Does anybody think that the housing market will bounce back anytime soon?

Question

Everybody is blaming subprime mortgages for what's going on in the housing market. I think that the cost of living is just getting to high for people, and people just can't afford to make ends meet.

Answer 1

I give it at least 18 month to two years, and prices will drop, and even those with decent credit are now going into foreclosure. Housing prices have been increasing in double digit rates, energy costs have doubled in the last couple of years, yet income or wages have remained basically stagnant in comparison at 2-4% increases. Add to this mix the fact that people have been treating their homes as an ATM machine financing all the equity that they have built up, add a little interest rate hike (as they have been artificially low) and as with the tech bubble of the 90's, you have the beginning of the housing bubble. More houses available, and less eligible buyers, because of the tightening of credit. Supply and demand. High supply + less eligible demand = housing recession, or I should say correction.

Answer 2

A housing market depends on buyer/investor confidence.

During the Real Estate boom in 2004/2005 all media were reporting about the great investment and the booming Real Estate market.

What happens right now is the opposite. Everybody is complaining and wining about the bad housing market and everybody is blaiming the "bad" housing market for things happening in our economy.

Buyers and Investors are unsure what to do, they are not confident anymore.

And nobody has a crystal ball. Nobody know if the housing market will continue to go down for another 2 years and nobody knows when it will recover.

As long as everybody keeps on reporting how bad things are, that is about as long the "bad" housing market will continue to stay bad.

Just a few encouraging news are needed to turn the market around. Real Estate is still a good investment, to own a home is still the american dream, now the prices are affordable again in a lot of areas and there will be always an increasing need of housing - just because the populationg grows as well.

Now is the time to buy!

Answer 3

Be careful! Don't always believe what you read and, remember, that housing markets vary significantly from one metropolitan area to the next. In Washington, DC, where I work, the housing market is robust while vacancy in apartments is low as well. Homes are selling quickly and getting good prices. While it is true that the market is not quite as robust as a year or so ago, it is also true that it is still a better housing market than most of the last 15 years or so.
Sub prime mortgages may lead to a higher foreclosure rate but those foreclosures won't necessarily lead to a down housing market. In a strong residential real estate market those foreclosures can be eaten right up by new buyers and everything moves along fine.
The most recent housing boom was helped along by alot of pent up demand amongst those who wanted to buy but were waiting for the right time with respect to the economy. Now that many of those buyers have made their purchases it is only natural that the housing market would experience a small correction because much of the demand has been satisfied.
If the housing market has slowed significantly in your town it should only have a negative effect on you if you are trying to sell. If that is the case it won't make you happy but I still believe you can move your property if it is priced accurately.

Answer 4

Well all of this mess wouldn't of happened if the mortgage companies wouldn't have gotten greedy and people that really couldn't afford a house wouldn't have jumped the gun when the so called boom came along. The mortgage companies gave out interest only loans like candy and look at what is going on. People who all of a sudden find themselves having to pay the principal and interest now are going into foreclosure. So now some of the companies are going bankrupt because they are not getting their money back. It is such a mess. Well if you have the money now and really good credit. It is a buyers market. People are giving a lot of incentives just to get their house off the market. Houses are just sitting sometimes for over a year! It is going to get rough now because banks are going to be more careful on who they lend money to now, so you better have a good paying job and good credit. I feel sorry for those poor people who thought they could make a quick buck by flipping, now they are stuck paying the payments because no one is buying. I think that it will look good for people who waited it out like moi. I am not looking to buy and sell in a few years. If I buy I am going to stay there for a long while, so if the market does go down, I won't panic because it is bound to go up especially if you live in a good neighborhood with a good school district. I have an advantage now because there are some great houses that are going for less and now people are really remodeling, putting up closing costs, etc. Just to sell their house that they can't afford anymore or want to make a quick buck! I don't feel sorry for the people who already owned a house before all this mess and are now trying to sell. They are still going to make at least 100,000 profit if they sell. Of course if you don't have a great job that pays well, yes you are suffering right now because everything is going up. Look at gas prices and stuff. It is ridiculous. I really don't know how people can make ends meet right now!

Answer 5

I agree. I think it has more to do with people living above their means. This is America, everyone is trying to keep up with the Jones, have brand new cars, dress like a million bucks, and eat out every night. If people just lived a little more conservatively, they could easily afford a mortgage payment! Esp. if they sought a house within their budget. Many mortgage payments aren't much higher than apt. rent! My mortgage payment is only $140 more a month than I paid for the apt.

Anyhow, back to the question. I heard one expert say he didn't expect to see the housing market bounce back till Spring of 2009. Let's hope it gets better before then though!

Answer 6

There are multiple factors affecting any given market. Both the factors you mention are contributing to the current downturn.

I don't think it will bounce back soon. I think it may level out for a while, but as you say cost of living is too high in many places (like NY for instance). If young professionals can't afford to live in an area, businesses suffer which leads to lower tax revenue, recession, and of curse a downturn in the housing market. unfortuantely that last factor hasn't happened yet in many places because older people are delaying retirement and staying put, which limits housing availability and therefore raises prices.

Answer 7

My projection is the END of next year.

What? A whole year.

Yes, a whole year.

Where's the proof???

Dead ahead is a whole lot of subprime mortgage re-set to hit the market.

Don't believe me?

Look at the mortgage resets for the subprime mortgage market next year.

(Source Bank of America)

Aug (07) 52 Billion Dollars
Sep 58
Oct 55
Nov 52
Dec 58
Jan (08) 80
Feb 88
Mar 110!!! WOW
Apr 92
May 72
June 75
July 50

Answer 8

I don't think it will in the majority of the country. Prices are way too high. It's like the stock market adjustment in the early 2000's. In the late 90's everyone thought they would retire and be rich because of way over inflated stock values. Housing is following the same trend. People were scared of the market so they turned to real estate feeling it was safe. Look at history...people lose money on homes contrary to popular belief

Answer 9

It is actually becuase of all the good deals that were given to first time buyers a few years back. They made it unbelievable and very beneficial for people to buy houses. I think that cost of living is getting ridiculously high for the average person, and that may have contributed, but I also think that some people thought that buying a house when these great deals were around, thought that they could slack off a bit with paying their mortage. They didnt' check the interest rates and payment plans carefully enough and in the event, have lost their homes. I also think that many people have lost jobs because of our economy and that would also cause them to lose their homes because they can't pay the mortage.

Answer 10

Torrey - everybody here is on the right track....it will be at least another 24 months.

Remember - this is not the first time this has happened. it seems to happen in a cycle (like everything else in life)....and yes it will recover, but not for some time...as fast as it went down, it will be more slow recovering.

thanks -good luck :)