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"Anyone who buys a house these days and pays the asking price is overpaying." Such attitudes,...

"Anyone who buys a house these days and pays the asking price is overpaying." Such attitudes, continually weak home prices and “a substantial risk" of further declines of “15%, 20%, 25%” do not bode well for the longevity of Obama's presidency.
Comments (34)
  • wyostocks
    , contributor
    Comments (7620) | Send Message
     
    You mean no summer of recovery part 2?
    I was so looking forward to it since it worked so good last year.
    22 Feb 2011, 06:20 PM Reply Like
  • realornot
    , contributor
    Comments (1281) | Send Message
     
    Totally agreed. I have friends bought a home just last year and the overall value have dropped another 10-15% depending on the location.
    22 Feb 2011, 06:22 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (3583) | Send Message
     
    The house probably still does and will continue to serve its purpose, though.

     

    If the house purchase was rent equivalent (or close to it), what difference does it make what the price is one year later?

     

    Here in the Memphis area, rents have gone UP since 2006. Soon our mortgage payment will be less than a comparable monthly rental.

     

    If you're nomadic, a house purchase is always a bad idea (for the 'but you can't move anytime you want!' crowd).
    22 Feb 2011, 06:39 PM Reply Like
  • Ohrama
    , contributor
    Comments (506) | Send Message
     
    Well, aren't you assuming that renters will keep spending the way they might have been spending in the last 30 years? What if folks decide to stay with parents longer, share with friends etc. etc. and bring down the rents as well. Also, there is always the cost associated with maintenance and taxes associated with a house which will keep going higher and higher.
    Yes, having a house is good since it gives a feeling of belonging to a neighborhood etc. But we have gone overboard from the concept of house as a decent, comfortable living to a big hotel / mansion with all the amenities that we perhaps use once in a while (like the whirlpool tub) and also as a cash cow to finance our other extravagant needs. Perhaps that era is over and will have consequences.
    22 Feb 2011, 07:57 PM Reply Like
  • Ford Pinto
    , contributor
    Comments (49) | Send Message
     
    Rents are always sticky in the short term. That short term should be defined as the time until the banks/court systems start to actually move properties, which are then sold to either occupants or investors who will rent them out. Many homes coming on the market at the same time at a lower purchase price mean that rents can (and will) go down and still give the later borrower more profit. Rents cannot stay sticky or rise in the long term unless investors want to bleed cash each month. We have a demand problem, but even worse, we have a supply problem (way too much).

     

    If you live in one of the urban areas with high levels of apartment-to-condo conversions, beware when they start reverting to apartments again. It will make the supply problem that much worse.

     

    Banks are in no rush to sell properties yet as they have to declare a loss at the time of sale. At some point this will reverse, and when it does, get outta the way.
    22 Feb 2011, 08:05 PM Reply Like
  • Ford Pinto
    , contributor
    Comments (49) | Send Message
     
    I'm not worried about children moving in with parents, what keeps me awake at night is the parents moving in with the children.
    22 Feb 2011, 08:31 PM Reply Like
  • coddy0
    , contributor
    Comments (1182) | Send Message
     
    JohnBinTN
    If the house purchase was rent equivalent (or close to it), what difference does it make what the price is one year later?
    ======================...
    IMHO
    If price of home is rent equivalent or becomes rent equivalent, it can not go below rent equivalent
    Rent cost is support price"
    Can this support go down ? This in hands of 'yes we can' man
    22 Feb 2011, 09:38 PM Reply Like
  • The Last Boomer
    , contributor
    Comments (880) | Send Message
     
    Continuously declining housing prices plus the bust of the commodity bubble that some predict plus a stubbornly high unemployment that pushes wages down: this is the deadly mix that will make all talk about inflation melt like a snowman on a hot July day.
    22 Feb 2011, 06:24 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3314) | Send Message
     
    Maybe the fed can pass a law.
    No bids below the asking price.
    That should help the Bank's balance sheets.

     

    Why not, since the fed is overpaying for all the other assets it's buying from the banks?

     

    Only difference, is the Fed gets to print the money. Most everybody else has to earn it, and live with the consequences of overpaying for an asset.
    22 Feb 2011, 06:25 PM Reply Like
  • bigazul
    , contributor
    Comments (963) | Send Message
     
    If you buy a house without giving a first offer below the asking price, you're stepping in it regardless of the market. The only time that logic wasn't true was in the "hot" markets..Southern California, Vegas, Phoenix..Oh wait, I guess it was true after-all.

     

    Point being, the attitude is correct.
    22 Feb 2011, 07:07 PM Reply Like
  • kmi
    , contributor
    Comments (3982) | Send Message
     
    As wealth continues to be transferred by every single method and policy imaginable from the middle to the upper class, house prices - a significant component of the middle class lifestyle - will inevitably decline.

     

    The buy-to-rent crowd will buy as prices drop to make the investment attractive, and prices will also drop as real wealth evaporates from the middle so that houses can still be bought and sold.

     

    An aging boomer population and diminishing immigration also decreases demand.

     

    There is no hope for residential housing right now.

     

    Structural headwinds coupled with demands to eliminate freddie/fannie and cripple legislation meant to promote housing on top of a changing economy which funnels all wealth to the top mean nothing Obama does will keep this turkey from getting cooked.
    22 Feb 2011, 08:11 PM Reply Like
  • wyostocks
    , contributor
    Comments (7620) | Send Message
     
    "and diminishing immigration also decreases demand."

     

    have you ever travelled to the southwest US?
    22 Feb 2011, 08:24 PM Reply Like
  • kmi
    , contributor
    Comments (3982) | Send Message
     
    Yes.

     

    And, since we are doing the 'anecdotal evidence' thing, I interact with many immigrants from many countries as part of my normal course of business, and take the opportunity to discuss their local politics with them.

     

    I can tell you receipts back to Mexico for one are falling even as the Peso rises. I can tell you that Peruvians see Spain as a better place to go than the US - not because of language or immigration - even with its 20% unemployment.

     

    I can tell you the Irish who came back in limited numbers after the Celtic Tiger proved to be more a kitten suggested many prefer Australia.

     

    both the quantity of immigrants as well as the quality - foreign born high skilled individuals - has diminished over the last decade rapidly. But of course, you are welcome to sit by a fence in Arizona with a camera and 4 by 4.
    22 Feb 2011, 08:32 PM Reply Like
  • RMF - Rethinking Modern Fin...
    , contributor
    Comments (165) | Send Message
     
    This comment is on the spot correct.
    22 Feb 2011, 08:46 PM Reply Like
  • RMF - Rethinking Modern Fin...
    , contributor
    Comments (165) | Send Message
     
    Its important to analyze demand relative to the past. With immigrants leaving or hiding, the demand for housing by them has been on the decline.
    22 Feb 2011, 08:48 PM Reply Like
  • JohnLocke
    , contributor
    Comments (381) | Send Message
     
    "But of course, you are welcome to sit by a fence in Arizona with a camera and 4 by 4."

     

    I would if it keeps out the illegal aliens who are only seeking to circumvent current immigration law:-) Does that make me a racist?
    22 Feb 2011, 09:23 PM Reply Like
  • JohnLocke
    , contributor
    Comments (381) | Send Message
     
    Immigrants do not hide those that have broken the law and are in the US illegally hide.

     

    The use of the term immigrant to describe the lawbreakers undermines the real sacrifice and work to those of us who went through the naturalization process.

     

    22 Feb 2011, 09:29 PM Reply Like
  • kmi
    , contributor
    Comments (3982) | Send Message
     
    Hey JohnLocke - I couldn't care less what you do with your spare time...

     

    The comment I made was about trends in american housing, you on the other hand want to make the conversation about the political issue of illegal immigration, and I'm not that interested. Wyo might be though.
    22 Feb 2011, 09:33 PM Reply Like
  • Bouchart
    , contributor
    Comments (755) | Send Message
     
    And anyone buying a previously owned house without good title insurance could be in for a world of hurt, too.
    22 Feb 2011, 08:21 PM Reply Like
  • bricki
    , contributor
    Comments (1099) | Send Message
     
    Title insurance doesn't mean squat, any more like any other type of insurance does these days. All of these companies have had recent profitability problems, and in 2008 LandAmerica went BK.

     

    The main thing is to avoid houses that have turned over after 2005 and/or gone through bank ownership/foreclosure.
    22 Feb 2011, 08:59 PM Reply Like
  • apberusdisvet
    , contributor
    Comments (2860) | Send Message
     
    A rather ill-advised comment just due to the fact that a NY Judge has ruled that MERS has no standing in foreclosure cases, and his ruling is rapidly spreading countrywide. Almost 60% of all mortgages issued in the last 10 years were registered with MERS, and most were sold multiple times; no title problems? Really?
    22 Feb 2011, 09:20 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4009) | Send Message
     
    A New Orleans lawyer sought an FHA loan for a client. He was told the loan would be granted if he could prove satisfactory title to a parcel of property being offered as collateral. The title to the property dated back to 1803, which took the Lawyer three months to track down. After sending the information to the FHA, he received the following
    reply (actual letter):
    "Upon review of your letter adjoining your client's loan application,
    we note that the request is supported by an Abstract of Title. While
    we compliment the able manner in which you have prepared and presented the application, we must point out that you have only cleared title to the proposed collateral property back to 1803. Before final approval can be accorded, it will be necessary to clear the title back to its origin."
    Annoyed, the lawyer responded as follows (actual letter):
    "Your letter regarding title in Case No. 189156 has been received. I
    note that you wish to have title extended further than the 194 years
    covered by the present application. I was unaware that any educated person in this country, particularly those working in the property area, would not know that Louisiana was purchased, by the United States, from France in 1803, the year of origin identified in our application. For the edification of uninformed FHA bureaucrats, the title to the land prior to U.S. ownership was obtained from France, which had acquired it by Right of Conquest from Spain. The land came into the possession of Spain by Right of Discovery made in the year 1492 by a sea captain named Christopher Columbus, who had been granted the privilege of
    seeking a new route to India by the Spanish monarch, Isabella. The good queen, Isabella, being a pious woman and almost as careful about titles as the FHA, took the precaution of securing the blessing of the Pope before she sold her jewels to finance Columbus' expedition. Now, the Pope, as I'm sure you may know, is the emissary of Jesus Christ, the Son of God, and God, it is commonly accepted, created this world. Therefore, I believe it is safe to presume that God also made that part of the world called Louisiana. God, therefore, would be the owner of origin and His origins date back, to before the beginning of time, the world as we know it, AND the FHA. I hope the hell you find God's original claim to be satisfactory. Now, may we have our damn loan?"
    22 Feb 2011, 08:26 PM Reply Like
  • nyuszika45
    , contributor
    Comments (633) | Send Message
     
    Geoffster, some of us have long memories.... but still cute.
    22 Feb 2011, 10:10 PM Reply Like
  • buyitcheap
    , contributor
    Comments (1848) | Send Message
     
    As one who is trying to sell, and buy in a new area, there is a palpable sense of "wait 6 months, it'll be cheaper" starting to creep into certain markets, anecdotal, I know, but still, I'm hearing it both on the sell and the buy side.
    22 Feb 2011, 08:26 PM Reply Like
  • HiSpeed
    , contributor
    Comments (1063) | Send Message
     
    Who pays the full asking price?
    22 Feb 2011, 08:30 PM Reply Like
  • Bouchart
    , contributor
    Comments (755) | Send Message
     
    Probably the same chumps that thought they could just flip houses for years on end. The prices just keep going up, so asking price is a steal!
    22 Feb 2011, 08:31 PM Reply Like
  • talbano
    , contributor
    Comments (324) | Send Message
     
    I have had 3 cousins all buy houses in the last 3 months - They have not had any problems with financing and/or titles.
    Granted they are respectable people with steady income and for all this is their trade up home. They have stayed away from foreclosures and/or short sales.
    One had to retain their condo due to the inability to sell but they were able to rent it for a year.
    On the flip side..
    My mother in law just passed and our family now has a condo to sell ....not looking forward to it, the one next door to it has been on the market for close to 3 years.
    The housing market will lag for years. One the biggest problems is having enough people with job stability and income that feel comfortable making the purchase. Just my opinion.
    It all comes back to jobs.
    22 Feb 2011, 09:40 PM Reply Like
  • talbano
    , contributor
    Comments (324) | Send Message
     
    as far as Obama, many things do not bode well for him going into 2012.
    22 Feb 2011, 09:42 PM Reply Like
  • Matthew Green
    , contributor
    Comments (457) | Send Message
     
    Being 26 years old, I found myself having to tell a few friends not to take the bait of the first-time home buyer's credit last year. But that was 2009, they had the realtors on one shoulder wearing red with a flaming pitchfork (2009 just had to be the bottom, right? Home prices had stopped falling and they were about to commence on another secular period of growth, right???) and I'd like to think I was on the other shoulder wearing a halo, but must have come off as more like a skeptic with a bunch of charts that I showed them. I'd like to see a nationwide study that shows how those who took the credit are faring on their mortgages, by metro area.
    22 Feb 2011, 09:53 PM Reply Like
  • RussianBearwithBalalaika
    , contributor
    Comments (335) | Send Message
     
    Maybe the fed can pass a law.
    No bids below the asking price.>>

     

    And maybe Obama should declare that good patriots bid the asking price and a half!
    22 Feb 2011, 10:29 PM Reply Like
  • talbano
    , contributor
    Comments (324) | Send Message
     
    People are losing sight that a house is suppose to be a home first and possibly an investment second.
    When my parents bought the house I grew up in , they never looked at how it was going to appreciate. They looked at wether it would be a good place to raise a family. Schools, community, etc. 30 some years later it is still a home first.
    Some how we have lost our way expecting to see immediate equity and price appreciation within a year.
    22 Feb 2011, 11:18 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3314) | Send Message
     
    It's all about the Bank's balance sheets.

     

    "For the first time in modern history, the total value of all residential mortgage debt far surpasses the total value of all home equity in the United States...."

     

    Check out the chart. You didn't think they really care about your portion of the equity in your home, did you?

     

    endoftheamericandream....
    22 Feb 2011, 11:46 PM Reply Like
  • mdenis39
    , contributor
    Comments (17) | Send Message
     
    Some how we have lost our way expecting to see immediate equity and price appreciation within a year.

     

    What do you mean "we", Kimmosabee?
    23 Feb 2011, 12:10 AM Reply Like
  • Glocks-n-Gold
    , contributor
    Comments (189) | Send Message
     
    Obama and his condescending, holier-than-thou attitude don't bode well for a second term either. Nor his continual apologies for America, union support and socialist leanings (I'm being kind here). Not too mention an apparent lack of any real, certifiable birth certificate. Plus unemployment north of 20%, inflation, gas prices about to skyrocket, a dollar not worth the ink used to print it, coming food shortages....good going Barry. I guess Gen. Powell was correct when he called this clown a "transformative figure". He's transforming this once great nation into a third world backwater.
    22 Feb 2011, 11:39 PM Reply Like
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