Buy Low. Sell High.

[Gawain 0]

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The housing market is low. So why aren't people buying?

It's not low enough. Inflation. The fed just pumped a bunch of cash into the system, but that won't do any good with the banks all skittish over lending.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[georgerussia 0]

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The housing market is low. So why aren't people buying?

Well, we're buying.
But I understand why only few people are buying:

1. It is VERY hard to qualify for a mortgage loan now. We're buying a good property in a Silicon Valley heard, and buying it cheap (bank reposessed), having a good credit - and we still have to put 15% down, and the mortgage terms are ... hmm .. they suck. We got preapproved in October, and now we're getting a lower mortgage with higher down comparing to what we got preapproved, but our monthly payment is higher.

2. There is basically nothing worth looking on the market. There seems to be three types of houses on market in Silicon Valley at this moment:

15%: expensive, but decent properties in good places. They are in good condition, and worth the asking price, but very few people could buy them. The interest rate is high, and 20% down for a 2M property is 400K plus closing costs - the result is that the property now is much more expensive than it would be a year ago, where in fact the prices were higher. When the price of all the properties around are dropping, it doesn't make any sense to get this type of property, because you could always expect to find a good deal from the rest 95%.

15%: a diamond in the rough. In 2005 someone bought a property near freeway 101. Paid 600K for it, and put 100K into remodeling. Upgraded bathrooms, kitchen, pipes, wires, replaced the roof and built the pool. And now trying to sell it for 700K, which probably wouldn't even cover his expenses. It worked in 2005 and 2006 (even early 2007), when the people were buying everything in hope to sell it for gain after two years, and retired at the age of 40 (that's kind of crap my previous real estate agent told me). But it doesn't work anymore, and I hope, like .com boom, it will never work again. Why do you need a hammock (and even a backyard) if you have to wear earplugs to rest there?

68%: a short sale, or will-be short sale. A poor family got a 100% financing, rate fixed for 2 years (they're now blaming the mortgage industry for that), and bought a home in hopes to sell it for gain after those two years. They might have built some equity since they bought it, but they took it away with equity loans. Since they were not going to live there for a while, they did not fix or remodel anything which would increase the property value. Now they cannot make their mortgage payments, and cannot refinance since they have no equity. Some are still trying to sell it. They are in no-win situation: they cannot sell it cheaper than their debt without going through the short-sale, and nobody gonna now pay the price they paid for it in 2005. Some already entered short sale, but since the property is usually in _awful_ condition, they're not sold quickly, if at all, until bank reposesses it.

2% reposessed properties. Usually when a bank gets their hands on the property, they are selling it cheap (50-150K below current market price seems to be typical). There it looks like 2005 - we have multiple buyers with multiple offers. However the final price is usually still below market value (for example, the property we just bought appraised 150K more than we paid for it - almost to the price the original owner paid for it in 2005).

That's my impression after a three-month shopping on Bay Area real estate market.



- About 90% of properties we've seen are labeled as "overpriced crap" in our workbook. A typical scenario is the owner

* Don't pray for me if you wanna help - just send me a check. *

[georgerussia 0]

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There's a house that was $300k 2 years ago. People could get 100% financing on it.

With stated income, and no money at all (even closing costs were included). So basically anyone could qualify for a mortgage. No paystubs, no tax returns. You are on welfare, work for cash and already deep in credit card debt ? No problem, you'll get a loan!

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Now the house is worth $250k. People can get 80% or 90% financing on it.

And now the same people cannot get ANY financing at all. Stated income loans seems to be thing in the past, the rate is up, the downpayment requirements are up (and even 90% means you've got to come with 25K on your checking account). However, which is probably more important, nobody knows when/if the situation changes, and prices go up. This combined with recession talks keeps a lot of people on the fence, waiting for a market change.

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Buy low. Sell high. People bought and bought when the market was high. They won't when it is low.

I'd say it in a different way. People were buying and buying, often paying more than the property worth, when the market was going up. And they are not buying when it is going down.

* Don't pray for me if you wanna help - just send me a check. *

[lawrocket 3]

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The housing market is low. So why aren't people buying?

Apparently, people ARE now buying. I heard a report on NPR that sales of existing homes increased by 3% last month. However, the median price fell again.

What's this mean? Houses are on sale and people are now buying them. Analysts expected home sales to drop by about the same percentage they rose.

My wife is hotter than your wife.

[kallend 2,117]

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The housing market is low. So why aren't people buying?

Apparently, people ARE now buying. I heard a report on NPR that sales of existing homes increased by 3% last month. However, the median price fell again.

What's this mean? Houses are on sale and people are now buying them. Analysts expected home sales to drop by about the same percentage they rose.

Just because sales rose it doesn't mean there isn't still a glut of unsold homes on the market. I *believe* foreclosures are still running at record levels.

...

The only sure way to survive a canopy collision is not to have one.

[lawrocket 3]

Yes, there is still a glut. That's why property values are low. There is a glut of homes on the market, meaning that they are on sale, and now people are moving in to purchase these properties on sale.

I'd reckon that there's probably 6-12 months of home supplies on the market right now.

My wife is hotter than your wife.

[nathaniel 0]

Are you looking at seasonally adjusted numbers? AFAIK February is usually a small uptick from Jan but insignificant compared with Spring / Summer figures, and YOY we're still way down.

More on February existing home sales

My advice is to do what your parents did; get a job, sir. The bums will always lose. Do you hear me, Lebowski?

[lawrocket 3]

I'm aware of that. Spring and summer are the hot seasons.

But - this news is a hit against the irrational pessimism.

My wife is hotter than your wife.

[kallend 2,117]

Looks like the Bear Stearns takeover has been re-vamped. There's now NO DOUBT AT ALL that taxpayers are bailing out the investors and that The Fed has changed the rules.

...

The only sure way to survive a canopy collision is not to have one.

[masterblaster72 0]

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The housing market is low. So why aren't people buying?

What's this mean? Houses are on sale and people are now buying them.

It means you were wrong in your first post in this thread.

Be humble, ask questions, listen, learn, follow the golden rule, talk when necessary, and know when to shut the fuck up.

[lawrocket 3]

To some extent, yes. I was wrong in my first post.

My wife is hotter than your wife.

[georgerussia 0]

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Apparently, people ARE now buying. I heard a report on NPR that sales of existing homes increased by 3% last month.

This is expectable.
First, according to my agent, Feb sales are usually higher than Jan sales regardless of market conditions.
Second, there is a lot of bank-owned properties on market now, and banks seem to sell cheap - usually significantly below market value.

* Don't pray for me if you wanna help - just send me a check. *

[nathaniel 0]

New home sales data are out now, don't look so good.

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Sales of new one-family houses in February 2008 were at a seasonally adjusted annual rate of 590,000, according to
estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.
This is 1.8 percent (±15.0%)* below the revised January rate of 601,000 and is 29.8 percent (±9.6%) below the February
2007 estimate of 840,000.

The median sales price of new houses sold in February 2008 was $244,100; the average sales price was $296,400. The
seasonally adjusted estimate of new houses for sale at the end of February was 471,000. This represents a supply of 9.8
months at the current sales rate.

My advice is to do what your parents did; get a job, sir. The bums will always lose. Do you hear me, Lebowski?

[lawrocket 3]

This is also expected. The sale of "new homes" can be expected to drop when there is a glut of existing homes to be sold.

I can expect that in 4 years, new home sales will be even lower because there will be far fewer new homes on the market, since they really aren't being built right now.

Existing home sales increased 3%.

My wife is hotter than your wife.