2006 Housing Market...

[apple27]

I am supposed to be closing on a new home soon and I am thinking of bailing. I initially bought it because I thought it would be a good short term investment in the Phoenix market, but now I'm afraid the bubble is going to burst. I only have a $2500 earnest deposit so there is no sweat walking away. What are everyone's thoughts on the housing market/bubble based on speculation or facts for 2006? This should be a good topic of discussion.

p.s I have been reading blog below and I know it is biased, its all in the name. But they do have some pretty good points.
http://housingpanic.blogspot.com/

 

[Ryanmcd2]

I will say this, if everyone keeps thinking the market is going to bust you are fine. It's when they say it's going to the moon you have to worry. Remember 95% are wrong lol.

 

[Dtrigg]

If you're looking for a short term gain in an overblown market like Phoenix, I think you're out of luck. Flippers have been out of the market for a long time, plus they only consisted of around of 5% of the real estate market in general. Home ownership itself is another question. If you are purchasing the home for your primary residence, what do you care what the market does in the next few years.

Good luck.

 

[nsx2tall]

I'd really like to reply with something profound, but I don't think anyone knows the answer. I sold my Whole Foods stock at $115 when analysts down-graded it for being overpriced. It's now at $160 (pre-split). I think what they meant to say is that they (the analysts) have no f-ing idea what it will do. Sometimes too much information is a bad thing (as I probably wouldn't have sold it otherwise). Stick to your own scenario and don't listen to the hype.

If you can't stomach the loss if the market turns, but you can stomach the $2500, I'd say bail. It's a gamble no matter how you look at it. But are you afraid of a 10% drop in the value of your house or a 50% drop? If the market tanks after you bail, I'd bet you could pick up a house for more than $2500 off sticker (thus recouping your earnest). If it doesn't tank, you got no house and no $2500, but lots of interest $$ (if you were buying outright) and no mortgage (if you were borrowing).

If you want the nice house (I'm guessing it's a nice house since you've got such good taste in cars.:biggrin: ) and the nice weather, and you can afford to stay in the market longer if it tanks-- buy the house. If the market tanks, it's still a nice house even if it's not worth as much.

I'd still love my NSX even if it was worth $2500 (I think). But I bought it because it was much less likely the drop in value compared to other cars in the same price range.

 

[redshift]

I hear a lot of talk on both sides of the fence. Some say the bubble will burst and many say it will just slowly equalize. As far as quick flipping, I think it's too late to make major money. My real estate agent friends tell me that they expect the market to continue to appreciate at about 8-10%/year. I don't know what to expect.

However, if the house your considering is in Mesa, I would strongly consider getting out. As you may know, Mesa has the worst zip code value in the Phoenix Metro area. As big business continues to move to AZ, they will be most likely taking up locations in the Scottsdale, Tempe, and/or Chandler - driving up surrounding residential value there. Mesa still has MAJOR problems with it's lack of Fine Dining, good malls, nightlife, ritzy areas, etc...

 

[morrow]

As a Loan Officer my advice is right now buy a home to live in! If you look at your home as a long term investment you should be fine. If you are looking to make a quick buck you might be too late. The housing boom is fueled by easy financing, imigration, and recent low interest rates. Remember if interest rates are avaraging 5-6% you can afford a lot more home, than a mortgage at 9%. Generaly speaking High values/low rates, Low values/High rates. You monthly mortgage obligations could be similar. The best advice I tell people is too buy a home when you are ready and when you have the money.

I know a lot of people that thought the market was tapped out 2 years ago and now look at it. I think we will expierence a leveling off period and a sideways market very soon. Real estate markets don't crash over night, rather over the course of months. If and when homes do loose their value, then all the talk will be over is it going to keep going down, how low can it go, ect.. If we could time the market we would all be super rich, since we can't we just have to watch for clues like supply and demand. Check you area, find out how long homes are sitting on the market. The bottom line is if you are really nervous don't do it. Just my opinion. Good Luck which ever way you sway!
-Ryan

 

[jimmycinla]

I have 2 friends that just backed out this past week on props in Az.
Their LO said she had 7 others backing out as well.
Dont consider your deposit lost. Have an RE agent or attorney completely read the builders contract and make sure they did everything they said they would when they said they would do it.
One of my friends got all of his deposit back because the builder said a written acceptance would be delivered to the purchaser after the deposit was received. It wasn't. He walked into the office, hand delivered his notice of cancellation based on the builder not performing per the contract and his deposit was returned.

Real Estate investment is always a good investment long term and risky short term. The last few years of ridiculous double-digit percentage gains are for the most part done now.

NAR President Thomas M. Stevens from Vienna, Va., said that housing has always been the soundest investment for most families. “As the old saying goes, homeownership beats the heck out of a drawer full of rent receipts,” said Stevens, senior vice president of NRT Inc. According to the Federal Reserve Survey of Consumer Finances, the median net wealth of a homeowner household is 36 times higher than a renter household.

Stevens said that the national median home price has never declined since good recordkeeping began in 1968. “Although there can always be a temporary decline in a given area if jobs are weak and there is an oversupply of homes on the market, people who stay in their homes for a normal period of homeownership generally see healthy returns over time. There are no guarantees, but there are very good odds”

-j-

 

[NRG]

http://money.cnn.com/pf/features/lists/nar_3q05/

 

[JChoice]

According to most extreme optimists, you will have a slight gain.
According to some, there will be a slight decrease.
According to others - there will be a major drop.

Not much of an upside to me.

My prediction is that hottest areas hit their peak in Q3 and Q4 of 2005. 2006 will be a slow decline until the middle and end part of the year. Then, values will drop quickly. There might drop 15 - 30% in some areas causing a recession in 2007. Housing will stay depressed for a while.

Those that are hording cash will be in a great position to take advantage of the downturn.

I just spent the morning getting a great lecture from an economist. His prediction was a slight downturn in late 06, follow up a great 07 followed by a massive recession in late 08 and 09. If prices don't hold up in the housing market then it's a major recession in 07. Hold on to your hats!

 

[apple27]

I just ended up dropping it, thats what I thought I would do all along. I just wanted to see if you guys would do the same. I may even get the earnest back. I'm just glad it wont be a headache since I am going on vacation for a month.:biggrin: Thanks for sharing your thoughts.

 

[eddiensx]

I have clients that purchased houses in Arizona and they haven't been rented for the 9 months they have had them. Now they are going to sell(hopefully) and try not to lose too much. After Realtor fees, and no real appreciation, it can get ugly.

If you aren't afraid of distance, consider buying on the Big Island, in the Puna district. You can buy a house on 1/4 acre or $200-250k

 

[NsXMas]

You make money when you buy a house, not when you sell it.

The property needs to be under-valued in order for it to make sense to buy as an investment.

by the way, have we met before?