They're still selling condos in South Florida for $600k. In some places, it hasn't slumped enough.

This just in: Some people aren't very smart. Film at 11.

They'll get over it.

Now they wonder if it will ever stop slumping

It'll stop when housing prices aren't overinflated. We can spend ten years wishing them to go higher and using whatever means we have to artificially inflate them to please delusional sellers, or we can let the market correct and get it over with. I vote for the latter.

"...but it's a golden age for the repo business. One that shall never end!"

Sliding Carp: 960 sq. feet total on THREE LEVELS sold for $358,000 and they didn't think they were in a bubble?

Three levels? That's a bargain!!

I've been looking for a place for the past two years, and the cheapest condo I've found so far was 198k for a 2 bed 1 bath about 1k sq ft. And all the businesses nearby have signage en Espanol.

Most of them are closer to 250k for the same size. With $300/mo HOAs.

I keep hearing about this collapse, but I'm not seeing it.

As some1 considering rent vs. buy in the next few months: I feel like renting is just 'throwing away money' EX: rent $1000/mo = $12,000 for 1 year with nothing to show - that money could have gone toward a morgage.

But many people on fark seem to beleive 'throwing away money on rent' is a false statement spun by the real estate mafia, could someone explain why renting would be better?

Um, lots of people knew the housing market was going to bust. Particularly the Wall Street thugs that marketed the crap.

Sorry. $950,000 for a 3 bedroom tract house with an interest only loan that balloons to an amortized loan at an adjustable rate in five years for someone making $75,000 a year is laughable, but profitable if you can flip the note and make a commission before it goes south.

wolvernova: Now they wonder if it will ever stop slumping

It'll stop when housing prices aren't overinflated. We can spend ten years wishing them to go higher and using whatever means we have to artificially inflate them to please delusional sellers, or we can let the market correct and get it over with. I vote for the latter.

Bingo. The market *really* hasn't corrected enough. Did they really expect housing prices to rise at 3-5x inflation forever?

//if the property is worth more than 4x your household income, you can't afford it. PERIOD.

moefuggenbrew: As some1 considering rent vs. buy in the next few months: I feel like renting is just 'throwing away money' EX: rent $1000/mo = $12,000 for 1 year with nothing to show - that money could have gone toward a morgage.

But many people on fark seem to beleive 'throwing away money on rent' is a false statement spun by the real estate mafia, could someone explain why renting would be better?


Zero equity is better than negative equity.

They made their bed. Now they have to lie in it on the street corner next to their neighbor's garbage cans.

moefuggenbrew: As some1 considering rent vs. buy in the next few months: I feel like renting is just 'throwing away money' EX: rent $1000/mo = $12,000 for 1 year with nothing to show - that money could have gone toward a morgage.

But many people on fark seem to beleive 'throwing away money on rent' is a false statement spun by the real estate mafia, could someone explain why renting would be better?

I rent a shiatty 4BR at 1300. 3 of those rooms are rented to students. Since the building's managed by a nonprofit I pay zero utilities. I end up paying $200/month to live here. If I were to buy something in the nearby area, it'd be a 3BR condo, and even the cheapest condo fees (utilities inclusive) are $600+/month.

I pay less in rent thatn I would in property taxes and utilities. That's why it's not money thrown away. You can't rent at the same standard of living you'd buy at.

So what do you guys suppose reasonable housing prices look like? I'm thinking median home price should be around 2.5-3 times median household income.

moefuggenbrew: As some1 considering rent vs. buy in the next few months: I feel like renting is just 'throwing away money' EX: rent $1000/mo = $12,000 for 1 year with nothing to show - that money could have gone toward a morgage.

But many people on fark seem to beleive 'throwing away money on rent' is a false statement spun by the real estate mafia, could someone explain why renting would be better?

Here's the rent vs. buying test, IMHO:

1. Are total monthly costs (mortgage payments, HOA fees, property taxes, property insurance, repairs, investment income that you have to give up due to not having your down payment, less the tax break at income tax time) less than the monthly rent for a similar house?
2. Do you plan on staying put for at least a decade, perferably for the life of the loan?

If the answer to both questions is no, you should rent. If the answer to at least one is yes, you should buy. Pretty simple, actually.

Fish in a Barrel: So what do you guys suppose reasonable housing prices look like? I'm thinking median home price should be around 2.5-3 times median household income.

Whatever the market can bear. In a coastal community with good weather and great views and an excellent job market and low crime and top rated schools and restrictive zoning limiting new construction, prices will tend to be very, very high. If supply is greater than demand, prices will increase to compensate. Economics 101. Merely saying "oh, house prices should never be 3 times typical income" is complete folly.

A 2300 sf house on 5 acres sold for $248k in my neighborhood in 2008. Listed on the market for $98K a few months ago, just dropped to $82K.

Geotpf: Fish in a Barrel: So what do you guys suppose reasonable housing prices look like? I'm thinking median home price should be around 2.5-3 times median household income.

Whatever the market can bear. In a coastal community with good weather and great views and an excellent job market and low crime and top rated schools and restrictive zoning limiting new construction, prices will tend to be very, very high. If supply is greater than demand, prices will increase to compensate. Economics 101. Merely saying "oh, house prices should never be 3 times typical income" is complete folly.

Comparing median incomes and median housing values is a good way to see if there's an imbalance in the market. In a nutshell: we should not be buying shiat that we cannot afford. If you're a millionaire and want to buy a ridiculously expensive coastal property, fine, go nuts. But if you're a local worker in that area and can only (barely) afford a tax-only mortgage on the contingency that housing prices never go down, no, don't buy that property, and the banks should never have let you buy it in the first place.

//Don't buy things you can't afford is the advice the western world will never take

In related news, over 3,000 houses were built in Billings, Montana last year.

Pick: A 2300 sf house on 5 acres sold for $248k in my neighborhood in 2008. Listed on the market for $98K a few months ago, just dropped to $82K.

That is very close to the drop I have seen in my neighborhood.

Lexx: Geotpf: Fish in a Barrel: So what do you guys suppose reasonable housing prices look like? I'm thinking median home price should be around 2.5-3 times median household income.

Whatever the market can bear. In a coastal community with good weather and great views and an excellent job market and low crime and top rated schools and restrictive zoning limiting new construction, prices will tend to be very, very high. If supply is greater than demand, prices will increase to compensate. Economics 101. Merely saying "oh, house prices should never be 3 times typical income" is complete folly.

Comparing median incomes and median housing values is a good way to see if there's an imbalance in the market. In a nutshell: we should not be buying shiat that we cannot afford. If you're a millionaire and want to buy a ridiculously expensive coastal property, fine, go nuts. But if you're a local worker in that area and can only (barely) afford a tax-only mortgage on the contingency that housing prices never go down, no, don't buy that property, and the banks should never have let you buy it in the first place.

//Don't buy things you can't afford is the advice the western world will never take

Meh, if the bank is stupid enough to basically sell you a free put option on a house, I can't really blame people for doing so.

Frankly, buying a house during the bubble was a no lose proposition. Buy it using a neg am zero down payment loan, making the bank take all the risk. If house prices had continued to go up, they could sell it at a profit at any time without investing their own money. Since prices actually fell, they could just walk away, paying nothing except their abnormally low monthly payments for a few years and then sit around and get free rent for another year or two until the bank evicted them. The only costs to them were their credit rating and the monthly payments, which would be less than the cost to rent the place, especially considering they got to live there free for a couple years at the end. They could also do cash out refis and open up HELOC-this is pure free money that never has to be paid back if they go into foreclosure.

kapaso: Pick: A 2300 sf house on 5 acres sold for $248k in my neighborhood in 2008. Listed on the market for $98K a few months ago, just dropped to $82K.

That is very close to the drop I have seen in my neighborhood.

I personally paid $150k for my house in 2009. In 2005, somebody paid $400k for it.

It will, but it'll be decades before inflation makes their house "worth" that much again.

I'm probably underwater, which in my mind is only a problem if I need to sell in a hurry, and you're going to have to pry my house keys from my cold dead hands before I sell.

I had other reasons than that ridiculous home buyer credit to buy, mostly my sanity, my son's schooling, and my wife(again, my sanity).

There's no capital at the mid-bottom anymore. You won't see that shiat recover until people are getting paid again. Which will likely be never with these whiz kids in charge.

Few believed the housing market here would ever collapse. Now they wonder if it will ever stop slumping.

First they can't see a very obvious bubble and keep yelling, "Buy, Mortimer, BUY!" Now they're saying that there is no end in sight and the slump is going to go on forever.

THESE PEOPLE KNOW NOTHING! THEY'VE BEEN PULLING SHAIT OUT THEIR ASS FOR A DECADE!
WHY ARE PEOPLE STILL LISTENING TO THEM?

We will see "home values" drop even more as interest rates rise.

rent VS own -- Depends on your situation

This seems like a perfect time to repost my favorite housing bubble story in the whole world. I have never seen this house in person and know nothing about what is it's Redfin records. However, it's farking hilarious.

398 West Palm Vista Drive, Palm Springs, California (new window)

Sales record:

Apr 16, 2001 Sold (Public Records) $38,250 (bank forecloses; price is arbitrary and probably the amount owed)
Jun 28, 2001 Sold (Public Records) $36,000 (bank sells it to somebody)
Oct 11, 2002 Sold (Public Records) $96,000 (first flip)
Oct 06, 2003 Sold (Public Records) $119,000 (second flip)
Jul 30, 2004 Sold (Public Records) $200,000 (third flip)
Sep 20, 2005 Sold (Public Records) $350,000 (fourth flip)
Sep 22, 2006 Sold (Public Records) $450,000 (fifth flip)
HOUSING CRASH
Feb 08, 2008 Sold (Public Records) $399,479 (bank forecloses; price is arbitrary and probably the amount owed)
Apr 25, 2008 Listed (bank lists the property for sale)
Apr 30, 2009 Sold (Public Records) $32,500 (bank finally sells the property after at least ten price reductions and one year on the market)
Jun 14, 2010 Listed (new buyer finally lists the property for $50,000)
Sep 13, 2010 Sold (Public Records) $20,000 (buyer fails at the flipping)
Nov 01, 2010 Sold (Public Records) $30,000 (next guy does ok though)

So, the house was flipped five times in five years for a singnificant profit each time, then sells after the crash at a 95.6% discount from the peak selling price. Oh, and check out the Google Street View-a block to the north of the house the Google guys catch a drug deal in process.

moefuggenbrew: As some1 considering rent vs. buy in the next few months: I feel like renting is just 'throwing away money' EX: rent $1000/mo = $12,000 for 1 year with nothing to show - that money could have gone toward a morgage.

But many people on fark seem to beleive 'throwing away money on rent' is a false statement spun by the real estate mafia, could someone explain why renting would be better?

I think that it depends on where you live. Is equity stable to a degree? Are you willing to take a paper loss for a few years before possibly regaining some of it later? Do you plan on living there for a long time(ties in to the prior question)? Is rent(plus insurance) significantly more than a mortgage(plus taxes, insurance, maintenance, possible HOA fees)? Does rent keep rising or falling?

Basically, plot it out in cash based on trends and see what you come up with. I'm in favor of home ownership, but where I live in the LA basin it is both too expensive and also still drastically overpriced vs median income. I grudgingly rent

Geotpf: If the answer to both questions is no, you should rent. If the answer to at least one is yes, you should buy. Pretty simple, actually.

I agree with you, though I would have qualms with part 2. I know very few people (well, folks under 40 anyway) that can honestly say "I'm going to live here for 10 or more years". There's very little job security from any direction (employer won't invest in you, the job market might tank in your area, you might seek greener pastures) in many fields. I'd probably qualify your statement to include whether you have a family (or plan to start one immediately). At the very least you'll have the excuse that you are building equity and can pass on the estate to the kids and home life is much easier if you aren't moving around.

This is the result of basing house pricing on "ooohhh, pretty" instead of inherent value. So many $ per square foot based on age of the home, size of the lot and crime rate for the area. Any other quantification creates a bubble.

Geotpf: Oh, and check out the Google Street View-a block to the north of the house the Google guys catch a drug deal in process.

I love that place.

The market here is still waaaaaaay overheated; I'm not sure staying anyway for more than five years. We did go house shopping when we first moved here and six figures buys you a shiatty foreclosure in the worst part of town. No thanks.

I'm paying $700/month for a nice duplex with a huge basement and the owner has done several upgrades for us, including flooring laminate and other things.

My ex is trying to sell the house I lost all my equity in thanks to the divorce, so I'm getting a kick out of this news.

GoodyearPimp: Geotpf: If the answer to both questions is no, you should rent. If the answer to at least one is yes, you should buy. Pretty simple, actually.

I agree with you, though I would have qualms with part 2. I know very few people (well, folks under 40 anyway) that can honestly say "I'm going to live here for 10 or more years". There's very little job security from any direction (employer won't invest in you, the job market might tank in your area, you might seek greener pastures) in many fields. I'd probably qualify your statement to include whether you have a family (or plan to start one immediately). At the very least you'll have the excuse that you are building equity and can pass on the estate to the kids and home life is much easier if you aren't moving around.

There are some people with enough job security to qualify under the second point. Government workers, for example (all branches of government, from cops to school teachers to Federal employees). There are plenty of private sector examples too. I would imagine a programmer at, say, Google is probably secure in their job. Somebody who owns a small business (say a bar or repair shop) is probably staying put.

But, you are right, few people qualify. Yet many people buy houses. They probably shouldn't. I doubt prices will go up significantly in the next decade, the amount of equity you build up in the first few years of homeownership is minimal (you mostly pay interest first), and the costs of selling a house can be significant (6% sales commission, taxes and fees, costs to get the house in saleable condition, etc).

Having a family is completely irrelavent to this discussion. You can rent a house of any size in any city in the country. Unless you plan on having your kids stay put while you move, your arguments about building equity are silly, IMHO.

not far from these people ~15 miles, I bought a 3 bedroom, 1 bath, 2 car garage house for $95K.

but their school district is much better than the one I live in.
I have a view of the puget sound and Airplanes go over,

and I only have 28 payments left.................

"Few believed the housing market here would ever collapse. Now they wonder if it will ever stop slumping"

Did anyone outside of Seattle think that market was not inflated?

moefuggenbrew: As some1 considering rent vs. buy in the next few months: I feel like renting is just 'throwing away money' EX: rent $1000/mo = $12,000 for 1 year with nothing to show - that money could have gone toward a morgage.

But many people on fark seem to beleive 'throwing away money on rent' is a false statement spun by the real estate mafia, could someone explain why renting would be better?

When you buy a house, unless you have money to put down, PMI and interest are going to account for 96% of your payment... So if you had $1,000 mortgage, $960 is being pissed into the wind... while only $40 is going to principal.

Now if you can rent the same house for $900 a month, on paper, it's a wiser financial move to rent..because you can save $100 a month ... vs.. the 40$ you can as a homeowner.

There are a lot of other variables (ie: is property over valued, under valued, etc.).. but above is the main concept.. provided everything else is relatively equal.

If by "few believed" you mean "a great many knew" then yes.

It will keep happening because investors still do not trade based on the difference between an assets Price and its Value.

And the most important thing to remember in housing and finance...

Depreciation.

In general, houses do NOT go up in value. The value of structure is constantly going down, because it's getting older....

The only time a house increases, is when the value of the land increases faster than the value of the structure is decreasing.

People have simply forgotten/ignored this...

/Ric Romero

Neurochemist: And the most important thing to remember in housing and finance...

Depreciation.

In general, houses do NOT go up in value. The value of structure is constantly going down, because it's getting older....

The only time a house increases, is when the value of the land increases faster than the value of the structure is decreasing.

People have simply forgotten/ignored this...

/Ric Romero

There's also inflation. And rent inflates too. A home loan is a 15 or 30 year hedge on inflation, and historically a damn good one.

moefuggenbrew: As some1 considering rent vs. buy in the next few months: I feel like renting is just 'throwing away money' EX: rent $1000/mo = $12,000 for 1 year with nothing to show - that money could have gone toward a morgage.

But many people on fark seem to beleive 'throwing away money on rent' is a false statement spun by the real estate mafia, could someone explain why renting would be better?

Why do you want to catch a falling knife?

"Few believed the housing market here would ever collapse. Now they wonder if it will ever stop slumping"

That is why you fail.

A prudent investor does his homework and crunches the numbers.

If the average income can't afford the average house on a average 30 year fixed loan, then there's probably some correction that needs to happen, in my opinion..

Since the average family income here in the Seattle area is somewhere in the neighborhood of 70k-ish, I would probably guess that most people can't really afford a 400k house. Unless they're doing an interest only, or an ARM.

Neurochemist: In general, houses do NOT go up in value. The value of structure is constantly going down, because it's getting older....

The only time a house increases, is when the value of the land increases faster than the value of the structure is decreasing.

People have simply forgotten/ignored this...

As long as the structure is kept up with basic maintenance (no leaks in the roof, paint isn't peeling, etc), this is largely untrue, at least for homes built before the 1970's. Depending on character and completeness of a neighborhood, older, unrestored homes will go up in value, along with the value of their land. This is especially true in neighborhoods with fairly unmolested craftsman and modernist movement homes.

The same goes for most any well-built custom home, especially those made by a widely known architect. What you say about home depreciation is mostly true for most of the 80's to current, slapped together, subdivision junk though.

Nightjars: Since the average family income here in the Seattle area is somewhere in the neighborhood of 70k-ish, I would probably guess that most people can't really afford a 400k house. Unless they're doing an interest only, or an ARM.

Not on their first house, no. But at the peak of the market, you could buy a very nice 3 bedroom starter home along the Sounder rail line, a 40 minute train ride to downtown Seattle, in Sumner, for $210k. Now they're going for about 170k.

The daffodil fields around here are especially nice in the spring.