Plenty of 'For Sale' signs but actual sales lagging

[Lucid Realty]

Apartment Dweller wrote:

We've been trying to get out of our apartment for 3 months already. There is NOTHING to buy right now. Everything for sale is overpriced, in a bad location or in a bad shape. Some houses we looked at were on the market for 100-200 days, but the owners won't do any improvements and won't drop the price either.
If you bought a townhome for $340K in 2005 and didn't improve anything, well, I have news for you - it won't sell for $390K in 2008!

Renting is not the bad option that everyone would have you believe. Be patient. Something will come along.

[GHT]

No Different wrote:

<quoted text>
If you knew the actual cost to erect your "new construction" (with drywall, inferior concrete, 1/2 brick veneer facade, PVC a.k.a. plastic plumbing) you'd be kicking yourself in the hiney right about now.
Be prepared to sell in about 5 years when your ARM adjusts for about $250K.

of course I know what the tru ehard costs are. that's life. as consumers we are pay 50% to 100% more than something costs. i don't have an arm, it's fixed at 5.5% for 25 years.

[realist]

mom wrote:

<quoted text>
Exactly...people posting here are really undermining the mortgage deductions, and forget that gains from home ownership are over a long term. So if you plan on staying in one place for a LONG time, you're definitly better off buying because the swings of the market don't really affect you whatsoever *IF* you bought a home you could afford in the first place. We built a custom home this year and it is still holding steady in terms of value. But, we put down a sizable down payment and live within our means so these fluctuating values don't concern me in the least because we never plan on moving again. Therefore, there is no doubt in my mind that in 15 years when our mortgage is paid off our home will be worth more than what we paid for it. And if it's not, I really don't care because it will be paid for, and we plan on staying in it until we die. And remember, the market varies for the type of house and the area that you're in. We just put our old house on the market a few days ago listed at 245K and have had an endless stream of calls in two days. And while I'm not necessarily expecting it to sell quickly because buyers today can take their time and be picky, I have no doubt it will sell. And some math for you doubters...we bought the home in 2000 for 104K, put about 20K worth of work into it and it was assesed 2 weeks ago at 250K. Just in 8 years! In essence we could wholesale the house at 200K, even though we don't need to, and still come out waaaayyy ahead. So to those of you so hell-bent on the merits of renting, I'll personally hand over all my money to you if you could get me that kind of return!

You made that return during the 2000's housing bubble. I made better returns than that in stocks during the 1990's stock market bubble. Neither stocks nor housing are likely to see repeat bubbles anytime soon.

[Sydney N Phin]

We should all stay put. When you buy a house it is a lifetime commitment. If you can't afford it then take in roomers or even make it available for "short stay" entertainment by making your ates cheaper than a cheap motel.

[realist]

Moved Away wrote:

<quoted text> You just don't get it. You cannot really be that stupid. The last year here in Florida houses are down like 15%. Even in a 200g house if it only loses 8% this year. THat is 16g gone within the first year. WHAT DO YOU NOT UNDERSTAND? Unless you are getting a great deal, it is not the time to buy yet. When I say a great deal it is not for some realtor to tell me when to buy. I was going to buy a house last year. I thought the price was too high. It ended up selling for 50g less than asking price.

Our man "Truth" appears to be a desperate realtor, telling everyone and anyone that owning is always the only way to go, and the right time to buy is always right now. What he doesn't understand is that the market won't pick up for years and he'll soon be waiting tables on a long term basis. With a temper like his I imagine his employment history is full of unexplainable gaps and multiple employers within short time frames.

[mom]

realist wrote:

<quoted text>
You made that return during the 2000's housing bubble. I made better returns than that in stocks during the 1990's stock market bubble. Neither stocks nor housing are likely to see repeat bubbles anytime soon.

Agreed. But the bigger point is that we are making that kind of money on the house because we had it for 8 years, and if people are looking at real estate as an investent, more than just a place to live, it needs to be a long term venture. For example, we wouldn't have made that kind of money if we had tried to sell it in 2003. Again, geography is key. Where we are houses are taking a little longer to sell (averaging about 60 days) but the prices are holding steady.

[Freemage]

Stack wrote:

<quoted text>
You left out the tax benefits to owning. It all depends on the situation you are in. I personally don't care if my house loses value on paper because I have plenty of equity and I'm not going anywhere. In the longterm owning will always work better, but only if you plan on staying awhile.

I also left out the possibility of investing the money that I had left over after renting. Even at a mere 3.5%, a CD would return another $10K. And that rent likely includes some utilities, and would already factor in property taxes and maintenance costs. At worst, I'm probably breaking even on the "other factors".

This is not to dispute, for instance, mom's comments about long-term home-ownership. Ultimately, yes, owning your house is the way to go. But right this second is, in much of the country, a lousy time to buy if you don't need to.

[Truth]

Freemage wrote:

Okay, let's start with a hugely simplified situation.
In January, you have $300,000 and two options: You can buy a home for that exact price, or you can rent a comparable space for, say,$2.5K a month.
Now, let's say that the predictions of further slides are accurate, and go with a fairly straightforward 10% reduction.
If I bought in January, at the end of the year, I have a house now valued at $270,000.
If I rented, I have spend $24,000 of my original $300K, leaving me with $286,000. I could now buy that same home, and still have $16,000 leftover.
Now, that's in the IDEAL buying situation, wherein I don't take a loan (and thus end up giving money to the bank). Interest is, in essence, renting from the bank--it MAY, under the right circumstances, be a better deal, but that doesn't seem to apply in a lot of the current housing markets right now.

Sir, your analysis is simplistic and inaccurate. It does not take into account tax breaks or other things.

If the market goes UP 10%, than what? If it does go down 10% initially, who cares?? If you are going to stay there for more than 2 years, it will come back PLUS you will get the tax breaks. Also, what you do not understand is, when the home appreciates, you are profiting from essentially, in this case, from $300k you do not even own.Try doing this in a brokerage account. First of all you will have to have $150K invested to even do margin of $300k. If you get margin, you are going to be paying much higher than 6%.

[Duh]

Tax break? Ok Truth, you pay me $500 month for 1 year ($6,000) and then I'll give you back about $750.00 in April.

[realist]

Truth wrote:

<quoted text>
Realist is certainly a bad name for you....it should be need financial management

Truth is a bad name for you....it should be desperate realtor spewing BS

[realist]

Duh wrote:

Tax break? Ok Truth, you pay me $500 month for 1 year ($6,000) and then I'll give you back about $750.00 in April.

You went beyond Truth's comprehension level. Won't matter soon, when he's refilling Diet Cokes at Bennigan's.

[Duh]

realist wrote:

<quoted text>
You went beyond Truth's comprehension level. Won't matter soon, when he's refilling Diet Cokes at Bennigan's.

Doubt it, he's living high off the hog from the "tax break" he received. It's making him a millionaire.

[recent buyer]

Most real estate folks I know suggest that you don't look at your home as a financial investment. If you beat out inflation and real estate taxes and make a little money, you are ahead of the game.

The decision to rent or buy really depends on many factors, return on investment being just a small part of the picture.

Concisely -- if you want a long-term commitment; if you need more space (e.g. have more stuff or people); if you are concerned about your community; if you itemize your federal tax deductions; if you want to customize your living space to your needs; or if you have special personal needs (health- or otherwise)-- buying a home is probably a better decision in a very general sense.

It should be pretty clear that areas with high homeownership rates fare better for quality of life, quality of schools, access to resources, and so on. I saw many properties around here in good neighborhoods in the sub-$200k range being snapped up by former renters looking to put down roots and have a place for their families outside of a rental situation. They pay about the same as renting, but enjoy the privileges and responsibilities of ownership.

It certainly does follow, though, that there are a range of situations and needs where owning a home does not make sense. My point here is that the motivations for owning your own home are not exclusively financial. Finances tend to be a deal-killer but not a deal-maker.

[Freemage]

Truth wrote:

<quoted text>
Sir, your analysis is simplistic and inaccurate. It does not take into account tax breaks or other things.

As I noted, it was the simplest because it focused on the largest issues. Other factors (interest paid on a bank loan, investment of money not spent on buying a home, tax breaks and so on) can get fairly complex, but just shouting "TAX BREAKS" over and over again doesn't mean that you're going to get enough to overcome the loss on the house price.

If the market goes UP 10%, than what? If it does go down 10% initially, who cares?? If you are going to stay there for more than 2 years, it will come back PLUS you will get the tax breaks.

Then, obviously, the best time to buy is near the nadir of the market--if prices drop 10%, then climb 10%, the best time to buy a house is when the market is near the bottom. You then have a lower mortgage to pay off than you would otherwise, and a better situation.

If we were to map Jan 2008-Dec 2009, and there was a straight 10% down, 10% up, then the best time to buy would be Dec 2008 or Jan 2009. And likely, anytime between Oct 08 and Feb 09 would be a decent point to buy.

Also, what you do not understand is, when the home appreciates, you are profiting from essentially, in this case, from $300k you do not even own.

This works WHEN THE HOME IS APPRECIATING value. If it is depreciating--because the market is shrinking--then you're losing money on that $300K loan.

Try doing this in a brokerage account. First of all you will have to have $150K invested to even do margin of $300k. If you get margin, you are going to be paying much higher than 6%.

[Stack]

Freemage wrote:

<quoted text>
As I noted, it was the simplest because it focused on the largest issues. Other factors (interest paid on a bank loan, investment of money not spent on buying a home, tax breaks and so on) can get fairly complex, but just shouting "TAX BREAKS" over and over again doesn't mean that you're going to get enough to overcome the loss on the house price.
<quoted text>
Then, obviously, the best time to buy is near the nadir of the market--if prices drop 10%, then climb 10%, the best time to buy a house is when the market is near the bottom. You then have a lower mortgage to pay off than you would otherwise, and a better situation.
If we were to map Jan 2008-Dec 2009, and there was a straight 10% down, 10% up, then the best time to buy would be Dec 2008 or Jan 2009. And likely, anytime between Oct 08 and Feb 09 would be a decent point to buy.
<quoted text>
This works WHEN THE HOME IS APPRECIATING value. If it is depreciating--because the market is shrinking--then you're losing money on that $300K loan.
<quoted text>

Everything you're saying makes sense if you're able to find the house you want at the moment it hits the lowest price. However, if you wait to long you can lose the house you want or wind up paying more for it. If anyone on these boards knows the exact moment the market will hit bottom than I assume they will become incredibly wealthy. Also keep in mind that some areas of the country have dropped very little or even gone up.

[Stack]

Duh wrote:

Tax break? Ok Truth, you pay me $500 month for 1 year ($6,000) and then I'll give you back about $750.00 in April.

I think you missed his point. If you were renting you wouldn't even get the 750 back.

[Pete]

Stack wrote:

<quoted text>
Everything you're saying makes sense if you're able to find the house you want at the moment it hits the lowest price. However, if you wait to long you can lose the house you want or wind up paying more for it. If anyone on these boards knows the exact moment the market will hit bottom than I assume they will become incredibly wealthy. Also keep in mind that some areas of the country have dropped very little or even gone up.

I don't know exactly when the market will hit bottom or how far it will fall, but I can say with absolute certainty that we are not at that point and will not be this year. How do I know? Inventory. Supply vs. demand. How will prices start shooting up anytime soon when most housing markets have well over a year's worth of inventory (with more on the way) to be absorbed by a shrinking pool of buyers?

If anyone can explain how home prices can go up as sales continue to stagnate, I'd love to see it. Some people believe that basic laws of economics somehow don't apply to real estate.

[Stack]

Pete wrote:

<quoted text>I don't know exactly when the market will hit bottom or how far it will fall, but I can say with absolute certainty that we are not at that point and will not be this year. How do I know? Inventory. Supply vs. demand. How will prices start shooting up anytime soon when most housing markets have well over a year's worth of inventory (with more on the way) to be absorbed by a shrinking pool of buyers?
If anyone can explain how home prices can go up as sales continue to stagnate, I'd love to see it. Some people believe that basic laws of economics somehow don't apply to real estate.

I tend to agree with you for the local area. However, there are plenty of sellers who have dropped price substantially already. I also don't think many people on the thread are factoring in how low rates are currently. When housing starts to go back up so will interest rates. Everyone's situation is different, but there are some deals out there if you look around.

[Duh]

Stack wrote:

<quoted text>
I think you missed his point. If you were renting you wouldn't even get the 750 back.

I wouldn't be shelling out the $6,000 in interest either.

[Stack]

Duh wrote:

<quoted text>
I wouldn't be shelling out the $6,000 in interest either.

You would be shelling out $6,000 in rent and receiving nothing in return.