Is the housing boom over?

AJ · 11-17-2005

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?

**scheides** · 11-17-2005

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.

**Kracka** · 11-17-2005

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!

armthelaser · 11-17-2005

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.

**JET** · 11-17-2005

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.

93sc · 11-17-2005

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.

ABV · 11-17-2005

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.

**Goat Blower** · 11-17-2005

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.

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.

Steeltwo · 11-17-2005

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.

**Shane@DBPerformance** · 11-17-2005

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.

**1ViciousGSX** · 11-17-2005

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.

Outlaw1 · 11-17-2005

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?

**Shane@DBPerformance** · 11-17-2005

Quote:

Originally Posted by Super4x4Duty

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?

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

**JET** · 11-17-2005

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.

**Halon** · 11-18-2005

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

**Kracka** · 11-18-2005

Quote:

Originally Posted by ju-on

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

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

ABV · 11-18-2005

Quote:

Originally Posted by ju-on

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

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.

Steeltwo · 11-18-2005

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

**Kracka** · 11-18-2005

Quote:

Originally Posted by Steeltwo

you guys must make an assload of coin

Thats why we're on DSMStyle

AJ · 11-18-2005

Quote:

Originally Posted by Steeltwo

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

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.