DUers and the Housing Bubble?

[edhopper]

I'm just curious. I have been following this very closely because my wife and I would like to buy a home.

How many DUers are aware that for the last 4 years we have been in what may be the biggest Housing Bubble in US history? Or that it started to collapse at the end of 05 and the Housing Sector is facing a major decline?

[NJ Democrats]

1. Yup

It collapsed here at least. We had to go down $45k.

[rox63]

2. Unfortunately, I bought a little over a year ago

I'm hoping I don't lose out big time. :(

[benburch]

3. I'm totally aware!

My 130 year old teeny-tiny house has a mortgage that only costs me 400 a month, so when it all goes "poof!" I will still be housed.

[SammyWinstonJack]

4. Well I don't think my part of the Country has experienced a

"housing bubble" I am in San Antonio Texas. We bought our house in '97 for $109,000. It's a 4 bdr/2ba brick home with a pool on a residential size lot in an established upper middle class neighborhood and it's now worth $168,000. Come to Texas and buy cheap.

[eleny]

9. I was amazed at the housing prices around Houston

Humid as heck but the houses are reasonably priced.

[edhopper]

10. Unfortunately

If the housing bust is big enough I think everyone will suffer.
Though I think at the price you bought at you're in good shape

[edhopper]

5. It will be

the people who bought in the last few years with ARMs and IOs (around 50% of buyers) who will be really screwed.
Paying more and more each month for a house worth less and less.

[MadMaddie]

6. I have been watching too......

The housing costs have sky rocketed in the Seattle area like crazy...

[kaygore]

7. In Virginia Beach, Virginia, houses have not only lost value in

the past 12 months (actually, the bubble burst here the third week of August 2005). We should have sold our house before then. We could have gotten at least $300,000 more!

[JAYJDF]

8. isn't some of the bubble problem tied to the devaluing of our

dollar? All financial actions are tied to each other. Face it, the dollar sucks, our economy sucks, oil prices suc, this administration sucks. Stock market is nervous too. I believe all because of the falling dollar.

[SammyWinstonJack]

11. Wait, why do you hate "Murica"? Our pResident claims our economy

is on the march! Life is good and the richey rich deserve another tax cut! humph!

[edhopper]

13. Well,

Greenspan created this bubble by keeping rates so low so long, and lending regulations loose. It has been financed by debt. So if the dollar falls and money gets tighter, the economy is toast.
A major portion of growth in GDP the last 5 years has been Housing. Without it we were barely above a recession. Greenie kept it going to get Bushie re-elected and then left the mess for Bennie.

[JanusAscending]

22. I tend to agree with your point of view, more than the others.

I am a retired Realtor, living in Ct. No "bubble bursting" here !! I think the main problem at this moment, is the loss of Alan Greenspan, who (in my opinion) was a genious ! Mr. Beirneke on the other hand is a "shill" for Bush, as is the new neocon Manager of the World Bank. Real estate goes in cycles, and FEAR of devaluation is it's biggest enemy. Real Property will always be our best investment. The thing is, try not to get yourself into a situation where YOU HAVE TO SELL !! If you can hold out long enough, the prices will always go back up. My late husband and I bought a small Ranch home in 1999, for $90,000. when he died 4 yrs. ago, one year later I sold it for $169,000 !! I paid off the mortgage, paid all our debt off, and payed cash for a condo ($70,000) In the 3 yrs. I have owned it, it's value has gone up to approx., $110,000 ! My next move is either to a Senior Retirement home, or buy something in the Berkshires where my friends are. Property values differ in different parts of the country based on JOBS and the ease of commuting to and from them. The overall rate of value on our investments should rise accordingly, where ever you live. DC

[FloridaPat]

25. Not yet. A lot of it is because a lot of people refinanced their homes

to pay off their credit cards. That kept the economy going for the last 6 years. Then they ran up the credit cards again. Now there is no money for keep what little economy we had up and running. The dollar came down a lot in the first 3 years of the * disaster

[Mayberry Machiavelli]

26. Bubbles eventually pop. People began paying higher and higher prices for

(mainly coastal city) real estate, largely because the expectations that the prices would rise ever higher became ingrained in people's psyche. Even if it might seem outrageous to pay 700-800K for a tiny crappy run down fixer upper in NYC or San Diego, it doesn't seem unreasonable if you have bought in to the idea that it will keep going up and never go down.

One factor is that after the stock bust, real estate became an attractive alternative place for people to invest their money.

One difference between the housing bubble and the tech stock bubble is that houses will have SOME intrinsic value and have land associated with it, so they won't tend to go to essentially ZERO value like some stocks. But, if you paid 800K for some 1200 square foot fixer upper, there's a long way to go down.

[wildeyed]

12. Houses continue to make slow, steady gains in my part of the world.

We never had a bubble so I guess it didn't burst either. I do notice a lot of people moving here from more expensive housing markets. They all cite affordable housing as one of the reasons for moving here.

[SammyWinstonJack]

14. We've never had a housing bubble either, so maybe we are due.

I can only hope! Maybe Toyota building a factory here, will help? :shrug: Austin is booming, maybe it will come our way?

[girl gone mad]

23. 1/3 of the houses being sold in Austin..

are bought by outside investors, i.e., people who want to "flip" properties for a short-term profit. You do not wish that type of activity on your community! It creates all kinds of long-term problems. Ask Phoenicians how they feel about flippers right about now.

[Mayberry Machiavelli]

29. The "flippers" have bailed out, like, overnight, from markets like D.C., &

San Diego, where they represented 30-40 percent of the condo buyers.

Apparently this has, um, had a pretty profound effect on the condo market in those towns.

I suppose since speculation is highest in the downtown condo markets, it is like a "canary in a coal mine" harbinger of things to come in the real estate market at large, perhaps...

[readmoreoften]

35. I've heard they have a new incentive to keep the flippers away.

A friend of mine told me that if you buy on the east side and agree to not flip the house for 10 years, you get a massive discount. She is paying a $900 a month payment (including property tax) for a 4 bedroomon the east side. I'm looking to buy in Austin next year.

[rubberducky]

15. If I were you, I would seriously consider a repo

With a little more time you are going to see an awful lot of them. People who bought homes with ARM or interest only won`t be able to keep up with rising payments. Just remember location,location,location. I bought in a wonderful location in `94 for 94,000, put some work in it. Had an appraisal done about 6 months ago and it came back with 272,000.

[Warpy]

16. I bought 10 years ago

and my paper profit is about 140%, according to Zillow.

I've paid the place off and will renovate here rather than move.

This area is convenient to everything, which is why it was so cheap 10 years ago. Think inner city.

The only fear I have is predators coming in, buying up these old houses to bulldoze them and put up McMansions on the generous lots.

Unfortunately, this town is still undervalued and keeps getting cited as one of the "hot" areas of the country. Our bubble really hasn't happened yet.

[blonndee]

19. Where are you in NM, if you don't mind me asking?

I plan to move to Las Cruces next spring, and I'm a NM native.

[wakeme2008]

17. And it is going to get more interesting

Re-refinancing, and Putting Off Adjustable Mortgage Pain
..cut..

Now, the first big wave of the mortgage boom is cresting as more than $400 billion worth of adjustable-rate mortgages, or about 5 percent of all outstanding mortgage debt, will readjust this year for the first time, according to Loan Performance, a research firm. Next year, another $1 trillion in loans will readjust.

...more at link...


http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x223906

[unblock]

18. up 66% in 4 years

a 30% decline at this point would qualify as ginormous, and i'd still be showing a nice profit.

not that it matters, much. if i move, i'll still be in the nj-ny-ct area, which is all in pretty much the same soup. whatever market conditions are like when i sell, i'll be buying another house in the same market, so it's all pretty much a wash.

[girl gone mad]

20. It's been about 5 years by my count.

I remember being concerned about the bubble back in 2002 when we were buying a house. We live in a non-bubble area, but I was worried that if prices fell on the coasts it would still effect us. Now the bubble has spread to Austin, and I'm a little peeved about it since Austin is a city I love and would like to move to soon. Prices in the areas I like are suddenly beyond my reach, and, worse, these areas are rapidly becoming overdeveloped.

I follow the bubble pretty regularly, but find that most people do not want to talk about it. Prices are already beginning to fall in some areas, and inventory is piling up. I believe the coming RE declines will throw our economy into a recession.

here are links to some useful bubble blogs, with apologies if they have been posted in this thread already:

http://thehousingbubbleblog.com/
http://housingpanic.blogspot.com/
http://www.benengebreth.org/housingtracker/

[sueragingroz]

21. Yep... but my farm

Is in poverty-striken New Brunswick.

I doubt that the value could ever go lower than it is right now ;)

[Mayberry Machiavelli]

24. Having lived in San Diego for several years before moving to a "red"

state, I am very, very aware.

[earth mom]

27. Housing prices have REALLY gone up here since we moved here in 98

and took the biggest jump in the past few years. Even though we own our house and have gained equity, I don't like it because developers are seizing and exploiting the opportunity and building McMansions and buying and building on any and every lot they can find and the roads/traffic is showing the strain. It's changed the small town, average joe, slow pace of the place and lately it's started to feel like a mini yuppified California...a place my husband and I moved here to ESCAPE!!! :argh:

[shireen]

28. hoppin' mad in Baltimore

because even tho' housing prices are not rising much, for the most part they're not falling either. Instead they're settling into a higher plateau. Friends who bought their properties ~5 years ago have seen it appreciate by as much as 75%. In the neighborhood where I live (in an apartment that is currently being converted to condos so I have to move out in a few months), a townhouse (these are small ones, not the new roomy models) that used to cost about $120k five years ago are going for between $275k to $350k. Some EOGs are going for more than 1/2 million. It is utterly insane.

So I'm hoppin' mad because I can't afford what I want, whereas if I had bought 5 years ago, I could have.

[jwirr]

30. Duluth NewsTribune headline was about housing bubble today.

[Herman Munster]

31. it's like the stock market

Never buy a hot mutual fund. Everything reverts to the mean eventually.

I would look at underpriced markets that did not participate in the crazy bubble the last 5 years. Pretty much "flyover" country....the midwest, rust belt, and Texas.

[me b zola]

32. Going through the roof here in Portland

The house across the street from us has considerably less square footage and many less amenities, and is on the market for double what we paid for our house in 1999. Unbelievable.

[Klapaucius]

34. I'm assuming that you mean Oregon....

Went looking for houses ( not condos, I hate the idea of paying HOA fees ) several months back, and couldn't find anything under 220k in the Portland/Beaverton/Tigard area. A couple of them we could have lowballed, but was not in a position to do so financially. Essentially, if you're single, forget about a house. If you're married or engaged, might be possible, but difficult. Frankly, the idea of financing a quarter million bucks scares the living crap outta me. Although the fiance and I may end up in a condo, worst case.

One other possibility though, although it's not high on my list. Future in-laws have 20+ acres they're on, currently, if they don't sell. Could put in a mfd home or stick-built home on their property. It would end up being about a 60 mile commute to work, and I'm not much for driving that much. If they would extend light rail down I-5, I would do it in a heartbeat.


K.

[Nye Bevan]

33. I wouldn't be at all surprised to see prices drop 30-40%

and I would actually like to see this happen (even though I am a homeowner). Too many first-time buyers are simply unable to buy *anything* at current prices.