When will real estate prices begin rising again?

  1. You have chosen to ignore posts from FinanceUsual. Show FinanceUsual's posts

    Listen to the usuals for the next 30 years

    Economist and advisors all have their opinion and predictions so why not usuals.

    Seeing how it is their expertise, they should have been able to predict the magnitude of the market collapse. Overall I believe that the average investors knew things were going to decline, just not as bad as it did. As for the experts, I only recall reading a single article in 2006 that stated, you are a fool if you stay in the market in 2007 and should move to 100% cash, and the only option mentioned was to hedge with gold. He was correct; the market began its downward movement in 2007. 

    So here is what I think on the big picture and long term. The consumer buys the cheapest product, resulted in a growing trade deficit in the early 90s and corporations moving overseas in search of lower labor cost to be competitive, resulting in a declining domestic output of real value. 1998 was the turning point where we passed below the breakeven point and began to borrow to sustain our life style. 2008 we maxed out our credit lines on over valued collateral. The market collapse compounded by lack of available credit in order to borrow and disposable income required to make payments on mounting debt on over valued assets. The future is a long road ahead but a great opportunity for those that understand what is about to take place over the next 30 years.

    2009: The unemployment rate will reverse its short term downward movement and will go above 10%.

    2010-2111: Unemployment stabilizes, but due to the lack of tax revenue and increased cost of programs to help the needy, government debt continues to sky rocket.

    2011-2014: Government debt collapse resulting in high inflation (stagflation), probably double digit inflation by 2012-2013 and the devaluation of the dollar.

    2014: The devalued dollar result in lower labor cost compared to overseas and creates a profit margin to support domestic products over imports. Plans are developed, capital is invested and factories constructed. This takes a few years to plan, raise capital and construct multi-million dollar facilities.

    2018: The capital investment and new factories create jobs and global competitive products resulting in a trade surplus, real economic growth from hard work and investments, not consumer spending from borrowed funds.

    I predict that you still have another 9 years to build upon your investments and in 2018 you will see the market begin a 20 year continues upward movement. The first 15 years supported by real economic growth and the last five years supported by low supply / high demand for stocks from the next generation looking to get rich quick. 

    The cycle continues. You can’t make a million dollars out of $500, but you can out of $100,000. Start saving now, to have the required investment in 2018 to capitalize on this opportunity.

     
  2. You have chosen to ignore posts from nickimar. Show nickimar's posts

    Re: When will real estate prices begin rising again?

    I have been saying the same thing and people look at me like I have three heads.  The prices in my town reflect the prices from 2007 for the most part and that could possibly be because Realtors and Banks are using 2009 Assessments as a marker.   Which makes me think they do not realize that Assessments in Mass are done on data that is two years out, so that data is from 2007 not the current market.   It's very frustrating for buyers because the only thing moving are bank owned properties which have factored in the percentage that the market has decreased in the past two years on top of the assessments.  If you take a 2009 assessment and then deduct about 35-40% from the assessed value that is about the range of what your property is worth TODAY.  I've examined the data on this and more often than not, this is what the properties are selling for.   If the Govt keeps messing with interest rates you could see a suspension of this market.  I wish they would just let it take it's course.  There are a lot of qualified buyers but they are not going to bite on property that is overpriced because they see the carnage around them and have no desire to join them.

    In Response to When will real estate prices begin rising again?:
    Thanks for starting the thread up again FM. Maybe this time the trolls will realize nobody cares what they have to say. As far as when prices will start rising is concerned, I do not believe this will happen for another 7 -8 years. Prices will continue to decline for another 2- 3 years followed by 4-5 years of price stagnation because prices will need to align with other economic fundamentals.
    Posted by centerfielder

     
  3. You have chosen to ignore posts from movingtarget2. Show movingtarget2's posts

    Re: When will real estate prices begin rising again?

    For starters it would help to know what towns you're interested in.  The affluent towns have not seen any price drop and have generally kept rising throughout this mess, however, with lower inventory and volume.

    I don't think a camera is unreasonable at an open house.  A homeowner conducting an open house will not be home and will have cleaned the place up knowing it affects people's judgement.  Usually an open house will have a pamphlet with pictures, but bring your camera and if you want to you can always ask the realtor if its ok to take some shots.

    Don't worry about fitting in.  Most people at open houses are nosy neighbors checking the house out.  Just knowing that you're taking this seriously is enough to make the realtor happy.

    General hints.  Use Zillow and Cyberhomes and ask the realtor why the list price is different.  It always will be, but you want to pick the realtor's brain as much as you can.  You'll learn some stuff but take it all with a grain of salt knowing he's just a salesman.
    The one thing a first time homebuyer needs to know is to not turn down a prospect simply because its not what you imagined.  Try to look at the potential.  Most likely any place you look at will need some work done so take any flaws into account understanding you'll be changing stuff anyway.

    If you are pre-approved and don't have a current home to sell then realtors will love you.  Especially in this environment, an existing homeowner looking to buy but that has to sell their current house is a liability.  Many many deals fall through because of contingent sales.  Since this is not you don't be shy about the fact that you will not need a contingency.

    Good luck.
     
  4. You have chosen to ignore posts from movingtarget2. Show movingtarget2's posts

    Re: When will real estate prices begin rising again?

    Ha ha ha!.  No, its a picture of Ralph Reed.  In all ways the antithesis of me.

    I wouldn't get hung up on the camera thing.  Did they have handouts?  A selling broker isn't doing their job if there isn't a brochure, usually with pictures, but definitely with drawings and dimensions.  Most listings will have several pictures on the on-line listing.  When I was looking I used Coldwellbanker.com.  It had, what I believe to be, all the listings, not just their own.  It looks like the Globe's real estate section does the same thing.  You can always take photos of the outside and take notes as you walk around the inside so together you've got a pretty good method of cataloging what you've seen.

    I imagine you're pressed for time, but keep in mind that you're new at this.  You're going to want to see a lot of properties.  I was lucky in that I targetted a specific town, so after a couple months I intimately knew the town and could price the houses myself pretty accurately.  We bought this house, with all its imperfections, because I had come to know the street and knew it was a good deal.  We had early on driven by the house and kept on driving because the paint was the color of vomit and the roof had moss growing on it.  A typical first time buyer response, but all of those things scared away other novices as well, and once we knew what we were doing and the price came down 2 times this house became attractive.  We had to fix the inside quite a bit as it was stuck in 1971, from decor to appliances, but that is fairly common.  A move-in quality house is very rare unless its a rehab or teardown.  There probably aren't a lot of those out there now as "flipping" has become too risky.  speaking of flipping, are you watching some home shows on TV?  HGTV and DIY have a ton of those shows and they could be educational.

    Back to your original question.  If you can afford to buy now is a great time to do it.  Interest rates will not be this low much longer (I'd say by this time next year mortgage rates will be at least high 6% if not 7%+).  This will definitley happen as the economy starts to grow again and inflation picks up.  Rates can not get any lower.  Also, some unfortunate people are desperate to sell because of the economy and job losses.  Once unemployment peaks (should be around next spring) people's finances will be improving and prices will likely go up ar at least not go down anymore.  Don't listen to people saying prices will drop another 30%.  They may in places such as Miami and Las Vegas where things got crazy and there are vast areas of undeveloped land.  In Boston there is no more land, so there's a lower limit on how low prices can go and what we're in today is essentially a perfect storm for cheap housing.  The economy is bad, there is delfation, unemployment is as high as its been in 30 years.  All 3 of these influences are in the process of being corrected, so now is is good as it will be to buy.  Its a bad time to sell, of course.

    One more lesson.  The cost of buying a house is affected by the price and the mortgage rate.  In normal times as interest rates go up the price of the house must go down.  What caused the housing bubble of a few years ago was incredibly low interest rates, so prices shot up.  Its a simple equation.  If your mortgage rate is high you can afford a less pricey house.  If the rate is low you can afford a more pricey house.  This is because you don't really care what the house price is, you care what your mortgage cost is and the mortgage payment is influenced a lot more by the rate of the loan than the size of the loan.  So its a great time to buy.  Even if prices do go down a bit more (and I doubt they will) the rate you will be paying on your mortgage will definitely be higher in the future.


    Good luck!
     
  5. You have chosen to ignore posts from wsjevons. Show wsjevons's posts

    Re: When will real estate prices begin rising again?

    Hey Mom,

    Nearly all of what movingtarget said is great information. However, he/she couched some opinion in with the helpful stuff.

    I can offer a counter opinion:
    * If you can afford to buy now is a great time to do it. 
    People who purchased homes on affordability basis alone is a strong contributing factor to this housing mess. Only consider affordability in your purchase decision if you are taking out a conventional, conforming loan.

    Also, you must be able to cover 6 months of housing payments with your savings in this environment. Not to do so would be reckless and irresponsible. If you are a single mother, I would go even higher 8 or 12 months.


    * Interest rates will not be this low much longer
    Well, people have been saying that for a comparatively long time. Me included. I have lost a lot of money betting that rates will rise.  Rates will stay as low as long as the housing market and general economy stays flat or slightly better. Only until real economic improvement is expected will rates increase. Until then, housing prices will remain flat or fall. So you need not worry. (ALSO, many people expect that increasing rates will cause home prices to fall more!)


    *In Boston there is no more land, so there's a lower limit on how low prices can go and what we're in today is essentially a perfect storm for cheap housing. 

    This is the only part of movingtarget's post I completely disagree with. It is simple false, wrong, and untrue. It feels like it should be the case, but it isn't - AT ALL. We know this because we look at historical data and it is never the case "no more land" = a "lower limit . . . on prices". 

    *  The economy is bad, there is delfation, unemployment is as high as its been in 30 years.

    Many people expect the economy to get worse. Remember, our economy is a complex system with lots of different things acting and influencing each other. So, for example, don't look at the stock market as an indicator of a healthy economy.

    *   Once unemployment peaks (should be around next spring) people's finances will be improving and prices will likely go up ar at least not go down anymore.

    Unemployment and unemployed people take a long time to find jobs and improve their finances. If prices won't go up until peoples finances get better and since unemployment won't peak until next spring, then why not wait until next spring and re-evaluate then?!?

    *  All 3 of these influences are in the process of being corrected, so now is is good as it will be to buy.

    The best time to purchase any asset - let alone the largest purchase you will ever make in your life - is AFTER things are corrected; NEVER while they are being corrected. For houses, it is about a year after employment gets straightened out, economy grows, etc.  Again, we know this because we look at 150 years of housing price data.

    I wish you luck.
     
  6. You have chosen to ignore posts from movingtarget2. Show movingtarget2's posts

    Re: When will real estate prices begin rising again?

    The economic stuff I said was opinion, true, but I'm in a position where I analyze economic data.  The economy is already growing and unemployment will definitely not peak for at least a few more months.  But unemployment isn't the driver of interest rates, inflation is, and right now the biggest enemy is deflation.  You fight deflation by lowering interest rates (we're at zero so they can't go any lower).  Inflation will come back.  This is not avoidable.  Within a year (probably 6 months) they'll start raising rates again.  Mortgage rates are like bank fees (or gas prices), when they should go down they don't go down as much as they should, but when they should go up they definitely go up.

    I"ll leave the decision of whether you ought to be buying up to you.  I made the assumption you could get pre-approval.  I'm not in real estate, but I don't think there's a firm out there writing the kind of mortgages that got so many people in trouble.  A 30 year conventional is definitely the way to go, its just that I think its all that anyone could get nowadays anyway.
     
  7. You have chosen to ignore posts from movingtarget2. Show movingtarget2's posts

    Re: When will real estate prices begin rising again?

    Can you afford a 15 year?  15 years are traditionally for folks who could make a larger down payment but would rather have the cash.  Mortgages are wonderful things.  They are the cheapest loan a person can get because there is collateral behind the loan.  They have the added benefit of significantly reducing your taxes.  Traditionally people would get shorter term mortgages when they could have afforded to pay the whole home price in cash but realized that they'd miss out on the tax benefit and could likely earn a better return on investments. 
    If you are confident you can afford it a 15 year is smart.  You'll pay off the house sooner and pay less in the long run.
    Is the full 15 years set at a fixed rate?  If not then be skeptical.
    Would you have a reserve of 12 months like the other poster suggested?  I don't know much about you, but if you received a large settlement you could be financially secure enough so that a 15 year makes sense.  Again, I'm not a real estate professional but what is more important than paying off the mortgage before you die is making sure the monthly payment is something you can afford.  If that's not going to be a problem then just make sure you feel comfortable.  Have you shopped around much?  Never settle for one opinion.
    Again, make sure its a fixed rate for the entire term of the loan.  Variable rates aren't automatically bad, but they're much more complicated and risky.  Also, make sure the rate is in the 4.5% to 5% range as this seems to be the acdeptable range today.
    $100,000 of loan value at 5% for 15 year equals $790 monthly payment
    $100.000 of loan value at 6% for 30 years equals $600 monthly payment

    You can see that a 15 year mortgage means higher payments each month, but because you're going to get a lower interst rate and because you're paying off the loan quicker the monthly payment is not nearly twice as much as a 30 year mortgage.  Take the 15 if affording the monthly payment is not a concern.
     
  8. You have chosen to ignore posts from wsjevons. Show wsjevons's posts

    Re: When will real estate prices begin rising again?


    "The economy is already growing and unemployment will definitely not peak for at least a few more months.  But unemployment isn't the driver of interest rates, inflation is, and right now the biggest enemy is deflation.  You fight deflation by lowering interest rates (we're at zero so they can't go any lower).  Inflation will come back"

     Your premise of now being a good time to purchase is based on a currently growing economy, but is completely dependent on a continued growing economy. In effect, you are telling people to bet on an improving economy by purchasing a home now.

    There are very real, tangible reasons why the economy will not have a robust recovery necessary to support broad economic recovery - especially a housing price recovery.

    Further, there are regimes where unemployment is no longer a lagging indicator, but a leading indicator. Generally speaking, when that number gets above 2x natural rate of unemployment. While headline unemployment is still below 10%, the aggregate unemployment/underemployment rate is much, much higher. This is very bad.

    True, short rates are at zero, but mortgages aren't priced off of short rates. They are priced off the 10 or 30 yr. These rates are coming down and can come in another 100 basis points with ease.

    "Inflation will come back" When?

    The prudent buyer should wait until after the correction is over. Not during, not before.
     
  9. You have chosen to ignore posts from wsjevons. Show wsjevons's posts

    Re: When will real estate prices begin rising again?

    singlemom,

    I appreciate your wanting to get a piece of the American dream, but through your postings and dialogue, there is a lot about purchasing a home you clearly do not understand.

    Do not buy make the largest purchase of your life until you take the time to fully understand what buying a home entails. The expense of making a mistake
    by rushing into buying a home now is much higher than waiting.

    And when you are ready to buy, make certain you enough money left over to have a savings account at a bank that has at least six months of living expenses (including mortgage payments).


     
  10. You have chosen to ignore posts from wsjevons. Show wsjevons's posts

    Re: When will real estate prices begin rising again?

    movingtarget, I forgot to explain why I think inflation is not an issue in the next few years. My bad.

    There is a ton of mispriced assets on the balance sheet of banks/financial institutions and our own Federal Reserve. If they are marked to market or defaults are higher than current book valuations reflect, then you are "destroying money" or deflating.  I think Congress and the Fed are going to leak those losses into the market and offset any potential inflationary gains.

    I guess the bottom line is that the economy won't get truly better until we face up to the massive evaporation of wealth.
     
  11. You have chosen to ignore posts from wsjevons. Show wsjevons's posts

    Re: When will real estate prices begin rising again?

    Anyone want to talk housing prices?

    New info out over the weekend and picked up by some blogs. Supports the "square root" recovery. Calms the hyperbole quite a lot AND supports movingtarget a little more, but is all dependent on effectively clearing out the foreclosures and pent up forclosures.

    Thoughts? Is there a pent up flood of pending foreclosures or will the gov't cut it short. 
     
  12. You have chosen to ignore posts from FinanceUsual. Show FinanceUsual's posts

    Re: When will real estate prices begin rising again?

    Nobody posts about real estate here anymore.  It used to be a good site but now its full of ignorant trolls and drugged out high school kids posting junk.

    This place suckz worse than a Yahoo Finance message board.

    Somebody should put this sick dog down, maybe put it on a diet of Chinese dog food, you know melamine gluten. 
     
  13. You have chosen to ignore posts from FinanceMike. Show FinanceMike's posts

    Re: When will real estate prices begin rising again?

    In Response to Re: When will real estate prices begin rising again?:
    [QUOTE]Anyone want to talk housing prices? New info out over the weekend and picked up by some blogs. Supports the "square root" recovery. Calms the hyperbole quite a lot AND supports movingtarget a little more, but is all dependent on effectively clearing out the foreclosures and pent up forclosures. Thoughts? Is there a pent up flood of pending foreclosures or will the gov't cut it short. 
    Posted by wsjevons[/QUOTE]

    Hi WS -

    One of the big drags on the economy will likely be the joblessness rate.  You mention forces acting to keep inflation low, and the slack in the labor market is a big one.  Economists estimate that labor makes up something like 70% of GDP, so until we see wage increase, inflation will likely stay in check.  Related to the RE market, joblessness directly impacts the demand side of the equation, which also acts to push prices down.  Either way you slice it, inflation doesn't seem to be the biggest risk a potential homebuyer needs to worry about right now or for the next year or two.

    Good luck all!

    Finance Mike
     
  14. You have chosen to ignore posts from centerfielder. Show centerfielder's posts

    Re: When will real estate prices begin rising again?

    Mass. unemployment hits highest rate since 1976 
    October 15, 2009

    http://www.boston.com/business/ticker/2009/10/mass_unemployme_21.html


    Nothing to see here folks. Just keep moving right along. The recovery is here. Now is the time to buy a house. Nothing to worry about.

     
  15. You have chosen to ignore posts from FinanceMike. Show FinanceMike's posts

    Re: When will real estate prices begin rising again?

    Hi all -

    Another view on the potential for more decliens in housing.  Note that this is a national article, not Boston MSA - specific.

    http://www.marketwatch.com/story/housing-could-take-double-dip-down-in-2010-2009-10-13?siteid=nwtreal

    Good luck!

    Mike
     
  16. You have chosen to ignore posts from beermeister. Show beermeister's posts

    Re: When will real estate prices begin rising again?

    In Response to When will real estate prices begin rising again?:
    [QUOTE]Thanks for the new thread. When will the bottom arrive... 2009, 2010, 2011 ?? I'm not sure.
    Posted by bullseyejoe[/QUOTE]

    The low end of the market (under 300k) has already hit bottom and is experiencing bidding wars.
    The middle part of the market (300k-800k) will hit bottom in 2010 or 2011.
    The high end of the market (800k - 5mil) will not hit bottom for many more years.
    The really high end of the market (5mil +) has already hit bottom.
     
  17. You have chosen to ignore posts from chilipepr. Show chilipepr's posts

    Re: When will real estate prices begin rising again?

    In Response to Re: When will real estate prices begin rising again?:
    [QUOTE]In Response to When will real estate prices begin rising again? : The low end of the market (under 300k) has already hit bottom and is experiencing bidding wars. The middle part of the market (300k-800k) will hit bottom in 2010 or 2011. The high end of the market (800k - 5mil) will not hit bottom for many more years. The really high end of the market (5mil +) has already hit bottom.
    Posted by beermeister[/QUOTE]

    Most of the bidding wars for the low end are due to people trying to get in on the $8k first time buyers program... watch what happens in December if it is not extended.
     
  18. You have chosen to ignore posts from FinanceMike. Show FinanceMike's posts

    Re: When will real estate prices begin rising again?

    Hi all -

    More Case Schiller, August 2009.  The good news is the index was up for Boston MSA yet again, around 1% or so.  Interestingly, the gains were largely limited to the "low" and "medium" price tiers, with the "high" tier (over $387k) only showing an anemic 0.14% increase. 

    http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,4,0,0,0,0,0.html

    Good luck all!

    Finance Mike
     
  19. You have chosen to ignore posts from WeAreSoSpecial. Show WeAreSoSpecial's posts

    Re: When will real estate prices begin rising again?

    Key Senate Democrats reach agreement on homebuyer tax credit extension: Dodd

    Read it and weep pepper puss.
     
  20. You have chosen to ignore posts from PruTowerIsADork. Show PruTowerIsADork's posts

    Re: When will real estate prices begin rising again?

    How lame can you get.

    This is the thread that time forgot and anybody with half a brain should wipe it from their memory as well.

    Real Estate is SOOOOOO last century.
     
  21. You have chosen to ignore posts from nickimar. Show nickimar's posts

    Re: When will real estate prices begin rising again?

    I'm currently looking for a home.   I just want to clear something up for sellers and agents who are not in the know.  Assessments in Massachusetts are based on data that is two years previous to the current year.  If you have a home that has a 2009 Assessment for 325k, this means it was basically worth 325k according to 2007 data on comparable properties, which means it's worth a lot less today, more like between 200-250k.  I'm so tired of hearing agents say priced well below assessment when in fact it's actually higher.  This is false advertisement as far as I'm concerned.  You are making buyers think they are getting a deal when it's clear they are not.  I wasn't aware of this fact until I called The State House and someone explained to me how Assessments are done.   If the market was in an upward trend the home would be more than the assessment value but since we are in a downward trend you need to adjust the current assessment with two years of reductions subtracted from the 2009 Assessment to get the TRUE value.   When you try to inform realtors of this FACT, they become beligerant.  They are costing their clients money in the long run.

    One more thing, if I hear another seller say they are not going to "Give the property away" I'm going to go bananas.  The value of your house is based on what a buyer is willing to pay for it in the current market.  Real Estate values fluctuate according to the market.  Just because you paid  500k in 2005 (Peak of the market) doesn't mean it's worth that today.  It may be worth 250k.  It doesn't mean you are giving it away, it means you bought at a time when you should have been selling.   Sell when prices are high buy when they are low.  You made a bad investment if you have to turn it around that quickly.  Otherwise hold onto it and the value will eventually go up, but don't say you are giving it away when it clearly isn't worth that anymore.  
     
  22. You have chosen to ignore posts from centerfielder. Show centerfielder's posts

    Re: When will real estate prices begin rising again?

    Well put nickimar.

    The problem for sellers is that as much as they want to believe they don't dictate the market, buyers do. Just because someone made the mistake of buying an overpriced property does not mean they can dictate what they will get. Unfortunately for sellers it's going to be a long time before prices increase again over the long term.
     
  23. You have chosen to ignore posts from CBRB2. Show CBRB2's posts

    Re: When will real estate prices begin rising again?

    When will real estate prices begin rising again?

    According to Case-Shiller, a trusted source for data-wonks everywhere, they started rising several quarters ago and have not stopped rising (another 3% nationally this past quarter). "The Usuals" have clearly missed the boat. Their absence on this board confirms that their arguments for a Boston housing crash have crumbled and they have all followed their fantasies to the only place in the country where dreams of Blue-Dot specials and genuine fire-sale prices can be realized:

    http://archives.chicagotribune.com/2009/jan/29/nation/chi-detroit-housingjan29

    ...and some good news for these lucky buyers: Detroit's homicide rate dropped 14 percent last year. That prompted mayoral candidate Stanley Christmas to tell the Detroit News recently, "I don't mean to be sarcastic, but there just isn't anyone left to kill."
     
  24. You have chosen to ignore posts from centerfielder. Show centerfielder's posts

    Re: When will real estate prices begin rising again?

    Funny how the real estate bulls will use any excuse to hype up the market, but here is the reality:


    "Still, the news is not all rosy. The median price for single-family homes in October fell 2.8 percent to $277,000 from $285,000. And year-to-date sales are off by 1.4 percent compared to a year ago.

    "Locally prices are still down in the double digits from peak numbers."

    "The continued weakness in pricing comes even as sales have posted some impressive – though arguably tax credit fueled – increases."





     

     
  25. You have chosen to ignore posts from gerry70. Show gerry70's posts

    Re: When will real estate prices begin rising again?

    2015.
     

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