As much as I like to see the housing prices drop like dead flies, I don't think it'll "collapse" but rather a slow drop over time. The real idiots are the ones who snapped up several houses at a time with I/O mortgages hoping to make a fast buck. Greedy real estage agents (scumbags themselves) and greedier mortgage originators are also to blame.

 

Certainly things have slowed down here in San Diego. Some areas are hurting, and others are seeing sales very strong. I can say less desirable areas have been hurt the worst. Condo market is flat. I have a friend who sells in the trendy Mission Hills area of San Diego and when he does a open house he still gets 30-40 visits. The big problem I see is construction cost. They have doubled here the last 3 years. I read China is buy huge amounts of resources to feed their growing economy and it's going to get worse, not to mention all the construction materials going to New Orlenes. Land is scarse here in San Diego. All the easy land is built or bought. Also you have to look at local economies. If there has been a boom, but the job markert is horrible, you will see a bust. I think you just can't say a blanket statement like things are bust. Areas that have done well before the boom will continue to do good over the long run.

Sam

 

he copied and pasted that.

 

I live near Harrisburg, PA....nothing exciting has happened in my neighborhood. I paid $220k 8 years ago and my house may be worth $300 or so.

the houses were selling very quickly in our neighborhood last year.... now there are 2 that have been listed for 3-4 months. the prices keep dropping on them.

My investment houses are holding strong. City properties are in a different category than new towhouses. In the past 5 years though, my city places have gone up 75% in value....and continue to hold pretty strong..... but we are talking about a $40k house now worth $75k....

 

[QUOTE=Wildncrazy,Aug 31 2006, 11:04 PM]


You can still get a lot of home for $300,000 here.

 

I sold in July in Ellicott City, MD and netted 280K in profit!
I'm renting now in South Florida waiting to see how thing sort out.

Go housing crash, GO!

 

Well, as I noted, most foreclosures are PROPERTIES that have problems rather than homes that went back because the PEOPLE had problems. So that means you have to be more careful buying a foreclosure than home that hasn't been foreclosed upon.

Look at it this way, it has been proven that a house that has been foreclosed upon has a problem. So it is up to you to figure out what that problem is and see if it is a risk you are willing to take/fix.

The problem with a lot of the problems is that they have nothing to do with structure or anything you can fix. You can't spot the problems selling a home because it is on a corner, busy street, near a shopping center/school/railroad tracks, etc. Unless you are aware of how big an issue those things really. And the only way you can truly know those things is to have been in the business for years, had trouble selling multiple homes, be an appraiser, etc.

You also have to make good comparisons of what price you could buy another home in the same neighborhood. Many times you will find "normal" listed homes are the same price or less and they usually have more financing options plus better resale which means you'll make more money/lose less money when you sell.

Or should I say IF you sell. There is one house in my neighborhood that is 17 years old and it has never sold thru anyway but foreclosure. It is on the corner of a busy street, sitting right behind an electrical distribution center, right beside a tall metal transmission line, across the street from a noisy park.

The builder couldn't even sell it.

 

The thing I don't understand about areas like that is that if people can't afford to buy how could they afford to rent? The investor/owner is paying those prices and therefore has to recoup the mortgage costs and make a profit on the renter.

Is it just that you don't have to qualify for rental like you have to qualify for a loan?

That would mean people are paying 50% or more of their income just for housing expense.

Now that's scary!

 

To answer the one question about how do people afford their mortgages in CA, the answer is negative amortization. People willingly negative amortize on their mortgage in order to stay in their homes. They pray that their homes' appreciation outpaces their rate of negative amortization. Perfect example: I just refinanced a client in S.F. who owns a home appraised at $1.4m. He took out a loan for $990k on a neg-am loan. His normal payment should be $6k a month, he is paying the neg-am payment of $2500. He is adding $3500 a month to his balance. As long as his house appreciates 4% a year, he is staying ahead of the game.

Also, down here is South Florida, none of the investment properties bought in the last 3-4 years are cash-flowing. My neighbor has monthly carrying costs of $3k on his unit, and is only renting it out for $1700. It is like this all over South Florida. People bought pre-construction hoping to flip, got stuck with the unit, couldn't sell it, so had to turn it into a rental and take a huge monthly loss. Every rental in my development is losing at least $1k/ month, most are closer to $2k and those are the fortuntate ones who have rented their units. The unit on the other side of me has been listed for 9 months and hasn't sold. That guy is eating his $3k a month in carrying costs. Yikes.

Detroit

 

so the loan gets larger and larger? What happens eventually? Surely the bank won't let it go to $2mil?