1990 All Over Again
From Marketwatch:
From Financial Sense Online:
Real Estate: About to Get Worse
From Financial Sense Online:
Real Estate: About to Get Worse
It’s looking like 1990 all over again…
1990 was the last time homes were unaffordable. The confidence of homebuilders was at a record low (and about to go lower). And the U.S. economy was starting to cool…
Home prices fell hard. Nationwide, new home prices fell from around $200,000 in 1990 to around $175,000 by 1992 (in inflation-adjusted terms).
By 1993, home prices were affordable once again. Home buyers slowly crept back into the market. Prices crept higher, and they didn’t surpass the 1990 highs for over a decade (in inflation-adjusted terms).
Over a dozen years have passed since new home prices bottomed back then… enough time for people to forget real estate is not always a sure thing. Just ask the Japanese how bad it can get… they just lived through 16 straight years of falling home prices.
...
We’re setting up for a repeat of 1990. Back then, new home prices nationwide fell by double-digits, percentage-wise, over two or three years. Speculators got crushed.
Again, the last time around, prices peaked around 1990. It took a decade for new home prices to get back to 1990 levels (in inflation-adjusted terms).
We could see the same today… a fall in prices for a couple years… and then a slow rise again, as people who got burned are slower to touch the fire.
So if you’re looking to buy real estate, but don’t have the money now… there’s no hurry. If we see a repeat of 1990, you may be able to buy cheaper two years from now.
And if you’re overextended in real estate, but you’re holding out for your price, you’re doing the wrong thing. Get out now. The cost of carrying that real estate will eat you alive.
If you’re overextended in real estate, think about this: What if real estate prices fall for two or three years instead of rising as you hope? Then you’ll lose even more money. You’ll have wasted three years paying interest, and then you’ll take a loss on the property.
It’s better to take a small loss now than wait and potentially take a bigger loss in a few years, while paying interest along the way.
20 Comments:
http://tinyurl.com/pvz8p
Wasn't Barbara another talking head pumping away just weeks/months ago?
IT IS FRIGGEN DISGRACEFUL TO SEE THESE LOSERS NOW ADMITTING THAT THINGS ARE OUT OF WACK!
They should apolgize for their incompetence.
BOOOOOOOOOOYAAAAAAAAA
Bob
She should apologize for calling me wrong on national televsion 5 months ago for bubble sitting (#@&%@$#)*&)@!
1990? Sellers wish it could be that good. We have never seen a bubble like this in real estate before. We have never seen this level of speculation, we have never seen this level of leverage, and we have never seen the price to income ratio anywhere near where it is today. The early 90s are going to look like a picnic next to this thing.
Chaka Chong
Amen CF,
She should have you back on for a na! na! nuh! na! na! interview.
This Bubble Today is much bigger and the consumer more leveraged than ever seen before.
We have oversupply finance companies/banks who made dumb decisions last 3-5 years.
It's payback time for this reckless consumer lending.
Bababababa
NJGal said...
Can I ask you all a question? How do assessed values come into play? The town we're looking in is going to be basing its taxes (in the next yr or two) on sale price. So some people with lower assessments paying bubble prices will get screwed.
To my knowledge, they can't legally have an uneven tax rate. I think what your town is saying is a 100% assessment, whereas other towns do not do that and assess at a percentage of actual value. It is all a numbers game and the reason for the different methods used I have heard is so less money goes to the county.
Helping the bubble crash softley:
I have seen many people doing lowball offers and prices being reduced.
My way of bidding on a home is simple.
Do rent to own, but on your own terms. Non of this 30% will go towards the purchase price.
If a house is listed for 400,000.00
than you offer to pay 1111.12 + taxes. 400,000.00/360 (30 Years)
Most likley they are already making a profit @ 400K so don't let them snow you to get more.
Yeah people are greedy and want there profit upfront but to me I would rather get all of my money over a period of time than get less upfront.
If you do rent to own its cheaper in the log run, yeah you are paying the full 400,000 but if you got a normal mortage and paid 270,000 for the same place at 6.5% with no money down you are going to pay $614,250.00 over 30 years. You do the math. I would rather pay the 400,000.
If doing this make sure that the house is fairly priced with others in the market in that area. If they are asking 500K and people with pretty much the same thing are listing at 400K try and offer it at 400K but do the rent to own idea.
And if the rent to own price is less than what they pay on a mortage, well than there just an idiot for paying to much on there place. Find places that were bought many moons ago.
This may not work for evey situation but this is just another alternative.
Good luck getting a house that way. The seller would have to be a real sucker. Let us know how you make out.
Corcoran is a saleswoman, and her professional spin will always be "it's a great time to buy" even when the market is crashing around her head. Her job is simply to make deals happen, regardless of the current conditions or consequences for the buyer and seller, or whether it's a good investment or a money-loser. Anything she says has to be measured against this bias.
JAY
And yes CF, she owes you a big apology but you will never hear it.
JAY
She should apologize for calling me wrong on national televsion 5 months ago for bubble sitting (#@&%@$#)*&)@!
CF,
I've only been posting for a few months. I would be interested in hearing about that one.
Thanks,
BC Bob
NJGAL,
I believe it is meant to level out that kind of inequity. You can appeal taxes based on comparble in your neighborhood. If you have a house that is identical to yours and there is a differential in taxes you can appeal your tax. Assessors generally do not like to be questioned.
njgal
Oh! the weird part of this is California has prop 13 which is against the law here. You pay based on when you bought.
I had an idea today. Go to a subdivision with alot of for sale signs and then look the addresses up on NJACTB.org and see what the number were bought in the last 3 0r 4 years. just an idea and a way that others can contribute. This will establish an idea of the reset effect.
Please help if you like the purpose of this blog. More data could not hurt.
Like I said the houses in East Hanover just sit, then reduce, then sit, then reduce, etc... Realtors, don't tell me you just sold a house in East Hanover at the inflated asking price. Stick to your guns... stick to your guns! I tell everyone I talk to - hold out and wait for the correction, and I mean everyone!
I just found this blog and would appreciate some advice on our uncertain situation;
We have been looking to buy as our but our personal circumstances (baby) and our nyc rent(3500) make buying seem like the right thing to do.
Just made an offer that was accepted; Original asking was 699K and after some back and forth we have an accepted for 649K.
Can put 20% down with a 30 fixed.
Our combined gross is 250K so we can easily make our payments/taxes.
Expect to be in the house for 6-7 years.
Should we move forward with the deal or back out now?
Grim,
I'm interested in the scandals that are starting to appear. Do you have anything to substantiate that appraisers were taking under the table fees from realtors and realtors were taking payments from speculators to receive preferred listings? I see the next 6-9 months just like the aftermath of the tech wreck w/ respect to scandal headlines becoming the norm.
On a side note, watch the securitization mkt to get a jump on the financing drying up. Some of the the big wirehouses are pulling in their risk appetite to resi mortgages after getting stung with some bad loan purchases meant for securitization.
Thanks
Homes are unaffordable because the inflation rates continue to rise as well as commodities. That is the result of poverty. Seems like the entire world is suffering from this dilemma. How can we get away from the reality?
Bergs:
http://www.abcnews.go.com/Video/playerIndex?id=1710092
chicago
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