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Good time to buy housing in the US

combatcolin

combatcolin

macrumors 68020
Original poster
Oct 24, 2004
2,283
0
Northants, UK
With al the chaos in the States i at the moment now would be a really good time for anyone in the UK to make a speculative buy to let investment

Fantastic $ to £ exchange rate and rock bottom reposssed house prices - shame i m not in the position right now to do so.

Anyone in the States thinking of going shopping?

Aploogies in advanced to anyone on the other side of the Sub Prime crash.
 
Are you out of your f'in mind?
Rock bottom house prices? Clearly you're letting the media make investment decisions for you. The housing market is mush, the market itself is volatile, liquidity is gone...you do the math.

Exchange rates or not, I simply can't see your statement as being correct.
 
In a lot of places in the US, the housing market is still doing all right. Houses are definitely not cheaper in my town then they were a few years ago, though they aren't selling as fast either. Many people who need to move are not able to sell their house for what they owe without losing money (since they didn't put anything down many can't even get out of a mortgage). This has led to a lot of rental properties since they still need to move but don't want to take a hit on their loan.

I would not really suggest buying up investment properties unless you are willing to take a lot of risk. Property prices might go up or down at this point depending on what happens over the next few months to a year.
 
Housing prices in the LA area didn't drop as much as everywhere else. Here in Pasadena, the average price for a house is still around $650,000.
 
Housong rates haven't dropped much in NY/Long Island but are taking longer to sell. Took me 6 months to sell my condo (last year, you'd have an offer withon 2 weeks). Not a problem since new one is still being built.
 
Housing in the D.C. area has cooled off a little, but it still takes a while to sell and prices certainly aren't where I'd like them to be. We're still anticipating around $350K for a townhouse, and not necessarily an end unit.
 
I think a great time to shop would be in 7-8 months. The bulk of the ARMs are resetting between Oct07 and Mar08, I understand. Something like 43% of home loans were initiated as adjustable rate in 2005.

1 in 26 homes is in foreclosure in Stockton, CA right now, for instance. I can almost guarantee that number will grow to at least 1 in 18.
 
epiphany said:
Something like 43% of home loans were initiated as adjustable rate in 2005.
Click to expand...

I believe that's a region specific number, not a national number. I could be wrong though, and if I am I would love to know where you got the number so I could check it out.

There are many "buyer's markets" across the country right now, but where I live it's not really a buyer's or seller's market. Homes have corrected to the appropriate prices (for the most part), and although there's roughly eight months of inventory on the market sellers are still receiving on average something like 97% of their asking price.

I would say here it's a fairly solid market still.

So all you fine folks out there, come to Idaho and I'll get you your financing for your new homes!

;)
 
Exchange rates are the major imponderable in this calculation. The dollar is weak of course but it's gained a bit recently with the credit crisis (which ironically has at least temporarily increased the global demand for dollars). Some predict the dollar will drop again when the crisis abates. Who knows?

Also, the weakness in the US housing market hasn't really been reflected in sales prices -- at least, not yet. Even foreclosed properties aren't being offered for lower prices. With liquidity being the big issue now, the lenders are going to have to become more flexible, but I haven't seen any signs of it yet. Everybody is hoping against hope that we don't see declines on the order of 30-40%, as in the early '90s -- but it could happen if lenders find they need to dump properties in a hurry.

Finally, mortgage loans are harder to get now. I can't imagine any lender being anxious to offer a mortgage to an offshore borrower these days.

All of which brings to mind a thought I had during the early '80s. I thought about purchasing a home in the UK. Back then, a nice small one in a Cotswolds village could be had for around £40,000, about $60,000 US. Of course I never did it. I hate to think what that property would be worth today. :eek:
 
You can now trade in said village for a small tropical island.

;)

I can relate to that, in the very early 80's, when my parents moved down to where we live today, 3 story linked house (linked by a garage wall) were selling for £2000.

Of course, nobody had any money, but it makes you think.
 
evilgEEk said:
I believe that's a region specific number, not a national number. I could be wrong though, and if I am I would love to know where you got the number so I could check it out.

There are many "buyer's markets" across the country right now, but where I live it's not really a buyer's or seller's market. Homes have corrected to the appropriate prices (for the most part), and although there's roughly eight months of inventory on the market sellers are still receiving on average something like 97% of their asking price.

I would say here it's a fairly solid market still.

;)
Click to expand...

Fairly solid market still?! Try finding a loan...

Want the data? Go to www.recharts.com/reports/CSHB031207/CSHB031207.pdf and download this lovely Credit Suisse report. Please note pages 4,5, 8, 32, 34, and 37, for an overview of the problem in numbers.

Want to see how bad it's going to get.? Try page 47, a lovely graph of the impending ARM reset bubble, and the percentage of same bubble made up of subprimes, et al.

Then ask yourself, 'when will I be able to buy a house dirt cheap? And a used Lexus, to go with it.'

Looks like soon, as well as in another2.5 years.
 
combatcolin said:
With al the chaos in the States i at the moment now would be a really good time for anyone in the UK to make a speculative buy to let investment
Click to expand...

The difficulty is the cap rate.

You need to find a market where the realistic rental revenue you can get, is 10% p.a. of the purchase price. Not to say it can't be done, what you are suggesting is exactly what smart and aggressive investors try to do, buy in the trough of the market. And the tightening of the bottom end of the mortgage market will force more people into the rental market.

But the very forces that trigger the depression of housing prices in a market, such as loss of manufacturing jobs, are those that depress the realistic rents you can charge too, and increase the default rate by renters. (which will kick the sauce out of your profits)

The magic trick is identifying the trough in a local market where there is a strong probability in in-migration and future economic development.

And to do that, you have to do mondo research and get on the ground in that market personally.
 
I sure agree with the last point. You need to know the area where you're going to buy. You also need to have a property manager you can trust in that location. Exploit family and friends in a chosen locale, if you can. If I'd had some personal connections in the UK during the early '80s I might have bought that Cotswolds cottage, and made a mint!

One other positive for you, the dollar/pound exchange rate is not going to stay out of whack forever, which means you will see some appreciation on that basis alone, eventually.

I don't know about that 10% ROI, though. Not sure anyone is getting that on investment property anymore.
 
CanadaRAM said:
The magic trick is identifying the trough in a local market where there is a strong probability in in-migration and future economic development.

And to do that, you have to do mondo research and get on the ground in that market personally.
Click to expand...

Not necessarily. You're 85% there if you look at where housing prices and concomittent development have increased markedly in the last two go-arounds (Cali, Nevada, Florida, Boston, NY, CO, etc.) People tend to be attracted to the same area over and over again, for good reasons (job availability, standard of living, quality of life, etc).

Then factor in future water supply availability. ;)
 
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