Question for real-estate gurus

[lander]

I know conventional knowledge says that house prices never go down, but we're coming off of record low (modern history) interest rates and we're at an all time high home ownership rate (according to Bush -- I'll take his word since nobody challenged this).

But now, we're heading into the slow season and mortage rates are destined to keep rising back to normal rates.

Two questions -

1. Do you think that prices are going to do the unthinkable and drop? They went down 1% in England (or so I hear), so it's not impossible.

2. Do you think that this season will turn into the usual seasonal buyers market?

Thanks.

 

[LEYKIS101]

Lander,

I am no expert, but I think the chances of a down period are much more likely than the continued rise in prices. I have and am still taking Real Estate classes at the local community college. One of my professors, who has 40+ years in Real Estate says he's selling a lot of his multi-units right now. He claims to have been through two markets just like this and now is the time to sell, according to him. Of course there are no guarantees, that's just his opinion.

 

[lander]

I relocated last spring, sold my place .. and didn't have time to buy (had two weeks before my new job started).

I'm looking to buy now, but positively HATE the timing of it all-- I feel like it is just a horrible time to do such, despite the still low interest rates.

 

[LEYKIS101]

So where are you located now Lander?

I know what you mean, the prices have increased so much you know you aren't getting any value.

 

[lander]

I'm in Buffalo, NY. I moved from Westchester county.

One on hand the prices are about 1/4 of what I was used to, but you hit the nail on the head -- there's no value here.

You have to plan for the worst -- I fear that it would be very tough to break even if i had to sell for whatever reason in a year or two.

 

[heart222]

From 1989-1991 house prices stopped going up. they then went sideways for about 4-5 years. So what happens is when you factor in closing costs in MD where I live their around 5% and then add in a broker if you have to sell 6% then in the early 90,s people had to bring money to the table when they sold. in effect buy a house for $300,000 closing costs $15,000 commission when sell $30,000 houses did not improve buy $45,000 for around 6 years and as you know equity growa slowly. so thats what happened then. if history is any guide the Bushs have not yet repealed the business cycle and all parts of business including real estate go up and down. so in answer to your question they may not go down but going sideways is just as bad. hope this helps. long memory.

 

[kyhawk]

The bubble will definetly burst. The market is insane in certain areas. I read in one email newsletter, that people take a bus from So Cal to Phoenix right to a development and line up to buy since Socal prices are through the roof. When interest rates go back up and appreciation stops a lot of people will be holding the bag. Just a matter of time.http://www.homebuyersdepot.com/

 

[sherman]

Rates of course will go up over time, but because of the past few years people think 7 & 8 % is bad. It really isn't. House values are already standing still and the market is slowing down. I am a mortgage broker and my business has not fallen off too bad but of course I do more purchases tan refi's. My wife is a Real Estate Agent and she has more buyers than sellers right now but not as many buyers as she did, say 6 months ago.

 

[ChuckSims]

lander, buy outside of Buffalo. Don't buy anything in Buffalo. Thats one place the market has been going south for years.

 

[lander]

Chuck, I'm looking in the subburbs. You're right on -- the city itself is a horrible investment, the school are terrible and there's nothing in the foreseeable future that appear to be chaning any of it.

Sherman,
I literally came within hours of buying in South Norwalk this spring ... not sure if you're there. The guy got a last minute offer, and before I found another place I took a new job.

Heart - thanks for the informative post.

Kyhawk,
By burst -- as in a decline? Or more along the scenario that Heart described?

Thanks for all the feedback.

 

[sherman]

I work the Hartford area mostly but I know where Norwalk is. Mo Vaughn territory.

 

[Buffalo66]

People have been saying "interest rates have to go up" for 2 or 3 years now.

 

[sammythesage]

land in fla. has tripled in value the last 11 months............insane

 

[WildBill]

Stop thinking of it as an investment and start thinking of it as a place to live. Now is not the time to be an investor, but the low rates make it good to be an owner of one property. Look at the cost with rates so low chances are good in most markets you real costs are the same or lower as renting. If prices stay flat for years it won't bother me because it almost surely be more expensive to rent at that time.