchased 1999 for $135k
W/few improvements……sold it in 2002 for $208.5k (If I’d waited 3 mos more after 9/11 I could have gotten 50k more)
New owner added 30% in size: Now on tax rolls at $525k. The land alone was valued at more than we bought the whole thing for in 1999. Knowing assessments to valuations for that area, I’m guessing before the downturn he could have asked $575000. But as luck may have it he may soon want town to reassess.
I just don’t think the valuations between 2001 and 2006 are real. For most areas they just aren’t based on any fundamental reality whatsoever. There may in fact have been the anomaly that was significantly undervalued- but on the whole… those values were based on nothing but cheap money, speculation, greed and lenient lending standards.
In my area of the Netherlands same problem. There are many existing homes on the market for 2x the purchase price of just 2-3 years ago. A few years ago, it was normal that newly built homes were sold even before they were finished for 2x price of the first buyer (pre-construction price; construction etc. takes about a year here).
The average home here has increased 500-1000% in price over the last 10-15 years. Around 1990 the most expensive, big and luxury homes (just a few of them) cost EUR 150-200K - that was considered extremely expensive then. Now even a small old garage sells for EUR 60K, a tiny POS home for 150-200K and the top of the market for over EUR 1.5M.
When I tell someone the price of a home they are looking to buy from 10 years ago, they drop their jaws in total disbelief or get very angry. They are convinced it cannot be true. Most people do not even bother to check apparently (which was difficult here 10 years ago, but very easy nowadays), they totally realy on the RE mob.
So I agree, valuations are unreal but they have been like that here for nearly 10 years already, and prices are still climbing. With all the efforts of the FED and ECB to flood the market with money, I don’t see an end to this soon.
many buble areas, it is 3 times!!
My old home (sold a bit early in 2004) is over 4 times what I paid in 1998. No speculation there…none at all!
Athena- There’s stuff in Seattle on the that sold for 500K in 2004 , now on the market for 1,400,000.
When I saw that, I made a mental note to always check the tax records before buying any home ever again.
Really, really sick.
I am with you. For all the price reduced listings I do- I post the zillow stats… they may not be all that accurate but some data is better than no data… and when there are sales history records even better. There is just no excuse to be underinformed in the information age.
Moonvalley came up with an interesting idea… she mentioned she had been to a garage sale on a street that we knew to have a couple foreclosures going on… and now is wondering if she was at a pre-foreclosure garage sale… and how many more might be on the horizon?
I am considering doing a pre-foreclosure list/comparing it with houses for sale on the mls… and cross referencing it with the garage sales going on…
Talk about public service!
This is just another confirmation of the trend, but it is still too early to start buying. That number needs to go over 90% - expecting the bubble to pop in one year. need to think buying RE is a bad investment. Then I can start looking at the houses and make low-ball offers.
In Bay Area, the price per sqft is up almost 25% YOY even today. That is nuts. Interest rates have been going up for last year. So affordability has been going down even for “how much a month” gang. I think, these people are buying a smaller house, but at a higher per sqft rate. Cannot afford a 2000sqft home for 800K ? OK, how about a 1500sqft home for 700K ? Aha ! That sounds like a nice deal.
We are truly in the last leg. Next spring is going to be a whole lot different. And 2008 summer, when a lot of ARM resets have hit, things will be much more nasty.
So in Bay Area, even if prices go back to 2004 levels, just erase one year of gain, it will wipe out 25% gain in per sqft rates !! I think this scenario is highly likely.
Sorry for the bold tag. Trying to close .
bold tag non-closure
$5.00 fine
….and fifty lashes with a wet noodle.
Help, my ARM is broken. Can someone reset it for me?
What do you mean I have to pay more?
Yup, the mass hysteria of ARMs is on its last legs. The posters on this blog have a durty as well as a RIGHT TO BARE ARMS, and all the crap that goes with them.
Great bumpersticker at “The Great Lost Bear” bar and restaurant in Portland: “Support the Right To Arm Bears”.
my favorite new phrase is “you seem to get more for your money this spring” translation? —price declines
Wait until next spring. RE agents will be saying prices are down 25%, great time to buy. Same old stuff but the real declines will still be to realized.
If and when prices drop 25%, greed will take over and if incomes and credit allow, some buyers will decide the time is right and jump back in.
And they will be sorry!
how about “it seemed like a good idea at the time”
Front page of Washingtonpost’s business section today is a great article, I’m surprised I haven’t seen it here already.
http://www.washingtonpost.com/wp-dyn/content/article/2006/04/19/AR2006041902320.html
Suddenly, the big guys are getting religion.
some of my top articles. almost to 30…
#20 Pension funds play catch-up with high rise of real estate
#21 As real estate market cools, ‘buys’ return
Title
#22 Selling Condos? “The DJ’s Got To Be Really Good”
#23 Looking For A Condo? Grab A Sleeping Bag
#24 buyers are sending flowery bios, pictures, and letters to sellers
#25 The Housing Bubble Made Me Quit My Job
#26 L.A. banks strongest in nation, report concludes(Sept 10, 1990 )
That article about pension funds “hitching their cart to the RE boom” in Nov 05 is scary. It is almost like corporate America is going to use the RE collapse to eliminate pensions. “Sorry, we lost all your retirement money in the RE collapse”……WHO KNEW? (CEO shrugs shoulders, smiles, and gets into his Lexus, then lowers window and says in a fatherly voice…..”I hear Wal-Mart is hiring, and you can work there until you in your seventies”).
Like a movie playing over and over in my mind…..
Still at the top of the parabola…The lull ,and fascination as the ball seems suspended mid-air. Then velocity, curve steepens….Down
Seems like you’ve been watching with disbelief ,and now wish to jump in? Wait til the curve steepens ,and even you will be hestitant about ever thinking that it’s safe to buy….That will be your entry
Very well said. All of these underlying newly established trends of decreasing sales, rising inventories and rising foreclosures will eventually hit a “critical mass”. Right now it seems that people are just noticing that things are different, I can sense a growing nervousness among industry cheerleaders. I have friends that I use as barometers here in SoCal - all of them now speak of RE as growing vulnerability measured against last years view that RE is invincible. “Fascination as the ball seems suspended in mid air” is spot on. I have a feeling that by the end of 06 people will be getting frustrated that sales are still down, inventories are reaching record levels and those damn foreclosures are piling up. Just as those of us who sat and watched in disbelief that it just keeps on going up, I have a feeling it’s now the other side’s turn to sit and watch in disbelief that these downward trends seem unstoppable. The soft landing crowd thinks of the downturn as a tidal wave, tidal wave being only the very top portion of the water that breaks at the shore. What I see right now is a tsunami - a wave from top to bottom that races miles inland and devastates everything in its path. The Economist was right when they said this is the biggest bubble in history.
mostly agree but I’m sure it will take many years before the speed to the downside picks up in earnest.
Especially in Europe, 10-15 years of uninterrupted and huge price gains are rooted in everyones consciousness. It will take one generation to eradicate the belief that housing is the sure way to get rich without working, even if the central banks would stop fighting the tide (and I’m sure they will fight the tide with everything they got, because they will probably be washed away as well when this tidal ways arrives).
My friends are in denial, saying the same thing. Articles in LA Times last week didn’t help, with regards to still-rising median price. My friend bought a 2BR condo in Palms for $480K in April 2005 with an ARM. I’ve tried to convince him to bail, but he’s adamant to stay at least 2 years to avoid capital gains. I told him that it’s only a matter of time, and that one or two low comps in his area will submarine him, but he’s adamant to stick it out. He’s a good guy, spend 8 months just trying to get into a place of his own after he felt like he was getting “priced out of the market”. Time will tell.
I disagree, you’d still be catching a falling knife.
IMHO a Sine wave is a better image than a parabola; there’s plenty of time to get in near enough to the bottom.
Astonishing analogy. In a sine wave, at the instant that it’s at its maximum downward slope, when things are back to normal, you’re only halfway to the bottom. That might be about right for the housing market.
Bubble consensus grows is right.
I had an experience today with a co-worker that is an Architect and a bubble denier as of 6 months ago and called me an idiot for not buying.
He introduced me to his new boss today. I and some co-workers used to work at Enron and we were joking about those days.
Totally unprompted the new boss explains that mortgage brokers are playing exactly the same games as Enron did in 2000 and 2001.
The co-worker agreed with his new boss. I don’t know whether it was ass-kissing or a change of heart but it was interesting.
That is too funny. Brown nosing - that is for sure.
You are the smart one.
Yuk, yuk. If you aren’t sure that it was ass-kissing, better not trust this co-worker with any of your money. It was ass-kissing.
Seven in 10 Consumers Expect Housing Bubble to Burst
Still, only about 4 in 10 expect housing prices in their areas to remain the same or decline
In other words:
“While prices in other markets are crazy and unsustainable, prices in _______ are clearly justified. It’s different here because ______.”
Many people still think their area is special. Where I live it’s:
1)NJ
2)Access to NYC (like it just appeared out of nowhere 5 years ago)
Could just as easily be:
1)CA
2)Nice weather
This pretty well matches with what you see in media now. Just do a search for housing bubble on Yahoo News. The national media coverage debates the existence of a bubble, where most local media outlets run stories like “No bubble in (your town here) says local RE expert and Century 21 agent”.
Don’t forget:
There’s no bubble in Kentucky because prices haven’t risen as much as the coastal areas.
Here, it’s:
1) Baltimore
2) near DC, with strong employment.
Mad Libs again! I love this game.
While prices in other markets are crazy and unsustainable, prices in DULUTH are clearly justified. It’s different here because WE HAVE A POPEYE’S CHICKEN AND TWO WAL-MARTS.”
Be patient folks, we are just at Phase One now-slowing market and building inventory. Based on what I have read and heard lately I dont think we will see real concensus and prices decreases till mid 2007, then watch out, I see real pain and decreasing prices in 2008.
Not all markets are the same. In DC there are plenty of people saying the mareket is way over valued (PMI), but others are not so sure (Credit Suisse, Economy.com).
http://dcbubble.blogspot.com/2006/04/dc-market-overvalued-so-what-nearly.html
Economy.com? Those jokers are the epitome of mainstream *cough*bullshit*cough* economic analysis! They wouldn’t know a bubble even if it was shot in ‘em intravenously.
another interesting martgage option…wouldn’ you say.
http://www.realestatejournal.com/buysell/mortgages/20060420-simon.html
I listen to a RE radio show on saturday at 10:00AM on 97.1 in LA and alot of callers have these mortgages and then they are shocked when they find they have a pre payment penalty, can you imagine, signing a 500K document without reading the details.
Also one mortgage broker has been doing alot of advertising for thier new 50 year loan. Insanity.
In fact, I prefer writing out the 500k just to remind myself what the heck we’re talking about: FIVE HUNDRED THOUSAND DOLLARS!
Which for me = 10 year’s income after tax.
“It also added a 40-year fixed-rate loan that is interest-only for the first 10 years.”
___________________
Basically, you rent for ten years (with a payment that is likely higher than comparable rental homes) with the honor of being responsible for all the maintenance, taxes, etc. Additionally, you risk being stuck if prices even remain flat (can’t afford selling costs). If you, for some reason, become unalbe to pay your mortgage, you will lose your “home” and have a major credit ding, as well as pay taxes on any forgiven debt — that is IF you are not held responsible for paying back the difference due to it being a recourse loan.
After ten years, you are left with a fully-amortized, 30-year FRM. Just the same as if you had waited 10 years to buy. However, due to the extreme nature of this bubble, the downside is such that prices are still likely to be lower than peak prices even ten years from now (it took 10 or 11 years for peak prices to be reached again in the last bubble in LA).
Unfortunately, there are so many stupid people out there, they will actually sell these loans. Stupid, stupid, stupid…IMHO.
CA Renter — nice summary. Even if the risk were dead even re prices being higher or lower at the end of ten years, you’d have been paying the much higher costs of owning versus renting during the previous ten years. Not to mention the statistical likelihood of wanting to be in a different house within ten years, anyway.
Sunset,
Ass kissing w/o a doubt. I like the Enron analogy for the MBs.
oh hell, here are most of my top 30 articles, it’s been awhile since I posted them.
National Real Estate Investors’ Conference at BWI this week drew about 500 people, and many of them hopped on a bus to Baltimore for a tour of potentially lucrative investments
Historical Census of Housing Tables
Home Values
Even in the county’s toughest neighborhoods, we couldn’t find cheap housing
After a holiday slowdown, the Super Bowl each year marks the start of housing’s prime season.
Average US House Prices Measured In Ounces Of Gold Or Silver
Supply Hits High In Condo Craze
If you want to buy my house, you have to feed the squirrels.
In come the waves(from the economist)
Housing bubble’s burst could cost 1 million jobs and cause a recession, experts say
#10-20
more housing bubble articles
#11 Analysts eye Miami’s condo boom, raise a ‘more risk’ sign
#12 Attention, Speculators: Here’s a Lesson from Hong Kong’s Housing Bubble
#13 Rich House, Poor House
Financial guru Robert Kiyosaki has turned bearish on the boom he helped create
#14 Real estate: When booms go bust…
Home prices can and do go down. Here’s what declines have looked like in the past.
#15 Real estate clubs ride the housing boom
#16 Global credit ocean dries up
#17 Understand risks of ‘creative’ loans
#18 Renting versus buying
#19 Real Estate Rebound
After a long, painful slide, housing prices around the Bay Area — especially in certain zip codes — are finally heading back up
Jonathan Marshall, Chronicle Economics Editor
Sunday, April 9, 1995
Wow John, you’ve been busy
Thanks for the links.
I bookmarked some articles and just made it so I could link, it’s all saved and easy to cut and paste. I have to round it out to 30.
Cannot afford a 2000sqft home for 800K ? OK, how about a 1500sqft home for 700K ? Aha ! That sounds like a nice deal.
That 2ooo sf was around $250K 5 years ago. 1700 sf was around 160-170K. So what caused it to go up to $850K. Aside exotic loans not much.
togoplease. Stupidity of the sheeple, greed of the mortgage and realtor crooks, and the idea that a greater fool will always come and pay a higher amount. After all, RE only goes up.
besides stupidity, the sheeple are also greedy
“Unsure whether to buy a home now or wait? If you wait, mortgage rates could go higher. Right now, inventories are growing and houses are sitting unsold longer.”
____________________
Since the “higher interest” argument is so prevalent, I compiled a list of reasons why we would want to buy with high interest/low price versus high price/low interest.
1. During this bubble, not only were prices pushed to record highs, but monthly payments are at record highs as well. The argument that rising interest rates will cause monthly payments to go up does not hold water because people are already stretching with 40 - 50% DTI ratios on gross income (and that’s even will “liar” loans). Since payments cannot rise much further, it’s prices that have to come down.
Also, as more buyers chased the market and prices rose accordingly, buyers were willing to allocate more of their income toward housing costs because they expected the house to “earn” $100,000 or more per year (especially true in bubble zones). They could refi/HELOC themselves out of trouble — and many people did this over and over and over again. If prices are no longer going up, buyers will want less of their monthly income to go toward housing. Therefore, the **monthly payment** will likely fall as well as the total price of the home.
2. Low interest rates and exotic mortgages are a sign of too much money chasing too few borrowers. Lenders expand their definition of a “qualified” buyer, which increases the buyer pool. More buyers = higher prices. High interest rates mean less money to lend. Only the most qualified buyers will be able to borrow. That leads to a smaller buyer pool. Fewer buyers = lower prices.
3. If you buy at a high price, you assume the risk of falling prices/losing equity/being underwater on a loan AND being stuck for years and years in a house you might not be able to afford or want. If you buy at a low price (even if the payments are the same), you have less risk of falling prices, and stand to gain on rising prices. (this would seem obvious, but…)
4. As long as the MID is retained, the portion of your housing cost that can be written off increases as more of the payment goes toward interest.
5. If your income increases over time, and you want to prepay principal, you can pay off your mortgage faster with high interest/low price because the principal amount is lower.
6. If you buy at the bottom of the cycle (on the assumption that the buyer pool is smaller with high rates), and the housing inventory is very high, you have a better chance of finding a better house for the right price (and no bidding wars!!).
I’m sure there are more reasons. If others can add some, we can carry this list around to shut people up when they threaten us with, “better jump in now because interest rates are rising and then you’ll be priced out FOREVER!”
Someone here once remarked, “I can’t be priced out of the market. I am the market.”
I thought that was brilliant.
“I can’t be priced out of the market. I am the market.”
That’s beyond brilliant. That’s what anyone who invests in anything, be it housing or securities, should tell themselves every time they consider potential purchases.
The classic “Mr. Market” analogy of Benjamin Graham is a good one, too.
You forgot the main reason:
You can refinance to a lower interest, but not to a lower principle.
I think that was me.
In addition to me being the market - at my salary level I’m in the upper end of the market when I look at the salary bell curve in San Diego - yet I can’t even justify paying for a townhouse here on my paycheck.
When someone up the upper 75th percentile for income can’t afford a property in the botttom 25th percentile of price range something is badly screwed up.
Yes, I believe it was you, if I remember correctly.
Exactly right. We are in the same boat with respect to the SD market. We have a significant down-payment, 6-figure income, and cannot reasonably afford a very average home in a not-so-good neighborhood. We rent, and will continue to do so until the Monopoly money is shaken from the market.
BTW, love your trolls on the Yahoo HB message boards!
My apologies to Robet C. for being so long-winded.
Also, sorry for typos as well. (*will* “liar” loans = *with* “liar” loans)
DUH! I also forgot LOWER PROPERTY TAXES!!! Sorry.