Bad news for homeowners and real estate investors who were expecting a recovery real estate.
Despite the trillions of dollars pumped into the economy to ‘stabilize’ prices at pre-crash bubble highs, nature continues to force a shift towards equilibrium in the real estate market:
The ailing housing market remains hampered by the backlog of distressed properties, which is growing larger as banks repossess more homes than they sell.
Banks now hold more than 872,000 homes, nearly twice as many as in 2007, the New York Times reports, citing data from RealtyTrac. In regions like Atlanta and Minneapolis, banks are seizing more homes than they’re selling, suggesting that their staffs are overwhelmed by the volume of foreclosures, the NYT notes.
…
As of January, the shadow inventory constituted a nine-month supply of properties, according to a March report from data-provider CoreLogic.
The fall in prices even appears to be accelerating, as home values fell 3 percent in the first three months of this year, for the biggest quarterly drop since 2008, according to a report from data-provider Zillow. Home values will continue falling through the year, and likely won’t stabilize until 2012, Zillow chief economist Stan Humphries said in a statement earlier this month.
Source: Huffpost
While Zillow claims that the real estate market will stabilize in 2012, we will continue to vehemently disagree. Zillow did, after all, predict a stabilization of the housing market in 2011 – and we can see how that forecast went.
As we’ve pointed out before, our view is that the real estate market has at least another 20% decline to go – minimum. And it could be a lot worse.
In June of 2010 we commented on the so-called “home run” in home sales, as mainstream analysts called it, resulting from the home buyer tax credit. We wrote:
That’s right, the housing market will continue on its decline trajectory.
Homes are a debt based asset, and the easy creation of money from 2001 to 2006 led to massive price increases – we’re talking 50% to 100% asset value rise in an asset that remained fairly price stable for about 100 years.
The system is now trying to correct this extreme upward price swing. In the last couple of years the government tried to counteract the corrective deflationary pressures in an attempt to “stabilize” housing prices at overblown 2007 levels by making mortgages inexpensive, providing tax credits and loan modifications.
All of these billion dollar programs have failed. FAILED.
In April, the Federal government told us that home sales were up 27%. We were told this was a “grand slam” for the housing recovery.
We warned you that this was a complete fabrication driven by the aforementioned policies and that we could expect a return to decreasing home sales and prices this summer.
Given that we are not in any sort of economic recovery, but rather, a relapse into recession, we expect a continued to deflationary impact on the housing market. First, we have people losing their homes every year in the millions. Second, we have people losing jobs in the millions. Third, we have banks refusing to make mortgage loans in any meaningful capacity. The long-term trend is down.
As mentioned above, home price values sky rocketed before the bubble – some in excess of 100%. This was the pendulum swinging into one direction. Now we’ve had a reversal and we can expect the pendulum to shift towards equilibrium – towards a historical balance. That balance means that home prices should be somewhere around their historical average of about $140,000 (inflation adjusted, of course). Since the pendulum is swinging, however, we can expect to see an extreme swing in the opposite direction of the bubble, and we would not be at all surprised to see a decline from top to bottom in the area of 50% to 75%.
That sounds a little extreme, we know. The Japanese didn’t think it could happen when their real estate bubble popped in the early 1990’s either. But it did.
Not only do we not expect a stabilization in home prices in 2012, we will venture a forecast that prices will be unstable, regardless of stimulus, bailouts and machinations, for the rest of this decade.
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Comments…..
I never thought I would be that I bought a home, worked hard, scrimped, saved, did without; all to pay of my 30 yr. mortgage in 8 years. Walking around my neighborhood I counted 17 houses either vacant or for sale, How am I ever going to sell when a house down the block sold for $6300?
the house next to me was valued at $90K and sold for $35k. Idoesn’t look like it’s going to get better at all
What bothers me the most is that people who didn’t take on extreme levels of debt and managed their finaces are being taken down with everyone else. Obviously many people lost their jobs too and unexpectantly got caught up in the worlwind laid out by the banks and supported by the government.
I use history as a guide and expect that home prices will fall by 85%. Thats what happened in the last Depression. Stocks by the way, fell 90% off their highs. After they bottomed they went no where until WWII.
The banks use granite and hardwood to enslave people and have done so for years. They are protected by government who have kept one Ponzi scheme after another going for decades to support the rich. The rich by the way aren’t the Gates and the Buffets, they are the Rothschilds and Schiffs and other banking families that have managed and increased their wealth over the past few centuries.
Unfortunately the bubble is so big and out of control now that the results are going to be horrendus. We can all thank the Rothschilds and friends for destroying a way of life. We also need to wake up big time and stop being fools. We are lead down the garden path everyday by controled media, finacial and religious institutions and government. Its time the sheeple pulled their collective heads out of the ground and seen things for what they really are. You can start by reading this article.
http://www.iamthewitness.com/DarylBradfordSmith_Rothschild.htm
I hope the banks choke on them
Comments…..
sorry I meant to say that “I never thought I would ever regret buying a home”
Can’t think of any more bubbles the feds can inflate. And Au/Ag can never be a bubble. Rome is burning while leader’s fiddle. Let them eat I-Pods.
Sorry to all of the people who think of their house as an “Investment” rather than a dwelling, but ll continue to plummet. There needs to be about a 40% drop from current prices, maybe as much as 60%. Unless the homes are demolished, or foreigners move in, there is nothing to sustain the ridiculous prices people have been paying. It was all financed through debt, and a debt that could not have been paid anyway. People were simply looking for the price to rise and sell, and that created (partly) the bubble.
The price of a house should be roughly double 1 years gross salary. That is between 80K-90K. Anything more than that is unsustainable for a family. And not only that, but wages will continue to depress, which may have to lower the housing cost even more. People cannot afford a house at the levels they are. They never could, hence they just paid a high interest rent, hoping to move on, and get someone else to pay more for it then it cost them. News flash, the “value” of your home should not go up unless you vastly improve it, or there is a shortage. If it does go up in price, it’s because the dollar is losing value.
The era of thinking of a home as an investment (with returns), was based on silliness and ignorance. Well, that’s over now, it’s time people got used to it.
MAc, it was a brilliant article, I just finished reading. You said:
“Not only do we not expect a stabilization in home prices in 2012, we will venture a forecast that prices will be unstable, regardless of stimulus, bailouts and machinations, for the rest of this decade.”
I agree. As a matter of fact,t he more they try and manipulate it, the more people will lose jobs, and the more food, energy, etc, will accelerate, causing the price of real estate to fall. During which time, the elites will snatch it up, but I suspect that will be an unwise proposition if things ever really do go south the way we expect it will.
BTW the “ll” is supposed to be “it’ll,” in my above post.
The financial laws of physics declares that all markets return to mean. And this is going to get as ‘mean’ as it gets!
A L-O-N-G way to go to the bottom. Housing will decline 75-90% (depending on market region) of its market top. We’re only about 20-25% there.
A perhaps somewhat dated analysis report, but still highly accurate and pertinent.
HOUSING BUST
by Sol Palha
http://www.financialsensearchive.com/fsu/editorials/ti/2007/0322.html
—
Oh, and the rule of thumb for prices on houses, cars and rents, is this. A house should be no more than 2x your annual pay. A car should be no more than half of one years pay. And rent should be no more than a weeks net pay.
Those values shift as the costs of some other goods and services (taxes are ridiculous), but the principle has been sound for generations, and should be used as a rule of thumb. But in any event, we’re do for an even bigger correction, and they’ll print money to make their numbers look better (valueless dollars require more to buy a house, “Stabilizing” prices, while driving up foor energy, etc, which they leave out anyway). There is hope, though, people are waking up in great numbers, and deciding they don’t want big brother’s help. And we don’t need it either. The free market can settle things. It just has to be free again.
“foor” is “Food” I did it again, shucks.
There is no way what so ever on this side of a frozen hell that I would be able to find a decent enough livable place for a weeks net pay. I have a mortgage and a very cheap one from having foresight a year and a half ago to by a nice foreclosure….but we used to rent and rent was $875 a month for a 1K sg ft apartment on the 2nd floor. Only a few times in my life did I ever have that lucrative of a paying job……just sayin
Actually, there IS a way that home prices will return to their old values — VIA HYPERINFLATION!
Which, could indeed occur by 2012…
All values are “relative.”
The real estate market is currently down. And, was indeed overdue for some adjustment. And, the adjustment probably isn’t over (yet.) But, this down-cycle also creates opportunity to buy and snatch-up the deals we all missed a decade ago. And, to get it at TODAY’S dollar values (before hyperinflation takes hold.) Then, we will literally be able to buy equity in our homes for pennies on the USD.
Again, don’t get too hung up on the home prices as they relate to the USD. The USD is the “next bubble” to collapse…
We bought our current house 7 years ago. It quickly “appreciated” to about $150K more than we paid for it. Homes in my neighborhood would go on the market at that new, high price & sell within 2 weeks.
Now, homes in our neighborhood are now selling for about $100,000 less than what we paid for ours 7 years ago.
By my math, my home has truly lost $250,000 in value over the last 3 years. At the very best, I’ve lost $100,000 in value off my purchase price.
The mainstream sheeple media says were in an economic recovery. Yea right, and my left foot has 16 toes on it……
I too, hope the banks choke on them. My bro recently went into foreclosure (strategic default) near Pheonix, Az. as balance is way more than value of the house. Smart move is to default in this type situation, and go rent. Many areas houses have tanked. The banks are their own worst enemy. Folks, if you’re in this situation (prices dropped way below what you owe), them dump the house asap and move on! Then you may have to file bankruptcy, so check with legal aid in your area as you could wind up in court with a law suit.
We’ve been looking in a rural area about 20 miles from town near in the area we live in now for the last 4 years. It’s my hearts desire to get out of the city asap. For one reason or another – the few places we found that would work have all fallen thru.
The last one was in early March -a short sale. The bank would not get back to us in writing that our offer was actually accepted so we didn’t want to risk $2k in inspections. The house went to auction and sold for $2100 more than what our offer was on it. We offered to pay that difference and ING again flat out REFUSED to work with us. So we waited until it came back on as a foreclosure.
Now, just last week, the same house came back on the mkt at $275K (it was on short sale previously for $303K). We offered $290K because we knew the house was underpriced. We are still waiting to hear if our offer was accepted as there were several other offers also.
I won’t be holding my breath.
To make a long story short – I was reading an article in the San Diego business journal. It said “In many instances, instead of facilitating houses to willing buyers the banks are purposely withholding them because they stand to make larger profits thru loss sharing agreements with FEDERAL REGULATORS (emphasis mine).
Everything the govt touches truly turns to crap!
Im with VRF – I hope the banks shoke on them also. Greedy bastards.
Well Mac the rest of the decade could be right. At a minimum I would say 2015 or 2016, but I don’t like to use years, but price points. I thing we could see 1968 home prices before its all over. That would put the average home in the $20K to $30k range.
My advise to someone looking to buy a home is keep renting. If you buy now you could lose as much as 30% in the first year.
BJ, FYI if you have the average salary of 44k per year, one weeks pay is approximately $850. So, not only is the rent you quoted in the ballpark figure, but also proves that rent should be below that, and not above. $700 in the area I live would get you a 3 bedroom apartment or house. In Las Vegas, where I am from, $850 would get you a 3 bedroom house also. So while individual circumstance may vary, it’s still a rule of thumb.
BJ, I wanted to add that, if I didn’t make it clear, the fact that the cost to rent is currently higher than a weeks’ pay for many people, is indicative of the problem. When overall values drop enough that no one will pay the outrageous rent (like just happened to mortages, and is still happening), the price of rent will fall, just like the purchase price. And that was my point.
I don’t regret building my house or living in it for almost 40 yrs, what really worries me is that we may lose it to land and school taxes in the next 15 yrs if we’re alive,.even my senior citizen and veterans discounts don’t help much the way taxes are going up every yr
Well, wait a minute here guys (and gals)…
Prices/values should start going up as soon as interest rates start going up, right?
I mean a higher interest rate on your mortgage means that you can afford a more expensive house, right?
Oops…
Real estate is still ridiculously over-priced where I live on Long Island, NY. Your average house is still being listed for $300-$350k. However, I’ve noticing more and more houses for sale and been on the market for quite sometime. This decline is going to be slow and painful. I honestly don’t anticipate the dollar collapse or hyperinflation happening this year or next year, it’ll probably happen closer towards 2018 to 2020. You have to remember that there are still many affluent cities and areas in the U.S that can withstand this recesssion/depression for quite sometime such as NYC, Boston, Chicago, LA to name a few.
Here is South Florida the Commercial Real Estate market is starting to tank big time. I count the empty store fronts in various shopping centers near our home and there are more and more of them every week.
The banks have started foreclosing on apartment complexes purchased by investors who have since ‘boogied’ on the mortgage. For some reason they seem to feel that it makes good sense to get everyone out of the apartments and let the buildings sit empty.
Two or three weeks after they have gotten the last tenant out, the bank sends one of their flunkies out to check the condition of the property. Folks are again living in the apartments that are supposed to be vacant. They have broken into the apartments, changed the locks and are living there without electricity or water. They haul water in, use lanterns/candles for light and propane camping stoves to cook. They are ready to flee into the night the minute that the police take notice of them or receive a complaint from the bank. There is no way that they can throw all of them into jail.
Others have taken to moving back into the single family homes that they have been previously evicted from, alleging misconduct on the part of the banks that foreclosed on them in the first place. They file a lien against the bank and it takes more than a year to get on the court docket to hear the case. In many cases, the banks can’t prove legal title …. so the cases sit there in a kind of a legal ‘limbo’.
It’s all excellent entertainment for a pervefrse old bastatd like me. Ya gotta love it!
Make that a perverse old bastard like me who can’t spell and doesn’t take the time to proofread their writing.
We built our house in 1985 for cash, improving it along the way, including a new kitchen remodel this past year. I actually hope it goes down in value in the tax assessor’s eyes, but other than that, don’t care what the value is…..I will leave here in a box, or a bag, or an old sheet.
It’s preaching to the choir here but broke, homeless and hungry people are ripe for totalitarianism. Since the 60’s well-paid blue collar jobs have been outsourced. Now professional work is being done in the BRIC nations. Broke is abroad in the land.
Your article portends homelessness for those who never expected that would be them. Mr. Honest Productive buys a home based on his good job. Good job goes. His home goes. The banksters turn him into the street.
Hungry is coming. The people who most need to see this website, the “progressive” social justice crowd (sheeple) never will see it.
The only thing we can do about it is stock your larder and keep your powder dry.
I ignored all the savvy personal finance advice to “carry the biggest mortgage you can” to buy my home for cash. Looking at the carnage I feel sorry for the innocents who are being harmed. But I feel free too.
What needs to happen is we need to do more than survive. We have to prevail to turn the parasitic Power Eliters out of power. Once and forever. Without becoming them when given the chance.
You might read some of Charles Hugh Smith’s posts on oftwominds.com. He has written extensively on the illusion of home equity among the Middle Class and the concentration of political power among the wealthiest 1 percent.
You are correct NunJoBizness. If the banks dump the homes on the market, prices fall even more & quicker. It’s a double headed snake and the slope is decreasing decreasing & they knew it would happen. Greenspan knew it too but he wrote a book. I blame him the most for letting it happen & the fed reserve for making it happen. Wait for Fannie & Freddie to hurl. The G’s are the only answer. A few kiddies here opine that “grub” is the answer but they are sooooooo short sided & it probably sucs to be them. There’s warning labels on hotdogs. Flip an Oscar Mayer package over & look at it…. The good ones are pork anti-terrorist Muslim. Nobody – I mean nobody puts ketchup on a hot dog!”
You can always tell who the renters are by them informing us that “our homes aren’t investments”.
Guess what, after 20 years of paying a mortgage, we’ll have an asset that can be sold, borrowed against or handed down while those who rent will have a shoebox full of cancelled checks and much higher rent by then!
We all pay a mortgage, you can pay your landlords (it’s called “rent”) or you can pay your own.
“Dave” is interposing the term “asset” with “investment.” They’re not the same thing.
Ask the millions of people forclosed upon because their asset has gone , is going, and will continue to drop in value. As a dwelling, it can be an asset which can be sold, borrowed against ad nauseaum. If it’s going down in value (Price, in this case), it’s not an investment in the terms we’re talking about.
The past few years in real estate have been difficult for buyers who got into the game at the peak.
But even if they can keep paying off their loans, they will someday own it and have an ASSET ( all renters will still own nothing!).
Keep in mind that many that have gone through foreclosure have done it intentionally to get out of a huge debt in order to get into a home close by for less money, or due to them losing a job which would have put them in economic peril whether they rented, bought high, or low.
Remember, you’re paying a mortgage one way or another, your landlords or your own.
Spot on TnAndy, I see you understand the true value of your home. It’s your dwelling, your castle, your spot on earth. That’s worth more than anything else people try to afix to the “value” (they mean “Price”) of a home.
I met a middle aged lady who was ranting one day about how no one would pay her what he home was “Worth” and that she knew how much it was “Worth” because she knew what it cost to make the changes she had. Thankfully an elderly gentleman turned to her (so I didn’t have to) and said, “If no one is willing to pay you that much for it, then it’s not worth what you think it is. You can either sell it to them for the price they are willing to pay for it, or you can continue to live in it, but saying it’s worth more than someone is willing to pay for it, is just kidding yourself.” That’s what’s happening to the market. Banks can hem and haw and say how much the house is “Worth” (monetarilly), but people IN DROVES are refusing to pay that price.
Also, as has been pointed out, I read a few articles before the end of the year that said that banks are being rewarded for foreclosing and sitting on homes, refusing to drop the value. The reason why is that they are being repaid by the federal government. if I remember correctly, the banks foreclose on a property, then refuse to sell for a lower price, and make it go to auction. Then they get something like 85% of the original NOTE value, minus the amount from auction, from taxpayers. Thus, if they sold at the new market price, they would lose out on the government bailout they are receiving, in all actuality raping the taxpayers coming and going. (As they have always done).
Your home is your castle but not an investment. It is your place to live. Anything else and you are in dream land.
What sucks is the “interest” paid to the banksters for the privilege of borrowing money from them that isn’t even really theirs and for the most part does not exist because of fraction loan banking laws. For the first half of the loan term more interest is paid than principle on the monthly payment. After the first seven years or so on a 30 year mortgage, you have paid the price of the home in interest. People are losing homes to banks that are literally paid for.
Comments…..to az.ready….boy, are you hitting the nail on the head. everyone has gotta have the best and they want it now, no matter the cost or risk…. i paid 29,000. for my home 22 yrs ago and have paid it off. it is not a mansion, but it is mine. and i refuse to buy a car that cost more than my house too. people today just cannot stand to not have what others have, and they just gotta have it now.
Excellent Point AZ Ready. And not only do the banks loan us our own money, if they fail, we bail them out. Or as was pointed out last year, they borrowed billions from us, to buy our treasuries, receiving interest on that, paid by us, and then returning the loan we gave them. It’s insane!
Its been reported that Sarah Palin just purchased an 8,000 sq ft house in North Scottsdale on five acres for $1.4 million. Thats a pretty good buy for the neighborhood.
If a forclosure action is taken against me, I will stay until forced to leave, then squat in one of the empty houses in my neighborhood and force the banksters to evict me. I once owned rental property, and for my tenants eviction was a way of life. Rember how hard it was to get rid of “Katrina refugees”?
The banksters try to pretend it is not so, but they are living their worst nightmare– people do not fear forclosure anymore.
I agree that a house is a place to sleep in relative safety, not an investment.
Ben Dover
I too own rental property and agree tossing out non-payers is a hassle…the stories I could tell!
Had much fun selling tenants possessions to satisfy rent and damages…not much recovery, but fun nonetheless. Most tenants take what they can and DESTROY everything left behind…electric cords cut in half, smashed furniture, etc etc. Savages.
A mistake you make is punishing a private landlord vs. screwing with a bankster, kinda like punching the milkman vs. grappling with a vampire.
I do agree if you are severely underwater, you are an imbecile for continuing to pay anything. Get a new place while your credit is good for 40% or more less, or buy preps and PMs with your erstwhile mortgage while squatting for the 2+ years it takes them to toss you out.
My uncle asked me my opinion about his daughter (Las Vegas homeowner) walking away from a mortgage, and I explained the fraud to him, turned him on to zerohedge, themarketticker, and even showed him the Daily Show clip where the Mortgage Banker’s Assc. WALKED AWAY FROM THEIR MORTGAGE IN D.C.!
Haven’t heard from him since. Sheep and cattle exist to be bred, culled and led to the abattoir. Sad fact of life.
Aren’t we lucky when a semi-literate savant like Hairy Bawls stops patching his house trailer with duct tape to favor us with his wisdom? The phrase is “short sighted.” I own my home free and clear. Still making payments on that trailer are you? The banksters likely have you by the Bawls. Nobody has me by the short hair.
The Power Elite owns and runs this country. Those of you who vote and think you make a huge difference are deluded. Voting keeps the sheep quiet and prevents real change.
Old Money + highest ranking execs of largest corporations + elitist finishing schools and talent scouts like Harvard + think tanks (CFR) + media propaganda + elite law firms + bought and paid for politicians = The Power Elite.
They select and finance winning politicians at all levels. Who write laws for the PE. Their judges interpret the laws their way. Yo, Harry, do you think you have the kind of political power the guy who gives $100K donations has? Your $100 dono x 1,000 people … you have NO influence. When was the last time you had lunch with your US Senator? He doesn’t know you’re alive.
Politicians are selected and financed by the Power Elite. Both major parties serve the PE’s goals. You have NO influence on policies or laws. There’s no redress there.
One thing you can do is have the necessities for survival. That is within your control. Stop paying or squat. Write letters to the editor etc. MIght make you feel good. Might delay your fate. Won’t change a thing because the policy makers don’t give two damns about us.
Harry, yeah I mentioned “grub.” You want to take a swipe at me, loser? Be man enough to do it directly.
You really are short sighted. You need to re-read and think this time. Not replying to you at all, you have been here a while. You are one of those me me people. Your fuse is short too.
You know, sometimes there isn’t much to say other than… DAMNED if we do, DAMNED if we don’t.
I won’t pretend to know jack daniell’s about the world of realestate, but I will say if you can make it happen now doesn’t seem to be a bad time to purchase a house. Assuming that is, the bank will accept your offer! What a scam the bankers get to run. Shame on them.
I am a “homeowner” who still thinks a house is a place to sleep, not an investment. It is cool to finish with a mortgage and still be able to stay there (some just stop paying and stay there). Rent never stops.
True, that’s why property and school taxes have to go.
Home Mortgage is just one more link in your NWO IMF CFR IRS DEBT SLAVE ball and chain.
Stay LIQUID if you want to survive and plan to be mobile to move to healthier areas to survive and plan to provide your own security against local preditors!
Dear Friends,
I’ve been in the real estate industry for decades and seen it all, but nothing like what’s happening now.
I posted on this forum a couple months ago, urging people not to buy real estate. There are still voices out there saying “it’s not a bad time to buy.” Don’t believe that. We’re in a complete collapse of the housing market (and probably the general economy). Don’t throw your money away. I’ve seen so many people buy “at these low prices” and be delighted, at first, only to hate themselves 6 months later when their nice new home depreciates, evaporating the down payment they worked so hard for, and then be stuck upside down. We’re in for YEARS more housing collapse.
This is a little beside the point (and I’m not any expert on the stock market) but if you still own stock you might want to sell quite soon. Don’t wait one more month.
If you’ve been falling behind on your prep program, you don’t have much time left. Best of luck to all.
Mac,
Do you have an opinion on land? Farm land, hunting land, etc.
We’ve been working with a few realtors on buying a piece and it seems like land has held its value very well and is selling briskly.
Then just late last week Drudge puts up an article that hedge fund manager are flocking to land.
Seems like it might be a great investment place. Especially if the shtf. You just can’t grow enough crops on your suburban 1/2 acre lot to survive.
Hairy, I presented an analysis. An analysis I didn’t see in the several dozen posts above mine. You took a gratuitous swipe at me. You’ve got disinformation tactics down pat. It works like this. If I don’t reply to the insults I’m discredited. If I do respond, I’ve “got a short fuse.” You can’t fault the analysis, or make your own, so you try to discredit me.
Yawner, dude.
Didn’t even read your post when I posted. Was referring to a few here that thinks food is the only thing important. No harm, no foul. An oz of silver is an oz, you can only store so much food, we have a nice home that was paid off from our other home that we sold at the top of the bubble. Living well. Louis: Looking good, Billy Ray!
Billy Ray: Feeling good, Louis!
Not only is a house Not an investment – or an asset – it is a liability… because it costs money to keep it, even if it is PAID for,… Unless you rent it out.
Spend some time reading thehousingbubbleblog.com and you might come to think renting is the better option and right now is not a good time to buy. YMMV.
Suze Orman says that 4 out of 5 people owe more on their home that it is worth.
She also said that the housing market will not recover until 2025. And she is VERY optimistic person with her predictions.
Agreed, it sounds just like the statements made by Robert Kiwosaki (sp). If anyone doesn’t know, he’s the author of “Rich Dad, Poor Dad.” He defines an asset as something that makes money, and a liability as something that costs money. A House costs money, perpetually. Like I’ve said, it serves an important role, but it’s not the same as an investment in financial terms.
You could make a case that buying a home isn’t and asset in the last 4 years only, but for most of the other years in the last 230 it was.
Yes, you’ll have property taxes (here in FL we have a constitutional amendment that limits the property tax to 3% per year).
There is no such thing as not paying something for having a roof over your head, the difference is that you can sell the roof of the home that you bought, but not your landlords.
I have to say, I dislike having to educate people who are so adamant about a point that is not only incorrect, but which harms others, but I will anyway. Here is a link to a graph from a study of housing prices from the year 1890 until 2006 (Feel free to look up the study yourself. It was done by Yale Economist Robert Shiller.
http://graphics8.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
While I doubt there have been any studies from which your conjured 230 years number came, this graph simply demonstrates that the housing prices from year to year over the 116 years from 1890 until 2006 were fairly stable. Actually, what happened for the most part is that the price was stable, fell drastically, and was stable at a lower price for a few decades, rose and was stable for several decades. Then for about 15-20 years, it swung wildly up and down, an in the last 10-15 years, doubled in price.
I’m sorry to have to tell you over and over, but in monetary terms, a house is not an investment in the sense that it becomes more valuable. It DOES NOT. Your dollar may become worth less, but the value of the house does not go up unless the price is manipulated. The more that are built, the less they are worth. It’s a simple law of supply and demand. Some of us understand it, some don’t. I hope the value of a house falls another 90%, but 60% is more realistic to bring it down to appropriate levels. The (nearly) 100% rise, has a far, far way to fall, and objective 116 year history shows it will. You’re house should be worth the same or less than you paid for it, unless it was more than 20 or so years ago. Cheers!
Feminism is a bubble that’s also about to pop!
No jobs=no money=no home=no independence=no more feminism bullshit!
ZBK a little FYI.
The definition of feminism is: 1. the theory of the political, economic, and social equality of the sexes
2. organized activity on behalf of women’s rights and interests
Unfortunately “Equality” means “parity” and “same” in the sense referenced (I have 2 degrees in the field), and is a lie. Men and women, while of equal worth, cannot do the same things, are not equal in character, demeanor, physical compositon, disposition, nor capability. To perpetuate such nonsense is ignorant at best and insidious at worst.
Some of you people are in serious denial.
If you think buying a home & paying it off (yes, many of us still do that!) is tantamount to “slavery”, then what do you call someone who’s been renting for 40 years?(aside from a fool)
Lots of People are finding they cannot sell the roof over their heads without paying a huge sum and incurring a loss.
Many People would have been much better off renting, the mobility of such is often an added bonus and they don’t have to contend with having lost their equity, for example:
The Other Side Of The Knife
“… Patricia and Ricardo had bought their three-bedroom home in a middle-class section of southwestern Atlanta in 1983 for $30,000… “Even the initial monthly housing payment, including taxes and insurance, was barely affordable: $1,215.33. As documented in their loan file, the Jordans’ total monthly net income was only $2,697. Their monthly housing and other debt costs totaled $1,642, so after they paid their debts each month, the Jordans had only $1,055 to live on… Much has changed for the family, and the more than $30,000 they spent on the house is gone.
…home ownership is not the low-risk path to wealth and happiness. In the 1920s, Americans gorged on Florida real estate, some of it underwater. The Depression came and – ka-boom! – property values fell like a rock in the Everglades.”…”
http://thehousingbubbleblog.com/?p=6504
Lots of renters are looking pretty smart right about now.
“Lots of renters are looking pretty smart right about now.”
Correct, and they didn’t have to pay the associated costs of maintainence if there was a major problem with the property. Also, for many who have bought in the last 10 years, once they sell, they are either at an even par, or net loss, otherwise they are scrambling to go bankrupt “strategically.”
The price of a home should not fluctuate much and should certainly not increase by 100% over the course of 10 years. That’s speculation and dollar devaluation, which means the home still didn’t increase in value, it would be worth a similar buying power in that situation. Here’s an associated graph with defining periods over a 116 year period from 1890 to 2006:
http://graphics8.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
TN Andy….spot on,a home is to be lived in,not wagered on!
All these goofballs buying property and gambling on a profit….ends up driving other people into homelessness…shouldnt matter what my home is worth unless I choose to sell it,used to be here that property taxes were mostly based on what you paid for your place and stayed pretty much at that level,now theyre based on what the MARKET says they would/might sell for….I got no plans on selling and my taxes are up because some danged speculator says so???? Yep!
I bought this place(10 acres) about 30 years ago for less than 7000$ when I was 17, built a tarpaper shack on it,12×16,married a girl I grew up with,added on a room or two and a couple fine kids…tore down shack used lumber to build new one a bit bigger 24×32,used alot of logs and rock as well as scrap lumber from odd jobs,burn piles and dumpsters and other freebee sources ans well as some new material when said sources were lacking.
Cabin(upgrade from shack) is not a mansion but its nice and by golly its paid for …place is now 20 acres with a 20yr old cabin and I have less than 20,000 in the whole darn thing….its not an investment its my familys home!
I have no intention of selling it or leaving here unless some state or states rebel against this govicorp…then Ill swap it for something on rebel soil 😉
glad to see you and a few others understand what a home is…thanks for letting me rant!
I live in CA. We paid $220k for this house 10 years ago. 1600 sq ft 4 bed 2 bath in a decent area. Our payment is $1140 a month and people here envy us for it. We are most certainly not upside down because we didn’t use it as a “cash cow” like so many others did. For that Im grateful, but dammit, I still want to live in the country and I’ll never give up even if I have to do it on my own.
Oh by the way, referring to my previous post on this thread – we didn’t get the house we tried twice for because an all cash buyer came in and the banks like them better. How does an average Joe compete with that!?
A satellite picture is worth a billion opinions and million lies.
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A Frightening Satellite Tour Of America’s Foreclosure Wastelands
Gus Lubin and Robert Johnson | May 26, 2011
Next phase of the housing crisis.
First quarter sales data released yesterday by RealtyTrac showed that foreclosure accounted for 28 percent of all sales — the highest amount in a year.
Read more: http://www.businessinsider.com/satellite-tour-foreclosure-wastelands-2011-5?source=patrick.net#news-zip#ixzz1NffN3vo9
Housing Apocalypse Tomorrow – 675,000 homes in foreclosure have made no payment in over two years. The never ending pipeline of troubled real estate.
There will be no sustainable housing recovery until the shadow inventory is cleared out. As of April with the latest data close to 6.4 million loans are delinquent or in foreclosure. This is a massive number of homes. What is downright disturbing of the 2.2 million homes in foreclosure you have 675,000 homes (31 percent of the pool) that have not made a payment in over two years. That is right, two full years.
http://www.doctorhousingbubble.com/housing-apocalypse-tomorrow-675000-homes-in-foreclosure-no-payment-in-over-two-years/
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