you are right, my bad, I didn't see the sold price at the bottom of the page, and didn't pay attention to what you were saying, I thought you were comparing the Zestimate with the current price
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Housing doom and gloom - ENOUGH already !!
- Thread starter Joab
- Start date
you are right, my bad, I didn't see the sold price at the bottom of the page, and didn't pay attention to what you were saying, I thought you were comparing the Zestimate with the current price
Zillow or not real estate is going down fast. This web site...(see chart)
http://recomments.blogspot.com/2008/02/its-not-different-here.html
Shows real estate in the south west is going down over 3% per month. The markets of Vegas, San Diego, Los Angeles, and Orange are in lockstep in agreement on this decline.
On my street Zillow shows the same, houses on my street are going down 8-12k a month!
Around the corner from me there was a house that sold for 631k on 2/14/2006. It just sold again for 440k on 12/14/2007, a solid 30% hit.
http://recomments.blogspot.com/2008/02/its-not-different-here.html
Shows real estate in the south west is going down over 3% per month. The markets of Vegas, San Diego, Los Angeles, and Orange are in lockstep in agreement on this decline.
On my street Zillow shows the same, houses on my street are going down 8-12k a month!
Around the corner from me there was a house that sold for 631k on 2/14/2006. It just sold again for 440k on 12/14/2007, a solid 30% hit.
Quote from day7793:
You have no experience in real estate and it shows. Real estate has been in a bull market since 1930s and it does have a cyclic nature. Your pessimism filters through your post, and the same old doom and gloom...depressed out look.
Amen! I am getting real tired of listening to this doom and gloom scenario. Have owned 4 homes over 30 years, have seen a real estate "pullback" before. It is the same as stocks, when their crying, start buying!
Now is a good time to get a reasonable rate on a mortgage, and purchase a home at a substantial reduction compared to a year or two ago.
The young wannabe financial geniuses here will be stuck in their high rent studio flats if they wait too long. The Real Estate market will rebound very soon.
Quote from Jayford:
Guys, we are going to revert to the mean. The mortgage payment/income mean which has been stable at roughly 3 to 1 for 50 years. In Cal and New York, 4.5 to 1.
It WILL happen, just a matter of time.
I am in San Diego, and prices here are dropping fast.
Jay
If past corrections are anything to go by, we may actually go below the mean, possibly for some time. Not saying it will happen, but the possibility must be considered - secular bear markets don't usually go to fair value, they usually then move down further to undervalued.
Quote from SteveD:
A house, assuming it is habitable, ALWAYS has a value.....
Enron, Worldcom, etc etc have NO value....
Anyone who compares the two simply does not understand....
A guy buys a house for $100,000 in 1990....goes up in value to $500,000 by 2007.....he sells in early 2008 and only gets $475,000.....
Press and ET loudly shout...."Man loses $25,000 on house sale"
Peabrains, LOL
SteveD
Your comparison between stocks and houses is faulty, because the leverage and concentration of assets is totally different. Houses are usually bought with 0-30% down i.e. the leverage is anything from 3-1 to infinity. Stocks are usually bought with 50-100% down. Most people do not diversify their real estate holdings (they can't afford to) so they have >100% of their net worth in their house. Most people diversify their stock holdings, either through a fund, an ETF, or multiple holdings of 10-20+ stocks.
For a homeowner to be wiped out, all that needs to happen is for their home equity to be wiped out by falling values. Take a conservative buyer with 20% down, buying a $500k home with a $100k deposit. If home prices fall 25%, he is now worth -$25k (actually worth even less, because of transactions costs which are about 7-10% for real estate in the US). He has gone from $100k net worth to being net indebted. Now imagine a conservative investor putting $100k to work in stocks instead. If stock prices fall 25%, he is now worth $75k. Even a killer bear market like 1973-74 or 2000-2002 would leave him with $50k.
Now consider that many people in recent years bought with 10%, 5%, or even nothing down. They are wiped out even in a flat market, since transactions costs are bigger than their deposit. As for Enron, Worldcom etc - problems like that are avoided by diversification, which is simple, cheap, and easily to implement. Try doing that in real estate. What if your neighbourhood becomes a ghetto, or becomes rent-controlled, or the apartment building next door becomes a crack house? What if your house gets destroyed by fire, or your title deed is fraudulent, or you get bad tenants who trash the joint and won't move out? What if you borrow to build, and then the market collapses before you finish? The real estate equivalents of Enron do in fact exist - just that in real estate, people often have >100% of their net worth in one house or project, so they go bankrupt; whereas in stocks, an Enron will knock maybe 5-10% tops off your portfolio (if you are stupid enough to hold a fraud stock all the way down as 5-10% of your portfolio). Losing 5-10% at most is a lot different from going bust or having negative net worth. Meanwhile, pretty much every other stock in the market retains a positive value, and the S&P as a whole will never fall 100%.
As for ET predictions on real estate - many ETers shouted "load up on puts on real estate stocks" back in 2005, 2006 and 2007 when the noise from housing market cheerleaders was deafening. Anyone who followed that advice has done very well financially during this real estate crunch. Anyone listening to the cheerleaders has lost, at a minimum, tens of thousands of dollars in opportunity cost.
Quote from Joab:
I think the economy is in trouble because of MASSIVE budget deficits and bad government policies that have trickled down to main street.
Regardless of who it's still a mess !!!
That has contributed, but the main driver right now is the fallout from an insane real estate bubble that is now bursting. The economy would suck now even if there was a balanced budget. Note that France has worse budget deficits and worse government policies, yet they are not mired in a borderline recession. Why not? Because they had no real estate bubble, unlike the US.
The real culprits are stupid home speculators, reckless lenders, realtors, and mortgage brokers, and the dumb sheeple who fell for their spiel.
Quote from onewaypockets:
Zillow or not real estate is going down fast. This web site...(see chart)
http://recomments.blogspot.com/2008/02/its-not-different-here.html
Shows real estate in the south west is going down over 3% per month. The markets of Vegas, San Diego, Los Angeles, and Orange are in lockstep in agreement on this decline.
On my street Zillow shows the same, houses on my street are going down 8-12k a month!
Around the corner from me there was a house that sold for 631k on 2/14/2006. It just sold again for 440k on 12/14/2007, a solid 30% hit.
ok, i bought my first home (condo) in 1990 at an auction. one year earlier it went for 330k; i paid 166k and they threw in a 30' boat slip that separately went for 40k. so, a 50% drop (oversold imo)one year of stagnant (s-l crisis) prices and then buying started real good in 92. prices did not bubble at first, but it eventualy did and all memories of the disaster were forgotton.
our economy is much bigger and stronger today; so even though home prices went up even higher than the last boom; i still believe we get the 40% drop (this year), then sideways in 2009, then rising prices in 2010. seen all this before. half my income does come from the construction industry; so yes i am biased, but i believe i am very in touch with the big picture...as long as i look at things objectively; which i think i am! i will be buying when i see the 40% or so. if we did that 18 years ago a little more; i would not be trading as much today.
Quote from domestic:
ok, i bought my first home (condo) in 1990 at an auction. one year earlier it went for 330k; i paid 166k and they threw in a 30' boat slip that separately went for 40k. so, a 50% drop (oversold imo)one year of stagnant (s-l crisis) prices and then buying started real good in 92. prices did not bubble at first, but it eventualy did and all memories of the disaster were forgotton.
our economy is much bigger and stronger today; so even though home prices went up even higher than the last boom; i still believe we get the 40% drop (this year), then sideways in 2009, then rising prices in 2010. seen all this before. half my income does come from the construction industry; so yes i am biased, but i believe i am very in touch with the big picture...as long as i look at things objectively; which i think i am! i will be buying when i see the 40% or so. if we did that 18 years ago a little more; i would not be trading as much today.
What city do you live in and how much is your condo worth now after 18 years ?
I think there is a lag between the bad areas and good ones. Right now, Seattle ans SF Bay Area are starting to show. But Miami and Vegas and Sacramento has been going down for while. So I'd say 2010 maybe the bottom of those areas that declined early.
Quote from Adobian:
What city do you live in and how much is your condo worth now after 18 years ?
I think there is a lag between the bad areas and good ones. Right now, Seattle ans SF Bay Area are starting to show. But Miami and Vegas and Sacramento has been going down for while. So I'd say 2010 maybe the bottom of those areas that declined early.
southern ct. 45 miles from midtown manhattan. to add fuel to the housing bear fire; it took 15 years to reach 1989 prices. condo's were hit especially hard. i was gone in 10. the point i do want to make is things did bottom (as i say they will in 08) and started the rebound over the next decade and then came the bubble further pushing things higher. so, a bottom imo lasts a year and then the slow rebound commences. while it is rebounding off the lows, to the construction industry, it feels like things are "good". that is where i am coming from. hell, i was for this correction for the obvious reasons. i also expect things to turn back up in the near future.
I know Pabst will disagree, but we've only just begun.
Taxes (way up), insurance (not even available in certain areas, and extraordinarily expensive in other areas), credit (tightened lending standards), existing home inventory (hampering new sales)...
...even the formerly strong bastions of Seattle and New Mexico are weakening at the fringe.
It's going to be a long, protracted housing bear.
Taxes (way up), insurance (not even available in certain areas, and extraordinarily expensive in other areas), credit (tightened lending standards), existing home inventory (hampering new sales)...
...even the formerly strong bastions of Seattle and New Mexico are weakening at the fringe.
It's going to be a long, protracted housing bear.