So did you lose any money in your inventory of houses that you bought in 2003?

SUCKISSTAPLES said:I agree with Dave in that it is too early.... however, that hasnt stopped me from buying again NOW.

As I stated on page 40 of the Rental property sticky, I too stopped buying as home prices went too high to make sense in 2003/2004. Although I could have still made tons of money flipping all the way through 2006, I dont flip. I buy homes that are cash flow positive and , once mortgages are paidoff, will create a lifetime passive income stream.

So in 2008 , when the #s again made sense and I could rent homes for more than the ownership costs, I bought as much as I could (with financing) because I feared financing would be cutoff. Sure enough, stated income financing was cutoff early this year.

I believe we still have quite a ways to go in terms of a pricing bottom...in prior threads I've stated 2010-2011 will be the golden years, especially in markets where the Option ARMs ruled the world. However, as there is a lot of modification and foreclosure avoidance programs emerging, that may help to prevent a freefall.

Given all of the "things" that dictate home values (besides the government), should any home cost more that it did in say... 2000 or even the late 90's? In Phoenix for example, I can't see why a house should, though we are still pretty far from 2002 prices. If your looking to see what those 2000ish values are, most county assessors allow for purchase price and tax info online. I'm searching similar properties and using 2000 prices as a guide to buy. We'll see...

Maricopa County Assessor

There were at least 8 years of inflation, so yes, they should "cost" more in current dollars, but they shouldn't be 500% more.

Mulligan said:Given all of the "things" that dictate home values (besides the government), should any home cost more that it did in say... 2000 or even the late 90's? In Phoenix for example, I can't see why a house should, though we are still pretty far from 2002 prices. If your looking to see what those 2000ish values are, most county assessors allow for purchase price and tax info online. I'm searching similar properties and using 2000 prices as a guide to buy. We'll see...

Maricopa County Assessor

What about the second wave of defaults? Option-ARMS and Alt-As will reset in huge numbers over the next couple of years. 2012 to 2013 might be a safe time to buy.

michal1980 said:Voom said:What about the second wave of defaults? Option-ARMS and Alt-As will reset in huge numbers over the next couple of years. 2012 to 2013 might be a safe time to buy.

but aren't those way more localized?

While I expect it to have some impact. The amount of growth, where i'm looking to buy, in SE Wisconsin, has been no where near what FL,CA,NV and a few others have seen. I've posted this before, but driving through FL, was really eye opening, there are a few dead projects around WI. And alot of empty lots for sale. But to see whole subdivisons just fenched off, was amazing.

I think we are going to see that Option-ARMS and Alt-As are going to hit like a brick the areas that are currently holding better than the rest, especially well-established cities that went through real-estate boom.

EvilCapitalist said:I think we are going to see that Option-ARMS and Alt-As are going to hit like a brick the areas that are currently holding better than the restWhile EC makes a good point about Option-ARMS and Alt-As, it's important to note that those loans were concentrated in specific regions (esp the option loans). IIRC someone posted a link to a nice chart on this at FWF sometime back.

If you're in the market to buy or sell, it's worth checking to see where your target region stacks up.

michal1980 said:but aren't those way more localized?

While I expect it to have some impact. The amount of growth, where i'm looking to buy, in SE Wisconsin, has been no where near what FL,CA,NV and a few others have seen.

Definetly.. As far as I'm concerned, this thread doesn't even apply to many parts of the midwest and/or many "cheap" areas. So, you guys need not even participate in this thread. I would be willing to bet Wisconsin fits in this category.

Personally, if I bought a "nice" home that was $150k, and it dropped 10%, would I lose a minute of sleep? Probably not. It's places where a "nice" home costs $400k+, and 10% is a whole lot more (in actual $ amount) than the $150k home.

pthor1231 said:Is this what you were thinking of Dave?No, but this one is probably more informative than the one posted before (which wasn't dymamimc and was orange on white). Thank you pthor1231.

DaveHanson said:pthor1231 said:Is this what you were thinking of Dave?No, but this one is probably more informative than the one posted before (which wasn't dymamimc and was orange on white). Thank you pthor1231.
that's Map of Misery

As I've previously posted, there is no way for anyone to accurately predict how any of the events are going to shape up in the future, but I can tell you that for market novices market timing is the absolute best way to ensure that their plans will fail. Not only are you only guaranteed to badly miss the bottom but you also have no idea what the conditions will be at the bottom. There is a very good reason that in a lot of areas the best deals are attracting multiple prospective buyers. Just ask anyone who has gone after an aggressively priced REO or any other property lately and you'll immediately hear about multiple bidders in quite a few situations.

Now, none of this means that now is a good time to buy a house because, in part, real estate is by definition very local and because there is more to a decision to buy a house than just real estate conditions in the area. What people need to realize, however, is that even if real estate prices will continue to fall in your local area (which will not be true for a lot of areas and price ranges) does not mean that you cannot or should not find a smoking deal now. Worry a little less about the "average" price and concentrate a little more on finding great deals, which will still be great deals even if average prices in your area continue to decline. In many cases these deals will be a lot more difficult to get once the hysteria is over and all of those sitting on the sidelines hear a news report or two that the bottom has been reached (which report will invariably come way after it happens) and start jumping in to snatch up what they think are great deals.

There is a reason that I say that people need to worry a lot less about the "average" prices and a lot more about specific deals. For instance, a year ago I posted about us buying our latest primary residence (the smallest and the cheapest house in our subdivision). At the time it was appraised by Penfed (a pretty conservative lender) for a whopping FORTY-ONE PERCENT (41%) higher than our purchase price. Our county estimated its value to be 36% higher than our purchase price. Since then the housing market and the economy have weakened some more, including additional weakening in our area. We continue to be quite happy with our deal, however. For instance, our neighbor's house was sold 4 months ago for about 60% more than our purchase price. That house was larger, but even after adjusting for the square footage, the price was higher even though the neighbors got a good deal. I can tell you that not too long ago I participated in a number of conference calls dealing with the merits of our property tax appeal in which we sought to use our purchase price for tax purposes (in our state, just like in many other states out there, property taxes are based on the fair market value of the property, which may or may not be the same as the purchase price). The county tax assessor, however, argued that based on the sales data in our subdivision and in the area our sales price was so far below the comps that our transaction could not have been an arms length one and does not, therefore, represent a fair market value of the property.

What a lot of us are taking advantage of right now is not just the depressed housing values but also relative inefficiency of the housing market, which is causing tremendous deals to pop up from time to time, which are not only far below today's depressed fair market values but are also way under fair market values that can be expected even if the worst predictions materialize. Once the hysteria is over and all the "would be" buyers jump in, marketing times will shorten considerably and all the best deals will disappear WAY before the average prices start to go up.