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Is it time to buy or sell a home??? |
As interest rates increase, home values/prices will decline or level off. |
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63% |
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Strong demand for housing will continue to push prices up at a record rate |
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23% |
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Sell now!!!!!!!!!Take your profits. The valley has overbuilt. |
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13% |
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Total Votes : 30 |
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pfredricks
Joined: 10 Apr 2003 Posts: 347 Location: Peoria, AZ
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Posted: 5/29/2005, 7:14 pm Post subject: Is it still time to buy a home??? |
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Again, I know that this is off topic, but, I was curious what the consensus is now compared to a few months ago. |
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Daddee I once was a slug.
Joined: 04 Jan 2003 Posts: 2815 Location: Mesa, AZ
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Posted: 5/31/2005, 10:30 am Post subject: |
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It's a toss up between options one and two. The pricing push simply cannot continue at its current pace. My home has increased in value by nearly $90K in 9 months. While nice to think about, that's clearly insane (we had our home appraised 9 months ago, and then last week - the jump was $87K). It is now worth nearly $100K more than what we paid for it. That big of an increase over such a short period of time just doesn't feel right, and we're not even on the extreme end of that curve. I've seen home value increases on the order of 100% inside a 4 month span. That's just plain wrong unless there's an oil field under your home.
My theory is that we'll probably see the market slowly level off over the next 6 months to 1 year and then a slight drop (probably only 15% or so) over a fairly quick time frame (say 4 - 6 months) and then the market will return to normal.
The people that buy at the peak are going to be very, very upset. _________________ "Only small minds want always to be right."
- Louis XIV
"...haven't you lived long enough to know that two men may honestly differ about a question and both be right?"
- Abraham Lincoln |
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rrds45
Joined: 25 Oct 2004 Posts: 13 Location: Scottsdale
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Posted: 5/31/2005, 10:39 am Post subject: home prices |
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Rent my friend, rent and wait... |
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Daryl
Joined: 07 Feb 2003 Posts: 1168 Location: Everett, Washington
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Posted: 5/31/2005, 11:10 am Post subject: |
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Prices will not drop. If they do it will be minimal. History has shown that. What will happen is the amazing rise in prices we see now will slow down or stop, and houses will sit on the market longer.
Right now there is still a shortage of houses (more buyers then sellers) so it's still a good time to buy. Houses that go on the market typically sell over asking price with multiple offers in a few days (unless they are overpriced). Even the over priced houses are selling pretty fast.
If you own a house and don't need to sell it, don't.
Just my opinion, but renting is the worst thing you could do right now. House prices are going up daily. If you do not own a house now you are not collecting the equity as the market rises. Within a year or two it will be impossible to buy a nice home without a 6 figure salary and/or a good chunk of cash to put down. Home prices are rising much faster then incomes and it's not slowing down at all yet. Prices will not drop.
An average home (3 bedrooms 1200-1500 sq ft) is approaching $250,000 now. that's monthly payments of $1500/month without figuring taxes. It's only going to get worse. I feel bad for kids just graduating because homeownership may become just a dream in the Phoenix area for them.
Also, why pay rent, only to make someone elses house payment, let them get the tax write offs for the interest, and let them collect all the equity while you fall further in the housing market hole?
But, if you do want to rent, let me know because I'm looking to buy a house to rent out and I'm looking for someone to make the payments for me _________________
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Daryl
Joined: 07 Feb 2003 Posts: 1168 Location: Everett, Washington
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Posted: 5/31/2005, 11:17 am Post subject: |
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Daddee wrote: |
It's a toss up between options one and two. The pricing push simply cannot continue at its current pace. My home has increased in value by nearly $90K in 9 months. While nice to think about, that's clearly insane (we had our home appraised 9 months ago, and then last week - the jump was $87K). It is now worth nearly $100K more than what we paid for it. That big of an increase over such a short period of time just doesn't feel right, and we're not even on the extreme end of that curve. I've seen home value increases on the order of 100% inside a 4 month span. That's just plain wrong unless there's an oil field under your home.
My theory is that we'll probably see the market slowly level off over the next 6 months to 1 year and then a slight drop (probably only 15% or so) over a fairly quick time frame (say 4 - 6 months) and then the market will return to normal.
The people that buy at the peak are going to be very, very upset. |
That $100K you made is very normal. Unfortunatly it's not really cash in hand because to get the same house you bought a year ago you will need that $100,000 to make the same monthly payments.
This same thing has happened in southern california and more recently las vegas. Phoenix has learned for Las' Vegas's mistake and quickly stopped selling new homes to investors, which will greatly reduce the likelyhood of a crash, and made the re-sale market of houses take off.
All the investors are buying on 3 and 5 year ARMs, usually interest only. Thus, in about 3-5 years more houses will be avaialble, but not at the prices you see today.
Sorry for my rambling, this is just something I've done a lot of homework on lately... _________________
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rrds45
Joined: 25 Oct 2004 Posts: 13 Location: Scottsdale
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Posted: 5/31/2005, 11:26 am Post subject: |
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There is a glut of homes/condos/townhomes in the rental market. Rental prices are way under monthly mortgage payments, especially in the new developments, where the small time investors are waiting to sell ...the investors do not care if they rent way under market...and you are an ideal rental canidate.
The important thing is to pack away the money that you are saving. Buy when the market is down, be aware of the area you want to buy, just watch the market closely. Just be patient.
But then Pete, we have had this discussion before...nothing new in my approach. |
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rrds45
Joined: 25 Oct 2004 Posts: 13 Location: Scottsdale
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Posted: 5/31/2005, 11:33 am Post subject: |
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In 1989-90, the Phoenix market dropped as much as 50% in some areas, more/less in others. The market will change, and sooner than later. The house I live in currently was listed for 345,000 in 1989. I bought it after being on the market for 18 months for 200K. That was typical of the downturn.
Long term interest rates will be the key. |
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thesuperstitions Guest
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Posted: 5/31/2005, 12:07 pm Post subject: |
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I know I'm an outsider, but markets around the country are the same, based upon the same market forces. In the late 90's here in the Baltimore/Washington area, you couldn't hardly sell a house without giving major incentives to the buyers. That came just a short time after a stellar growth in housing prices. Shortly after I bought at the bottom of the market in 97, the market turned up and now has risen to astronomic proportions. It WILL go down again. Nothing this capital-intensive is immune to cyclical forces. Those that speculate by buying for the short-term by taking out interest-only loans run a substantial risk that they will end up with negative equity and that short-term position will turn into a long-term position or will force you to take a big loss to get out. You have to calculate your own personal risk/reward threshold and live with the results.
Just my $0.02 |
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Daryl
Joined: 07 Feb 2003 Posts: 1168 Location: Everett, Washington
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Posted: 5/31/2005, 2:15 pm Post subject: |
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Again, if anyone wants to rent I’d be happy to let you pay my mortgage. I’ll even let you pick out the house/condo if you sign a 2 year lease.
Even after the rise we have had the last 18 months, Phoenix is still below the national average in average home price by about $20k. There is plenty of room for the market to still rise and the market has only gotten hotter since the beginning of the year. There are no signs of a slow down anytime soon.
If the market does drop (which would not be for a few years), it would only be because interest rates went up significantly (up to 9-10%). If that happens you are still better off buying today because the higher interest would get your monthly payments (unless you are paying cash for a house). Historically drops are rare and are rarely more then 20%. We’ll probably rise in value another 20% by the end of the year so even if there was a drop after this boom (which is far from over) prices will never be lower then they are today. Couple that with record low interest rates and why not buy? But that’s just my opinion and everyone should do their own homework and make up their own mind. _________________
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Davis2001R6
Joined: 12 Dec 2003 Posts: 5591 Location: Italy
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Posted: 5/31/2005, 2:26 pm Post subject: |
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Quote: |
Again, if anyone wants to rent I’d be happy to let you pay my mortgage. I’ll even let you pick out the house/condo if you sign a 2 year lease.
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Daryl I like your thinking!. I'll make that same offer to anyone else also!
I also don't see a major drop in the future, I believe it will peak out in the next year and then return to normal after that. I have a few friends that are investors and have been for a few years and they firmly believe the same. Just wish I would have been doing the same thing as them when I moved to Phoenix.
TIM |
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Daddee I once was a slug.
Joined: 04 Jan 2003 Posts: 2815 Location: Mesa, AZ
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Posted: 5/31/2005, 3:14 pm Post subject: |
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The primary reason that rental payments LOOK like they're lower than mortgage payments is due to the prevalence of the "Interest Only" mortgages.
You can get a home, do an interest only loan, rent it for the cost of the loan payment (there is a $400 difference between the monthly payment on a 30 yr fixed and an interest only loan on our home - in favor of the interest only) - then sell it after a year and reap a substantial reward.
I wish I had done just that with a few homes in our neighborhood that sold a year ago. I'd be several hundred thousand $s richer right now. _________________ "Only small minds want always to be right."
- Louis XIV
"...haven't you lived long enough to know that two men may honestly differ about a question and both be right?"
- Abraham Lincoln |
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CatValet Got Gear?
Joined: 04 Jan 2003 Posts: 735 Location: Scottsdale
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Posted: 5/31/2005, 5:04 pm Post subject: buying a house |
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OK, I've got to wade in now, after reading all this posting today. Here's my two cents worth:
I believe much of the "spec buying" is being done in locations where homes are at the entry level for single family detached homes. In most cases this means far out at the edge of the urban area, in some cases well into Pinal County. There is a saying now, "Drive until you qualify".
Every day at work I get calls from people who have done so, and are now wanting to know how soon we can build enough new freeways and expressways to get them to the job they've now moved much further away from. I know, I know, I do the same thing in reverse, for those who know what my commute is. I don't want to move out to the cheaper housing, because I fear that when my job tenure is done, I'll never be able to move back to where I live now, since my neighborhood is going up faster than the "starter homes".
Home builders are now not selling homes until they have been framed and sheeted, so the increase in value during that phase of construction is theirs' not the speculators.
If the market goes soft, and/or the cost of gasoline goes to $4.50 a gallon, the homes that will deflate the fastest and the most are those that are far from major employment centers and the farthest from major freeway and transit corridors. Needless to say, those with 8 mpg gas hogs will notice some loss of resale value as well.
During the "bust" in the late 80's/early 90's, when the Savings and Loan guys went belly up, I saw very few homes really lose value, the market just stayed flat and those who faced job losses or "divorce forces sale" conditions were sometimes hung out there a bit. Those who were burned were those who had "negative amortization" mortgages where the unpaid interest kept adding to the principal. Those who did not use "sweat equity" and overpaid to have extravagant landscaping upgrades installed at retail prices rather than doing it themselves, also sometimes ended up "upside down" when they discovered that their additional improvements were valued at less than retail. I recall that a couple a block from me spent $25 thousand on custom landscaping. They got big boulders and 48 inch box trees installed. It looked like a million bucks at first, but ten years later, when everyone else's little spindly trees grew up, it was just one more house on the block.
Object lessons: Sweat equity pays, so does pay-as-you-go. Those in it for the long haul usually do well. Those wanting to make an overnight fortune with no risk and no sweat sometimes get burned. There's no such thing as a free lunch. However, those who sit on the sidelines and never get in the game, never get the chance to score either. -R |
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rrds45
Joined: 25 Oct 2004 Posts: 13 Location: Scottsdale
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MikeInFHAZ
Joined: 15 Feb 2004 Posts: 1401 Location: location location
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AK
Joined: 03 Jun 2003 Posts: 104 Location: Queen Creek, AZ
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Posted: 7/1/2005, 10:56 pm Post subject: |
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For those that think that housing prices will level off soon, remember what most Californians are paying for homes. And now look at where a lot of Californians are going (or coming). The price of houses over there has continued to increase for quite a few years now. Granted these are mostly major metropolitan areas where the enormous increases are, but whats happening here is what has happened on both coasts. Arizona being a neighbor to California just puts it in line to follow the trend. You don't have to look at just California though. Consider Seattle, Portland, Las Vegas...... I've never owned a house here and probably never will do to my constant procrastination and the seemingly endless growing real estate bubble.
As for me, I'm moving to Kansas City, Mo in about 8 months for a new job. For what I would pay here for a house, I can buy a house double in size there. Although there are no mountains, the hiking sux, and I will have to contend with tornados and snow, I think that it will be a great change for myself and my future family.
My 0.05 cent worth. _________________ Aaron
"Can't think of a good signature quote". - Me |
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