I'm confused on the "housing crisis" and have a question.?

Question

Aren't a lot of the places housing prices are falling is where they were already way overpriced to begin with? Certainly not all but most?

Answer 1

Housing is just like anything else.

Two steps forward and one step back.

Homeowner's are mad because their home has gone down 20-30,000.

But wait! They went from $200,000 to $400,000.

A drop of even $40,000 represents only 10% decline.

They quickly forget the same home DOUBLED in price.

Trees' don't grow to heaven and everything Stocks, bonds, gold, and yes, even Real Estate will retrace an advance like we saw from 2001-2005.

That you can count on.

Terry S.

http://www.Welcome2Arizona.com

Answer 2

Florida, well, we're one of those markets. Yes, values over the last couple of years increased at a crazy rate. Coupled with the buyers' willingness to pay whatever a seller was asking, came the crazy DOM - days on market, the amount of time a property is on the market - which was sometimes only hours! This drove the price even higher. It was vicious circle, and in areas like mine where most locals only make enough to afford a mortgage on $60k - $100k, the price increases drove alot of potential buyers, and tenants, out of the market. As more and more investors bought here and drove prices up, the less affordable it became for locals to buy or rent. Eventually, it all evens itself out.

What I tell people now is this - we're seeing a return to a normal market, where prices are often reduces, where negotiations are open, where a property may be on the market for 60-180 days. That's normal, not a bust. What we've seen for the past couple of years was just abnormal and not sustainable.

Answer 3

There's a two-fold problem:

1. Some areas (especially the coasts) were experiencing abnormally high property value increases that couldn't be sustained. That's not to say that anyone caused this problem; that happened because buyers were willing to pay more and more. Now that property values are self-correcting, people who bought in the last couple of years and want to sell are finding out they owe more than they can get.

2. Homeowners have been treating their houses like banks. With these value increases, they kept refinancing and taking out lines of credit which pulled out their equity from their homes. Many of them took out ARMs, and now that the fixed period is over, the interest rates are killing them. There again, they might now owe more that they house could currently sell for.

Answer 4

Define: Overpriced????

There is no such thing as a "market" being over-priced or under-priced...houses sell with what the market will bear, and what an able buyer is willing to pay.

I can tell you now, that many houses that routinely sell in California for $400-$500K, you couldn't get someone on the east coast to pay $100K for...b/c on the east coast, real estate is much less expensive (due to lower demand and less population)and a buyer can afford to be picky.

To me, the weather isn't worth it.

Answer 5

That is correct for where you are but not in Australia~~