| Back to Home > Bulletin Board > Current Events > Topic: Steep housing price declines |
Topic: Steep housing price declines
| Author | Message |
| UGoGirl | Posted – 12/22/2007 1:19:36 PM | show profile Yale Economics Professor Robert J. Shiller on why the continuing decline in housing prices could be very steep. ** UNDERSTANDING RECENT TRENDS IN HOUSE PRICES AND HOME OWNERSHIP ...While home price booms have been known for centuries, the recent boom is unique in its pervasiveness. ... There appears to be no prior example of such dramatic booms occurring in so many places at the same time. Within the United States, the current boom differs from prior booms in that it is much more of a national, rather than regional, event. ...This dramatic price increase is hard to explain, since economic fundamentals do not match up with the price increases. Also shown on the figure is an index of real owner occupied rent (thin line). Real rent has been extremely stable when compared with price. ... the examples we have of past cycles indicate that major declines in real home prices - even 50% declines in some places - are entirely possible going forward from today or from the not too distant future. Such price declines have happened before. http://cowles.econ.yale.edu/P/cd/d16a/d1630.pdf |
| seeattleme | Posted – 12/22/2007 2:03:57 PM | show profile I walked around telling people this was going to happen, and it was going to be wrose than ever before and wrose than anyone imagined. Two and a half years ago. Everyone luaghed at me and said, no there will be a bit of a decline, but not that much. They were "finance " and "real estate experts". I'm just a dumb writer. |
| reporterwriter | Posted – 12/22/2007 5:15:59 PM | show profile Considering that I passed up property for $275,000 in 2001 that's on the market for $650,000 today ... |
| ManhattanMatt | Posted – 12/23/2007 10:56:48 PM | show profile Exactly, Belinda ... I get sick when I think back to 1995, when I could have easily bought a 1-bedroom in Chelsea for $150K. I have a friend who just sold his smallish Chelsea 1-bedroom for $800K. 50% decline? So that apartment would be worth *only* $400K. That's still a remarkable climb from $150K. And the prices will eventually come back. |
| dribbledrive1 | Posted – 12/24/2007 3:56:38 AM | show profile Well, actually that's a 8.5 percent annual return. It's a good return but not really "remarkable." You would have done just as well putting that money into S&P 500 stocks. --Exactly, Belinda ... I get sick when I think back to 1995, when I could have easily bought a 1-bedroom in Chelsea for $150K. I have a friend who just sold his smallish Chelsea 1-bedroom for $800K. 50% decline? So that apartment would be worth *only* $400K. That's still a remarkable climb from $150K. And the prices will eventually come back.-- |
| seeattleme | Posted – 12/24/2007 4:45:41 AM | show profile Right, guys. so if NYC has no housing crisis, the rest of the country must be making it all up. What's happening to your stocks as the fantasy housing crisis develops????? It's spreading. and it'll affect you and your kids. The only people who can afford to buy in NYC are the rich, The very rich, if that's the city you want, fine. But it's why the interesting people are leaving. |
| seeattleme | Posted – 12/24/2007 4:48:51 AM | show profile and to clarify you are missing the point that !) the housing declines will continue. NYC will be affected. and 2)the only people who will be able to afford $400 K are the ones who can put 40 per cent down. Who the FUCK is that? I mean, hey. Maybe you want to live with a bunch of people whose Mommy and Daddy buy their houses for them, but not me. And also, with the rise in foreclosures comes crime. At twice the rate. That's according to the FBI. |
| ManhattanMatt | Posted – 12/24/2007 12:16:01 PM | show profile I'm always bemused ... by the people who insist on comparing real estate against the stock market as an argument against buying versus renting. Yes, it may be true that the $2500 every month would be better *invested* in stocks. But you still need somewhere to live! One way or another, that money is earmarked not for investing, but for HOUSING. And compared to the alternative, putting that $2500/month towards a mortgage versus simply handing it over to a landlord, it really IS the best thing you can do financially. |
| dribbledrive1 | Posted – 12/24/2007 2:35:46 PM | show profile Depends on the situation, actually. How long you plan to stay. You have to factor in maintenance costs, interest, taxes, tax breaks, (and the interest you would receive on the downpayment for the house if it were invested elsewhere) and the cost of owning vs. renting. You need to crunch the numbers for yourself. --Yes, it may be true that the $2500 every month would be better *invested* in stocks. But you still need somewhere to live! One way or another, that money is earmarked not for investing, but for HOUSING. And compared to the alternative, putting that $2500/month towards a mortgage versus simply handing it over to a landlord, it really IS the best thing you can do financially.-- |
| UGoGirl | Posted – 12/24/2007 2:58:27 PM | show profile This isn't so much a problem for people who bought their homes 15 or 20 years ago, but people who bought within the last 5 years, people who plan/want to refinance, or people who declined to put away more retirement because they thought their home would be worth a million. It has implications throughout the entire economy. |
| Metro Writer | Posted – 12/25/2007 12:47:29 AM | show profile It's still a problem. We bought a two-bedroom townhouse 15 years ago in a buyer's market and now need to sell in order to buy a regular house to accommodate a growing family. We were frugal and didn't overborrow, but now we're stuck because we don't want to give away what we worked hard for and get deep into debt for a larger home. |
| Cyrus | Posted – 12/25/2007 1:21:28 AM | show profile It's worth noting that the NYC market isn't much of a barometer for this situation, because condos and co-ops have much different lending requirements than traditional homes. Also, the vacancy rate in NYC will always be relatively low for a number of reasons, including a growing number of international buyers. So while NYC may not be feeling the pain en masse, just 45 minutes to an hour outside the city, it's often a whole new ballgame. Prices have easily dropped 10-15 percent in many area markets. Not a problem if you don't need to sell your house soon, but bad for those who might, for whatever reason. ------ Cyrus Afzali Astoria Communications www.astoriacomm.com |
| writesonwater | Posted – 12/25/2007 6:47:30 PM | show profile Homeowners who can wait the crunch out should be okay. Problems arise for those who bought in at low temporary rates assuming they could easily refinance, but whose place is worth less than they paid for it and so tightening lenders won't refi them. The other buyer in trouble is one who bought high and needs to move from a market where rents won't anywhere near cover payments. That relocating buyer may have to take a bath or worse, walk away. If you don't own a home, it could be a good time to rent -- or to pick up a home at a bargain from the repos out there. REO -- bank-owned real estate -- is the place for bargains right now, and a bargain price can hedge against further declines. |
