Overvalued is just a frame of reference really. As they say in the stock market, the market is always right. Just because someone thinks things are overpriced, I would love for him to go out and talk to a seller and say "hey this market is overvalued, so what do you say about you and I doing a deal for this house with what I think is the right price?" Good luck on that one. Bottom line is this probably isn't the time to go out and buy hoping to flip for a nice profit. If you are buying a house because you want to live there and can afford the payments, go ahead and do it. If you are buying a house because you think its a way to make a fortune in short order, go elsewhere. Pretty simple isn't it?
Eventually these people claiming the bubble is going to burst will be right...but it is hilarious how wrong they have been. Even when it does burst, it will be impossible for most to "lose" money after all of these profits.
http://news.yahoo.com/s/ap/20051201/ap_on_bi_ge/home_prices
WASHINGTON - Average U.S. home prices jumped 12.02 percent from the third quarter of 2004 to the same period this year, a slowing from the record pace of the previous quarter yet still a strong increase, federal regulators reported Thursday.
The figures released by the Office of Federal Housing Enterprise Oversight, the agency that oversees the big mortgage-finance companies Fannie Mae and Freddie Mac, were the latest sign of a gradual cooling of the red-hot housing market. The Commerce Department reported Tuesday that sales of new homes jumped to an all-time high in October, in what could be a final spurt from a housing market that is expected to slow after five record-breaking years.
Rates of increase in home prices in the third quarter "were extremely strong, although some deceleration can be seen in a number of the faster-appreciating markets," OFHEO's chief economist, Patrick Lawler, said in a statement issued with the report. "Price momentum in the Pacific and New England states, in particular, has pulled back."
The agency noted that house prices grew far more rapidly over the last year than prices of other goods and services included in the Consumer Price Index — 12 percent versus 4.5 percent.
Average home prices rose 12.02 percent on an annualized basis from the July-September quarter of 2004 to the third quarter of this year, the new OFHEO report showed. That was down from a 13.4 percent increase from the second quarter of 2004 to the same period this year, which was the biggest rise for a comparable span in more than a quarter-century.
The third-quarter figure is derived from an average of prices in July, August and September. Prices in that July-September period were up 2.86 percent from the second quarter.
The OFHEO report, based on data from Fannie Mae and Freddie Mac on repeat sales and refinancings of single-family homes, also found that:
_Growth in home prices in Arizona continues to accelerate, with a one-year rate of increase of 30 percent — the largest of any state by a wide margin.
_Florida took the No. 2 spot, with a one-year rate of increase of 25 percent. Eleven of the 20 priciest metropolitan areas for homes nationwide are located in the state.
_Nevada's one-year appreciation rate dropped by more than 10 percentage points, from 28.6 percent to 17.6 percent. For the first time since the fourth quarter of 2003, the top 20 metropolitan areas do not include any Nevada cities.
_Idaho and Utah continue to show noticeable appreciation in house prices, with rates of 15.1 percent and 11.4 percent, respectively.
_With a one-year growth rate of 34.4 percent, the Phoenix-Mesa-Scottsdale area in Arizona topped the list of the fastest appreciating metropolitan areas for the first time since 1995. The second quarter's top metropolitan area, Naples-Marco Island in Florida, fell to third place.
The Commerce Department report for October said that while the median, or midpoint, price of a new home rose to $231,300, that was up just 0.9 percent from the median price in October 2004 and far below the double-digit annual price gains that sellers had been enjoying.
http://news.yahoo.com/s/ap/20051201/ap_on_bi_ge/home_prices
WASHINGTON - Average U.S. home prices jumped 12.02 percent from the third quarter of 2004 to the same period this year, a slowing from the record pace of the previous quarter yet still a strong increase, federal regulators reported Thursday.
The figures released by the Office of Federal Housing Enterprise Oversight, the agency that oversees the big mortgage-finance companies Fannie Mae and Freddie Mac, were the latest sign of a gradual cooling of the red-hot housing market. The Commerce Department reported Tuesday that sales of new homes jumped to an all-time high in October, in what could be a final spurt from a housing market that is expected to slow after five record-breaking years.
Rates of increase in home prices in the third quarter "were extremely strong, although some deceleration can be seen in a number of the faster-appreciating markets," OFHEO's chief economist, Patrick Lawler, said in a statement issued with the report. "Price momentum in the Pacific and New England states, in particular, has pulled back."
The agency noted that house prices grew far more rapidly over the last year than prices of other goods and services included in the Consumer Price Index — 12 percent versus 4.5 percent.
Average home prices rose 12.02 percent on an annualized basis from the July-September quarter of 2004 to the third quarter of this year, the new OFHEO report showed. That was down from a 13.4 percent increase from the second quarter of 2004 to the same period this year, which was the biggest rise for a comparable span in more than a quarter-century.
The third-quarter figure is derived from an average of prices in July, August and September. Prices in that July-September period were up 2.86 percent from the second quarter.
The OFHEO report, based on data from Fannie Mae and Freddie Mac on repeat sales and refinancings of single-family homes, also found that:
_Growth in home prices in Arizona continues to accelerate, with a one-year rate of increase of 30 percent — the largest of any state by a wide margin.
_Florida took the No. 2 spot, with a one-year rate of increase of 25 percent. Eleven of the 20 priciest metropolitan areas for homes nationwide are located in the state.
_Nevada's one-year appreciation rate dropped by more than 10 percentage points, from 28.6 percent to 17.6 percent. For the first time since the fourth quarter of 2003, the top 20 metropolitan areas do not include any Nevada cities.
_Idaho and Utah continue to show noticeable appreciation in house prices, with rates of 15.1 percent and 11.4 percent, respectively.
_With a one-year growth rate of 34.4 percent, the Phoenix-Mesa-Scottsdale area in Arizona topped the list of the fastest appreciating metropolitan areas for the first time since 1995. The second quarter's top metropolitan area, Naples-Marco Island in Florida, fell to third place.
The Commerce Department report for October said that while the median, or midpoint, price of a new home rose to $231,300, that was up just 0.9 percent from the median price in October 2004 and far below the double-digit annual price gains that sellers had been enjoying.
The market might be getting worse, but it depends on where you are. I know in the northeast it hasn't slowed down as much as people make it out to be. Sellers are not going to give their places away. Obviously anyone selling in the past couple of winter months must have really wanted to but come summer time, things will be different.
Anyone waiting to buy a place, I wouldn't wait too long. Come summer time this year, the demand will be there as well as higher interest rates - you get screwed double then.
I took out a 5/1 ARM mortgage a few months ago for 4.75%. That same loan is now 6.125% I believe. It's a lot of an increase - especially for 5% down buyers. Haven't figured it all out, but it's probably a difference of being able to borrow $300,000 vs borrowing $260,000. It all adds up - you get screwed either way no matter what you do with real estate.
Anyone waiting to buy a place, I wouldn't wait too long. Come summer time this year, the demand will be there as well as higher interest rates - you get screwed double then.
I took out a 5/1 ARM mortgage a few months ago for 4.75%. That same loan is now 6.125% I believe. It's a lot of an increase - especially for 5% down buyers. Haven't figured it all out, but it's probably a difference of being able to borrow $300,000 vs borrowing $260,000. It all adds up - you get screwed either way no matter what you do with real estate.
This bubble will bust similarly to Nasdaq and other bubbles throughout history.
Nothing at all is different...everyone is in the game and many believe it is impossible to lose money in real estate.
Many will be shown that in fact it is possible to lose staggering amounts of $$$ in real estate.
These people flipping condos are playing a game of the greater fool. Anyone currently playing this game, consider yourself warned.
Adjustable rate & interest only mortgages are going to blow out many people who were duped into buying more expensive homes.
:drink:
Nothing at all is different...everyone is in the game and many believe it is impossible to lose money in real estate.
Many will be shown that in fact it is possible to lose staggering amounts of $$$ in real estate.
These people flipping condos are playing a game of the greater fool. Anyone currently playing this game, consider yourself warned.
Adjustable rate & interest only mortgages are going to blow out many people who were duped into buying more expensive homes.
:drink:
I've been experimenting with this mini-derivative company called HedgeStreet. They have these contracts called "hedgelets" that allow one to speculate on a downward trend in just about anything ... sort of a cool concept; might come in handy for a real estate downturn.
Phaedrus
Phaedrus
Still a 12 month wait to get a house built in my part of Florida been shopping for a bigger one Up over 100% in less than 2 years here, bought for 160K in march '04 just appraised for 350K here and their building the same model for more in my subdivision.
Got a line of credit as well, Nice to have a blank checks that I can write for up to 150K, can't do that renting.
But with taxes for an average house at around 5K a year plus association fees, I can't see how anyone can make it renting out houses anymore.
Got a line of credit as well, Nice to have a blank checks that I can write for up to 150K, can't do that renting.
But with taxes for an average house at around 5K a year plus association fees, I can't see how anyone can make it renting out houses anymore.
DAWOOFDADDY said:
So-called "investors" might lose real money, but people who buy a house to live in should not. If values of houses really dropped say 30%, I think the loss of equity would be the least of worries of the people. If that happens it means there was a major localized economic hit like what happened in NYC in the late 80s due to the market crash or the early 90s in California due to the cutbacks in defense spending. Think about your local economy and if it depends on any one industry and what are the prospects of that industry.
This analysis makes me worry about places like Detroit more than anything. No new residents coming in and tons of potential layoffs coming to a market with no real clear new industry to pick up the slack.
As for interest rates, I think its time to take a better look at what all these pundits are smoking. Rates have been barely nudged up and signs are they might fall later this year. People might be squeezed with an ARM a bit, but I doubt it is the stuff that causes a mortgage default. It will take more than a few percent hike in the rate for someone to give up a house. Mortgage defaults are still mainly caused by divorce and lost jobs, not by overzealous lending practices.
Lastly the NASDAQ lost 78% in about 30 months. I am so tired of hearing the NASDAQ bubble comparison. If this happened to housing you would see $150,000 homes in San Diego and $40,000 homes in Dallas. Does anyone really think that will happen? Correction is one thing, utter bubble devastation is another.
Amazing looking back on it that the summer of 2005 was indeed the top in the housing market. Looking it at it now with subprime and other nonsense figured in and its only going to get worse. I'm no Nostradamus but when I saw a nearly 3% increase in prices that July alone, I knew the end of it was near.
http://patrick.net/housing/crash.html#links
http://patrick.net/housing/crash.html#links
