double post

[Disney-Kim]

I live in Phx, where the bubble is HUGE, housing here is BOOMING.
Our neighborhood starting prices have jumped from $200ish to $400+ in 1-2 yrs. A house went up for $529,000 4 houses down from us. and no pool.
Now I don't live in a fancy neighborhood, or a stucco track home, just an older established brick home area with BIG lots. Its our location !!!!! that is what drives these prices. yes some of these 50 yr old homes are remodled and pretty but its the big lot and the location.
Sadly...we could not afford our own neighborhood anymore without creative financing (which we wouldn't do). Our house has has more than tripled in value from what we paid for it. (but we have used some of that equity for home improvements). So even though our equity has grown a lot we couldn't necessarily move to the next step up area even with our down payment. Those houses have gone past $600-700. and its just for a bigger house about 1-2 miles north of us. LOCATION !!!!!!!
ps...luckily our property taxes have not caught up with the high values. I can't believe what you guys pay back east.

 

[kadaten]

Just found this thread

Even if the builder pays a high per-lot cost and a high per-home impact fee, how do they justify raising the prices on these to-be-built homes on a monthly basis?

[QUOTE='Canes Fan]we've been waiting a year to make a move, but the Tampa area keeps building and building. now I'm worried about the price of materials after Katrina. concrete is going to skyrocket. building a house looked better than buying a pre-existing, but now who knows. QUOTE]
You got it. This is a contributor to the escalating new construction prices...why it goes up by the week. Lumber, drywall, brick/block, concrete, and steel...the major elements in a new house....are not fixed-price items. Their prices fluctuate daily so the builders have to cope with them. The rise in new home construction nation-wide has resulted in increased demand for these products and therefore increased prices.

2 houses ago (6 years) we couldn't buy new because there was a dry-wall shortage so the builders were behind by months and we needed something sooner. They couldn't get it no matter how much they were willing to pay!

Same with land....more demand = price increase.

 

[kadaten]

About worrying about all these folks losing their homes when the bubble bursts....you have to remember, a LOT of these folks have bought and sold homes before and probably brought a lot of equity with them when they bought. Not everyone has to take a no-money down exotic mortgage to get into the house they want. In our case, we bought/sold homes in DC suburbs and Tidewater, VA, before this move....both are markets that have been hot for years before the rest of the country caught on....so we brought quite a bit of money to the table. So even if the bubble bursts here, I won't have to bring money to closing or anything like that....worst case scenario is we lose a little equity. Like any investment, that is always a possibility. (Note: We *did* go with a regular 3/1 ARM because being military, we know we won't be here for the first interest rate adjustment, so it would have been dumb for us to pay the higher rate on the traditional 30yr loan.)

Also, most financial folks are predicting a cooling of the markets, not a burst. So they're thinking the prices will level off....not take a nose-dive. Every city is different, however....

Also, why does everyone think folks will be foreclosed on? That will only happen if they stop paying their mortgage. Last time I checked, salaries usually stay the same or increase (assuming you keep the same job) so there is no reason these folks might not be able to make their payments. As for folks who take a loan that they can't afford when if it does start adjusting, well, someone said it better than I could:

It's sad....but, at the same time, when someone tells you your payments are going to DOUBLE in 2 years and this doesn't concern you, I can't have too much sympathy when they end up foreclosing.

 

[kadaten]

[quote='Canes Fan]we're not going to sink ourselves financially, and the loans you can qualify for are ridiculous. but the market is so hot. we sold our house a year and a half ago and it was pending after 3 days on the market.[/[/quote]
'Canes Fan We bought here in the Tampa area 3 months ago. Unfortunately, we don't have the luxury of deciding when to move (military), so we have to deal with whatever the market is where and when we're told to go. We simply bought in the best neighborhood we could afford that had lots of things going for it....best schools in the state, planned development, neighborhood amenities like pools and a trail system, planned internal business district, lots of open/green spaces, etc. (you probably know where from the description). There will ALWAYS be a demand for places like this. Seemed like a pretty safe investment for us, and we needed a place to live!

I'm wondering...is there a reason you didn't buy when you sold your other one? Seems like you've missed out on 18 months of appreciation. In my neighborhood, that's about 43%.
I certainly don't plan on that trend continuing while we're here, but it will be nice if it goes up even a little bit. My house is the only investment we have that's made decent money in the last 6 years, so I'm making sure we keep some of our $$ in real estate, at least for now.

 

[kadaten]

OP (chrissyk?) I see you're in FL, too? If you don't mind me asking, what part? I'm just curious due to all the jobs references (i.e. where are the jobs to sustain these houses??) Since we're still pretty new to this area, and had been out-of-state that last 6 years, I'm not up on all the regional stuff quite yet.

ETA: sorry for all the sequential posts, but I kept opening new windows to reply to stuff and ended up with lots!

 

[chrissyk]

OP (chrissyk?) I see you're in FL, too? If you don't mind me asking, what part? I'm just curious due to all the jobs references (i.e. where are the jobs to sustain these houses??) Since we're still pretty new to this area, and had been out-of-state that last 6 years, I'm not up on all the regional stuff quite yet.

ETA: sorry for all the sequential posts, but I kept opening new windows to reply to stuff and ended up with lots!

Space Coast I was actually referring to a new development (town?) here in my original posts. The housing prices there are out-of-sight, and I just don't see the jobs here to sustain those kinds of prices. There are good jobs here, but these housing prices are wild even for an area with good jobs.

 

[chrissyk]

Also, why does everyone think folks will be foreclosed on? That will only happen if they stop paying their mortgage. Last time I checked, salaries usually stay the same or increase (assuming you keep the same job) so there is no reason these folks might not be able to make their payments. As for folks who take a loan that they can't afford when if it does start adjusting, well, someone said it better than I could:

I can speak to why I think that a lot of these houses will end up in forclosure...it's because it's already happening. A realtor in another town where we own property recently told me about how 8 houses in the town (small town) have recently gone into forclosure, and how he will no longer work with people who need "exotic financing". When he turns them away, another broker is always willing to take them on, though He has watched some of these people buy and then rapidly end up in forclosure already. Scary. I really think that that's just the tip of the iceberg.

 

[gina2000]

So is there a huge difference of paying a higher price for a home at a lower interest rate, or a lower priced home at a high interest rate? Not really. I think people who have lots of equity in their homes - either by appreciation, or the down payment they made when they bought the home - don't have too much to worry about. My house would have to drop over 100K for me to start being concerned. But even then, the market goes up, it goes down, it goes up again. It's a cycle. I think the people who are doing no money down, ARM loans, and other exotic mortgages might have something to worry about, but who really knows for sure? People have been predicting the bubble is going to burst any second for the past 2 or 3 years, and it hasn't happened yet. It's cooled a bit in some areas, but not burst.

Actually, buying a lower priced home at a higher interest rate is a much smarter idea. As interest rates come down, refinancing is an option. Also, as rates come down, demand sharpens causing housing prices to go up.

If interest rates go up, very often the housing market cools off or possibly crashes (depends on how steep the spike is and how quickly it happens). At that point, you've lost equity. It can take years to recoup lost equity. Look at the housing market in the late 80s....interest rates spiked and the housing market crashed. It took several years to recover and many people were trapped in houses which lost major value and real capital.

I don't think anyone can really predict what will happen here. Alot depends on the job market. Loss of jobs can turn any housing market into a disaster quickly.

 

[chrissyk]

Actually, buying a lower priced home at a higher interest rate is a much smarter idea. As interest rates come down, refinancing is an option. Also, as rates come down, demand sharpens causing housing prices to go up.

If interest rates go up, very often the housing market cools off or possibly crashes (depends on how steep the spike is and how quickly it happens). At that point, you've lost equity. It can take years to recoup lost equity. Look at the housing market in the late 80s....interest rates spiked and the housing market crashed. It took several years to recover and many people were trapped in houses which lost major value and real capital.

I don't think anyone can really predict what will happen here. Alot depends on the job market. Loss of jobs can turn any housing market into a disaster quickly.

Exactly! There is a HUGE difference between buying in high and buying in low, regardless of the interest rate. The difference is in how much you'd actually owe the bank if you HAD to get rid of your house. The payment itself might not be much different, but your liability is vastly different in the 2 situations.

 

[Lisa loves Pooh]

chrissy--I think it is the money is moving to the area.

They just had that article in our paper--and one guy quoted had moved from California and got a very nice home for the cost of a shack out there.

Not all buying the homes will be in high risk mortgages.

Then there are people like us who will just be sitting tight where they are at b/c there is nowhere affordable to go.

 

[Planogirl]

Supposedly, service industry jobs are increasing at a faster pace than any other (at least here) and salaries are for the most part static. I wonder how all of this will affect the first time home buyer in particular.

We purchased our home in an established area with no thought of selling it at any point. In an area with houses being built at an enormous rate and jobs increasing at a much slower rate, it seemed wise to concentrate more on a permanent home rather than a temporary home. People around here are steadily moving into bigger, newer houses further and further out and smaller used homes don't sell too well right now. But I think that location will be key eventually and the McMansions will lose their luster. Plus, salaries have to catch up with people eventually too.

 

[chrissyk]

chrissy--I think it is the money is moving to the area.

They just had that article in our paper--and one guy quoted had moved from California and got a very nice home for the cost of a shack out there.

Not all buying the homes will be in high risk mortgages.

Then there are people like us who will just be sitting tight where they are at b/c there is nowhere affordable to go.

I totally believe that people from the high housing cost areas are moving in. Our house here was a real deal compared to what we could have gotten for the same money where we're originally from. I think that people from certain parts of CA have it even worse housing-cost wise than we did in MA, so they are probably coming out WAY ahead by moving here. Still, though, I can't imagine that all of the folks buying those incredible new houses are equity-rich people from CA, NY, NJ, New England, etc. Of course, I could totally be wrong (and I probably am).

This isn't such a bad place to be sitting tight Still, though, we're just starting a house-hunt for a bigger place and it is NOT fun. Anything that we buy is going to need quite a bit of work, and DH is not looking forward to that. I can't blame him...it seems like all we've done for the past 10 years is move and renovate