House. Losing on your investment?

[RickPro]

Looks like we are heading to a depression.
All i hear now is houses going on foreclosure. In my Private Community I see other Mansions, i mean houses that are vacant. its a newer community here in Windermere and most of the houses are full. Now im seeing people that aren't able to afford there house. Here we have a lot of houses that are on the market. its a buyers market now, and you really can name your price and whatever house your heart desires.
i flew into texas 2 weeks ago to play a little golf with a buddy that lives there, and i saw the prices on houses there, and they are so cheap. i could have bought so many mansion, i mean houses there. the community didnt have much to offer, but the houses were descent.

how is your guys situation? what are you going to do?

[Lemay427]

My castle, I mean house, is losing a ton of money. the other castles, i mean houses, in the neighborhood are being taken over. I have thought about building a moat around the place to keep out realtors and potential buyers from stealing my place. It is going to be tough these next few years.

[steve8820]

My wife and I live in Orlando as well and the market is bad. Currently own a home in Baldwin Park near downtown. I think the vast majority of the market problems are due to people thinking of homes as only investments. Over the past 5 years, people have purchased houses not for a home, but in hopes of selling in 2 years for a profit. That gravy train had to come to an end sooner or later.

At the end of the day, a house is somewhere you live and is very much a liability. It is a money pit in which we pour thousands in per month. Sure, historically homes have increased in value over longer periods of time, but assuming short term increases is simply rolling the dice. I have very little sympathy for those out there who purchased too much house than they can afford in hopes of turning a quick profit. However, I do feel bad for those who are losing jobs and thus losing their homes as a result. That is truly unfortunate...........

[elementz]

I think that it's strange how the housing market in the US is tanking and here in Canada, houses are rising every month. I was looking at a house just before xmas for $150k. 8 months later now its almost $175k without any major renovations done. It's pretty sick. Houses are going up at a rate like 2-3% a month.

[MunkeyGolfer]

A lot of the problem came from Adjustable Rate Mortgages given to people who really shouldn't of had a mortgage loan in the first place. I purchased land last year in hopes of selling my current house and building a new one. But looks like I will hold off on my plans for a year or two.

[joshtpa]

A lot of it has to do with the people buying homes. What I mean by that, is that everyone just assumes real estate increases. People hate to think that even in real estate homes lose value. Top that off with everyone and their mother going into the mortgage business and all of the sudden you end up with bad things happening. People getting approved for loans that they cant afford, and realtors buying up and flipping new homes. Now everything is going down, and people do not want to admit that it was a false inflation with real estate 3 years ago.

[ChiChiIsMe]

Real Estate is a LONG TERM proposition. When I'm ready to sell in 20 years (or more), my house will have at least doubled in value.

[m11]

A lot of the problem came from Adjustable Rate Mortgages given to people who really shouldn't of had a mortgage loan in the first place.

There you go.

There is too much money in it for the mortgage companies to have more discretion to whom they give their loans. Because so many can't afford the mortgages, they are being forclosed on...allowing the banks to sell the homes ...which drops the value of all the homes in the area.

[iacas]

The housing market in Erie, PA is pretty good. We've always had pretty low cost of living, though, so we're not hit as hard by this kind of tomfoolery.

[GaijinGolfer]

My house has done nothing but gain in value since I bought it in '03. Around here, you arent seeing as many homes for sale as it seems you are seeing in other parts of the country.
You are seeing more houses on the market than usual because GM announced they are closing the plant in Janesville though...

[TD22057]

I have a hard time feeling any sympathy for people with this problem. The value of your house does not change the payment you're making. If you can't afford the payments, you shouldn't have bought in the first place. It's extremely annoying to hear people on the news say things like: "The price of their house fell drastically and so they had to declare bankruptcy". What? What they meant to say is something like "They made a very bad investment with money they didn't have and they bet wrong."

I do feel bad for people who lose their job because of the economy and can no longer afford their house but it sounds to me like those people are in the minority. Most of the problems seem to be from people thinking they could flip the house for $$ or signed up for loans they couldn't afford assuming they could refinance to a better rate later on.

[RickPro]

Yes a big problem is the loan officers of the mortage firms.
they get a percentage when they approve a loan. so when they approve a loan that is 1/2 million, they there percentage increases. so the loan officers probably know you cant afford it, but approve it anyway because they will receive their bonus whether you go bankrupt or not.
there needs to be change and laws to be taken into account. if this happens its gonna help revive the housing market because their will be less forclosed homes on the market. One great thing about your private community here in windermere is that you are required to live in your house for 2 years minimum. This drives away people that just want to flip a house or people that want to rent their house. So the people that buy mansions here stay here and live here, and not put up a for sale sign in front of it.

[InTheTwenties]

My wife and I live in Orlando as well and the market is bad. Currently own a home in Baldwin Park near downtown. I think the vast majority of the market problems are due to people thinking of homes as only investments. Over the past 5 years, people have purchased houses not for a home, but in hopes of selling in 2 years for a profit. ..........

Well said! I

live in my home. I invest in the market/bonds/funds for capital growth. That being said however, appreciated home value is the saving grace of most retirements. BTW: In my opinion, American blue chips are on sale. Even banks are on sale if you can take a little risk. For example: FNM, I got a bunch of shares at $8ish, and have sold some to pay for the new driver (FTI). I'm holding on to the rest because of a significant upside potential.

[nevets88]

I don't own a house, but do own an apartment. I totally lucked out. I bought an apartment in New York City pre 2000.

The value peaked probably about two years ago, but it's worth about 7 times what I paid for it. There are rules though that limit the amount of appreciation you can keep. For example, the board gets a certain percentage of the selling price. The downside is I've been living in a limited amount of space for longer than I care for.

[mellojoe]

My wife and I live in Orlando as well and the market is bad. Currently own a home in Baldwin Park near downtown. I think the vast majority of the market problems are due to people thinking of homes as only investments. Over the past 5 years, people have purchased houses not for a home, but in hopes of selling in 2 years for a profit. That gravy train had to come to an end sooner or later.

Extremely well put.

I work in the banking industry and it just got out of hand. Mortgage lenders weren't being conservative with their figures. The hopes were that even if someone got upside down, the market would catch up to them in 2 to 3 years and they could still sell and get out from under it without losing. Worst case scenario, they thought, would be that they would break even ... even on a bad loan. Of course, that doesn't work. Houses flooded the market, consumer confidence plummetted, and it is now a buyer's market. I mean, property values were increasing at 10% per year!! Of course it had to end. People were buying way more house then they could afford. Heck, I saw people getting reverse-amortization loans! They assumed that no matter how negative they went in equity, they surely would make it up with the market gaining at 10% a year. That kind of thinking only breeds trouble... as we have seen. To our Canadian friend, I know you are in a boom right now, but please beware that you could hit a bust. Treat your real estate smartly, and you'll make out like a bandit. Get reckless, and you'll end up like a lot of these guys in bankruptcy and forclosure. Good luck to all those who are facing hard times. Its really bad in some areas. I hope you all pull through.

[mellojoe]

Yes a big problem is the loan officers of the mortage firms.

Don't forget the greedy customers who agreed to an "interest only" loan thinking they could flip the house for profit in a few years.

Yes, the mortgage guys screwed up royally. The banks made some terrible mistakes by gambling on real estate futures. But, many customers knew what they were getting in to, they just bet on the wrong horse and they want to blame it somewhere else. Both parties are to blame. Equally. PS: I read one bank CEO quoted as saying, "Yes, we lost some money. But, it wasn't customer money that was lost." Whaaa...??? Profits come from customers. How can you say things like that?

[RickPro]

I don't own a house, but do own an apartment. I totally lucked out. I bought an apartment in New York City pre 2000.

wait so you bought a condo then right?

because apartment you can just burn your money in smoke because you get nothing back at all, probably pay more when you move out because the place is not exactly as they wanted. apartments you don't own. I stayed a year in an apartment while my house was getting built from the ground up. i got no money back at all. my house is a 6500 sq ft home. with 5 big bed rooms and 5.5 baths. the master bedroom is enormous, probably was what got me to buy this particular home. the master bedroom has its own living room, and the master bathroom is huge 2 sinks, 2 showers, 1 tub/jacuzzi, 2 walk in closets that are size of bedrooms in smaller homes. and in my community this is one of the smaller houses. i guess its safe to say mansion. the bigger houses or mansions look like apartment complex its so big.

[iacas]

apartments you don't own.

You can in New York City.