Not in FL, CA, NY, or Las Vegas!

The current price levels are based on a market expectation of heavy appreciation...10-20% per year or more in many areas. Now the market expectation is 0-2% per year for the medium term.

Now, real estate is "sticky" meaning prices are slower to come down, but they will as buyers don't line up to buy. In areas with heavy proportion of empty speculator-owned real estate, the declines will hit harder. When the speculators feel the price appreciation is too low, they will sell quickly. Most of them are leveraged 100% and know that they can't afford a price decline.

You will not believe the number of for sale signs in my area. One condo has about TEN of them...and I think it is 20 units!!!

Areas like the midwest won't be hit hard, if at all. Places like FL will as the price spikes are based on a market assumption of high returns and the area has a lot of speculative real estate.

 

I wish we had that concept here in NY

 

Some areas of NY do. My tax assessment increase is capped at 6% per yr or 20% over 5 yrs.

 

Equity Lines (HELOC's) are not generally the smartest idea...they are tied to prime which has about doubled in the last couple of years. Fixed 2nd's don't offer as much flexibility and the rate will be a little higher but it will be FIXED and is generally a normally amoritized loan where payment includes P&I.

 

It is only "financial suicide" to buy a house right now if you plan on trying to sell or flip it in the next few months. If you are planning on keeping it for a few years, it is the smartest investment you can make. Interest paid is tax-deductable, you gain equity through appreciation or principal reduction, and you have pride of ownership. And if you put less than 20% down you don't have to pay PMI (mortgage insurance). There is lender-paid mortgage insurance, where you pay a slightly higher rate than normal, but don't pay PMI (the extra interest you pay via the higher rate is tax deductable, so it is often called TAMI or tax advantage mortgage insurance) or you get a non-conforming loan that doesn't require it. Everyone's situation is different, so to make a blanket statement such as calling buying a home 'financial suicide' is ridiculous.

Christian

 

I agree that if you intend to occupy the house, it is a good time to buy.

Still, in many areas with heavy proportions of speculative real estate, things are only going to get better. Supply is up, demand is down.

 

Depends on the market in your area...I could quit my job and just flip houses for a living here in Florida.

 

I think you do not understand the basic of investment: "Recent housing appreciation isnt good for anyone (except the Bank)." ??? It is good for current homeowners. What do like to have: no change or decrease or increase in your real estate investment ?

I bought my house 8 1/2 years ago, the current value is about 3 times what I paid back then, and you said that it is not good for me ?

I'd re-financed about 2 years ago with no-cost 5.5% fixed for 30 years, about 2.5% less than original loan interest to reduce monthly payment by about $500 and that is not good ?

The problem is the home price in California is too high for new buyers and if you are selling your current house to buyy another house in nicer neighborhood, you will pay very high price for the new house and your property tax will be a lot higher than your current one. That why many current California homeowners are remodel and/or adding rooms rather move to bigger house.