LOCAL HOUSING MARKET IN TAILSPIN Prices still dropping

We just bought a home after actively looking for the past 4+ months or so.(BTW, we got pre-approval and we had to prove income, etc).

Here was our thought process and some of what we did (as buyers). We were looking for a single family 4 bed, 2.5 bath, 2 car garage.
1. We disregarded "comps" that our realtor gave us that had dates of 6+ months ago.
2. We looked on some real estate sites and http://www.lehighcounty.org/Assessment/Puba.c... to get information about the homes that we were interested in.(we could see how much the seller paid for the house and when they bought, for example).
3. A lot of times we found the seller bought the house 5-7 years ago (2000-2003) and were now selling the house for 60-80% more than they bought it, and in most cases they didn't do anything to upgrade. We couldn't understand why it was worth 80% more than 5-7 years ago when they bought it. Would we be able to sell for 80% more in 5 years?
4. When looking at the sale price we thought, could we even sell it at the sale price in 5 years? In many cases we thought no.
5. We compared the resales to similar new building, because we thought why buy a used home if we can get a new one for the same price or cheaper.

In our opinion it was definitely a buyer's market. We looked at some fine homes, many of which were on the market for the entire 4 months we were looking and still are today. We passed on them because we did not value them at the same price they were being sold for. We didn't want any wacky incentives. Our bottom line was price and value.

On another note, down 4.1% is not all that bad if in the past 5-7 years the prices are actually up 40-50%. This is probably just the market correcting for a jump that was too high, too fast.

please read this carefully. this is not made up, and hopping you sell your houses, but price it to the market and not to your own hopes and dreams. let reality come through for your own benefit.

Great post RB.

Another point here is that many sellers can't "price their house to the market" due to the fact that they owe far more than their house is currently worth. These sellers, in many cases, either accepted an ARM with little or no downpayment or bought extremely overpriced units.

Buyers should avoid these overpriced houses at all costs.

Here's an odd concept....how about the sellers who bought in the last 2-5 years ACTUALLY LIVE IN THE HOUSES.

Buying a home is supposed to be a long term committment. Unfortunately too many people were hoping for quick money.

The mere fact that consumers can now visit websites to see exactly what it sold for 2 years ago is a fireball of a wakeup call that many sellers better start realizing. If not, they better repack the kitchen shelves.

"oh?? you bought that home 3 years ago for $80,000 less? and you did nothing since to improve it"

You better believe that's happening more and more with the ever increasing tech savvy consumer.

Sure life deals a lot people a raw hand and they have to move quickly and unexpected...that I will sympathize with. But when I hear stories about people stating "Oh we only wanted to live here for 2-3 years before we bought another home...." or "Well, we wanted to flip it..."

Two words:

OMFGLOL HAHAHA

I have no doubt that the 4.1% will multiply within a few months. Go to Realtytrac.com and view your local maps. It will amaze you!

The housing market "bust" was, in part, created by buyers who should never have been approved for a loan in the first place and those that bought 3-4 years ago at $80,000 more then current prices (and then, in some cases, sunk another $80,000 in "upgrades" into the house). These buyers, and those that gave them the loans, created a "lose-lose" situation in the housing market.

The sad thing is that those with good credit and common sense will be paying the price for those who lacked both good credit and common sense.

if you bought during the last few years you overpaid bigtime!

SUCKERS

http://patrick.net/housing/crash.html

I own a house in Palmerton that I have lived in since 1983. I have had a medical problems for the last 6 years and need to sell and move closer to my daughter in GA so can help me.
I would like to find a buyer that would like to take this house and do the cosmetic work for a reduced price. I received estimates from local hanyman but it seems scarey and I really don't have the funds up front.
Any suggestions?

National and even regional trends are interesting, but real estate is still local. Prices in my neighborhood are staying quite steady because demand is still there. A neighbor just sold for a couple thousand more than what he bought for in 2006, which was 45% higher than the previous sale in 2002. This is similar to other recent sales in my area.

Keep dreaming fred you sound like a realtor! All you have to do in order to see how bad housing around the valley is check out the multiple listing service. Houses that sold for let's say 250,000 are now being listed for 175,000 and not selling. The people in major jeopardy are trying to lease/rent their property but they are asking 1,500 - 2,000 a month and that's just barely making the mortgage payment and sometimes even if they rent the owners still paying a portion. This real estate market was the biggest bubble/joke this country has even been in and it's only going to get worse. People shouldn't be thinking of buying a home for 3-4 years. That's how long the drop in prices are going to be dropping. The only thing congress did by signing the new housing laws were to make things worse and play out longer. Instead of having this play out in 2 years, they doubled that timeline.

Would you like me to post the addresses and public records of sales prices for the houses I mentioned? I'd be happy to accept your apology after you see the facts....

crazed wrote:

Keep dreaming fred you sound like a realtor! All you have to do in order to see how bad housing around the valley is check out the multiple listing service. Houses that sold for let's say 250,000 are now being listed for 175,000 and not selling. The people in major jeopardy are trying to lease/rent their property but they are asking 1,500 - 2,000 a month and that's just barely making the mortgage payment and sometimes even if they rent the owners still paying a portion. This real estate market was the biggest bubble/joke this country has even been in and it's only going to get worse. People shouldn't be thinking of buying a home for 3-4 years. That's how long the drop in prices are going to be dropping. The only thing congress did by signing the new housing laws were to make things worse and play out longer. Instead of having this play out in 2 years, they doubled that timeline.

One Third of New Owners Owe More Than House Is Worth

http://www.bloomberg.com/apps/news...

++++++++++

Pre-foreclosure Filings Set Record in July
http://www.businesswire.com/portal/site/googl...

++++++++++

This next article is about 1 year old. It's only gotten worse and will continue to worsen.
Shiller: Mr. Worst-case scenario
Robert Shiller called the tech-stock crash just as the Nasdaq peaked. But he is also the expert on the real estate market. And where does he think it's headed now? Uh-oh.
By Jason Zweig, Money Magazine senior writer/columnist
July 6 2007: 4:42 PM EDT
(Money Magaine)-- Robert Shiller is worried about your home's value, and that's not good. A finance and economics professor at Yale, Shiller proved he could see a crash coming with his book "Irrational Exuberance," which forecast the end of the 1990s stock bubble and hit bookstores in March 2000 - almost to the day the Nasdaq started to collapse.
Today, Shiller believes homes are roughly as overvalued as stocks were then and, once again, he's worth listening to.
Robert Shiller
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A research company he co-founded, Case Shiller Weiss, created the definitive index of housing prices. A newer venture, MacroMarkets, designs ways to hedge against risks like falling home values.
In short, no one else knows the history - and perhaps the future - of U.S. real estate prices better. Shiller spoke recently with Money's Jason Zweig.
Question: What caused the stock bubble, and why did it end as it did?
Answer: Some sociologists talk about collective consciousness. We humans evolved to be very closely linked, and our minds focus on the same ideas. Those [ideas] get reinforced because we hear them all the time.
Back in the late 1990s, you kept hearing that you had to stake your claim on the Internet or you'd miss out on the future. No one cared about the present. Then something happened around March 2000. There was an acceleration of public talk about doubts. You could no longer declare at a cocktail party that Internet stocks were going up. Such statements had become embarrassing - and just like that, word of mouth changed.
Embarrassment is a powerful emotion.
Question: Is that about to happen in real estate?
Answer: It doesn't seem like we're there quite yet. But this is the biggest boom in housing prices since, well, ever. Nothing seems to explain it, and nobody forecast it. It seems to me...wait a minute. Please don't quote me as forecasting the markets.
Question: Okay. What you're about to say is not a forecast.
Answer: Well, human thinking is built around stories, and the story that has sustained the housing boom is that homes are like stocks. Buy one anywhere and it'll go up. It's the easiest way to get rich.

Question: So how rich can you get on real estate?
Answer: From 1890 through 1990, the return on residential real estate was just about zero after inflation.
Question: Excuse me? That's all? Hasn't it been higher lately?
Answer: Since 1987 it's been 6 percent [or about 3 percent a year after inflation].
Question: So real estate doesn't go up roughly 10 percent a year?
Answer: It can't be true that homes rise 10 percent a year. If they did, in the long run no one would be able to afford a house.
Question: Let me grab a calculator. If real estate really rose 10 percent a year, a $25,000 home in 1957 should be worth roughly $3 million now.
Answer: And that flies in the face of common sense. In fact, I'm inclined to think there's a good chance that the return on real estate will be negative, substantially negative, over the next 10 years because all booms reverse in the end.
Question: All right. We won't call that a forecast either. So how should people think about their home as an asset?
Answer: Avoid concentration of risks. You need a house, but I would avoid a second one - or at least avoid an outsize house. Over-investing in real estate now would be a recipe for disaster.
Question: You also write about the risk to human capital. What's that?
Answer: What you're trying to do is to invest in skills that somebody else will want to pay you for. Let's say you want to work at Bethlehem Steel. That would have been a good idea in the 1950s, not so good by the 1970s. The world went the wrong way on you.
Question: How can you manage that risk?
Answer: I used to coach children's soccer, and I would tell my players, "Stand away from the pack, and sooner or later the ball will come to you."
In your career choices too: Get away from the pack. Also, you associate your home country with safety. But the rest of the world is pretty peaceful too, on average, and the average is all that matters.
I think relatively few [Americans] are getting away from the pack, investing more outside the U.S. than in.
Question: How are you investing now?
Answer: I'm probably a little over 60 percent in stocks, almost all of it outside the U.S. I have a lot of cash. And I've been reducing my exposure to real estate. It may be at the end of a cycle.

This link show's a graph that spells everything out, even Fred might be able to understand this one. Being Schiller is probably the greatest economist of all time, I'll stick with his predictions, it saved my 401k before the DotCom disaster that nobody saw coming (except people who pay attention)

This shows the history of home values over a 100 year period. Face the facts people, housing is dumping and while it took 6 years to double (THAT'S LEHIGH VALLEY AND A LARGE PORTION OF THE US FOLKS, WE ARE NOT IMMUNE).

http://graphics8.nytimes.com/images/2006/08/2...

Fred wrote:

Would you like me to post the addresses and public records of sales prices for the houses I mentioned? I'd be happy to accept your apology after you see the facts....
<quoted text>

I bet car salesman love to see you walking in the door. How long have you been trusting the morning call for all your information? Please do post the information for this house. With the ability to use the local deed searches online, it's very easy to show this. In fact I can show you using the county deeds website & the multiple listing service and prove very easily that the average house around the lehigh valley has dropped at least 25-30% and will continue until prices are somewhere around the mid to late 90's in cost. That's what's happening freddyboy.

Telmark wrote:

The housing market "bust" was, in part, created by buyers who should never have been approved for a loan in the first place and those that bought 3-4 years ago at $80,000 more then current prices (and then, in some cases, sunk another $80,000 in "upgrades" into the house). These buyers, and those that gave them the loans, created a "lose-lose" situation in the housing market.
The sad thing is that those with good credit and common sense will be paying the price for those who lacked both good credit and common sense.

Yeah but the Fed, the banks and all of the brokers skimmed off of the boom

Among the causes to Allentown's falling sales, remember that Pawlowski and his Croney Council (ht Michael Donovan) put pre-inspection into place before anything can be sold in Allentown. That took effect before the start of the year and sales collapsed. Sales in Allentown are now around 200 a month or about 1/5th of 2007's.

You can keep an eye on the trends here: http://www.city-data.com/city/Allentown-Penns...

The real giggle will be this falloff's impact on the city's budget.

Two good sites.

http://www.policymap.com/

With policymap you can view demographics, types and numbers of mortgages. For instance, it shows that subprime piggyback mortgages in 2004 and 2005 were very popular just west of Allentown in Salisbury and North Whitehall. Look for foreclosure storms there...

The other site is cuter, with heat maps for foreclosures. http://hotpads.com/

Here's the best site for housing

http://patrick.net/housing/crash.html

Hey Fast Freddy, where's that info? I guess your searching hard and dry on the lehigh county deeds site to find a home that actually increased, don't worry, only maybe 1 fool is left and your it!