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Real Estate Update

May 14th, 2010 at 08:59 pm

I haven't said much about real estate lately, because it's pretty same old, same old here. What is the phrase I keep using to describe it? Manic depressive? Balancing all the foreclosures and market depression with the enthusiasm of first time homeowners and wanna-be investors. Means a nice house will sell in minutes, if the price is good. But there is a lot of empty homes and foreclosures going down all the same. I think "manic depressive" sums it up pretty darn good.

The single story homes in our neighborhood had bottomed out around $200k. Anything priced $199k or below would ignite a bidding war of bubble proportions. (Which is good to know, since we owe about $208k on our mortgage, still!) The split level homes (like ours) had settled around $250k. Maybe a little more.

So anyway, I peeked to see what was going on. Tons of foreclosures in our neighborhood. But a house sold for $292k!!! Woohoo! I looked at it to see if it was a large lot. It was a house facing the empty field. They might have fetched a small premium for the view, but otherwise, nothing much unique I could see about the house. It looks like a slight uptick in price. It's hard to tell though since so little is actually selling.

Another interesting observation was a single story home, listed for sale at $250k. The home was purchased in 2002 for $340k. Ouch! I keep thinking that people's memory is so short term - that we bought well before the boom - but we only bought a few months before this home owner did (though I admit they must have had a TON of upgrades or something. Or the public figure could be wrong). I suppose people were really getting into bubble terrirtory as early as 2002? WOW!

But that is not the interesting part. The interesting part is that our neighborhood peaked out at $650k prices in 2005. Only a few really gullible people bought at that price (most after the market started to turn - REALLY gullible people). But, I remember getting little flyers about all these homes in our neighborhood, for JUST $3000/month. Some of these were ARMs and etc. JUST $3k/month mortgage payment! (For reference, our payment was $1300/month, at the time).

Right now, our payment is $1100/month (we refied below 5% - fixed rate), and this house advertised home ownership for as little as $1041/month!

A larger home advertised a mortgage payment of just $1200/month.

I don't think I have ever seen advertisements of such low payments, in our neighborhood. (Or in this state, ever, for that matter!) IT's a combo of the prices and the interest rates. My how things change...

For now, we get to stay in "well above water land." But, I am still wary what the short term will bring. For now, our neighborhood is attracting first-time borrowers and anxious wanna-be investors. Phew, for that. What makes me nervous is the sheer number of people I know who are borrowing for home with like 3.5% down. Those FHA loans, correct? I don't know anyone putting any real money down on any home purchases. I still get the feeling no one has learned anything, and this mess will be prolonged for a while. It's kind of a mess, and I don't think I have had anything new to add. I have said all of this before, pretty much. Big Grin We may be the only ones in our age group, with some equity to spare around here, but we are ALSO quite clearly the only people in our age group (+10 years) who ever considered putting a real down payment on their house. It just boggles my mind that this "no down payment business" still prolongs. $9k down payment on a $250k home? Give me a break. OF course people walk away when the going gets rough!

2 Responses to “Real Estate Update”

  1. whitestripe Says:
    1273965127

    we were disappointed when the banks started getting rid of the 0% down option - until we found out that we actually had 5% Big Grin and then we didn't really care lol.
    I do agree that it is bad in MANY circumstances for MANY people to even consider it. in our area rent is the same price as a mortgage per week which makes it harder i think to get to the point of having a down payment. at the moment our mortgage, (interest + principle) is around $1800-1900 a month (for ~$290k)

  2. MonkeyMama Says:
    1274111991

    Where I am from, rents are VERY expensive. But, so are housing prices. Thus, most people I know, "couldn't save anything for a down payment." & yet would take on MASSIVE mortgages. Just doesn't make any sense. If you can't save anything, what are you going to do when home values go down, or you lose your job, etc., etc. How do you afford home maintenance? etc.

    Of course, people justified it because of course the value of their home and income could only go UP!

    Hasn't worked out so well for anybody around here. Though I am sure it's a combo of the 0-down payments and the way over-lending. The 2 do not mix, at all! It seems simple to me, if you don't have any savings, how are you going to afford a giant mortgage for the long run??? These were mostly $400-$700k mortgages.

    OF course, at the peak, renting was WAY cheaper than owning!

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