03-26-2008, 10:27 PM | #1 | ||
Senior Member
Join Date: Jan 2006
Location: WA
Posts: 1,287
|
Price stickiness in house markets
Quote:
Quote:
At this rate it will take a few more years for prices in bubble markets to realign with historical averages. Obviously, all housing markets are local. For example here in King County with Microsoft and Boeing hiring, prices have not moved down much more than 1% in the last year. But the national numbers raise an interesting question: Does the average homeowner, in a bubble market, view their house primarily as an investment or shelter? If you view a house as shelter, and plan to stay there for a long period of time, you can wait out a market correction. You know that in 7-10 years you will at least break even and your home will have provided shelter over that time. On the other hand, if you see your house primarily as an investment, a rational investor would walk away from the loss now. If they bought at the top of the market there is little chance of breaking even in 3-5 years. Of course walking away is not "free" - there is a cost in terms of credit scores and self esteem. You do have to live somewhere, but some homeowners can rent at a fraction of what their upside-down mortgage is costing them. It will be interesting to see where foreclosure numbers go from here. Maybe, in the end, the biggest market correction will be one of expectations.
__________________
"Five to one... One in five No one here gets out alive" |
||
03-26-2008, 10:34 PM | #2 |
Senior Member
Join Date: Jul 2006
Location: South Jordan
Posts: 1,725
|
I'm not terribly concerned with the price of my home any time in the next 15 years. Although I don't want to be upside-down in the home, it doesn't bother me too much if I am (as far as I can tell, I'm not). We plan to be there for at least 15 more year.
I guess that puts me in the "shelter" camp. |
03-26-2008, 11:04 PM | #3 | |
Senior Member
Join Date: Jul 2006
Posts: 860
|
Quote:
|
|
03-26-2008, 11:11 PM | #4 |
Junior Member
Join Date: Jul 2006
Location: Henderson, Nevada
Posts: 28
|
Seems that the market is dropping much faster than the article contends. Prices in Vegas are down around 20% in the last year, and the house I sold in California 2 years ago has a valuation on zillow.com (which I know is a very rough measurement tool) of $150,000 less than the price I sold it for. So if a painful "ripping off the band aid" fix is best for everyone, I think the pain is coming faster than some think.
|
03-26-2008, 11:26 PM | #5 | |
Senior Member
Join Date: Jul 2006
Posts: 860
|
Quote:
|
|
03-27-2008, 01:32 AM | #6 |
Senior Member
Join Date: Jan 2006
Location: Clinton Township, MI
Posts: 3,126
|
my house is worth 10% less than what I bought it for in 2004.
__________________
Its all about the suit |
03-27-2008, 02:45 AM | #7 |
Senior Member
Join Date: Oct 2007
Posts: 1,589
|
I think one of the problems is that people don't really have a choice, i.e. they owe more on their house than they can get in cash to pay off the loan, and they'd rather pay the house payment.
|
03-27-2008, 04:04 AM | #8 | |
Senior Member
Join Date: Aug 2005
Location: The Bluth Home
Posts: 3,877
|
Quote:
__________________
The Bible tells us how to go to heaven, not how the heavens go. -Galileo |
|
03-27-2008, 04:18 AM | #9 |
Demiurge
Join Date: Aug 2005
Posts: 36,365
|
My house is up, but not much, because I live in the ghetto.
In 6 years, it is up something like 15%. Nothing to do with the housing crash. |
03-27-2008, 01:37 PM | #10 |
Senior Member
Join Date: Jan 2006
Posts: 6,177
|
Price stickiness is evidence to me that they view the house as an investment. You don't dump a stock that has great long term potential just because it's dipped down for a couple years.
|
Bookmarks |
|
|