Housing market driven recession?

[B12]

Rate lowered 1/4% today and building stocks did nada.

Scary.

Oil at 94. a barrel. Where does it end?

[Bandit]

It is driving rental properties sky high. I don't know if it is just the housing market because I am seeing it in everything.

I wish I would have bought a house by now but then again I would probably be losing it & that would hurt me more inside than not having one now, I think.
We are supposed to be having huge economic progress in these last two years of the presidents office. eh!
Where & for Who? that is my question.

[freshstart06]

Housing market will be worse next summer. Having equity in your home today is like suicide. Take all equity out and put the money in a savings account where it is safe, heck, you can use the extra money to pay your mortgage for a few months. Take advantage of the low rates . Convert your arms into 30 or 40 years. Just hold tight for the next 5 years.

Home buyers look for deals out there like short sales, foreclosures, any property with equity and make sure you can afford the home, not maybe, kindof.

We are holding off until next summer to purchase a home.

[Peevee]

Why is having equity in your house like suicide? I'm not understanding this.

[freshstart06]

Well with the property values dropping the way it is, you are lucky to have any equity at all depending where you live. I would rather have some or all of it in my savings before it gets eat up by the bad market values and save it for a rainy day because it is going to be a long time before the market can correct itself. Next summer's prediction is that it is going to get worse.

For example, say you only have about $10,000-$15,000 equity in your home, in most areas the home values are dropping every month so in about 6 months that money is gone. Say it take next year you start having finanical problems and now no equity to back you up. Because the market is so bad and unpredictable the best thing to do is to take that equity and take advantage of the low rates, put yourself in a 30-40year. Now if you face hard times, you have you money in the bank and have not lost it due to the horrible market. If the market recoverys it will not affect you because you will now have equity again and money in your savings... win win situation.

[chpxiii]

freshstart06, I realize where you're coming from, but it seems to me that this idea is based off of thinking about the equity in your as a savings. From what I understand, equity should not be considered as a savings. Home ownership should be considered a long term investment.

Maybe I'm misunderstanding what exactly you mean, but I do understand what you are saying and your explanation.

[Bandit]

I think she just means you can't count on a house as a good investment right now. People are not getting what they have put into it. They are losing money. Well, not everyone but quite a few are.

Even if you have a house for 10 years you may not be able to sell it for what you put into it. It has always been a guaranteed investment even within just a couple of years- but it isn't right now & it does not look real bright for awhile. It is more/will be more of a of a buyers market not a sellers market for awhile.

I would say the few homes in & around growing business districts will be just fine as that property is always valuable.

[chpxiii]

I think she just means you can't count on a house as a good investment right now. People are not getting what they have put into it. They are losing money. Well, not everyone but quite a few are.

ah ha! Gotcha. Makes perfect sense now.

[Bandit]

Well with the property values dropping the way it is, you are lucky to have any equity at all depending where you live. I would rather have some or all of it in my savings before it gets eat up by the bad market values and save it for a rainy day because it is going to be a long time before the market can correct itself. Next summer's prediction is that it is going to get worse.

Putting the equity to the side for minute, I have a friend who bought a home two years ago & did a complete renovation & remodeling. Turned it into something beautiful. He could not sell it for what he put into it. He broke even with what he paid for TWO years after he bought it but made nothing on the thousands he spent to make it new & got nothing for his labor. So, he ended up remodeling this entire house for free. He lost big time but was glad to sell it when he did because it would have been worse if he waited to sell in the next couple of years.

On the other hand people who have had homes for a longer time will be better off just waiting it out (IMO) before selling in hopes the values will go back up or at least stop dropping. That might make their return better than selling right now. It is real hard to say because people are not used to this happening & everyone is uneasy about it.

Like you say, it does not correct itself over night. Maybe for a few but not for most.

[freshstart06]

Thanks Bandit, You explained it much better then I did LOL. I am a Morgage Broker and I am very familiar with what is going on with this market. Equity should never be considered "savings" but it is there to be used, and in this market if you don't use it you will lose it LOL. The rates are not too bad right now so I suggest to my clients (I am in Arizona, market sucks in most places) take the money out put it some where safe because in a few months it will not be available if you leave it in your home. Some homes out here have been on sale for 2 years. It is hard to sell your home for $350K when your neighbor's hone that is going into foreclosure, has the exact same model but with a pool did a short sale for $210K. The short sales and foreclosure homes outweigh the regular sales. The people selling their homes that are not in foreclosure must sell their homes at higher prices because they have no equity.