Housing market spot check

[happy2bretired]

Since I was born to older parents and had older grandparents than most people of my generation I was exposed to a different perspective on home sizes. My grandparents remembered when there were very large Victorian homes, very grand homes only for the wealthy. Over time, those grand homes were vacated since the next generation could not afford to live in them because of heating costs, etc. The next generation built smaller homes (1950s, 1960s). My parents generation didn't want large, hard to clean or heat homes. The old Victorians were either torn down or divided into apartment houses, becoming the poor part of town.

Twenty years from now, after most of the boomers have retired, I see many McMansions being divided into multiple family dwellings. The rich will move on to new ground and we'll start the cycle over again.

 

[twaddle]

Well, I have wondered whether this rapidly increasing square footage is a part of what has driven house prices over the past decade.

I think that trend started before the current bubble. Median square footage went from 1500 in 1982 to almost 2000 in 1997. The current median is 2248 sq ft.

Anyway, the OFHEO (the source of the data in the graph I posted) uses a "repeat sales" methodolgy. Those are price increases for the same houses being resold, so it doesn't reflect any trends toward bigger homes.

 

[eridanus]

Anyway, the OFHEO (the source of the data in the graph I posted) uses a "repeat sales" methodolgy. Those are price increases for the same houses being resold, so it doesn't reflect any trends toward bigger homes.

Double incomes?

 

[kcowan]

Raised in an 850sq.ft bungalow with 2BR and 1 bath for the 4 of us.

When I had a family of 4, we were in 5000sq.ft - how was that for space inflation. Why? Because we could!

 

[biosurfer1]

I'm right in the proces of buying my first home and its almost too much to take in at once. Not only am I going through the typical learning curve of what means what, how much is what, all the new terms, etc, but I have the added fun of trying to figure out what is a good deal, why is it a good deal, where the market is going, and on, and on, and on.

It has been very hard for me to even make an offer on a house because of how things are going around. I feel bad for my real estate agent (truly, only a little) since I know he wants me to find a place and buy it (duh) but with absolutly no signs whatsoever that the market is still going anywhere but down, thats very hard to do since the same house will probably only keep going down, and if it does sell, there are 10 more around the corner that are cheaper.

I watch a lot of markets pretty close but even a monkey could see this coming. When you have a situtation where even a median house price is way more than a couple, who both make good money, cant even afford it, it has no place to go but down.

 

[JustCurious]

Twenty years from now, after most of the boomers have retired, I see many McMansions being divided into multiple family dwellings. The rich will move on to new ground and we'll start the cycle over again.

I don't think so because most new McMansions are built in planned developments, and the developments restrict the type and size of home that can be built by convenants and deed restrictions. They will not allow homes to be subdivided into multi family dwellings.

 

[haha]

I don't think so because most new McMansions are built in planned developments, and the developments restrict the type and size of home that can be built by convenants and deed restrictions. They will not allow homes to be subdivided into multi family dwellings.

I believe that the rising cost of transportation fuel will before too awfully long make these things economically obsolete.

Ha

 

[Texas Proud]

Yes, and have you noticed the increase in numbers and sizes of bathrooms? I have to admit that I am guiltier than most in this respect, since I love large bathrooms and utterly adore large showers with all the bells and whistles. But people managed reasonably well 50-100 years ago with one tiny, spartan bathroom in their homes and a line forming outside the door.

Well.. with 4 sisters and a brother... my parents filled up the tub once and washed us all.. two at a time.. I hated it when I was last in!!! But, we did have two bathrooms as my dad wanted his own....

 

[jazz4cash]

Tell 'em "good luck" with that $1000/mo electric bill...

As energy prices continue to escalate, I expect there will be less demand for the larger homes. Here in MD, we are going through a >60% hike in electricity rates. The PUC negotiated a flat rate for several years in exchange for deregulation and now its time to pay the piper.

 

[kcowan]

Our ideal home size is 1600sq.ft all on one level with a "great" room that has an open kitchen, dining area, and entertainment center, including Internet access. Opens to large deck/patio. Large MBR with ensuite with dual sinks and separate tub and large shower. Guest room with bathroom that doubles as a powder room off the great room; big enough to also serve as a hobby room.

 

[unclemick]

Sauna - in SW Washington growing up - you were 'rich' when you had a detached building/sauna out back. Back in the house - indoor plumbing was ok but it was 'the fanciness of the sauna' that kept up with the Jone's - er maybe the Jarvinen's?

heh heh heh heh heh heh heh heh heh heh

Yikes! - I have an empty concrete pad(former tool shed) out back near the power pole. Hmmmm?

 

[brewer12345]

Sauna - in SW Washington growing up - you were 'rich' when you had a detached building/sauna out back. Back in the house - indoor plumbing was ok but it was 'the fanciness of the sauna' that kept up with the Jone's - er maybe the Jarvinen's?

heh heh heh heh heh heh heh heh heh heh

Yikes! - I have an empty concrete pad(former tool shed) out back near the power pole. Hmmmm?

Just don't scare the neighbors. Might want to build a shack over the hot tub...

 

[unclemick]

Just don't scare the neighbors. Might want to build a shack over the hot tub...

Hot tub is the new new thing - my youngest nephew actually got the Navy to move the dang thing from Whidbey to Pensacola last rotation - along with other stuff. They have to wear swimsuits till they enclose the patio.

heh heh heh - all electric, tonneau cover, rugged unit - progress! Now that's agile and mobile!

 

[haha]

Now that's agile and mobile!

True enough. But how to stay hostile while sitting with a naked woman in a hot-tub?

Ha

 

[Nords]

They have to wear swimsuits till they enclose the patio.

But how to stay hostile while sitting with a naked woman in a hot-tub?

And who's gonna complain?

 

[Khan]

Our ideal home size is 1600sq.ft all on one level with a "great" room that has an open kitchen, dining area, and entertainment center, including Internet access...

Cooking fumes (greasy vaporous cloud) will coat everything in great room

 

[honobob]

Location, location, location

I think RE has a long way to go (down).

Honolulu had the highest rate of home price appreciation in the nation over the past year, according to new data.
Home prices rose 14.79 percent in the Honolulu market, according to the September 2007 LoanPerformance Home Price Index released Monday by First American LoanPerformance.

San Francisco is still up YOY prices and even Vegas (established NBHD,1994) is holding value.

Seems all the doom and gloom is in new construction and poor areas where people were sold financing not houses. Anybody know anyone in actual foreclosure?

 

[tryan]

Anybody know anyone in actual foreclosure?

Yeah, my buyer (2005 sale) lost a duplex 4 doors up the street. Pump and run. Watched it sell at auction (with 150 other homes in the Boston area) for 130k. She owed nearly twice that. Sad thing is even at 130k the new owners are assuming a NEGATIVE cash flow. The place only has 2 bed rooms per unit. $700/month is the ceiling (assuming it's deleaded and is in decent shape).

The 40-50% declines are well documented here (watched 150 of them). Good news is the next auction is in March. Better deals are coming.

Here's the link to the thread describing the auction I attended:

http://www.early-retirement.org/forums/f28/anyone-close-enough-one-these-30813.html

 

[Zathras]

I have a friend that bought a new house a year ago. They sold their house, closed on the new one, moved in, and the buyer of their old house couldn't close.
They had 2 other buyers since then. Both deals fell through do to financing.
They are now in forclosure on the old house and in serious straights after trying to pay off both mortgages for the better part of a year.
Yes the housing crisis is real. No it doesn't affect everyone, but it is effecting enough to cause a crisis.

 

[honobob]

The 40-50% declines are well documented here (watched 150 of them). Good news is the next auction is in March. Better deals are coming.

I so don't understand this! 2003 to 2005 values double. 2005 to 2007 values plummet 50% to 2003 prices. Now you think 2003 prices are a deal? Isn't this how they're selling us $3.00 a gal. gas and make us think we're getting a deal? Sorry I ain't smart enough to buy low sell high in your markets. Prudent people stick to the same old, same old 9-11% annual compounded appreciation markets without all the drama. Wouldn't you have been better buying the 2003 price in 2003 when financing was more favorable? Better yet, just rent!

Tryan, I think you need to get out here to Cali for a cash flow intervention!
Don't they tax you yearly on that stuff? Give me that tax free $500,000 capital gains. Such a deal they had to legislate limitations of how often you could do it. Oh, eventually develop a taste for tofu.

 

[twaddle]

This is like watching an old rerun of RetirementTrek.

honobob: To the moon, Tryan!
tryan: Captain, she's not cash-flowing anymore. We'll need negative amortization!
honobob: Hmm, I know -- we'll make it there on pure momentum. Wheeee!
tryan: Captain, we've run out of momentum. She's going down.
honobob: Down, shmown. My rear-view mirror tells me we're on a 9-11% course!

To be continued.....

 

[honobob]

This is like watching an old rerun of RetirementTrek.



To be continued.....

But first an all NEW episode, "The Trouble with Twaddles!"

Same Batty station, same Batty time!!!!!!!!!

 

[cute fuzzy bunny]

Lets see. My buyer from 3 years ago @240k is in foreclosure. The bank will be lucky to get 150k for it.

ASP's in my old neighborhood have gone from 175 in 2002 to 250 in 2003 to 380 in 2005 to 250 in 2007.

ASP's in my new neighborhood went from 225 in 2002 to 275 in 2003 to 650 in 2005 to 480 in 2007.

My mailbox is full of automated emails from my agent with price reductions running from the 30-50k range for 300-400k homes to 300-500k on homes between 1-2M.

 

[laurence]

You couldn't buy a home for under 500k in my 'hood at the peak, the latest Real Estate throw away on my front porch had two homes listed for under 400k for the first time.

But hey, it's just a dumpy neighborhood with houses as old as ten years in a crappy town called San Diego a whopping 10 miles from the beach, who would be stupid enough to invest there?

 

[twaddle]

But hey, it's just a dumpy neighborhood with houses as old as ten years in a crappy town called San Diego a whopping 10 miles from the beach, who would be stupid enough to invest there?

Everything has its price. I love google, but there's just no way I'm "investing" in them while they have a $200 billion market cap and a P/E of 50.

So, how much would a $500K place rent for in SD? I'm guessing maybe $2000/mo. That's a 5% yield for a lot of work and carrying costs, don't you think?