Is the housing boom over?
 

http://money.cnn.com/2005/11/17/news...ex.htm?cnn=yes

I think we can all agree no matter what the case it's better to buy a house than to pay rent in terms of getting something of value out of your money. But with rates jumping the amt of new homes getting built has dropped. And values of homes are not going up as fast as they did a year ago.

So what does everyone else think? Will it be more location dependant over the next few years for value to go up at an above average pace?

Re: Is the housing boom over?
 

In the TC Metro, I think it is still booming, although it is definitly a buyers market right now. Lots of great houses on the market, as well as condos. I just had my house appraised at $20k over what I paid for it 3 months ago, but like you said AJ, I think it will be location dependant.

I don't watch the market with a mag. glass, but I do know that I do a TON of work for one of the bigger custom home builders in town, and they are selling million dollar homes left and right, it's freeking rediculous.

Re: Is the housing boom over?
 

The boom is no where near over. I just read an article on this yesterday in fact. The rising interest rates will definitely put it "in check", but it will still continue to increasingly climb. Hell, home appreciation has been fluctuating between 12-16%/year here in Duluth the past few years. I can't wait to sell me house come spring!

Re: Is the housing boom over?
 

I know it is getting harder to find a good starter home, for me that is under 200,000. Right now I am looking for a house in the northwest subrurbs. There are alot of them but they are smaller than my apartment. I will probably end up getting one in crystal or robbinsdale.

Re: Is the housing boom over?
 

I think the boom is close to being over, but I don't think the market will head down too much. Instead of the double digit increases I think we will get down to the 8-9% range. It isn't healthy for the market to go up that fast anyway. Hopefully the home builders aren't planning on cranking out even more. That could send the market down farther.

Location is huge in the twin cities. When I move I am going to try to buy one of the first lots in a new development, usually they will give them to you cheap if you buy one of the first ones to recoup some of their costs.

Re: Is the housing boom over?
 

I work in a civil engineering/land surveying company. We are busier than ever with new developments, and so is the company I just left. It's not over.

Re: Is the housing boom over?
 

Anyone remember back in '99? Everyone was buying tech stocks at ridiculous prices because "It's guarenteed to go up". Then remember when the bottom fell out? Granted the real estate market is much more stable than the stock market, and I don't think the bottom is going to fall out. But when people in California are paying up to $1.0m for the rights to lease a lot in a trailer park (MSN Money article from a few months back, I'll try to find the link), you know things are getting out of hand.

The bottom line is that the housing market has had down turns in the past, and it will see down turns in the future. Just because real estate has had double digit returns over the past few years, doesn't guarentee that will happen in the future. Isn't that the first rule of investing, "Past performance does not indicate future results." It's anybody's guess if the housing market will decline over the next decade, but I think we will at least see it level off and remain stagnant for a while.

And as far as the rent vs. buy debate, I don't even want to get into that. It's a matter of personal preferance. Buying isn't always the best option, depending on your situation. There are many, many variables to take into account.

Re: Is the housing boom over?
 

We just sold our house this week. The market crapped out at the beginning of August and it's been a buyer's market ever since. Homes are still selling, but prices have dropped significantly. Our house was appraised at $245K last spring, we just sold it for $225K. It's what would be considered a starter house in one of the better neighborhoods of Brooklyn Park, 1700 finished square feet. We built a brand new house a few miles away still in Brooklyn Park, and at least 50 houses have gone up or are going up in our development since ours was started in June. The house two doors down from ours is currently on the market for $699K. :eek:

Personally, if you've got the credit, buying even at a slightly higher interest rate is far better than renting. Even if the appreciation settles back to a historic 6% per year, you're still way ahead in gains over renting. Plus the tax benefits saves you a couple hundred per month, so you can actually afford a higher house payment than a rent payment. Buying 8 years ago was the best investment I ever made by leaps and bounds.

Re: Is the housing boom over?
 

my friend who sells houses in metro area and western wisconsin said it's slowed down quite a bit

he use to clear around a house every 3-4 days.

now it's about 1 per 6 days. He said it is also a buyers market.


one of the big things you will see in the up coming years is alot of people selling for cheap.

why you ask?

a big chunk of home loans over the past 3 years have been interest only. And depending on the terms. In 3-5 years, you have to start paying on the principle. So your payment goes up by quite a bit.

and since houses are now staying on the market for longer and longer. People will need to get their houses sold faster. So lower prices.

the boom isn't over persay. But it is slowly going back to the way it was.

Re: Is the housing boom over?
 

A couple months ago the Twin Cities and Duluth areas were some of the most overvalued housing markets outside of California, Florida, New York and Massachusetts. Interest rates still really quite low. Back in 1990, home loan interest rates were around 10%, during the early 80s they were up to 18%, when I got my house in 1993, we got it at 7%, which was the lowest it had been in 20+ years.

Re: Is the housing boom over?
 

It has alot to do with location. For what I paid for my house in Florida, I could be living in a "gated" community with security and a big ol' lake at my backyard in Louisiana. The housing market is still pretty strong here. I paid $290k for my house here in FL, but it appraised at $315K before I even got the papers signed.

Re: Is the housing boom over?
 

I was shocked to see the price of houses in this area. Around Houston you can buy a nice starter home for ~$100,000. The houses around this area seemed to start in the mid/low $200,000's. I still don't understand where all the extra money goes. Is the land way more expensive? Are the materials more expensive? I'm I just in the wrong business?

Re: Is the housing boom over?
 

A lot in the cities is usually $85k+ for a 1/4 acre. We are also the most spread out metro area over 1mil people (population density), so they shouldn't be all that high, but they are. You can make a killing if you time it right. I just talked to a customer that bought a house in St. Michael 3.5 years ago. It appraised now at almost THREE TIMES what she paid for it! They put 4 housing developments around her. Timing and location are key.

Re: Is the housing boom over?
 

Texas has some of the cheapest and most undervalued housing though.

Re: Is the housing boom over?
 

I too am looking at buying my first home right now. I have come to the conclusion that for the price I'm looking at, most houses I'd be getting would be built in like the 30's in columbia heights or something. So I've decided to get a townhouse since they seem to be cheaper. Winter time is pretty much always the buyers market, because people who are moving away in winter are usually doing so because they have to move, otherwise they'd have waited until the summer when it's not freezing out. That's what I have been told by the realtors I've been speaking with

Re: Is the housing boom over?
 

Any particular townhomes in mind? I looked at some this summer and found a few that I really liked in the sub-$200k catagory.

Re: Is the housing boom over?
 

I am also looking already Chris, I found a few right below the river in Eagan with 2 car garages for aroudn 175, newer built. Im going to need a good garage, thats all I really care about, that and location cant be too far away and would like to stay in the south metro. You guys are probably looking north though huh?

Re: Is the housing boom over?
 

I'm in the same boat. A year ago, I was planning on buying a house or at least starting to look at the end of 2005 or early 2006. I've decided that I'm just going to wait it out and see what happens. The last thing I want to do is take out a 100% mortgage at the top of the housing peak. So I'll just wait a couple years, save up a big honkin' down payment, and go from there. A house would be nice, but more than likely I'll end up with a townhouse considering the locations I would like to buy in.

Re: Is the housing boom over?
 

god damn
you guys must make an assload of coin to afford a 180k house.

Re: Is the housing boom over?
 

Just remember guys, if you aren't able to put 20% down, you'll have to buy mortgage insurance. Not that expensive, but still an added expense for really nothing.

Re: Is the housing boom over?
 

Thats why we're on DSMStyle ;)

Re: Is the housing boom over?
 

Depending on credit, rates, and other fun loving house buying ways a house in the $180,000 range can cost you anywhere form $850-$1800 a month. Rates, Credit, Insurance, Down Payment, etc etc, it all plays a part.

If your single, and make 15ish an hour your gonna take home abour $850ish every 2 weeks with normal deductions. With no debt and great credit your gonna have no problem getting a house and giving up half your income to the payment. It's controling that other half that gives people issues in their personal debt management.

It doesn't take much to be able to afford something, it does take work and time to keep being able to afford it and giving those you go to for the $$$ a reason to give keep giving you the dough.

Re: Is the housing boom over?
 

Not exactly, there's ways around that. And not all lenders require that anymore. We ended up with less than 20% down on our new place, and we won't have any mortgage insurance.

The rates are going up fast and houses are dirt cheap right now. This is the best time to buy that I've seen since 1998.

A good credit score is more important than having a lot of money. There's some really decent programs out there that bank on the fact that you'll make more money from year to year. If you work at McDonald's, this doesn't apply to you. :D

Steve

Re: Is the housing boom over?
 

Actually there is a way around that. I have a 1st and 2nd mortgage on my house. It ends up being a tad cheaper than if I had mortgage insurance, but my 2nd is only a 20 year loan and if I pay it off early, all the better. Most people refi within 3 years anyway, so it isn't a big deal.

Re: Is the housing boom over?
 

the problem with me is

I want the cake and to eat it too :-D

Re: Is the housing boom over?
 

80/20 loans will allow you to not pay the mortgage insurance. I am looking at townhomes all over. I am not naming the ones I am going to be making offers on soon because apparently I'm not the only one on here looking at these, and I don't wanna screw myself by having someone else beat me to them. But they are fairly local. Should only be a 20 minute drive MAX to work for me.

Re: Is the housing boom over?
 

The only downside of a townhome is that you also have to pay $150-$250 for association fees, which covers lawn care and snow removal. It's actually much cheaper to do it by yourself even after spending $1000 on a decent snowblower and lawn mower. It does allow you more time with the ladies though...

Re: Is the housing boom over?
 

I did the same thing with my house

Not to mention they are harder to sell considering there are thousands more being built every year. A person can buy a brand new townhouse for the same or less as your used one.

Re: Is the housing boom over?
 

The ones i am looking at have 100-150 association fees. Yes it kinda sucks, but the ones I'm looking at, the fee not only covers lawn/snow, it also covers all exterior maintenance and so you don't need any insurance for the exterior which saves you a few bucks, includes hazard insurance, also it covers the garbage removal. And townhomes usually have little bit lower property taxes due to the very small amount of property they are on. So in the end, it's really not costing you a ton more. Plus with my job I travel up to 75% of the time, and so having the lawn care and snow removal will be nice since I may be gone for 6 weeks at a time.

Re: Is the housing boom over?
 

There are some townhomes up for sale in Hopkins. I think they were around 180K and the fee was around 150. I have kind of been looking for a house. I was almost thinking of getting a townhome but I would rather own the land I am living on.

Re: Is the housing boom over?
 

Yea I would rather have a house too, and I have been looking at houses in the same price range and unless you go way out of town you will get a shack for under 200k... Compared to a newer or brand new town home from 140-200k that are usually in nice areas. It all depends on what you want to sacrifice- small lot and house with 1 garage in crappy neighborhood for 170k or a really nice townhome in a nice location with more than 1 garage attached.

One thing that I have been looking at also, which I would be sold on if they had separate garag-ing would be a loft downtown. I think that would be sweet to live right downtown in a redone old building with huge ceilings and get up everyday to see the busy life outside.

Re: Is the housing boom over?
 

the loft would be spendy though

Re: Is the housing boom over?
 

Jana and I spent a few weeks looking at lofts downtown. There are A LOT of options but in reality is just a big spendy apartment with more room, sweet views, and resale value. We looked at 5 or 6 different buildings on the outskirts of downtown (past the Vu), and everything we liked would have been 500K plus. And that's just to have something with a little more room (200-300 sq feet more) than we already have. Anythign in the low range (300Kish) wasn't as appealing. Anything we fell in love with was 750k + Go figure. We won't be living downtown anytime soon.

Re: Is the housing boom over?
 

Yea I found a few from 170k and up but it is basically an apartment you own, and I dont think I would end up liking that too much. I just think it would be awesome to live downtown.

Well I still have more than a year to figure things out so no problem yet...

Re: Is the housing boom over?
 

Going to a second showing on the ones I'm looking at today. I am pretty close to owning one! Gotta find me a damn roommate to help with these payments!!

Re: Is the housing boom over?
 

Smart man. Get a three bedroom, rent out to two of your buddies, and your portion of the mortgage cost is almost free. To be young and single again. :rolleyes:

Re: Is the housing boom over?
 

I wouldn't go quite that far, but it does help a lot. Basically for every $10k extra you put into a home, you are paying an extra $100/mo. It sounds like a lot in the beginning, but once you figure it out it isn't so bad. I was looking at houses around $180k and couldn't find anything I liked. I got mine for $210k not quite 2 years ago. It ended up being $1,800/mo instead of $1,500/mo, will all the house bills. Really not that huge of a difference and it was well worth it. A bigger investment will just gain that much more!

Re: Is the housing boom over?
 

I'm glad we got into ours when we did. Granted it's a little out of the way. But it's nice and quiet here. We don't hear the "Thump, thump, thump" from the little teenie-boppers' cars all nite long like we did in our rental in Burnsville.

We got our townhome for $120K. We did a 100% mortgage. We went through FHA and they hooked us up with down payment assistance. We paid $600 at closing. The builders paid all the closing costs (allowable by law) and are picking up the first year of assoc. dues ($128 a month).

On the bad side, we only get a one stall garage. But on the good side, our mortgage is for $120K while the property was appraised at $133K. So we have equity going into it. Also, being that it is a brand new build, our taxes are for the "unimproved lot value" for the first year or so. Next years taxes are somewhere in the neighborhood of $600-700. It's a 2-bedroom, 1200 sq-ft, 2-bath townhouse. We have a middle unit so it's easy to heat. The association takes care of the water, sewer and garbage. We got a fireplace in the livingroom, ceiling fan up in the bedroom and walk-in closets in both bedrooms. Also a huge amount of storage space. We have 5 good size closets in this place.

Re: Is the housing boom over?
 

Went to my showings today. I think I've made my decision. We will look at one more, but I think I've made my choice. Kinda exciting!!

Re: Is the housing boom over?
 

Party at Brandons!!! ;)