Home Prices Dropping...

Like many of you, I've been following this topic for awhile. DH and I would like to buy a house within the next year or so, but the prices we have seen in LI are too high for us. This would be our first house, but we do own a co-op.

Everything I've been reading does point to a bubble, but it doesn't look as if it's really going to hit this year. One article I read recently (possibly in the NY Times Sunday magazine section this week) pointed out that right now, buyers and sellers are at an impasse. Sellers think they can still get a lot of money for their homes, and are holding out for the Spring, thinking buyers will be eager to purchase then. Buyers think that the bubble will burst soon and prices will drop.

Another trend a few of you mention is the flight of many young Long Islanders to other less expensive parts of the country. I know many communities in LI are concerned about this trend, but I haven't heard of any doing anything concrete to assist first-time homebuyers, and I suppose their powers to assist homebuyers are quite limited.

Anyway, I don't have much new to say on this subject, but I guess I'll hold my breath with everyone else and hope prices do come down soon. Otherwise, DH and I may need to start looking at some other areas of the country ourselves.

It is interesting, FH and I calculated a much less priced house with higher interest and it kills the monthly payment.

Waiting for the right price may not be the best idea because of the steady increase of interest rates. I think in the end you either pay it towards the price of the home or towards the high interest rate.

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Posted by KarAnthony

It is interesting, FH and I calculated a much less priced house with higher interest and it kills the monthly payment.

Waiting for the right price may not be the best idea because of the steady increase of interest rates. I think in the end you either pay it towards the price of the home or towards the high interest rate.

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IMO, id rather pay a higher rate for a smaller loan amount due to a lower purchase of the house. That way, it is easier to come up with a decent down payment, and you can always refinance in a few years if rates drop. Alot of people talk about the real estate bubble burst of the late 1980s, in which prices did decrease - but interest rates were much higher. 6% is still considered a low mortgage rate when comparing to the past 30 years!

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Posted by Preshy7

i feel like they will stabilize and remain the same....
the only thing i have seen is interest rates going UP
i think if you are ready to buy, buy. if you arent dont. if you see a wonderful house that you can afford then buy it.

i bought last year with prices supposedly going down, and let me tell you, my house value is up and so are the values of other houses in my town

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I couldn't agree with you more. prices will definitely not drop the way that everyone is expecting them to. as of right now, prices are stabilizing and leveling off. one thing that is definitley moving are the interest rates and thats only going up! I'll give you the best piece of advice i ever got in real estate and it's the same advice i give to all of my buyers...'dont wait to buy real estate, buy real estate and wait'. you won't regret it!

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Posted by Meaghan729

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Posted by KarAnthony

It is interesting, FH and I calculated a much less priced house with higher interest and it kills the monthly payment.

Waiting for the right price may not be the best idea because of the steady increase of interest rates. I think in the end you either pay it towards the price of the home or towards the high interest rate.

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IMO, id rather pay a higher rate for a smaller loan amount due to a lower purchase of the house. That way, it is easier to come up with a decent down payment, and you can always refinance in a few years if rates drop. Alot of people talk about the real estate bubble burst of the late 1980s, in which prices did decrease - but interest rates were much higher. 6% is still considered a low mortgage rate when comparing to the past 30 years!

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I agree. you can also write off the interest on your taxes. you can't do that with the price of the house.

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Posted by alnem

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Posted by Preshy7

i feel like they will stabilize and remain the same....
the only thing i have seen is interest rates going UP
i think if you are ready to buy, buy. if you arent dont. if you see a wonderful house that you can afford then buy it.

i bought last year with prices supposedly going down, and let me tell you, my house value is up and so are the values of other houses in my town

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I couldn't agree with you more. prices will definitely not drop the way that everyone is expecting them to. as of right now, prices are stabilizing and leveling off. one thing that is definitley moving are the interest rates and thats only going up! I'll give you the best piece of advice i ever got in real estate and it's the same advice i give to all of my buyers...'dont wait to buy real estate, buy real estate and wait'. you won't regret it!

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no offense, but you're a realtor. so of course you're going to say not to wait. there is nothing wrong with waiting if you can. people like me are socking lots of $$ away for a DP while waiting.

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Posted by dleeny

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Posted by alnem

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Posted by Preshy7

i feel like they will stabilize and remain the same....
the only thing i have seen is interest rates going UP
i think if you are ready to buy, buy. if you arent dont. if you see a wonderful house that you can afford then buy it.

i bought last year with prices supposedly going down, and let me tell you, my house value is up and so are the values of other houses in my town

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I couldn't agree with you more. prices will definitely not drop the way that everyone is expecting them to. as of right now, prices are stabilizing and leveling off. one thing that is definitley moving are the interest rates and thats only going up! I'll give you the best piece of advice i ever got in real estate and it's the same advice i give to all of my buyers...'dont wait to buy real estate, buy real estate and wait'. you won't regret it!

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no offense, but you're a realtor. so of course you're going to say not to wait. there is nothing wrong with waiting if you can. people like me are socking lots of $$ away for a DP while waiting.

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I would have to say that she is referring to if you are aready to buy and you're waiting for prices to drop.. If you still need time to get enough for a downpayment to make your payments comfortable then you will have no choice but to wait.

I agree with not waiting for home prices to drop substantially. I don't think you are going to see 10% declines but you will see softening. Sellers may be more willing to concede on prices more than before. JMO.

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Posted by Blu-ize

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Posted by dleeny

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Posted by alnem

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Posted by Preshy7

i feel like they will stabilize and remain the same....
the only thing i have seen is interest rates going UP
i think if you are ready to buy, buy. if you arent dont. if you see a wonderful house that you can afford then buy it.

i bought last year with prices supposedly going down, and let me tell you, my house value is up and so are the values of other houses in my town

---

I couldn't agree with you more. prices will definitely not drop the way that everyone is expecting them to. as of right now, prices are stabilizing and leveling off. one thing that is definitley moving are the interest rates and thats only going up! I'll give you the best piece of advice i ever got in real estate and it's the same advice i give to all of my buyers...'dont wait to buy real estate, buy real estate and wait'. you won't regret it!

---

no offense, but you're a realtor. so of course you're going to say not to wait. there is nothing wrong with waiting if you can. people like me are socking lots of $$ away for a DP while waiting.

---

I would have to say that she is referring to if you are aready to buy and you're waiting for prices to drop.. If you still need time to get enough for a downpayment to make your payments comfortable then you will have no choice but to wait.

I agree with not waiting for home prices to drop substantially. I don't think you are going to see 10% declines but you will see softening. Sellers may be more willing to concede on prices more than before. JMO.

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DH and I are ready to buy, we're waiting b/c we want to and while we're waiting, we're saving for a bigger DP.

there is nothing wrong with waiting for Spring when sellers will add to the already large invetory of homes that is out there.

I just spoke to someone at work that told me the 6 houses in her development of 20 homes went up for sale in the past 2 weeks.

to the real estate agent- who by the way- my father is also one- told me to wait and my hubby owns a mortagage company refuses to buy a home for the next 1 to 18 months

Here are a few facts I learned in school

real estate is listed as liability on a balance sheet- not an asset

and according to the laws on compounding interest- real estate is not always the best investment

the bottom line is buy a home that you love, when you are ready and can afford it- and nothing else should be included in the thought process

edited for spelling

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Posted by Beth1210

the bottom line is buy a home that you love, when you are ready and can afford it- and nothing else should be included in the thought process

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Posted by 103005FallBride

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Posted by Beth1210

the bottom line is buy a home that you love, when you are ready and can afford it- and nothing else should be included in the thought process

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Posted by KarAnthony

It is interesting, FH and I calculated a much less priced house with higher interest and it kills the monthly payment.

Waiting for the right price may not be the best idea because of the steady increase of interest rates. I think in the end you either pay it towards the price of the home or towards the high interest rate.

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EXACTLY!

Which is the reason why buying now is ALWAYS the best option if you plan on being there for at least 5-10 years!

You never known whats going to happen with interest rates. People say 'well you can always refinance.' But refinancing costs money... and its not guaranteed.

If you can find a house you like... with a monthly payment you can deal with... and plan on living there for at least 5-10 years... then you should definitely buy.

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Posted by dleeny

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Posted by Meaghan729

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Posted by KarAnthony

It is interesting, FH and I calculated a much less priced house with higher interest and it kills the monthly payment.

Waiting for the right price may not be the best idea because of the steady increase of interest rates. I think in the end you either pay it towards the price of the home or towards the high interest rate.

---

IMO, id rather pay a higher rate for a smaller loan amount due to a lower purchase of the house. That way, it is easier to come up with a decent down payment, and you can always refinance in a few years if rates drop. Alot of people talk about the real estate bubble burst of the late 1980s, in which prices did decrease - but interest rates were much higher. 6% is still considered a low mortgage rate when comparing to the past 30 years!

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I agree. you can also write off the interest on your taxes. you can't do that with the price of the house.

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I'm sorry... but that logic makes no sense. Thats like saying 'Well I don't mind paying 900k in mortgage interest for the life of the loan because I can write it off'. The key is... DONT pay the interest in the first place.

People really underestimate how much damage even a half a percentate point does on a mortgage. Punch up a mortgage calculator. See how much mortgage interest you pay for the LIFE of a 400k loan at 6%. Then see how much mortgage interest you pay for the life of a 350k loan at 8%.

When you are pumping money into principal and not interest... thats your own money that you will get back when it comes time to sell.

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Posted by Blu-ize

I would have to say that she is referring to if you are aready to buy and you're waiting for prices to drop.. If you still need time to get enough for a downpayment to make your payments comfortable then you will have no choice but to wait.

I agree with not waiting for home prices to drop substantially. I don't think you are going to see 10% declines but you will see softening. Sellers may be more willing to concede on prices more than before. JMO.

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If you don't have the cash for a DP... then you should wait. If you have money sitting in the bank for a DP... you should buy.

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Posted by Beth1210

real estate is listed as liability on a balance sheet- not an asset

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Actually.... what you owe (balance) is a liability. But the equity you have is an asset which adds to your total Net Worth.

The key to building wealth in life is finding ways to increase your total net worth.

QUOTE]
I'm sorry... but that logic makes no sense. Thats like saying 'Well I don't mind paying 900k in mortgage interest for the life of the loan because I can write it off'. The key is... DONT pay the interest in the first place.

People really underestimate how much damage even a half a percentate point does on a mortgage. Punch up a mortgage calculator. See how much mortgage interest you pay for the LIFE of a 400k loan at 6%. Then see how much mortgage interest you pay for the life of a 350k loan at 8%.

When you are pumping money into principal and not interest... thats your own money that you will get back when it comes time to sell.

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It does make sense, when we are talking about a lower down payment.

For the example you use, you pay $471k in interest (for a $400K loan at 6%). The second you pay $585K (350K loan at 8%). The difference is $114M. However, if you take the $50M you didn't have to shell out for a DP and invest it for 30 years at 4.25% (which is a going liquid savings rate right now and much lower than the 30 year note), you will have $179M at the end.

You are not incorporating the opportunity cost of not having to put the extra $$ down.

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Posted by DjPiLL


I'm sorry... but that logic makes no sense. Thats like saying 'Well I don't mind paying 900k in mortgage interest for the life of the loan because I can write it off'. The key is... DONT pay the interest in the first place.

People really underestimate how much damage even a half a percentate point does on a mortgage. Punch up a mortgage calculator. See how much mortgage interest you pay for the LIFE of a 400k loan at 6%. Then see how much mortgage interest you pay for the life of a 350k loan at 8%.

When you are pumping money into principal and not interest... thats your own money that you will get back when it comes time to sell.

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assuming it is still worth what you paid.

We put a bid on a condo which was accepted and withdrew for various reasons. Now, a month later, that same condo is $10K less. So we would have essentially LOST money on it had we bought it. the buyers dictate the market. And right now, there is a lot of inventory and less demand. Combine that with rising interest rates, and that condo might be worth $30K less by the time it’s sold. Who knows, right?

The bottom line is that higher interest rates don’t scare me as much as buying under pressure does.

I’m not going to rush out and buy a house I am not in love with because the rates might go up.

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Posted by dleeny

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assuming it is still worth what you paid.

We put a bid on a condo which was accepted and withdrew for various reasons. Now, a month later, that same condo is $10K less. So we would have essentially LOST money on it had we bought it. the buyers dictate the market. And right now, there is a lot of inventory and less demand. Combine that with rising interest rates, and that condo might be worth $30K less by the time it’s sold. Who knows, right?

The bottom line is that higher interest rates don’t scare me.

I’m not going to rush out and buy a house I am not in love with because the rates might go up.

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this is the logic Jake agrees ( for those who don't know yet- he owns a mortgage company) with and why we are waiting

we don't want to buy a house for $600K and have it worth $550K 2 months later

he would rather pay a higher interest rate-- regardless of the fact that we can refi any time we want for free-

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Posted by dleeny

We put a bid on a condo which was accepted and withdrew for various reasons. Now, a month later, that same condo is $10K less. So we would have essentially LOST money on it had we bought it. the buyers dictate the market.

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So big deal... you temporarially are down 10k. Big deal.

You can't treat real estate the same way you treat a stock purchase. Its a long term investment.