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Monday, December 28, 2009
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57 comments:
NPR: Walking away in the DC exurbs
could be anywhere, PWC, Loudoun, Gaithersburg... But it's somewhere that prices have been cut in half...
Cara-
I seems really stupid for the woman to be written about. In Virginia don't the banks have the right to go after her for the difference between what her house sells for and what she owes. The last thing I would want to do is have my name in the paper so they make an example of me...
housebuyer,
That's what makes me think Gaithersburg. MD laws are more buyer-friendly. Although there are fewer THs to rent along the red-line... Way more THs in NoVa...
Still, either way it does have the ring of, "what on earth would possess you to admit this to a reporter?"
I find it disgusting and a further example of the moral decay of our society. Debtor's prison? Looks better and better. She's stupid enough to set herself up for years of creditor's and collections and garnishments. At least "act" poor.
We will all pay her debt.
Va_investor,
Presumably she plans to file for bankruptcy if the lender comes after her. I don't see any other reasonable course of action. But bankruptcy is not the end of the world.
In more financial questionable thinking news:
Trial modifications wreck your credit score Gee, no really?
Axelrod, a municipal employee who lives outside Chicago, entered a trial mortgage modification program this spring.
He had not fallen behind in his mortgage, but he was finding it harder to make ends meet after his overtime was cut and his property taxes skyrocketed. Told it would not hurt his coveted 750 score, Axelrod secured a $565 reduction in his monthly payments.
Eight months later, Axelrod is still stuck in the trial modification, trying to satisfy his loan servicer's endless requests for documents.
And to his horror, his credit score has plummeted to 644.
"It's completely destroyed my credit," said Axelrod. "If I had known it would affect my score, I would have never entered the program."
Representatives at JPMorgan Chase (JPM, Fortune 500), which services Axelrod's loan, are instructed to tell applicants that entering a modification could impact their credit histories, a bank spokeswoman said.
Despite his weakened credit score, there is at least some good news for Axelrod: After being contacted by CNNMoney.com, JPMorgan Chase said his permanent modification had been approved.
...
Axelrod is already feeling the impact of his lower credit score. He ordered a new car this summer, believing it would come with a lower monthly payment. It arrived in mid-December.
But because of his newly blemished credit background, his two credit unions turned him down for a car loan. His dealership told him the best he could get is a 12% rate, a hefty hike from the 4.7% he was paying before.
"This is the biggest nightmare," he said. "My credit is completely useless."
Wow. just wow. I'm one of the luck few who manage to get a loan modification through HAMP, and what do I do? I try to reduce my monthly debt obligations by trading in my not yet paid off car, for another new car...
The funny part is, I can see how he would think that "should" work. If his previous car cost $35k new, and the new one costs $16k new, then one would think you'd be cutting your monthly expenses in half... Except that the depreciated old car isn't worth the remainder of the loan amount, and your new loan isn't going to be at 4.7%...
Loan mods. Freeing up DTI to be spent on other things. The american way.
Cara,
I don't know much about the new BK laws, but she will lose all her assets (except retirement accts?) and I can't see how she can go chapter 7 when she can afford her payments. Does anyone do BK law?
Va_investor,
I don't know BK law. But she's not trying to keep the house. With 0% down, I'm doubting she has any assets. I don't know if 529's for her kids or her retirement are off-limits or not, but I'm pretty sure she's doing the calculation that even if she gets wiped clean of all assets that will be better in the long run than being -100% underwater on a house. If you're going to start from scratch, the sooner the better.
She figures the house she bought for $465,000 won't sell for more than $225,000 now. That lower figure is what a house down the street went for earlier this year in a foreclosure auction. Like a lot of people, Baker bought her house with no money down. The mortgage broker she worked with told her she qualified for the loan based on her credit score alone.
"He was like, 'Go get whatever house you want. It doesn't matter.' And that's pretty much what I did, unfortunately," Baker says.
Starting to sound familiar? Baker's experience is a classic case of the mixed-up logic that ruled the housing boom. But there's a difference: Baker is solidly upper middle class. She has a good income and can actually afford her payments.
"I'm looking at the investment part of it," she says. "Not just, 'OK, yes, I can afford this house.' But I just don't see it as a good investment."
Now let's get this right.
She did not buy a house or a moral investment or anything else.
What she bought was a zero-down option on a house with lease payments. She is now walking away
with some chance of a lawsuit regarding a force to close on her unpaid lease payments.
The banks are dumpingproperty in a heartbeat without regard to what it does to people. The banks wrote these mortgages without regard to any sense.
If she had 20% down, she'd be miserable over walking away.
That she had a zero-down call, makes it a business decision.
As for VA_Investor, are you personally on the hook for all your investments?
as for moral decay, where were you when Paulsen was bailing out Goldman?
Goldman vs. Morgan Stanley
Morgan Stanley:
Yields on benchmark 10-year notes will climb about 40 percent to 5.5 percent, the biggest annual increase since 1999, according to David Greenlaw, chief fixed-income economist at Morgan Stanley
Goldman:
Edward McKelvey, senior economist in New York at Goldman Sachs Group Inc., the top-ranked U.S. economic forecasters in 2009, according to data compiled by Bloomberg, expects yields to drop to 3.25 percent. Goldman Sachs says unemployment will average 10.3 percent in 2010, hindering the recovery.
This is why I'm out of the interest rate prediction business.
bubblemeter graphs
National
http://mysite.verizon.net/vzeqrguz/housingbubble/
DC
http://mysite.verizon.net/vzeqrguz/housingbubble/washington.html
Vegas
http://mysite.verizon.net/vzeqrguz/housingbubble/las_vegas.html
if you look at the bottom of the national page you can see the market graphs,
Miama, Vegas, Phoenix are fully corrected, wether there will be offshoot or stickiness as investors come in is hard to say.
I'd argue that it may be a long time before those markets start to grow, but ifyou can pencil out a deal there it's fine.
LA, NYC, Baltimore, DC are still above the heights of prior bubbles.
That the mega-bubble has popped is true but the prices still will fall or stagnate going sideways for a decade or longer letting inflation slowly cure what the market didnt
pat,
Thanks for posting graphs.
If you did the same comparison for incomes rather than inflation, you'd come away with the conclusion that the 1990's stagnation over-corrected the previous bubble, and that we're now quite close to the income adjusted norm.
In either case, there's no compelling reason to expect the strong V we got since last spring to continue upwards. That's the one thing that won't happen.
Robert,
One could alternatively take away this message that this is why one shouldn't listen to experts.
pat,
"still fall or stagnate" hardly equates with alot of air. Wouldn't you agree?
yes pat,
Personally on the hook. People who have personal responsibility tend to be prudent. Are you defending "walking" on a debt that you can afford? I hope she is hounded by creditors for 20yrs. You make your bed, you lay (lie? pun) in it. Bankruptcy was not meant for people simply "underwater".
Pat-
Do you think it is ok to walk away from credit card payments or car payments? If so how are these different than a house.
Cara-
That is crazy. The guy is saving 600/month on his house and he is worried his cars interest rate is 12% not 5%. This increase is likely only 100-200/ month...
"This is why I'm out of the interest rate prediction business."
Robert, if everyone agreed there would be no money to be made making predictions.
Robert
It's actually easy making interest rate predictions.
Take whatever Goldman is selling and bet against it. Goldman says rates will fall and is selling fixed income instruments? Then assume it's going to rise. Goldman has no clients only counter-parties.
So view Goldman as selling HorseHockey and that rates will rise.
VA_I
Stagnate for a decade, is a big one if you plan on appreciation as part of your plan. so if we see a 20% further decline or a decade of stagnation it's all about the same. I'd prefer a rapid decline and then a return to 2-4% price growth.
as for walking on debts, me, I have not paid more then $50 in interest on credit cards or cars since 2003. The last time I bought a new car was 1990, and the last time i carried debt outside a mortgage was 1985.
however, i think if everyone walked on these zero-down goofed up mortgages, and the banks lost their asses, and were forced into bankruptcy, it would be a real valuable lesson for all these monkeys.
as for bankruptcy being not for people "Merely underwater", was that
your position when GM went CH 11 on thier pensioners?
After all, GM was merely underwater on those pensions.
Moral hazard is a moral hazard is a moral hazard.
If you let people buy stuff with no skin in the game you take some risk.
Buying a place in the boondocks due to the bubble prices everywhere and paying mortgage on something that is worth less than HALF of its mortgage amount is nuts.
I wonder why she didn't buy a cheap new place somewhere closer in and THEN default on her old home.
There are different types of burdens that people have to carry in life --- take care of the sick and poor, take care of your own family, that are much higher on the average joe's list than the debt to some bank.
You can only adjust these preferences using harsher legislation against borrowers but it in effect it is much easier to do restricting lender's behavior. We do not want to have debtor's prisons here, we are not in Dubai, are we?
We live in a country that believes in fresh starts and second chances. The immoral thing is not the bankruptcy, the immoral thing is knowingly gambling when given the opportunity, the bankruptcy is just the result for those who's bets didn't work out.
If she really viewed the 0% down house as a no-skin-in-the-game free appreciation money gamble, then the immoral thing was taking that risk in the first place. This is just the natural consequence.
But life is not like that, and people aren't like that. She felt she needed a to own a house to be a full member of society at age 40. And then everything tumbled out of proportion from there, because of the ridiculous prices and lending environment at the time. She's guilty of believing the hype that the roof over your head is an investment not a consummable, and now feels no reason not to act in her own self-interest.
Pat,
How exactly does house price appreciation on your primary residence help anyone's wealth, given that during your life-time you always have to live somewhere? Why would you ever need to "count on" appreciation? To cover transaction costs? Why? How are those costs any different than a new roof or new furnace?
woah, we the taxpayer are about to take on an even larger share of the losses...
CR uncapping Fannie and Freddie
This is good for us the pensioner... spread the losses over the widest base we have, all of the US taxpayers. All those loans gone bad in GSE issues MBS's? The investors will be made whole. Could do good things for investor confidence in the mortgage market ironically.
You long-timers may remember the 4 big boxy modern houses in northern Falls Church. The first one sold for ~ $1.46 mill. in 06. The next two sold in 09, most recently for $1.04 mill.
http://icare.fairfaxcounty.gov/Forms/Datalets.aspx?mode=sales&taxyear=2010&ownseq=1&roll=REAL&jur=&sIndex=2&idx=9&LMparent=138
What I can't figure out is: why has the last (4th) one now sold for a higher price - $1.1 mill.? The lot is a tiny bit bigger, and maybe the buyer negotiated a completely finished basement (some had partially finished basements).
http://franklymls.com/default.aspx?m=R&l=800K&h=1500K&s=buckelew&x=sold
I can't believe values have gone up in that area, for that price range, in the past 6 months. The house sold right after a price drop, for exactly the new asking price. Maybe the buyers just had a crummy agent who didn't check out the comps?
Ace,
I'm very impressed that they all finally sold...
$60k higher than the most recent comp? They must have found a buyer who really fell in love with the place. Last of it's kind, since hopefully they'll never build such monstrosities again. Given that there's a good $30k swing in comps in my $400k price point, it's hard to say whether the $60k is meaningful above the $1 million mark or not.
It would have been nice if it had continued the downward progression though...
Cara
Why does price appreciation matter?
I guess in part to keep people investing in their own real estate if nothing else.
It also serves as an intergenerational wealth transfer scheme. The elderly get some wealth, and they sell and pay their nursing home bills.
http://www.slate.com/id/2239555/?source=patrick.net
Here's a discussion on the rich mailing in their keys.
You know it's a good thing for middle class people when the rich do it and then try and moralize on the working poor to not do such a thing.
Thanks, Cara, the swing re: your comps makes a lot of sense given how hot the market has been and that a lot of buyers in the $400K and below range qualify for the $8K bribe, but I really don't get it for this property. As you imply, love and a big checkbook or loan eligibility conquers all (or leads to disasters). Then again, I haven't been following this neighborhood that closely. But from the limited figures I have seen (selling prices of other houses near there, months of inventory, etc.), it really makes no sense. I wonder if they bought the staging furniture?
I tried a search on frankly for the agent's name and came up with nothing on the active listings - participated in 17 sales in the past 4 years.
Maybe I should hope she represents the buyer if I ever sell my house!
Ace,
They could have bought it furnished. That would make more sense than just the basement finishings.
Looks as if all of the other sales the buyer agent negotiated were in Montgomery County in the past 4 years.
pat,
I've only ever counted on RE slightly beating inflation. It's the mortgage pay-down and/or cash flow that is important to me.
People are buying me houses! And these houses produce a stream of income in perpetuity through net rent or for long periods of time thru their sale and holding the mortgage.
Also, please consider my actual cash-in and the current tax breaks for RE Professionals.
Cara said...NPR: Walking away in the DC exurbs could be anywhere
Well, wherever she lives, she lives within commuting distance of her job at Verizon:
Heather Baker @ Linked In
My money says its the Rockville MD address, as its the only SFH listed in a 'burb:
Google Search Heather Baker Maryland
The Waldorf Maryland address is unmappable, and is a heck of lot more in tune with actual price drops. SFHs in that area of Rockville peaked closer to $550k, and aren't down below $300k.
And how do you know she's not in VA?
Anyway, the internet is creepy.
Actually I take that back, that's a different part of Rock Creek Park than I was thinking, that is actually way way out there.
Oh, how many articles did I read about what would happen after Novermber 30th, 2009 when the tax credit expired, or about 12/31/2009 when the Fed MBS purchase program was supposed to end.
Now, bears are all waiting until 3/31/2010 and 4/30/2010. Well, you're going to have to keep waiting because the government isn't done yet...
U.S. may prop up housing further via Fannie, Freddie Unlimited support may presage more aggressive action in mortgage market
The government may put a mortgage-modification effort, called the Home Affordable Modification Program, or HAMP, into overdrive in coming years, pushing for reductions in the principal outstanding on home loans overseen by Fannie (FNM 1.31, +0.04, +3.15%) and Freddie
Instead, unlimited taxpayer support will give the government "more flexibility in potentially taking more aggressive action to support the housing market," George wrote.
Aggressive reductions in principal on mortgages overseen by Fannie and Freddie could leave the companies with significant losses and cut further into their waning capital bases. But Treasury can pump more money into the institutions to make up for that, George said.
And how do you know she's not in VA?
She could well be in VA, but one property tax record shows she lives in at least one house in Montgomery County, MD
Heather's MO CO Tax Record @ 6704 OLDE MILL CT
.
.
.
Robert
It's hard to make rational decisions when the Fed can weigh in with a trillion dollars against you.
1987 : Black Monday. The Stock market
starts falling on it's own accord.
Reagan intervenes, Greenspan drops overnight rates, Market starts rising.
1991: Real Estate, S&L Collapse.
Feds intervene.
1997: Asian currency crisis and LTCM Collapse, Greenspan intervenes.
2001: NASDAQ collapse. Greenspan drops rates to zero.
2008: Wall Street Crisis, Greenspan, Bernanke weigh in with trillion dollar intervention.
How does anyone other then Goldman know when to make moves?
I don't see anything amoral with walking away. The contract is simple: if you pay off the loan, you get the house. Otherwise, the bank gets the house. In essence, the house itself is collateral on the loan. If the house ends up being worth less than the loan and the mortgager walks away, then that's tough nuts for the lender. They should have thought of that before they lent the money.
Personally, I think it would be stupid to tie yourself down with monumental debt like that that can never be repaid.
Cara: I don't know where you get the over-correction idea from. I've been holding my tongue, but you seem to have really changed your tune since you bought/started the buying process. I'll just leave it at that.
I don't see anything amoral with walking away. ,,Personally, I think it would be stupid to tie yourself down with monumental debt like that that can never be repaid.
Therein lies at least one of the issues central to what we try and devine here on this blog. The dice are capable of showing seven or snake eyes when you sign that mortgage. Don't roll the dice if you can't handle snake eyes.
How many people are there, out there, whose mores and values are the same as yours? The minority? The majority? The young? The older?
In yesteryear, it was really a rare moment when someone had the courage to admit what you've said. There once was a time where uttering a statement like that led to permanent and irreversible ruin. A man's word was his bond back in the day where I came from. My first loan at a bank consisted of a 30 second verbal interview with the manager and a firm handshake to seal the deal. The debt was paid in full according to the terms based on that handshake.
Doesn't seem to be the case anymore with some folks and we're seeing at least some of the effects of this change. Wise(er) folks are starting to suspect that some folks are thinking this is a game of sorts. It isn't.
Banks get their money from the same place the government does. From the people. You and me. We either give or have it taken away (taxes) and it enters the system.
There is a real cause and effect at play when more responsible members of society decide that their faith in the current system may be misplaced.
Money is only worth what people think its worth. And if folks suddenly decide which things suddenly have value and which ones don't, we're in for an interesting ride in the coming years.
Grow up in a household with depression era parents. You'll understand.
FWIW.
Texas Native,
That can't be her, it said she was buying alone, that had two names on the tax record. 6 listings in the online directories says the name's pretty common.
Novawatcher,
I was referring to the post-90's stagnation. It's just a statement of fact. If one uses inflation then by 1999 the trend had finally reverted to norm. If one instead uses incomes, then the stagnation actually over-corrected.
If A then B if C then D. What's the question?
My opinion has been evolving over the course of time, as any sane person's would in light of the evidence accumulated.
My house could drop another 15% easy if this bubble is allowed to correct fully in the next year. I fully admit this. But you're right, I don't think it's going to happen. Another 5%? Sure. But that's about it. A full correction would require all the shadow inventory to hit the market in the course of a few months. Or a rapid interest rate hike up to 7%. Neither of these things is in the cards.
Neither your price point nor your area of interest are the same as mine. You're just going to have to trust me when I say, all signs say that any well-priced home has a willing buyer or two or three in the market segment that concerns me. There is a firm lower limit for what these homes can bottom at, and it's just not that far from what I'm paying.
When the time is similarly ripe where you're looking, one assumes it will be just as obvious.
Re the Buckelew houses - NoVa doesn't have a large supply of contemporary houses, and some are in neighborhoods (for example, Lake Barcroft, Hollin Hills) where the local schools aren't top-rated. It's really not a big surprise that these contemporary homes eventually each sold for over $1 million - they are close to the West Falls Church metro in a solid school pyramid (scores at Marshall have been higher last few years than at either Robinson or Lake Braddock).
In full disclosure: I close in January. I'm also betting that there is a good chance that my price range and location may stagnate for a long time, with a smaller chance of dropping (I don't see appreciation on the horizon). The crazy fed intervention this past year changed my outlook for my geography/pricerange from "likely-drop" to "likely-stagnate". In addition, my windfall from my realestate sale several years ago makes potential future paper-losses more emotionally palatable ("easy-come, easy-go"), but I do not fool myself into thinking that just because I am buying that prices are reasonable.
I also firmly believe that houses were not underpriced in the 2000-2001 range. During that period, I was interviewing here and trying to determine whether I wanted to rent or buy a place. I remember what PITI and rent were back then. In 2002, they matched, indicating that houses were overpriced. I accepted it back then, with the idea that I might be overpaying, but it wasn't by that much (10%), and I was willing to make the sacrifice for the convenience of not having to move a second time (I was single then and circumstances have changed, hence the later sale and current move).
Mozart: I know a couple of folks that live around the corner, and frankly, I always thought the surrounding neighborhoods looked a little rough.
I have a soft-spot for contemporary architecture, but frankly, those 4 places always reminded me of new public libraries, or even some of the new dorms on the GMU campus. Frankly, that's not a great example of attractive contemporary architecture, at least as far as a home goes. Nevermind that that the places look 10 feet wide and 100 feet deep.
If more and more of this crowd are buying, I find that very telling.
Novawatcher said...In full disclosure: I close in January.
HOLY SHIT!
NoVaWatcher - Not sure if the neighborhoods around the Buckelew houses could be considered "rough." Falls Hill is definitely a nice and well-maintained neighborhood, but there may be other areas off Shreve that are a bit more frayed.
As to the aesthetics of these houses, from an aerial perspective, if they don't look like a college building, they look like army barracks. But fans of contemporary architecture come in different stripes, and the number of new contemporary houses in NoVa is always small in comparison to the split-levels in the 1970s, the colonials in the 1980s and 1990s, and all the Craftsman stuff hitting the market now. The contemporary houses in Great Falls are too expensive for most, and other areas in NoVa with a large stock of contemporaries (such as Lake Barcroft and Hollin Hills) aren't close to a Metro station are in comparably strong school districts. These houses aren't my cup of tea, either, but I'm not surprised they eventually sold for over $1 million each.
Mozart, I was not expressing surprise at the > $1 mill. price tag but that the most recent sale was $60k over that of an apparently identical house that sold 6-7 months ago. Check the zipcode chart on that house's frankly page, or other data, and I think you'll find prices have been declining, etc. I realize that others here might feel that all 4 were overpriced.
Cowboy
Dude I lived in OKC, i saw lots of
empty houses left over from the energy bust, people went under then too.
Besides, GWBush ruined the reputations of texans everywhere.
Dude I lived in OKC, i saw lots of empty houses left over from the energy bust, people went under then too.
I've been to OKC. I'm amazed you were able to distinguish pre-bust homes from post-bust homes. Must be a detail thing.
Besides, GWBush ruined the reputations of texans everywhere.
President George W. Bush bought a nice home near Dallas and visits the ranch in Crawford. Those of us who knew him way back when fondly call him "Governor Bush". We're proud that way. We couldn't wait to welcome him and his dad both back home. As opposed to Arkansas and Chicago which both seem to have lost their favorite sons come each Christmas.
I hear Hawaii's nice this time of year.
Yep, we get plenty of folks yelling such and not from their side of the fence, be it Oklahoma, New Mexico, Old Mexico, Arkansas, Colorado, or Louisiana. We're used to it. Big border, big fence. Lotta folks with idle time to stare with envy at the neighbors hard at work next door.
Yep, lotta folks standing at that fence, staring in...and crossing over to a better life:
Looks like 32 to 36 in the House for Texas
Cowboy
The way you identify houses left over from the bust is that many of them are still boarded up waiting for people who will never return.
As for Proud of GW Bush? Is that
sort of the pride a parent has when their kid won the Special Olympics?
As for going somewhere for a holiday vacation, so what?
Obama is hanging out in his old hometown. Me I grew up in Chicago, love the city, but, if I had a choice between chicago in December or Hawaii, I'd be singing Don Ho
songs on the plane.
Are you trying to convince us that Houston in August is a smart vacation?
as for all those Hardworking texans, the unemployment rate is 8.1% and it's been higher, closer to 9.4% during the last oil bust and will be higher when the next oil bust comes.
if you like texas, it's okay and there are nice places but it's not God's country, that's San Diego.
However, Houston most times of year?
It's not Hell, but it's 2 exits south.
Va_Investor said...
"If more and more of this crowd are buying, I find that very telling."
Also telling that none of us bought last year despite the advice of many bulls here - and we're better off for it.
Novawatcher,
Fair enough. Thanks for the disclosure. In terms of what the market is likely to do, I don't see any disagreement. I think the only point on which our perspectives really differ is what constitutes "reasonable" for nice inner suburbs of a growing metropolitan area with a low unemployment rate and relatively high job security.
The premium for buying over renting is not dissimilar to that in every other place I've ever lived. Chicago, New Jersey, Boston, even the inner suburbs of St Louis. Compared to Indiana or the undeveloped areas of the south where renting an apartment is more expensive than buying a SFH, then yes, NoVa prices even in 2000 were not reasonable.
But there is a housing ladder here. Whether we like it or not. There are buyers who feel they can securely say, yes, I'm buying for 10-20 years or more, I don't need to break even versus renting now, I just need to fix my housing costs against inflation. So, the fact that decent townhouses near me are now definitively cheaper than renting 2 bedroom apartments, even with only 3.5% down, and FHA rates? Means there's no compelling reason prices _have_ to go lower. A supply of REO's would push them lower, but the demand side is there. The SFHs require a 10-20% downpayment for the monthly cash outlay to be similar to renting. To me that sounds just about right for a sustainable SFH premium. Because anyone who really wants it, can save up for it.
These are indeed the highest possible prices that could be sustainable. And they are only sustainable on a nominal basis. Things will come down closer to what you think of as reasonable. But people have the means to pay a premium for ownership, and in a major metropolitan area they will do so if that's what it takes to buy.
Once you factor in the tax deduction, owning a 3/2 SFH will not be any more expensive than renting our current apartment. How much more "reasonable" than that do you think it should have gotten? Should it have been cheap enough to cover the opportunity costs on our down-payment that was earning next to nothing? Given that we will still be able to keep saving at the same rate we were when renting, I'm just not that concerned. As you say, easy come, easy go, only difference being we earned our money, and are spending it on a SFH. Not investing. Spending. Instead of buying a couple of nice cars, we are buying a house. [and since we will have no garage, we'll get to avoid the cost of nice cars in the future, :)] If you're going to buy now, you have to be able to look at it that way, either as spending, like me, or as easy come easy go like yourself.
Yes, the prices are still higher than I would like them to be. But I don't see how what I would like them to be is any less biased for what constitutes "reasonable".
Now for Kevin and tbw, they don't have this luxury. They have to buy at the bottom or on the long slow way back up, because they're single, and they can't allow the aftermath of the housing bubble to dictate their personal life. So they should be more conservative and only buy once they're truly confident that they wouldn't lose more than the commission if they chose to sell. And preferably they should keep enough cash on hand to pay off the mortgage on their unknown future life companion's potential housing liability. If that's something they're wanting from life. Which is not necessarily the case. But in any case, they can't afford to be knife catchers like us.
Also telling that none of us bought last year despite the advice of many bulls here - and we're better off for it.
amen
"Also telling that none of us bought last year despite the advice of many bulls here - and we're better off for it."
Yep... for the 100th time, I don't think anyone here is against buying, just against needlessly overpaying.
I think many areas in the region are at or not far from their bottom so there is no reason not to buy if you are looking in one of those areas.
Depending what the government decides to do with the housing market prices may move down more or they may just stagnate for a long time, but in either case buying now is a far far better proposition than buying back in 2006 when some of our local experts were telling people to.
Tabitha bought last year.
many shorter term commenters bought. dgg for instance.
Harriet bought the year before?
Leroy,
Our local experts said to buy in 2006? Which strawmen are you referring to? I'd really like to know.
"Our local experts said to buy in 2006? Which strawmen are you referring to? I'd really like to know."
You asked, and as always... I deliver. :P
A little trip down "VA_investor's 2006 advice lane," starting with a particularly appropriate quote on the subject of "bubbleheads" buying when the time is right...
"Exactly. Same as forecasting a peak. Only hindsight is reliable.
Bubbleheads have been on the sidelines for years in anticipation of the peak - what makes you think they will be willing to enter the market at any price?
There is a risk/reward ratio. Of the 30% who rent; my guess is 10% can afford to buy, but never will due to risk-aversion.
Seeing Housing prices go into a "freefall" will only confirm their fears and make them life-time renters."- VA_Investor 22 Aug 2006 http://tinyurl.com/ycqm8kh
"One thing is clear (now), we are off the peaks of this current cycle. So some of the downside risk has been eliminated. Nothing is ever risk-free. You can always hoard cash or gold and hope that inflation doesn't wipe you out.
In the short term prices may drop further, may stabilize, or may go up. In the long term, history suggests that prices will increase. So make your best guess and proceed accordingly." _ VA_Investor 8 Dec 2006 http://tinyurl.com/yd4kb8h
"All I see from here is a big fat nothing. No crash and burn yet- only hopeful bitter renters."_ VA_Investor 20 June 2006 http://tinyurl.com/ybe87mb
Nice work Leroy!
Snippets out of context. I love it! Looks like a repeat of your last (failed) attempt at distortion.
As always VA_Investor the links are right there and anyone who is interested can confirm for themselves that those quotes are in no way taken out of context.
Keep trying to run away from your own bad advice. It is actually kind of amusing in a certain sad way.
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