I have to guess this has been talked about before... but...

First here's a quote:

--->

"The U.S. economy has weathered such episodes before without experiencing significant declines in the national average of housing prices," he said. "Nevertheless, we certainly cannot rule out declines in home prices, especially in local markets."

But he made it clear that he was not overly worried. A decline in housing prices "would be accompanied by some economic stress," he said, but "the macroeconomic implications need not be substantial."

<---

What do you think? You think a lot of people are going to be buried in houses that are worth a lot less soon, or do you think it will be a minor dip?

While we're at it, how do you explain the fact that short money (prime) is climbing (yes, I understand the Fed. Res. Rate... keep reading)... yet long money (30 year morts) are going down.

Pete

Here's the whole article for those interested:
http://www.iht.com/articles/2005/07/21/business/fed.php

A decline will mainly hurt those who are speculating on the housing market and haven't sold their inventory. For an ordinary homeowner, your equity goes down, which may hurt your ability to borrow. Then again when you go to sell, your capital gains are lower, and your next home will be cheaper to buy.

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1985 380SE Blue/Blue - 230,000 miles
2012 Subaru Forester 5-speed
2005 Toyota Sienna
2004 Chrysler Sebring convertible
1999 Toyota Tacoma

There's the thing right there -- "local markets". There's no bubble going to burst in my part of the world. If you live in a depressed area, home values could suffer. If you want to leave a depressed area for greener pastures, you may take a serious hit, but that doesn't seem like anything unnexpected...

Major bubble in my area.....or what appears to be one anyway..

my town...the cheapest houses are $524,000 and up right now....most of those are teardowns....bought for the lot to build a new house...a 1/4 acre lot at that. Just how many people can afford that?

__________________
Proud owner of ....
1971 280SE W108
1979 300SD W116
1983 300D W123
1975 Ironhead Sportster chopper
1987 GMC 3/4 ton 4X4 Diesel
1989 Honda Civic (Heavily modified)
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Section 609 MVAC Certified
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"He who fights with monsters might take care lest he thereby become a monster. And if you gaze for long into an abyss, the abyss gazes also into you." - Friedrich Nietzsche

Bone if you really believe it's coming, maybe you better get the hell out while you can.

See they've been saying "local market" all along, but here's the reality, what the heck is "local market". Think about it, people don't think *they* live in a "local" market. They think, well, my house was $200k and now it's $400k, so I don't live in a "local market"... I live in a good, desirable area. With that being said, I think it's a game of words...

Perhaps a place in NYC, Boston, LA, etc may not take a huge hit, but I think most of suburban, and for sure, rural, America is going to get slammed.

I mean, really, "local market" -- what the heck does that really mean!?

I bought low..........and like where I am....don't want to move.....Prices would have to crash 70% before I would lose.

__________________
Proud owner of ....
1971 280SE W108
1979 300SD W116
1983 300D W123
1975 Ironhead Sportster chopper
1987 GMC 3/4 ton 4X4 Diesel
1989 Honda Civic (Heavily modified)
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Section 609 MVAC Certified
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"He who fights with monsters might take care lest he thereby become a monster. And if you gaze for long into an abyss, the abyss gazes also into you." - Friedrich Nietzsche

What I read into it is certain localities...DC metro...NY...parts of California....anyplace thats had big runups the last 7 years.....but Rural areas? I think they will fare the best...or people who bought before the runup...like I did are fine...weve had sustained 20-27% annual increases in home prices...

__________________
Proud owner of ....
1971 280SE W108
1979 300SD W116
1983 300D W123
1975 Ironhead Sportster chopper
1987 GMC 3/4 ton 4X4 Diesel
1989 Honda Civic (Heavily modified)
---------------------
Section 609 MVAC Certified
---------------------
"He who fights with monsters might take care lest he thereby become a monster. And if you gaze for long into an abyss, the abyss gazes also into you." - Friedrich Nietzsche

There was a mobile home unit featured on the news in Malibu.....$1.3 million bucks. Ridiculous.

CA market will likely cool in the residential market but not by much. There's just too many people moving here. The cheapest new builds in the area are cookie cutter $400k homes with 15ft property lines and 50 miles from downtown.

My money is in rental property and it's still booming. 10% increase in under 3 months...

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1974 240D 3.0L 4(M) - 250K -OM617.910 + 300D FW + Rajay turbo power!
1977 6.9 3(A) - 84k

Well, everyone lives in a "local market". You seem to live in one that's appreciating nicely, so do I. I'm as far from a real estate expert as you're likely to find, but from a common sense point of view, let's just look at local markets from the perspective of population growth. If you're in a local market with declining population growth, you're probably in the midst of a declining real estate market. If you're in a hot area where demand exceeds availability, your property seems likely to appreciate markedly.

Didn't think to look at it like that... if that's the case. I was under the impression that the migration (at least how it works around here) is this:
People grow up in area 'x', only they can't afford to settle down in are 'x' because the prices are just too high, so they move a little more away from whatever makes area 'x' prices high. For example, where I live, I can be in NYC in 25 minutes by car. What I'm finding is that younger people are having to move to the Western part of the state because this area is just way too unreachable for them. So what happens is a once non-local market is becomeing a local market because the demand there is high because they can't afford area 'x' (I know, this is confusing...)... in the end, as people get more money together they migrate back to area 'x' and so on.

My theory is this:

The entire, and I mean 90% without any exaggreation, is fueled by the mortgage rates. There is no way in hell a person will pay almost $500K for a 3 bed 1.5 bath cookie cutter as a "starter home" unless they can borrow money for 5% and make interest only payments. The problem is, what's going to happen when the long money rates go up? My guess is the prices will have to go down. The family earning $85k a year isn't going to swing a house like that. No matter how crafty the financing.

Let's hear some theory on secondary home market (vacation homes, etc.) Since usually owned by people with extra income, do you think they take the hit first or second? Will waterfront homes feel the pinch? What do you think?

Which just goes to show how complicated this can actually be. During my lifetime, I have witnessed the mass migration from urban to suburban areas. People lived in cities when I was a kid, then moved away to the shiny new suburbs as the urban infrastructure aged. It seems to me that once that infrastructure becomes decrepit, it could be rebuilt, attracting suburbanites back to the city, and possibly depressing the suburban market. Oh -- don't mind me -- I'm just babbling.

It’s more a financing bubble than anything. Because of deregulation in the financial community there is no longer a cushion to handle the errors. In real estate the risk is that many people have no real equity in their real property. They can walk on the deal and leave the financiers with the problem of an artificially inflated value because the financing allowed them to get in over their head - all of them.
As long as the general economy stays strong it will work almost like a “Ponzi” where people continue to buy just because prices are rising. When the market does turn down buyers back away because the longer they wait the cheaper prices become, and because this is more a function of fear it happens much faster than the greed that drives price higher. The danger is also in semantics. You’ll hear the touters say that for most families their home is their biggest, and best investment; but that’s BS. The home you live in is not an investment at all, it just fixes a part of you monthly expenses and is a part of financial planning, but an investment is like an employee that pays you a return. Your home is an expense. Buying stock in “Home Depot” (not now please) too get back some of what you and everybody else is spending on their place is an investment.
What will happen? The question is when as everything cycles - this is Cochise County, but the Apache’s don’t own this land any more, and the Spanish land grants are all tied up in the courts. We’re nearly at the third minute of the eighth day of creation and this last split second may go unnoticed in the long run.
The property tax bill is a reminder that I’m only renting my place from the government of the moment, and everything can change. The biggest difference in the lifestyle of people, that I’ve come to realize, is in how much debt they have. Pay it off or don’t buy it. The downside will always come; it’s just a function of how long and how far the rise was. In real estate these cycles are so long (generations) that people are deluded into thinking they don’t correct, but if a picture doesn’t look right it probably isn’t. Can the bagboy at the grocery store afford to own a house? Stand by - news to follow.

__________________
89 300E
79 240D
72 Westy
63 Bug sunroof
85 Jeep CJ7
86 Chevy 6.2l diesel PU

"The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane."
Marcus Aurelius

Wait till rates go up even one point and see what happens to the husing market....and prices...

__________________
Proud owner of ....
1971 280SE W108
1979 300SD W116
1983 300D W123
1975 Ironhead Sportster chopper
1987 GMC 3/4 ton 4X4 Diesel
1989 Honda Civic (Heavily modified)
---------------------
Section 609 MVAC Certified
---------------------
"He who fights with monsters might take care lest he thereby become a monster. And if you gaze for long into an abyss, the abyss gazes also into you." - Friedrich Nietzsche