Another Bubble Bursting?

[ochazuke]

Prices coming down on new homes in Las Vegas...

http://www.reviewjournal.com/lvrj_home/2004/Oct-05-Tue-2004/news/24917895.html

Don't overlook the implications of this part of the article:

" a major increase in the number of resale homes on the market -- currently about 16,000, up from February's 1,400."

"About half of those homes were built this year, suggesting many are being sold by investors."

The tech stock bubble was one thing. What will it be like when the housing bubble bursts?

[Tandalayo_Scheisskopf]

1. Way fscking ugly.

It will not trickle down. It will be like standing under Niagara Falls.

[xray s]

2. Alan Greenspan said don't worry about it, which translates into...

...worry about it.

[drb]

3. The real estate market may well cool off...

...when rates go up. Right now, there are major shortages of drywall, concrete and lumber that are pushing new homes prices way up and pushing availability way out.

The real question is not "how many homes are for sale" but "how many days worth of sales are in inventory"?

[stopbush]

4. I'm in the process of moving to a new rental in Summerlin (Vegas).

We owned a home in NJ, but the prices here are outrageous, especially for the way some homes are constructed. When we moved to Vegas 16 months ago, we rented a 3-bedroom home with a pool for $1600 per month. In Nevada, you can rent month to month after a year's lease without signing a new lease. Well, our greedy landlords raised our rent to $1800 per month because we wouldn't commit to another year. We gave notice to vacate before Oct 1 and found a new rental in one day - a 4-bdrm, 3-car garage, HUGE place with a city lights view, a sizable backyard and a well-manicured park off the back. Oh yeah, it's only $1500 per month. There were hundreds of homes for rent in many price ranges, and we limited our search to a 5-mile radius from our present place.

When we told the old rental agent that we were vacating, we offered to stay if the owners were willing to negotiate a rent more in line with *today's* market. "No, they won't negotiate. They want you out...and they want to start showing the house immediately." Well, there hasn't been a single showing of the house in a month. They haven't even put up a sign. Worse, there are three houses across the street that have been for rent for 4-6 months. I guess there's no one willing to even look at the place for $1800. But our stupid greedy landlords would rather stick to their guns and have no rent coming in then to make a deal with tenants who took care of the place and mailed their rent in two weeks early every month. Fuck 'em.

The number of For Sale and For Rent signs in our neighborhood is incredible. I can't imagine what a homeowner with a second mortgage is going to do when the housing market really crashes.

As far as the speculator guy in the newspaper article, fuck him, too. It's yuppie speculators like him that have caused the housing market to over inflate, making guys like me sit in rentals until the market corrects itself and prices return to something approaching sanity.

[RawMaterials]

5. To buy or not to buy a house?

I'm married, I'm 25, and i want to buy a house.
The problem is I don't want to be stuck buying a house that ether drops in value or puts me in a position were i cant make payments(great depression 2). On the other hand I don't want to Miss the opportunity to get a 30 year mortgage at 6-7%. also if inflation is coming a 150000 house right now will be easy to pay off when 150000 provably just buys a car in 15 years.

I have a good stable job, but my wife is still in school and money is tight. what do you guys think, and what would you do if you were in my shoes. should i just wait it out and keep renting.

[phantom power]

6. Owning is preferable, but it's important to

make sure you don't mortgage yourself within an inch of your life.

One thing to keep in mind: even if you *do* lose money on a home sale, it can be better than if you had rented, where all your rent money is gone forever.

But that's assuming rent and mortage payments are roughly equal.

[RawMaterials]

7. the problem is a 3 bedroom home is now

around 150000, 3-4 years ago i wouldn't have had an issue.
but right now the housing market is kind of priced way to high for new home owners. a three bedroom house would be roughly 3.5 time higher then what i pay in rent now.

[phantom power]

8. The rule of thumb I'm familiar with is: keep your mortgage

payment <= 25% of your monthly take-home pay. I think that's a very good rule to follow in these economic times. It leaves a safety margin for uncertain employment status.