December 09, 2007

HousingPANIC Stupid Question of the Day

Serious Question:

When was it a worse time to buy a house?

1) December 1, 2004 (when inventory was building, prices were still going up and only a few people had figured out the whole scheme was gonna cave in)

2) December 1, 2007 (when inventory was at record highs, prices were plummeting, everyone including OJ jurors knew housing was crashing, and it was just soooooo tempting to reach out and grab that knife)


Andrew from Russia said...

Put "stocks" in place of "house", and Dec. 1928 and Dec. 1929 in place of dates. You've got my answer.

And if anyone here feels tired with Arizona and Texas, try Khanty-Mansiysk, Russia, for $300k...$400k Soviet-era flats in an exotic climate! This particular bubble was made of oil and inflated with natural gas, so be sure to take the necessary HAZMAT precautions.

Anonymous said...

"It's always a terrible time to buy a house"

Anonymous said...

3) December 1, 2010 (when we report occupied houses rather than inventories, prices are irrelevant because no one pays when you can just break the door, everyone knew something must have gone wrong, and it was just soooooo tempting to reach out and grab that knife and cut your wrist in the process)

Anonymous said...

Now is the worst time since you will never have appreciation to act as a buffer

Anonymous said...

12/1/07 -- at least if you bought in 04, you could have sold during summer '06. If you buy today, your house will not be worth what you paid for it for a decade or more.

tater said...

Now, because people can't use their homes as open-ended equity ATM's.

GT said...

you probably had to have some sort of down payment and put skin in the game. no atm use. might have had to call around to a couple lenders to find a sucker. closing day probably wasnt as headache free.

Paul E. Math said...

A good friend of mine just bought his first house. He's normally a pretty smart guy. One justification he gave for buying was that 'now is a great time to buy a home'. He said this just last night at a dinner party. I had to look away and go to my happy place or the conversation would have descended into a massive argument where I am the only person whose opinion is based on sound economic fundamentals - this first happened 3 years ago when I told this same group that prices were unsustainable. Even though I've been proven right they still don't want to listen to me because they don't want to hear the truth.

I would say that now is a worse time to buy a house because if you bought in 2004 you still had a few months to wake up and get the hell out. In 2005 they were still handing out mortgages at the border so you could always find a sucker to sell to.

Buying now means that when you sell your house, in 5 years, in 10 years, in 30 years, you will NOT get all your money back, not in real terms. Buying now is guaranteed to lose you money.

Stuck in So Pa said...

Anonymous said...
12/1/07 -- at least if you bought in 04, you could have sold during summer '06. If you buy today, your house will not be worth what you paid for it for a decade or more.
So true! Back in 04 "buy high, sell higher" was in full swing. I wish I knew then what I know now. I would be retired in Fiji!

Mid Hudson Valley NY said...

In my area there is no difference,
Prices in the Mid Hudson Valley NY are pretty much the same as they where in 05.

I keep hearing about prices falling but its not happening here.

Remember, prices went up 2-300% between 2001 and 2005.

So a house that sold for $120K in 2001 had an asking price of $399 in 05.
is now down to $379K and the realtor is saying its at a deep discount.

Real story:
Went to a party last night to my wife’s friends house, we know them for a bout 10 years.
They bought a nice house in 2000 for $225K on approx. 1 acre.
Sold it for $600K 3 months ago and bought an elegant larger home that needed some work, smaller property for, original asking price over $900k and ended up buying it for a little over$700K.
Aside from having to pay more to heat the new larger home, I think they did good.
Cashed out on their previous home and upgraded to bigger more stylish house.

Prices are just not coming down here, even tough it appears they got a good deal by getting a $900K property for only $700K. this house would not fetch more then $300K about 5 years ago.

Veronica Lodge said...

RE: When was it a worse time to buy a house?

1) December 1, 2004: This was the BETTER time. Sign the papers and then do multiple cash out re-finances before turning in the keys. What could be better than free money?

2) December 1, 2007: This was the WORSE time. Pay way too much and be underwater before closing escrow. No free money here.


bay400 said...

December 1, 2007 worse time

Sold at the peak, now renting because I can't find anything to buy. The housing inventory consists of McMansion cookie cutter crappy houses. At least at the peak, people were selling their NICE, older houses, not just the crap.

Anonymous said...

If you havent sold in the bubble areas (Veags Ca Vegas Fla etc)in 2005 no matter when you bought your an idiot.Who wants
to sit on something that's losing value daily.Buying now is just foolish as prices keep dropping.

Anonymous said...

In CA you could have unloaded your home up until July 2007.

I shudder to think what is going to happen to communities in Riverside and SB when property values plunge 60% and everyone who put down $5,000 or less mails the keys back.

Anonymous said...

Buyers in 2007 have instant negative equity and depression. Buyers in 2004 had a chance sell for a profit or pull out equity and have a party before walking away.

Anonymous said...

A co-worker just closed on a house this week - of course the closing was f*cked up and he didn't close on time. Me thinks it was a last minute shuffle for his broker - a friend of a friend - to find available funds.

Friday he tells me I'm throwing my money away on rent. He clearly stated he bought at the bottom of the crash. I just smiled and said I disagreed. My investments are growing every month with even the conservative amounts I can contribute. In five years I'll have more real money than his mirror money of equity that won't even be there!

I can't wait until all the slimy details of his mortgage show up on the internet so I can really gloat. He'll be upside down in 6 months and he thinks he made a brilliant move. What an idiot! I can't wait to email a link to his house on Zillow every month to show him that even in the fantasy world of Real Estate "Professionals" he's loosing money. said...

I'll never forget my landlord from 2005-2006. When I rented the place he told me I was insane for not buying (at the time my rent was $1,300 for a 1,000 square foot shoebox that was selling for $600k in the Arcadia section of Phoenix).

A year later he panicked when prices started falling - the guy owned about 20 houses in Phoenix - and he actually PAID me a few thousand dollar bonus to not renew and move out, he was so panicked and knew he had to sell then, or sell never.

Funny sh*t.

SteppedUp said...

One question - we all agree inflation is going to go through the roof, right?

If so, due to the government not taxing that inflation, a mortgage made with low interest rates, results in an amazing profit.

And yeah, if you lose 50% of the value in your house, it will offset that...but that's only going to happen in the bubble regions.

Unless the CDO's, SIV's, and derivate-based crash drives the overall economy through the floor.

But if we don't have a great depression...we already know the government is going to inflate our way out of this....

Check it out:

Anonymous said...

I don't see why anyone would disagree that buying a house now is worst.

youcrazydog said...

i am starting to shop housing in las vegas. i do believe this market is near a bottom in late 2008/early 2009. looking at property i see price drops of 60-80k on what was 330-350k property 2 years ago--or more. our situation is different than alot of places---i know that sounds foolish, but really their are more casinos being build right now than ever before--an unprecedented 3 megaresorts will open in the next 24 months with about 20k new jobs minimum. Several more are already breaking ground. i have never seen a casino construction boom this big--it will bring a wave of people to las vegas and fill the empty speculator houses. also the new home construction has completely stopped---so inventory will quickly drop in this market. I have totally agreed with hp and been out of this market for several years waiting for the hysteria to stop---well it is time to test the water here--those that wait too long will miss the opportunity that is available now. I do agree other markets like az, stockton, fla don't have the jobs coming online to bring things around for a long time.

Anonymous said...

It usually a good time to buy the house when you can buy it directly as a REO or from the BK trustee at less than %50 of the 2005 price. You simply need to get the deal from those who deal in real estate as a pure commodity, not as some emotionally loaded symbol of wealth and status. Real Estate is never an inventment anymore than the clothes on your back or the car you drive to work. Its a means to an end. Hey, wake up....It's just wood, cement sitting in dirt. The dirt it sits on is owned by the guy with the larger army who can remove you at his whim or if you miss a tax payment one year (otherwise called the Government), people!

Just go on strike. Live cheap. Save. Pay cash that you saved for stuff. Make the credit card dealing and mortgage lending thugs with names like Wells Fargo and Countrywide prey on someone else. Be Free.

Anonymous said...

the houses are still selling in my neighborhood in california. for everyone one sold one goes into foreclosure. either the banks are giving them away at sale prices or people think they are getting a great deal because the houses are 50 g's less than it was a year ago, maybe more. either people don't believe there will be better deals down (even better houses on less busy streets) the road or they are still thinking home ownership (debtorship) is still the better deal. at least there are no landlords who won't fix broken things or won't let you hang pictures on the walls, bleak white walls and obnoxious neighbors (apartment dwellers) 6 of one half dozen of the other. the whole system is designed to seperate you from your money and these days the bill collectors want even more (they want all your money and if you don't give it to them they will make your life a living hell). I have to keep my thermostat at 60, wear coats and socks and sweat clothes in my house to stay warm to keep from paying a 300 a month gas bill the house was my choice but the absolute greed is astounding and it is the stockholders who want more more more returns that drives alot of these out of control prices and the stockholders will eventually lose because americans are tapped out there is no extra money to play buy buy buy games or at least me anyway. i am tired of taking my hard earned money and stuffing someone else pockets and they live like kings and queens. i always wondered when the time would come to pass maybe it will be in my lifetime. i enjoy watching the show.

abb said...

In Dec 2004 I made an offer on a house for $200k. At the time, that was 40k more than any house in the neighborhood had ever sold for. I called it a bubble and yanked the offer.

By Dec 2005 it was "worth" $320k.
Today it's "worth" $270k.
In 3 years it will be worth $150k.

In retrospect I should have bought it, but there was no way I could have anticipated a 50% increase in one year.

Anonymous said...

c) Neither. They're not making any more land and everybody wants to live in California!

Paul E. Math said...

Youcrazydog, I'm glad you're not thinking of buying until late '08 or early '09. I would urge you to re-evaluate at that time.

They may be building lots of new casinos but this isn't Field of Dreams here: just because you build it, doesn't mean they will come.

In a broad economic slowdown, there is virtually no aspect of Vegas' business that will not be adversely impacted. Think of all the short-term thinkers, all the instant gratification monkeys who cashed out their home equity and went to Vegas - that's all going away.

A lot of Vegas business is conventions and special events - that falls off too as businesses and individuals tighten up their discretionary spending.

Sure, Vegas attracts the ultra-rich high-rollers, but even they won't want to go there when they realize the place is a ghost town.

You need to think really hard about buying a home in Las Vegas.

Anonymous said...

In Bay Area, California prices are not declining as fast. Some of the houses that was bought in 2007 are still selling for a higher price than they bought it. I have seen some of the REO selling for only $30K less than the listing price and after changing carpet, doing paint job and pay all fees and closing costs the price is about right there. I also wanted to make an offer for a REO, but they already found a buyer who was willing to give the full asking price and got approved for a 0 down loan and the asking price was $644,000. People are still crazy and banks are still making silly loans. I wonder how come government is not cracking down on 0 down loans and trying to bail out the people who were the most irresponsible.