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john p
Joined: 10 Mar 2006
Posts: 1820
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 Posted: Tue Apr 14, 2009 5:28 pm GMT Post subject: |
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So fleshing out my strategy for buying right now I'd do this:
Pair up a buyer type with a house type i.e.:
house type $550k, buyer type, two earners together making approx. $180k
house type $350k, buyer type, single earner making $100k or two earners making $100 combined...
In my mind it is typically a pairing of sellers and buyers. The lower the prices, the more buyers that will match up against sellers, the more sellers get into financial trouble, the more homes available. I think many people are still on the sidelines.
Do you guys see a rebound, whenever it takes place, as fast or will it be a slow track upward.
I am not sure about the number of layoffs and the amount of emergency funds that people have available, but there could be an 8 to 12 month lag between massive layoffs and foreclosures. |
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balor123
Joined: 08 Mar 2008
Posts: 1204
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| Posted: Wed Apr 15, 2009 6:19 am GMT Post subject: |
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| john p wrote: |
The people that are screwed are the people that were first time buyers in 2003 to 2006. These people are upside down so they can't sell without losing money and they can't refinance because of the LTV. |
Someone has to be at the bottom of the housing pyramid scheme. Phrases like "protect home values" and "stabilize home prices" really mean "make sure someone else is at the bottom of the pyramid". The cycle of protecting home values needs to end.
| john p wrote: |
So, basically there is one generation that is having to feel the brunt of it, those that bought ten years ago are fine because they caught the upswing and can take advantage of refinancing and those that are buying now can take advantage of low prices and low interest rates. So Obama's medicine helps those that really weren't financially hurt by the housing bubble. To me that kind of doesn't make any sense. |
I'll agree with you about those who bought ten years ago but I still don't see your logic in those who haven't bought yet, especially since that covers everyone 20's and under, not all who will enjoy low prices and low interest rates. Anyway, while the prices are a little lower than they were in the past few years, I wouldn't consider them low. I don't feel so lucky that I have the option of buying a decent house for only 6x income now when people used to be spending 8x. It's still way above 3x - 4x. If housing prices are cut in half in the decent towns, then I'll consider myself lucky (and even then Boston would still be a bad deal compared to most American towns). |
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balor123
Joined: 08 Mar 2008
Posts: 1204
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| Posted: Wed Apr 15, 2009 6:26 am GMT Post subject: |
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| john p wrote: |
house type $350k, buyer type, single earner making $100k or two earners making $100 combined... |
Where do you find a nice house by American standards for $350k in a nice neighborhood? Most Americans would say that $100k is a lot of money. That should put you solidly in the upper middle class. Around here that seems to put you in the lower class neighborhoods. Even Waltham and Watertown are a bit much for $100k income now.
| john p wrote: | Do you guys see a rebound, whenever it takes place, as fast or will it be a slow track upward.
I am not sure about the number of layoffs and the amount of emergency funds that people have available, but there could be an 8 to 12 month lag between massive layoffs and foreclosures. |
Boston's housing problems go back past the housing bubble. As the futures indicate, I expect a slight decline in absolute value of houses in nice neighborhoods for the next 5 years. Past that it is hard to tell but I think the US will have some real challenges, which will only add pressure to Boston. Price stabilization is mostly coming from the sellers, not the buyers, so inflation will control housing prices. If inflation is high, then the correction will happen quickly. If not, then it will happen slowly over a long time. |
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JCK
Joined: 15 Feb 2007
Posts: 559
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| Posted: Wed Apr 15, 2009 1:39 pm GMT Post subject: |
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| balor123 wrote: | | It's still way above 3x - 4x. If housing prices are cut in half in the decent towns, then I'll consider myself lucky (and even then Boston would still be a bad deal compared to most American towns). |
Boston has been more expensive than most American towns for at least 25 years. So this particular issue is not linked to the bubble itself.
I'm not seeking to justify the current price levels, but I also wouldn't be holding out for North Carolina-like prices here. |
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balor123
Joined: 08 Mar 2008
Posts: 1204
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| Posted: Wed Apr 15, 2009 3:55 pm GMT Post subject: |
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| Yeah I'm just saying that prices are far from low for those who don't own, even by standards for the last 25 years, in the desirable towns. They appear to be only slightly below bubble highs. I only mentioned 3-4x because those would be "low prices". At 4-5x they are average prices for the last 25 years. |
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