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Mizmoon Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Nov-14-04 04:00 PM
Original message
Poll question: Will the housing market go bust?
Will rising interest rates pop the housing bubble around the country? Let's hear your predictions.

Sorry, polls are turned off at Level 3.

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Pithlet Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Nov-14-04 04:16 PM
Response to Original message
1. I keep hearing that this will happen
and it makes sense, especially when you hear about 2 bedroom 900 sq ft homes going for 500 grand in California.

I don't want anyone to get burned in the housing market, but I do hope that when the crash happens, it isn't as pronounced in areas where the bubble isn't as exaggerated. I can't help but think that in some areas, housing prices are just price gouging elevated to a new level. But, I'm spoiled, because I live in relatively-cheap-housing land, and prices of homes in other parts of the country just seem ludicrous to me.
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louis-t Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Nov-14-04 04:38 PM
Response to Reply #1
2. As long as people are willing to pay
exorbitant prices, they will stay high. Currently, the only thing keeping the pre-owned home market alive is 0 down mortgages. You can buy a home with less money down than if you were to move into a rental. This phenomenon is also driving the foreclosure market. Easier to walk away from a home where you have no equity if things get tight.
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Pithlet Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Nov-14-04 04:52 PM
Response to Reply #2
8. I understand why prices inflate
But there is only so high they can go an they can be sustained for only so long. Part of what fuels the boom is the people that are selling and successfully getting these prices. And I'm not blasting them for it. I hope it didn't sound like I was. I would do the same thing if the price of my home doubled or tripled. But, there are also a finite number of people who are willing or able to pay those prices. All it takes is another recession to reduce that number sharply.
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Deja Q Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Nov-14-04 04:40 PM
Response to Reply #1
3. Couples with 5x salaries are buying 6x homes and foreclosing when they
lose their jobs. It's already starting to happen.

That's when somebody else comes in and profits big-time, I'd guess. :-(
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Gyre Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Nov-14-04 04:42 PM
Response to Reply #1
5. Crashed here in '90
and the same houses are now worth thrice what they were then. The deal is, California is not just a place on the far left of the map. It's got the best weather in the country, fresh vegetables and a heavy blue population which is evident even in the least progressive parts of the state (mid-to-southern valley). Oh yeah, it's got the best ocean too! Bottom-line: people want to live here for good reasons and it's the market which drives housing prices.

PS: After the latest political debacle, I'm damned glad I live here. :)

Gyre
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Pithlet Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Nov-14-04 05:06 PM
Response to Reply #5
10. I don't think that is the whole picture
I think there are other factors driving the inflation. I don't doubt that California is a great place to live. But, there are similar bubbles in crappy weather areas that aren't as blue, even if they aren't as exaggerated. The South's weather is considerably better than the East, North East and Midwest. And our housing costs are much lower, on average. And there are parts of California that aren't so blue, and the housing market is just as bad. I think part of the reason that prices are considerably lower here is that people just aren't as willing to pay those prices. It's a regional thing, no doubt.
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AndyTiedye Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Nov-14-04 05:51 PM
Response to Reply #1
11. Housing in California is Expensive Because So Many Want to Live Here
One might ask why are people willing to pay so much to live here?
Could it be because we are such a brilliantly blue state?
We have a really cool state flag too:


In general, there seems to be much more demand for housing in blue
states than red states. Coincidence? I think not. People are voting
with their feet, and have been for a long time. Many kids who grow up
in the bible belt flee to places like California or New York at the first opportunity and never look back.

Higher interest rates are coming, of course, and that will certainly
drive housing prices down, as will the accompanying economic downturn.
They've had the economy on speed for a yearto help Bush* get reselected,
and now comes the crash. I would expect all areas to be affected, not
just expensive ones. If anything, the less in-demand areas might be
hit harder.
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Pithlet Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Nov-14-04 06:27 PM
Response to Reply #11
12. If California housing prices
are inflated by demand, then why would lower markets which don't have the demand driving the inflation be hit harder? I would think it would be the opposite. I'm not an expert, so I could be wrong here. Just because it doesn't make sense to me doesn't mean it isn't so. I would just think that the more inflated the market, the faster and harder it would crash. I know that California is a high demand markry for a reason. I've never been there, but I've heard it's nice :)
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JVS Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Nov-14-04 04:40 PM
Response to Original message
4. That would be great!
I hope it bursts when I'm looking for a house in a few years
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DS1 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Nov-14-04 04:42 PM
Response to Original message
6. There'll be a boom in 3 bedroom housing - just after Bush takes
everyone's first born sons.
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Moonbeam_Starlight Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Nov-14-04 04:43 PM
Response to Original message
7. If the housing market does go bust
what does that mean for a current home owner?

We bought our house in 2001. We were thinking of refinancing to take advantage of some low interest rates (ours isn't too bad, though) but it would require closing costs, something we don't have right now.

I guess we'll definitely be sitting tight here for quite some time.

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louis-t Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Nov-14-04 05:00 PM
Response to Reply #7
9. If you do all of your banking with 1 bank
you may be able to refinance without cost. I've done it several times. A lot of times the mtg co will roll the cost into the mtg, but there's danger there too if values slide. Effect of 105-125% mtg's we saw several years ago: values stopped going up, people owed more than home was worth.
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customerserviceguy Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Nov-15-04 12:04 AM
Response to Reply #7
13. Means nothing
as long as you keep the income(s) that allowed you to buy that house. If you can refi for lower interest, and the closing costs aren't a ripoff (they often are), go for it. Just be prepared to stay there for awhile.


I spent twenty five years in the title insurance business, and I've seen the cycles. With the rise in interest rates, buyers will not be able to afford houses at current prices, and that will soften real estate inflation. Other homeowners, who got themselves out of trouble by refinancing credit card debt into their mortgage repeatedly (really, I have seen refi's take place every six to twelve months!) will be at the end of their rope, and won't be able to benefit from dropping rates, so they will wind up in foreclosure. Foreclosed houses on the market also soften up real estate prices, as lenders don't want to be homeowners, and there's often enough mortgage insurance to cover their losses.


Interesting times are ahead...

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hunter Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Nov-15-04 12:56 AM
Response to Original message
14. Other -- The price of everything else will catch up with housing...
Ouch.
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Pithlet Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Nov-15-04 01:12 AM
Response to Reply #14
15. Ouch, indeed.
Wages certainly won't keep up. :scared:
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