Originally posted by sasquatch672I can't comment specifically on US house prices but heres my logic:
Well, bud, you can doubt it, but the fact of the matter is that easy credit has been one of the drivers of America's economy. And if interest rates cause housing prices to fall, and you're locked into an interest-only loan, and you lose your job, well, there's a bad day in your life not too far down that path.
Hey, I hope I'm wrong. I want to ...[text shortened]... s people who do things like that today must want to lose their money. That came from Greenspan.
You only realise the value on your house when you sell it.
If you do sell now the market as a whole is dropping, your next home will be cheaper too (unles it is an old folks home).
A more rasonable entry price will make it easier for first-time buyers.
For those with more than one property rents tend to go up when property prices fall - although the reasons for this elude me.
Economically things are rerely as bad as the media makes out.
Originally posted by sasquatch672The main issue I'd be overly concern about is paying 300K for a house
Bud - I damn hope you're right. I think that there are definitely bubbles in certain places - Miami, San Diego, New Jersey shore - and not in other major metro areas with stable job bases. I think right now home values are cresting. I don't think there's been a wide retraction yet. Hey, bud, believe me, if you're right and I'm wrong, I'd love ...[text shortened]... ns that there's more of a demand for flats and less demand for homes. Supply and demand curve.
that is now only worth 230K or something like that, then needing to
leave. A loss is going to occur, and depending on how great the loss
that will show you how bad you could be hurt. It is easier to move or
leave a home when you paid 200K and can sell it for 300K and buy
a new home, but when you have to take a major loss you don't have
anything but debt to help you buy your next home.
Kelly
Originally posted by sasquatch672I'd love that so I can go get an interest-only loan and live high on the hog like everybody else.
Bud - I damn hope you're right. I think that there are definitely bubbles in certain places - Miami, San Diego, New Jersey shore - and not in other major metro areas with stable job bases. I think right now home values are cresting. ...[text shortened]... and for flats and less demand for homes. Supply and demand curve.
Isn't an interest free loan like renting with long term obligations since
your payments are going to interest only for a long while?
Kelly
Originally posted by sasquatch672interest-only is a real bad idea, unless you sure you're going to get an increase, or maybe if you're doing it so you can save up a nest egg to weather downturns ... out here, i remember neighbors paying 600K mtg for a house that later dropped to 500k value during the dip, around 2001/2 (?) ... but it's worth 800K now ... foreclosures happen, but i only remember one time seeing a bunch of houses for sale all at once for economic downturn, that was in houston in 1993 when nasa layed off a bunch ... haven't heard the doomsayers pounding the tomtoms recently ...
Well, bud, you can doubt it, but the fact of the matter is that easy credit has been one of the drivers of America's economy. And if interest rates cause housing prices to fall, and you're locked into an interest-only loan, and you lose your job, well, there's a bad day in your life not too far down that path.
Hey, I hope I'm wrong. I want to ...[text shortened]... s people who do things like that today must want to lose their money. That came from Greenspan.
Originally posted by KellyJayI wrote interest free I meant interest only loan like just paying rent
[b]I'd love that so I can go get an interest-only loan and live high on the hog like everybody else.
Isn't an interest free loan like renting with long term obligations since
your payments are going to interest only for a long while?
Kelly[/b]
with a long term obligation instead of a yearly one?
Kelly
Property markets everywhere run in five year cycles. If you check peak prices every five years I believe there has never been a dip... maybe one in the late 80's? should be the same in commonwealth countries and the US. Financiers spread chaffe every now and then to get a false gain for their capital investors..
Originally posted by KellyJaylocks in the house price ... if you wait til next year to buy you could pay 100K+ more for the same kind of house ... assuming you could find one ...
I wrote interest free I meant interest only loan like just paying rent
with a long term obligation instead of a yearly one?
Kelly
Real estate is a market that is very rigid to the fall of prices.
Whenever demand is low, the correction in markets is done by owners holding on to property and constructors building less. In general, owners prefer to wait than to lower prices and it's justifiable because in absolute figures, a small percentage decrease in prices could mean great losses of revenue.
When demand is high, the reverse happens with owners cashing in on the extra demand. New buildings can maintain more stability in prices because some constructors prefer building fast and selling fast to keep building. However, if demand starts to slow down, they simply slow down the rate of construction.
That said, I don't think a fast decrease in prices is very likely. Owners of very inflationated areas (usually used buildings) are not pressed for selling, so if nobody comes along they simply wait. Prices are high, because of the seller's transaction costs.
If you are living in the center, for example, you probably won't sell your apartment if prices increase 5%, but you'll require a very very good margin for the hassle of moving. That's why prices are over-inflated, owners might not pay that price for an equal house next door, but they might not sell their own either.
