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Submitted by flu on May 28, 2013 - 7:17am

Submitted by desmond on May 28, 2013 - 7:25am.

The homeowners in this article are geniuses?

http://www.thestreet.com/story/11933280/...

Keep pretending this is a normal housing market. I am not pretending the stock market is normal.....

Submitted by desmond on May 28, 2013 - 7:47am.
Submitted by outtamojo on May 28, 2013 - 7:58am.

Those who avoided 2005-2008 and figured the turn in 2009-2011 are geniuses. Rising home prices = leave the area or keep looking for a place to rent.

Submitted by spdrun on May 28, 2013 - 10:04am.

Very local. A lot of Western states have risen. NYC (area, not the central city) is actually down since last year, with a pile of foreclosures hitting the market right about now. Hope to be able to play in this cesspool soon, since once the foreclosures are sold out, the area will probably go the way of CA.

No touchy-feely homeowners' bill of rights in NJ, thought, just a hardass Republican governor who's letting the market take its course. Yeah, re taxes are high, but not in all towns. The ones I'm interested in tend to be about 1-2% of value per annum owing to a strong manufacturing and business base.

http://www.deptofnumbers.com/asking-pric...

Submitted by thebazman on May 30, 2013 - 1:07am.

Per the article,

"Rising prices also encourage more would-be buyers to purchase homes, before prices rise further."

If the price trends continue, people may truly be priced out of buying homes.

Submitted by spdrun on May 30, 2013 - 8:27am.

Hopefully, we'll be seeing a Japan-style market crash/correction soon, with home prices following back into the toilet where they belong. "Abenomics" in Japan isn't all powerful as we're seeing. Hopefully, neither is QE3 over here.

As far as home prices being unaffordable, they're not even close, since people are buying.

Submitted by thebazman on May 30, 2013 - 9:01pm.

True, the definition of "unaffordable" varies from person to person. For myself, being pre-approved for $250,000, single-family homes in the city are out of reach. For the average home buyers with a 300K to 600K budget, there are still plenty of affordable homes.

But I admit, I take responsibility for not buying when I had the chance. I'm just happy to still be living in San Diego.

Submitted by spdrun on May 30, 2013 - 9:22pm.

I'm not convinced that there was a recent point where you could get a single-family home in decent shape (meaning: not needing $50k+ of work to be habitable) in an acceptable area for under $250k. Oceanside and Escondido possibly excepted. Believe me, I looked and would have bought in a second had the right deal come along.

Why not look for 2 and (if possible) 3-bedroom condos at this price point? Common charges and taxes are on average low enough in the SD area to make a condo not a bad deal.

Submitted by Jazzman on May 31, 2013 - 12:08am.

50% of buyers think prices are increasing, so must buy now.
25% of buyers think prices have been going up so when will they come down.
The remainder of would-be buyers sit in hope that one day the world might be a sane place again.
It's a democracy so majority rules.

Statistics courtesy Robinson Crusoe Research.

Submitted by patb on May 31, 2013 - 1:52pm.

its just another bubble.

The banks want to clean up their balance sheets then the Fed will raise rates.

Submitted by The-Shoveler on May 31, 2013 - 3:42pm.

OK not saying your not right,

But If the fed raises rates, and the housing market crashes (Again), will that not mess up the banks once more, not to mention the economy and local municipalities coffers?

It's kind of like “coffin corner” if you are familiar with aeronautical terms.

No easy way out!!!

Interesting times.

Submitted by bearishgurl on May 31, 2013 - 8:15pm.

The-Shoveler wrote:
OK not saying your not right,

But If the fed raises rates, and the housing market crashes (Again), will that not mess up the banks once more, not to mention the economy and local municipalities coffers?

. . .

Mortgage interest rate hikes won't make the market "crash." Not when millions of buyers in recent years bought with super low fixed-rate mortgages, mostly 30 years in duration. And 95% of the rest of the buyers paid all cash when they bought.

How are all these properties suddently going to fall into "distress?"

The reality is that they aren't. Rate hikes won't affect the amount of buyers, either. They will only affect how much each buyer can borrow. This doesn't mean buyers won't buy a residence if they need one. It just won't be the type of residence that FTB's and STB's have become (artificially) "accustomed to" being able to buy in recent years. It will be lesser in size, in a lesser location or in lesser condition or all three.

Buyers will have to suck it up and deal with it.

And if rents keep escalating, people who want to stay will not want to keep paying exorbitant monthly rent if they have the ability to buy.

The SD RE market will go on as it always has and all will be as it should be in a CA coastal county.

Prospective buyers who are now waiting for another "crash" to buy in SD County will find themselves waiting forever, IMO.

Submitted by Reality on May 31, 2013 - 9:49pm.

bearishgurl wrote:

The reality is that they aren't. Rate hikes won't affect the amount of buyers, either. They will only affect how much each buyer can borrow. This doesn't mean buyers won't buy a residence if they need one. It just won't be the type of residence that FTB's and STB's have become (artificially) "accustomed to" being able to buy in recent years. It will be lesser in size, in a lesser location or in lesser condition or all three.

Buyers will have to suck it up and deal with it.

So who will be buying the homes that aren't "lesser in size, in a lesser location or in lesser condition or all three"?

I say the same type folks that are buying them now, only the principle (price) will be lower to meet the lower borrowing levels (demand). People aren't getting more house now due to lower interest rates, only more debt.

The sellers will be the ones sucking it up.

Submitted by bearishgurl on May 31, 2013 - 11:50pm.

JohnAlt91941 wrote:
So who will be buying the homes that aren't "lesser in size, in a lesser location or in lesser condition or all three"?

I say the same type folks that are buying them now, only the principle (price) will be lower to meet the lower borrowing levels (demand). People aren't getting more house now due to lower interest rates, only more debt.

The sellers will be the ones sucking it up.

No John, when rates revert to the "norm," there will be a much wider variety of buyers buying them than the ones who are currently buying them (mainly cash investors and FTB's and STB's who have little to no downpayment).

Read: "Professionals" shopping in LM, LG, Linda Vista and Golden Hill, for example.

Laugh all you want. But before you lie down and start rolling on the floor, read this recent thread:

http://piggington.com/monthly_payment_ra...

Buyers today are getting far more house and better area than they have EVER historically afforded in SD County when mortgage interest rates were in the (normal) 7-10% range.

Are some buyers today incurring too much debt for their families to realistically handle going forward? I would say some are but purely by choice as they DO have other alternatives. I would guess that many (most?) mortgage lenders don't use MR and HOA monthly expense (BOTH can be exorbitant) when calculating monthly PITI in front end/back end ratios for qualification purposes.

Any mortgage brokers here, please feel free to correct me on this.

Submitted by spdrun on May 31, 2013 - 11:51pm.

^^^

Exactly. Don't know where the market will end up in 10-15 years, but it will probably oscillate quite a bit in the next five. Remember that inventory was crap/prices were also high in late 2009 through 2010.

Submitted by desmond on June 1, 2013 - 7:06am.

bearishgurl wrote:

Any mortgage brokers here, please feel free to correct me on this.

Ha, like you would listen,,,,,,,,,,,,,,just kidding..................

Submitted by CA renter on June 3, 2013 - 12:47am.

JohnAlt91941 wrote:

So who will be buying the homes that aren't "lesser in size, in a lesser location or in lesser condition or all three"?

I say the same type folks that are buying them now, only the principle (price) will be lower to meet the lower borrowing levels (demand). People aren't getting more house now due to lower interest rates, only more debt.

The sellers will be the ones sucking it up.

Bingo!!!

Not sure why some people still can't grasp the relationship between easy/cheap credit and price. Housing prices are not set by yesterday's buyers, they are set by tomorrow's buyers. If future buyers have access to less credit than today's buyers, then prices will go down.

Submitted by The-Shoveler on June 3, 2013 - 7:34am.

CA renter wrote:
JohnAlt91941 wrote:

So who will be buying the homes that aren't "lesser in size, in a lesser location or in lesser condition or all three"?

I say the same type folks that are buying them now, only the principle (price) will be lower to meet the lower borrowing levels (demand). People aren't getting more house now due to lower interest rates, only more debt.

The sellers will be the ones sucking it up.

Bingo!!!

Not sure why some people still can't grasp the relationship between easy/cheap credit and price. Housing prices are not set by yesterday's buyers, they are set by tomorrow's buyers. If future buyers have access to less credit than today's buyers, then prices will go down.

And that will put us, maybe back in 2009 with cities going BK left and right and unemployment around 10%.

Submitted by CA renter on June 3, 2013 - 1:11pm.

That's entirely possible, TS. Still, we can keep throwing money at this dead, over-extended economy (and it will require more and more money for less and less effect, IMHO), or we can let the system clear and get to a point from which we can have a healthy, sustainable economy that is better aligned with productive growth rather than the never-ending speculative asset trading that's been the hallmark of our economy for the past decade or so.

Submitted by spdrun on June 3, 2013 - 1:16pm.

Good. I hope we do end up back in 2009. There's a lot of pigfat to cut from cities. Example being, overpaid cops earning $150k plus per year including fake overtime should be kicked out the door after being given their service pistol with single bullet as a going away present and polite hint about what to do.

Submitted by CA renter on June 3, 2013 - 1:27pm.

And private contractors with lucrative contracts for overpriced, unnecessary work. I'd like to see those go first.

BTW, there is no such thing as "fake" overtime for cops.

Submitted by spdrun on June 3, 2013 - 2:08pm.

Sure there is -- sitting in their cars playing with themselves while claiming to "direct" traffic at a construction site. Outright time fraud also exists at least locally to me.

Submitted by all on June 3, 2013 - 2:25pm.

bearishgurl wrote:
I would guess that many (most?) mortgage lenders don't use MR and HOA monthly expense (BOTH can be exorbitant) when calculating monthly PITI in front end/back end ratios for qualification purposes.

Guess again.

Submitted by patb on June 4, 2013 - 4:51pm.

If Interest rates rise, a lot of people will lose their butts.

Submitted by HLS on June 8, 2013 - 10:53am.

bearishgurl wrote:

Are some buyers today incurring too much debt for their families to realistically handle going forward? I would guess that many (most?) mortgage lenders don't use MR and HOA monthly expense (BOTH can be exorbitant) when calculating monthly PITI in front end/back end ratios for qualification purposes.
Any mortgage brokers here, please feel free to correct me on this.

Debt ratios are factored using ALL minimum monthly payments on a credit report + proposed mortgage payment INCLUDING principal, interest, taxes, insurance, HOA, (AND Mello Roos, which is normally included in the property taxes)

In general, the guidelines do not care how many dollars you owe, they only care about the minimum monthly payments that show on a credit report.

**MAJOR hassles can occur to this formula when:
a)There is an open large HELOC (on a refi) that has nothing drawn against it.
b) Large car payment that only has a few months left to pay
c)Student loans that are deferred
d)Debt that was co-signed for even though borrower does not make the payment

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