Poll:Let the housing market collapse

[JOHNNIE36]

I voted "no" in the poll. Below references are all in the Tampa area.
Bought in 1998 for $121,500. Paid off mortgage in 2003.
Sold in 2006 for $310,000. Had to be at the height of the market.
Bought another house in 2006 for $125,000 cash. Rented out in 2010-couldn't sell.
Bought our last house 12-30-09 for $205,000 cash. Bottom of the market.
We have no intention of ever selling as we plan to live out our days in this house which we gutted and completely remodeled (built in 1993 for $180,000). So, my feelings are that no matter what happens to the housing market, it won't affect us. The value of the house upon our deaths will be what the kids get.

[Purron]

Quote:

Originally Posted by JOHNNIE36 I voted "no" in the poll. Below references are all in the Tampa area. Bought in 1998 for $121,500. Paid off mortgage in 2003. Sold in 2006 for $310,000. Had to be at the height of the market. Bought another house in 2006 for $125,000 cash. Rented out in 2010-couldn't sell. Bought our last house 12-30-09 for $205,000 cash. Bottom of the market. We have no intention of ever selling as we plan to live out our days in this house which we gutted and completely remodeled (built in 1993 for $180,000). So, my feelings are that no matter what happens to the housing market, it won't affect us. The value of the house upon our deaths will be what the kids get.

Johnnie36:

This is your own personal buying and selling history plus your plans to sell (or not sell) RE you own. Doesn't the overall condition of the RE market impact all of us regardless of our plans to buy, sell or hold?

[samclem]

The government has wasted a ton of money artificially propping up the price of homes. Result: We now have a one year inventory (slide7) of unsold homes on the market (up 40% from a year ago).

Let the market set the price. Who is to say what the "right" price for a house is? Ultimately, only the most interested buyer and the seller know.

[LOL!]

I'm trying to think of a way that a government handout would help me. I have a mortgage, but my home value is not underwater. My interest rate is very low, so I get no benefit from a refinance. I am able to deduct my mortgage interest. I am not selling my house. So what can the government do for me?

I see all this help for others. If the government would prop up the yield paid by my GNMA fund to above market rates and guaranteed that the value of my fund shares would not drop, then I would invest more money in GNMAs. Or perhaps make the dividends from the GNMA fund tax-exempt. Yes, that's the ticket: Support higher yields on my fixed income investments without causing the NAVs to drop.

[W2R]

Quote:

Originally Posted by LOL! http://www.nytimes.com/2010/09/06/bu...06housing.html discusses helping current owners or future owners. I think that many current owners would not be hurt by a collapse in the housing market. Only owners who bought in the last 5 years or so would be hurt. Many folks have owned their homes longer and have not used their homes as piggy banks. To get a pulse on this, a poll. Would you be harmed significantly by a collapse in the housing market? For this poll, a collapse would be a 30% drop in the value of your home. If you don't own a home, you can answer no. A 30% drop would change the value of our house back to when we bought it in 1994.

I think (but this is not confirmed by a realtor yet) that my house is presently worth about what I paid for it back in 2002.

My mortgage is paid off, though, so I voted that a 30% drop in real estate prices would not "hurt" me.

I hope that I understood the question correctly. Since I plan to downsize and add the difference in prices to my portfolio, I wouldn't be happy about such a drop in housing prices. If both dropped 30%, then the difference would drop accordingly. I wouldn't need or want help from the government though.

[haha]

I am so tired of the government mucking about in markets that are much better off left alone. Just as this article says, creating a credit creates a class of winners, and at least two classes of losers. Winners, current owners who might plan to sell fairly soon. Losers, anyone who might be planning to buy, and the taxpayer as well as the stability of the entire housing market.

I am also getting quite tired of that little dweeb Bill Gross calling for a bailout of him and his billionaire buddies. Eff him


Ha

[bob boag]

No pain.

Bought (in Torrance CA) for 370 in 1999.
Peaked at 810 in 2006.
Bottomed at 630 in 2009.
Now back up to 660.

No plans to leave for 10+ years
Gotta love LA county; an $800K 1500 sq ft house

[chinaco]

We bought our current home in 2000.

If home values dropped 30%, we would have paid more than the home would be worth... yes that would hurt.

However, our area of the country did not experience a huge run up in home prices... therefore values have not adjusted down that much.

Of course, to sell you need a buyer. If we needed to sell in a hurry, we would likely need to cut the price to sell... but not 30%.


The big problem with housing is the 9.6% unemployment rate and the 18.3% underemployment rate. And this is what is tracked by the government... the real unemployment number are greater if we include people who have given up on finding a job.

Plus, many people who are working are waiting till the economy firms. Talks of a double-dip will hurt home sales.

[jayc]

Quote:

Originally Posted by haha I am so tired of the government mucking about in markets that are much better off left alone. Just as this article says, creating a credit creates a class of winners, and at least two classes of losers. Winners, current owners who might plan to sell fairly soon. Losers, anyone who might be planning to buy, and the taxpayer as well as the stability of the entire housing market. I am also getting quite tired of that little dweeb Bill Gross calling for a bailout of him and his billionaire buddies. Eff him Ha

+1. Don't get me started on policy. Housing value: After it is built with new windows, appliances, doors, carpet, roof, furnace, etc. Why should it go up in value when all of these things are wearing out. We just think it should go up from listening to the talking heads in the media.

[Walt34]

A 30% further drop would certainly make me notice, but then I suppose it would be lessened by the relative 30% drop in other places as well. While I certainly hope the home would retain or increase it's value we didn't buy it for an investment. We bought it for a place to live.

We contracted for it in 2001 and moved in a little over a year later. At this point it seems at break-even or perhaps a bit less so we haven't been stung as bad as many others.

But the government's price-fixing efforts don't seem to have accomplished much.

[chinaco]

Quote:

Originally Posted by jayc +1. Don't get me started on policy. Housing value: After it is built with new windows, appliances, doors, carpet, roof, furnace, etc. Why should it go up in value when all of these things are wearing out. We just think it should go up from listening to the talking heads in the media.

Inflation at least.

Possibly location, location location, or desired features of the property.(i.e., supply demand)...

Otherwise... why wouldn't everyone buy new?

[JOHNNIE36]

Quote:

Originally Posted by Purron Johnnie36: This is your own personal buying and selling history plus your plans to sell (or not sell) RE you own. Doesn't the overall condition of the RE market impact all of us regardless of our plans to buy, sell or hold?

Purron, I thought the poll was asking if I would be hurt by a significant collapse in the housing market. I answered no in the poll. I was showing how I made out during the housing market run up, how it led to buying for cash and that I don't care what happens to the market now. If I ever intended to sell in the future I would be concerned, but not anymore. I know the housing market affects the economy as a whole, but don't think it will be hurting me. How will it hurt me by "holding" forever?

[JOHNNIE36]

Quote:

Originally Posted by Purron Johnnie36: This is your own personal buying and selling history plus your plans to sell (or not sell) RE you own. Doesn't the overall condition of the RE market impact all of us regardless of our plans to buy, sell or hold?

Purron, just looking back at the poll percentages, 42% of those polled don't think another housing market collapse will hurt them.

[Purron]

Quote:

Originally Posted by JOHNNIE36 Purron, I thought the poll was asking if I would be hurt by a significant collapse in the housing market. I answered no in the poll. I was showing how I made out during the housing market run up, how it led to buying for cash and that I don't care what happens to the market now. If I ever intended to sell in the future I would be concerned, but not anymore. I know the housing market affects the economy as a whole, but don't think it will be hurting me. How will it hurt me by "holding" forever?

Johnnie36:

Looking at this again, I think you're right. We all know the housing market impacts everyone in varying degrees. This poll is specific to the individual household. Amazing how that first cup of coffee in the morning clears up things that were unclear the night before.

Thanks.

[jayc]

Quote:

Originally Posted by chinaco Inflation at least. Possibly location, location location, or desired features of the property.(i.e., supply demand)... Otherwise... why wouldn't everyone buy new?

Location = Land. This is different from the structure. That is why it is separate on your RE taxes.

Inflation only counts when you have to pay for the worn out stuff. Most things are actually cheaper in todays dollars/wages. I only need to work 10 hours now for a new dishwasher vs 18 hours 15 years ago. Building labor is the cheapest in 30 years.

They probably should buy new in the current environment. Over supply equals a big discount.

IMO the structure is no different than a used car. The sum of all new parts plus labor is always greater than original new. This plus inflation (on new cars) should make my 1995 honda increase in price with all new parts? The car provides transportation, the house provides shelter. The rest is hype, emotion, and status which always costs more.

[samclem]

Quote:

Originally Posted by jayc They probably should buy new in the current environment. Over supply equals a big discount.

To me, the question about housing today is: Why would anyone build a new house? Unless you've got a unique situation (limited mobility requirements, a piece of land with utilities that you already own, etc), the large existing stock of built homes offers a lot of selection and great prices. Folks who build new are usually surprised at the costs of all the add-ons needed to make a structure into a home (especially landscaping). Yes, lumber and construction labor are available at reduced rates now, but lots of the more expensive stuff is as costly as ever.

[Sea Kayaker]

Quote:

Originally Posted by bob boag No pain. Bought (in Torrance CA) for 370 in 1999. Peaked at 810 in 2006. Bottomed at 630 in 2009. Now back up to 660. No plans to leave for 10+ years Gotta love LA county; an $800K 1500 sq ft house

I can do ya one better... give this site a gander to see the most insane real estate market in North America... yes my hometown of Vancouver.

http://www.crackshackormansion.com/

[HFWR]

No bubble in prices in my neighborhood, or DFW in general. The bubble is in supply, in both residential and commercial real estate.

Bought in 2000 for $113,000.
Current alleged value is about $145,000-ish.
Owe $85,000...

Most new homes are over $100sf (some WAY more); at that rate, my house is "worth" about $165,000.

SOLD!

[Independent]

Quote:

Originally Posted by LOL! Would you be harmed significantly by a collapse in the housing market? For this poll, a collapse would be a 30% drop in the value of your home. If you don't own a home, you can answer no.

Maybe you can clarify the question

1) Would we be hurt directly? No. We've got a paid for house. It's a place to live, not an investment. The market value is only relevant if we move, and in that case the 30% drop would apply to both the house we're selling and the one we'd be buying.

2) Would we be hurt indirectly? Yes. I've got a daughter who's already underwater, a further drop would sharpen her current dilemma of whether to do the economically smart thing and walk away or the "morally correct" thing and pay her debt. She is also trapped in that she can't move for a better job because she can't sell. Both of these would be multiplied by millions of borrowers in the total economy.

[rescueme]

Quote:

Originally Posted by samclem To me, the question about housing today is: Why would anyone build a new house?

Because they are getting what they want rather than somebody else’s wants/need from the past? BTW, that's why we built our current home, after owning three "used" homes in the past.

Heck, we built our (retirement) home many years ago (and it's been paid off for many years). We don't worry about R.E. values, since this is our "terminal home".

However, we do share a property line with a development that started building about five years ago. At that time, the homes were in the $500-750k range (we're about 90 miles west of NYC). Our home is around 50% of the value of those homes.

Three years ago, construction stopped, and some spec homes were left "on the shelf". Of those, all have been sold within the last year (one is left), while new starts within the last 6-9 months have been off the charts.

It seems the builder is cutting back on spec homes, and I would say 75% of the homes being built are "owner built".

Since these are not on the "for sale" list, I won't know their perceived value till the local RE tax rolls are updated, but I have a feeling that most equal (and some more so) than the prior inventory.

In our area, the major "employer" is tied to health care, and I do know a few folks in this area are doctors (some, two in the family) and since medical is expected to do well in the future (due to old codgers - like me) they feel confident in building.

Oh well - their homes make my "shack" worth more if we pass in the immediate future.

In answer to your post, we looked to modifying our existing home to our "lifestyle requirements" at the time (this was in 1994). We had the option to modify/upgrade our existing home with our defined requirements. When it was all done, the cost to modify our home vs. building new was an easy decision; build new. Over the last sixteen years, comparison on utilities (due to maximum heating/cooling systems, insulation, air infiltration products, etc.) made our new home both more comfortable, but also less expensive to live in, over the long term.

Building (based upon your situation and current housing) can make sense, both in an emotional and financial sense.

Our first three homes were designed/built/purchased by others, based upon their needs. Our current home was built based upon ours…