OT: Drop in value of homes

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This is related to a news story I watched on a Cable TV news show:
The story had the value of homes in California dropping more than 15% in some communities.
And since there are several CA people reading this NG, I though I would ask---
Is there any tracking between the drop in the value of homes, and the quality of the house construction? All of us here know there are good, better, and just barely passed code house constructions. Therefore, I would presume when the across the board values drop, the less desirable constructed (built) homes just might drop more. And the value of quality built homes just might hold up more.
But, and this is just a guess, that it also just might be Location, Location, Location for the value of a house.
Any one from California know if there is a difference between shoddy and good construction making a difference? Or is it still all style and no substance dictating the revised value of homes.
Phil
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Phil-In-Mich. wrote: ...

I'm not in CA but it's not just a CA phenomenon.
The problem is simply one of demand at the previous price isn't there to continue to support the inflated prices.
An obvious piece of crap will be difficult to sell but as for these "evaluations" that has little or no bearing on how those were determined--any property is worth what somebody will give at the time the owner is wanting to sell.
--
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On Sat, 23 Feb 2008 16:10:13 -0500, "Phil-In-Mich."

I'm in Las Vegas. In my Zip Code there were over 400+ foreclosures...recent.. The next code over is just as many. In the north Valley there were over 700 defaults in one Zip code... first in the nation(?)..

The CA prospectors in NV, are about 65% of the defaults and foreclosures..abandoned ship... They came into the game to late or didn't get out when necessary.

Builders in NV have reduced building. Owner/Builder makes out best right now. Many workers are not greedy and want to build houses. I think the builders suffer at this time.
In my location; it is cheaper to build your own house.

I'm a mile or two from the LV strip. Not really worried about the value of the home, can you hear rebound?!

-- Oren
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Phil-In-Mich. wrote:

We live on the gulf (channel, waterfront). Four years ago, one owner doubled his money in less that two years of ownership. One unit had major remodeling, new kitchen; the other just flooring. The latest buyer, different unit in same condo, spent 6 mos. redoing the interior. He bought at top-dollar, just before the bottom fell out of the market - has an open house every weekend. My hubby paid $105K twelve years ago .... the "open house", upstairs, not facing the water, is priced around $500K. There has been talk about allowing 90' boats to anchor in the channel, and that is a lot larger than even the wealthier of the neighborhood folks. If 90' boats are allowed, then the remaining older homes will be torn down to make way for more McMansions. Lot of folks with a lot of money have no class at all, and it shows.
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according to network news last nite, friday over 10% of all hoeowners with a mortage owe more than what their home is worth. the forecloser mess is causing price drops nationwide. as home prices go lower more give serious thought to walking away.
the government should do a one time bailout, of the industry and buyers to stop the home prices tanking.
my family in phoenix reports builders going bankrupt, as what buyers there are getting cheap foreclosed homes.
we are in a major recession the government wouldnt admit too.......... fearing it will make it worse
with all the foreclosed homes nationwide home building is slowing to a crawl, puuting all those construction workers on the unemployment line
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snipped-for-privacy@aol.com wrote:

By the government, you mean me, the taxpayer. I did not cause this problem and do not wish to pay for it. As for the construction workers, let them go back to Mexico ;)
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On Sat, 23 Feb 2008 14:39:18 -0800 (PST), " snipped-for-privacy@aol.com"

I don't own hoes, so I'm not a hoeowner.

Like 911 and what others before....airlines? Keep bailing..libtards?

In Florida; it is reported folks are live under bridges.

Sugar will go down in price when Castro is dead.

Just to poot it another way; pick and find your next home. -- Oren
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If you got a conventional 30 year fixed mortgage, the fact that the house is now worth less doesn't mean you suddenly can't pay the mortgage. The people who are screwed, did it to themselves. They took out adustable mortgages, which in and of itself is not necessarily a bad thing. But they took out ones that had artificially low teaser rates, like 2%. In many cases they did this because they wanted to just pay the low rate for a year or two, then flip it and make a lot of money. Contrary to misleading media reports, this mostly isn't due to rising interest rates due to market forces. At the time they took the mortgage, they could have asked how much the payment would be if the mortgage were adjusted to the then current market rate. And the answer in most cases would have been 7%, not the 2% teaser rate. And now with rates having declined again substantially, the ARMs are coming down again. But they aren't gonna go back to the artificial 2% teaser rate.
So, now with the ARMS having adjusted to the real rate, having put 0 down in many cases and the property not having gone to the moon, many of these people want out. And plenty of them can pay if they had to. But, they would rather try to walk away and get out of it, if they can. That behavior is more prevalent today than it was a few decades ago, when people had more sense of responsibility.
Now if you have the govt bail these people out, you do it at the expense of folks who acted responsibly. And you encourage this behavior to continue.

The builders going bankrupt are the ones that over leveraged themselves, similar to what the byers did. They went deep into debt trying to get rich quick and believing the market was going to continue to grow at exponential rates. Here in NJ, the builders that have been around for decades, whether big or small, are nowhere near bankrupt. They are still building homes and starting new projects. The one medium size one that did go bankrupt came out of nowhere in the current cycle and was building projects that were out of control. The company didn't even know if they were making money or losing it on projects, because they couldn't control their own business and costs.

Major recession? Based on what? All the economic reports coming out show an economy that is still expanding, though very slowly. It may turn out that we are in an official recession. That call isn't made by the govt, it's made by an independent board and not until many months later, when all the data is in. If it is a recession, it's certainly a mild one at this point. Despite months of hearing these scare stories of recession, unemployment is just over 5%, which was considered full employment a couple of decades ago. We haven't had a major recession in 25 years. If you remember what the late 70's and first couple years of the 80's were like, that was a major recession. We;re nowhere near that today.

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our economy is on the way down a very slippery slope. ever heard of stag flation? inflation with dropping wages and economy.
one cause is NAFTA which cost us much manufacturing.........
when YOU need to sell a home or wonder why your retirement account has dropped.............
remember you didnt want to do anything.
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Sure, that's what we had in the 70's when the govt was doing exactly what you want. More intervention in the economy and high taxes to go with it. As I asked, where is your evidence that supports any of this? Unemployment is at levels that were considered FULL employment a couple of decades ago. Inflation has ticked up a bit, mostly due to the rise in energy prices, but it's still modest.
It's ironic that someone that's asking the govt to bail out speculators is complaining about inflation. When you bail people out of a market that was obviously spiraling upward, what message do you think that sends? Answer: NExt time, buy even more houses or whatever on spec, because if it goes up you win. If it goes south, the govt will bail you out, with money from people who behaved responsibly.

My house is worth over 2X what I paid for it 12 years ago. No problems here, because I wasn't greedy or stupid. As for NAFTA or any import situation, you need to look at both sides of the equation. How many people are better off because they can go down to Walmart and buy a product for $2 that would cost $10 if it were made here? Should they be working longer hours to pay for it? Or should the US economy focus on what we are good at: Boeing, Intel, MSFT, GE, etc and let others make $2 hammers?

I never said I didn't want to do anything. The most important thing has already been done. The FED has agressively lowered interest rates and provided liquidity. Mortgage rates are down. ARMS are down. Bush and Congress just passed a $160Bil tax rebate. What I said was the govt shouldn't be bailing speculators and fools out of bad investment decisions. Oh, and as for retirement accounts, no one has ever bailed me or anyone else out of theirs because they went down. You have evidence to the contrary?
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the reason interest rates and ARMs are dropping is our governments alarm at the economy.
the middle class is being squeezed out of existence
with over 10% of all mortages owing more than the home is worth things are bad.
all the foreclosed owners will have ruined credit for 10 years, thats another drag on our futre economy.
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*************************************************** If you got a conventional 30 year fixed mortgage, the fact that the house is now worth less doesn't mean you suddenly can't pay the mortgage. The people who are screwed, did it to themselves. They took out adustable mortgages, which in and of itself is not necessarily a bad thing. But they took out ones that had artificially low teaser rates, like 2%. In many cases they did this because they wanted to just pay the low rate for a year or two, then flip it and make a lot of money. Contrary to misleading media reports, this mostly isn't due to rising interest rates due to market forces. At the time they took the mortgage, they could have asked how much the payment would be if the mortgage were adjusted to the then current market rate. And the answer in most cases would have been 7%, not the 2% teaser rate. And now with rates having declined again substantially, the ARMs are coming down again. But they aren't gonna go back to the artificial 2% teaser rate. ***************************************************
I was selling real estate a few years back when 'everyone' was buying a home. There were people who could not qualify for a home that were getting them. Gone was the 10% or 20% down and 30yr fixed mortgage. Most were 5% down, 80% first mortgage, and a new 10%-15% second mortgage, and they tack on some seller helped contribution.
Go back in the past few years and you will see a lot of no money or low money down home purchases. If something happens with a buyer's income, and the whole ball of string will unravel.
It was not uncommon to see a house listed for 100k sell for 107k as the seller would help with a 7k rebate to the buyer. Usually a house had some wiggle room to accept that contribution. Now give it to a buyer who already was on shakey ground, and they may not afford it later.
Had these same people just rented instead of trying to be a homeowner, they wouldn't be in a predicament witha $1k mortgage payment vs a $700 rent payment.
There were also plenty of the ARM stuff going. Basically you qualify for this, so why not get that bigger house you want now. You know in the next few years you are going to be making more with raises at your job, and your spouse is going to be going back to work or get a raise at their job, so you can afford a higher payment in a few years when the rate goes up. So let's get that fancier house!
Well, if your raises don't keep up with the inflation, or you decide with the extra money to go on vacations and buy a new car with the extra money each month since you don't have an extremely high mortgage; you will have trouble making ends meet when that time comes. Toys and vacations are a bad thing for those who 'think' they can do it later.
We are do it now society as opposed to living within our means. Does every house need a $2,000 plasma tv on a credit card? Does everyone person need a new car @ over $20k all the time? Record losses for the auto makers with the latest survey indicating that most cars in families are now 11 years old. Seems right. I have a 9 yr old truck, a 17 year old truck, and a 33 year old car to play in. All paid for and run fine, why buy a new car and go into debt?
I have seen interest rates on loans in the 20% and higher range. Nobody should do those. If you don't absolutely need it, do you need to go in debt to keep up with the Jones'?
In my opinion, I think the wording of a sub-prime mortgage being a 'crisis' is wrong. Banks and lenders gave those loans out knowing the full credit history on the borrower. They have full history on what it takes to own a home. Buyers know what they can afford and should have known they couldn't afford a house if something goes wrong with their finances. Both the lender and the borrower are at their own peril. The banks wanted a profit and risked it by lending money out that the normally wouldn't do; the buyers wanted a home now instead of waiting until they could really could afford it with a down payment large enough to keep the payment normal.
We are now in a time where most Americans will see 3 to 4 major job changes in their careers and your income will fluctuate during those transitions. Gone are the go to work at one company and retire from there. Most will be lucky to even see a company still be around in 30 years.
Wow, just some 2 or 3 cents into a conversation.....:0)
Tim
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Tim wrote:

Similar problems this side of The Pond. Last week headline news was that several banks have withdrawn offers of 125% mortgages!
http://news.bbc.co.uk/1/hi/business/7254426.stm
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"Tim" wrote

Realtor tried that with us but I stuck steady. I also refused the ARM and went best fixed rate we could get. I *should* look at a new fixed rate as mine isn't as low as they go (7.5%) but last time I looked, the buy out to shift was a bit more than we had. We 'qualified' for 170,000 and bought at 83,500. Now worth 140,000 and holding in the current flux, 12 years later.
I can no longer rent a 2 BR/1Bath place for what it costs me to own a 4BR/1.5 bath home with fenced yard in good neighborhood.
I based everything on current earnings with some fudge room if there were problems. My military retitrement check will cover the house (inclusive of taxes and insurance) plus utility bills with 500$ a month to spare. My husbands retirement money is another 1,000$ a month.
We are happy <g>.
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cshenk wrote:

Making rational financial decisions like that? What a concept!
My mortgage broker told me I was qualified to borrow over twice what I came in the door looking for, and he had all the flyers for the unconventional mortgages. But his heart wasn't in it. I told him that I had been poor before, didn't care for it, and was going to try like hell to avoid doing it again. He looked relieved. He wrote the paper for 100 grand and change (w/20% down), and all together the red tape took maybe an hour. It ain't a fancy house, but I live alone, and my needs are simple.
They make plenty of money writing realistic mortgages, and it was nice to see a broker with the ethics to at least feel bad about the instructions from corporate to fleece the rubes as much as possible.
-- aem sends....
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"aemeijers" wrote

Yeah, what a concept! We calculated my anticipated retirement if I did not advance (I was an E6 when we bought and now E8), my husbands retirement of a little under 1,000$ then (a bit over now). Payments were roughly 750$ mo (includes taxes and insurance) but opted for the 'pay every 2 weeks' schedule about 2 years into the loan which makes each slightly lower but pays an extra 4 payments a year for a 25 year payoff vice 30. We even throw a little extra cash at it now and again which comes right off the principle.
We owe about 45,000$ still 12 years later <grin>. In real money? Cost of a reasonably top market car bought new.

Mine's not fancy either, but it's nice enough and at the price, we can afford to keep it up right.
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cshenk wrote:

You missed the window, rates were 5.5% a couple weeks ago but are back up now. We locked in the 5.5% but are still waiting to find out if they'll give it to us (hinges on appraisal) because like you we don't have the extra cash if we need to kick anything in at closing.
nate
--
replace "roosters" with "cox" to reply.
http://members.cox.net/njnagel
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"Nate Nagel" wrote

Luck to thy wings there Nate! In our case, last time we checked, they were not that interested because we don't owe that much left comparitively. We'd be refinancing about 45,000$.
Oh we did get dumb and had to use a small second mortgage for credit debit rollover, but thats almost all paid off and we have money in the bank which is more than that second total if we want to do that. It's at 8% and we get tax credit for it. Owe about 3,000$ there. When we do the taxes this year, will see if we are still getting a net savings with that one or if we need to clear it out as a net loss. So far, it's actually bumped our bracket just enough to result in a net savings. Wierd how that can work.
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90,000 ortages are in foreclosure at countrywide..... while CEO of that company spends lavishly of 750 buck a nite hotel rooms
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Now I do agree that the compensation of the CEO at Countrywide was totally out of line and had no relation to his actual performance. However, here's the problem with populist notions about things like this. How, exactly would you propose to fix it? Far too often, people look at microscopic detail of a few bad apples and then want to change things that would have to impact not just the bad apples, but everyone. Yet, the same system and rules has produced GE, Intel , MSFT, etc.
So, how exactly would you propose to stop the CEO from spending $750 a night on hotel rooms? BTW, I have no problem with that. Staying in places like NYC or SF isn't cheap. I do have a problem with him getting compensated $100mil+ a year, including a severance package for an amount in that range which got activated when Countrywide was taken over.
I'd be very interested to hear exactly how you propose to fix this without impacting the whole entrepernurial free enterprise system that has made this country so successful.
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