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Homeowners underwater
By Jim Weiker
The Columbus Dispatch - November 29, 2011 11:11 AM
About one in five central Ohio homeowners owe more on their mortgage than their home is worth, according to figures released today by the mortgage information company CoreLogic.
READ MORE: http://www.dispatch.com/content/blogs/on-the-house/2011/11/underwater.html
leftovers
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This combined with the job market has made some pretty nasty situations. I have a hardworking friend in VV who will probably end up foreclosing on his condo because he fell into the trap that 'realestate never goes down' and is now forced to move for a job.
howatzer
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Morals of the story?
A) Don't buy a house until you can put 20% down.
B) Don't buy a house unless you plan on living in it for 5+ years.
C) Never, ever, ever listen to anything a Realtor or a Broker tells you.
D) Right now is probably the best time in a lifetime to buy a house if A,B,C are obeyed.
Snarf
Dystopia
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howatzer said:
Morals of the story?A) Don't buy a house until you can put 20% down.
B) Don't buy a house unless you plan on living in it for 5+ years.
C) Never, ever, ever listen to anything a Realtor or a Broker tells you.
D) Right now is probably the best time in a lifetime to buy a house if A,B,C are obeyed.
F) Do listen to what random internet forum posters say.
Walker
The KLD / Downtown
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howatzer said:
Morals of the story?A) Don't buy a house until you can put 20% down.
B) Don't buy a house unless you plan on living in it for 5+ years.
C) Never, ever, ever listen to anything a Realtor or a Broker tells you.
D) Right now is probably the best time in a lifetime to buy a house if A,B,C are obeyed.
I don't think those things are always the case. Real Estate is a highly localized thing, so universal rules can be applicable in one neighborhood, but not in another. Same goes from city to city all around the country. Columbus is a different story from Cleveland is a different story from Las Vegas, etc.
Anyway, personally speaking... we used the CAM program via Huntington to buy our home four years ago which required 0% down, and it's been a great investment for us, and for other friends who have used it to invest in specific urban neighborhoods. I don't think the 20% rule always applies, depending upon your circumstances.
Bashing Realtors is about as silly as bashing lawyers or car salespeople. There are good and bad people at just about any profession you can think of. Find someone who is good and there should be no problems in listening to their advice. There are several people in Real Estate who post regularly on CU and are generally pretty solid with their honest advice.
howatzer
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Walker said:
I don't think those things are always the case. Real Estate is a highly localized thing, so universal rules can be applicable in one neighborhood, but not in another. Same goes from city to city all around the country. Columbus is a different story from Cleveland is a different story from Las Vegas, etc.Anyway, personally speaking... we used the CAM program via Huntington to buy our home four years ago which required 0% down, and it's been a great investment for us, and for other friends who have used it to invest in specific urban neighborhoods. I don't think the 20% rule always applies, depending upon your circumstances.
Sure, risk varies by degrees and there are cases when 0 money down comes with low risk. But generally the housing crisis was not caused by incentivized purchases in gentrifying areas.
If people typically followed those rules of thumb, would we have a problem?
(other than for realtors? - and "silly" is taking advice on how much you should spend from someone who's on commission, "bad" or not)
Walker
The KLD / Downtown
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howatzer said:
Sure, risk varies by degrees and there are cases when 0 money down comes with low risk. But generally the housing crisis was not caused by incentivized purchases in gentrifying areas.
True. Though I think a lot of people reading this site are interested in purchasing homes in gentrifying areas, so your rules are hitting a lot of the wrong eyeballs.
howatzer said:
"silly" is taking advice on how much you should spend from someone who's on commission, "bad" or not
If you're talking about how much you should spend, then sure... be careful of what you can actually afford. But what you originally said was "Never, ever, ever listen to anything a Realtor or a Broker tells you" which means ignoring their advice on everything. Which is silly advice.
howatzer
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Walker said:
True. Though I think a lot of people reading this site are interested in purchasing homes in gentrifying areas, so your rules are hitting a lot of the wrong eyeballs.
I was responding to the dispatch article, which covered all of Central Ohio.
ETA: and I bought a house in a "gentrifying" columbus neighborhood (U district) a few years ago. I'd be screwed if not for rule B above. So I think this has more relevance to your viewers than you give credit for.
cheap
Westgate
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howatzer said:
Morals of the story?A) Don't buy a house until you can put 20% down.
B) Don't buy a house unless you plan on living in it for 5+ years.
C) Never, ever, ever listen to anything a Realtor or a Broker tells you.
D) Right now is probably the best time in a lifetime to buy a house if A,B,C are obeyed.
hen i'm walking the dogs through the neighborhood i live in,i am astounded at the amount of vacant foreclosed homes i see.
on the flip side,i am seeing some foreclosed homes being offered in this neighborhood at really awesome prices,and people are buying them.
i talked to a fellow that bought a foreclosed house near Westgate park.he paid 55k for the house,is rehabbing the kitchen and bath,and said he can get $800 a month for it,easy.i seriously doubt $800,though
leftovers
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cheap said:
i talked to a fellow that bought a foreclosed house near Westgate park.he paid 55k for the house,is rehabbing the kitchen and bath,and said he can get $800 a month for it,easy.i seriously doubt $800,though
There is a lot of foreclosed, formerly owner-occupied housing being turned into rentals by investors. Sometimes this works well, but generally the connection to a neighborhood is not as strong. A think a lot of the success of Westgate is due to a strong sense of community.
howatzer
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leftovers said:
There is a lot of foreclosed, formerly owner-occupied housing being turned into rentals by investors. Sometimes this works well, but generally the connection to a neighborhood is not as strong. A think a lot of the success of Westgate is due to a strong sense of community.
I wonder if the decision by OSU to house sophomores on campus is going to effect the U district market for this.
leftovers
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@howatzer
South Campus* student ghetto landlording is extremely lucrative. They are used to charging higher than market rate for substandard housing. If they cannot find enough students, I think they will go section 8 (which still rents at higher than market). The fringe areas of South Campus would probably just turn into a different kind of slum.
Personally I am interested in how this OSU policy will effect the north western section of transitioning Weinland Park.
*less owner occupied area of the UD, and by far the most effected.
eta:
I think the so called 'Peach District' may benefit from this policy though.
Walker
The KLD / Downtown
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howatzer said:
ETA: and I bought a house in a "gentrifying" columbus neighborhood (U district) a few years ago. I'd be screwed if not for rule B above. So I think this has more relevance to your viewers than you give credit for.
I agree with you that buying a home generally shouldn't be considered if you're going to live in it for less than five years, but I don't think it makes for a universally applied rule that would help/hurt from a financial standpoint.
cbus11
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I know several people who bought into the Short North at the wrong time and are now underwater, some in the high 10's of thousands. Hopefully prices will rebound, but it may take a lot of time. None of them plan on moving, but there are a lot of variables outside of their control.
howatzer
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Walker said:
I agree with you that buying a home generally shouldn't be considered if you're going to live in it for less than five years, but I don't think it makes for a universally applied rule that would help/hurt from a financial standpoint.
There are extremely few circumstances, especially noncommercial, when buying a house with the expectation of selling in < 5 years (or now even 10 years) is a good idea. You would need a substantial value gain to just cover your closing costs.
Consider the list above as a starting point, from which deviation should be taken only for rational, concrete reasons - not "but it's my dream house!", which is usually the reason.
pedex
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what's the current housing inventory including the shadow inventory of housing in the US right now?
what are wages doing?
what is the cost of living doing?
credit?
actual real economic growth?
energy consumption?
given what we know now using all the available econ data how long is till the housing market can possibly recover and actually move back up to even 2005 or 2006 levels? more than 20 years
20% underwater huh? give it a few more years, seems many never learned the history lessons about economic bubbles and what happens when they implode if you ask me, deflation can play out for decades
Not so local anymore either, mortgage backed securities and other assorted related instruments were sold worldwide to nations which are insolvent and failing right before your eyes. What happens when our banks exposure to that debt becomes realized?
So far only a small fraction of the RE bubble debt has been forced to become real, just to return to the mean we have another 50-60% to go yet. It took roughly 8 years to blow the bubble and pull forward two decades or more of demand into that time frame, it doesn't just disappear in 3-4 years. Deflation may move slow but it is near impossible to stop until it runs its course as we have seen over the last 3 years. History is not exactly repeating itself here but it is doing exactly what should be expected considering the circumstances. We have been there and done that.
For the first time in what? how many decades the auditors office was forced to mark some deflated properties to market? more is coming, way way more of it. We have already seen prime downtown RE take 30% or more in devaluations, they'd be down far more if RE auction rules were changed.
bad bad time to be buying RE
cc
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I do wonder if lessons have been learned. I often hear people talking about 'when the market returns to 2005 levels' and I think they miss the whole concept of the bubble.
I know people who were buying $200,000+ condo's with 10 year tax abatements who are making salaries that just allow them to make the mortgage payments. They are stuck. It is probably just a matter of time before life gets in the way and they are forced to default for lack of options.
Analogue Kid
5th by West-Northwest
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My wife and I will be in the market for a house soon (hopefully). We have saved 20% for down payment, plus 6 months emergency fund, plus ~$10k for upfront repairs. All the "how much house can you afford" websites say we could buy a $300k+ house, but we're looking in the high $100k/low $200k range. Many of our friends bought larger/more expensive houses during the boom and are regretting it now. I don't expect to make money but hopefully we won't end up underwater.
howatzer
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That's really smart to have a good wad of $ for upfront costs. A lot of people, especially 1st timers used to renting, aren't ready for the inevitable maintenance costs in the 1st year and get in trouble.
Related, our home warranty has paid for itself and more every year we've owned. This year our water heater went out and we paid $200 for what would have been a $1500 fix.
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