MarketWatch: Why nobody wants to buy a house

[marmar]

By MarketWatch


CHICAGO (MarketWatch) -- Nobody wants to buy a house. Nobody in their right mind, anyway.

Oh, sure, a lot of gullible first-time buyers got lured into the market over the last 18 months to take advantage of an $8,000 federal tax credit (not realizing how little difference that money will make when the first property-tax bill hits at the same time the roof springs a pesky leak and the city hits you with a special assessment for sidewalk repair). But that tax credit has expired -- and, with it, any semblance of demand for homes.

The July data on existing-home sales show just how much the tax credit skewed the housing market in the months it was in effect. Sales plunged 27.2%, the biggest one-month drop on record, and inventories of unsold homes jumped to 4 million, a 12.5-month supply at the current sales pace, the worst level that measure has seen in at least 11 years. Read more on the plunge in existing-home sales.

Because of the original timing of the tax credit -- you had to sign a contract on a house by April 30 and close by June 30 (the closing deadline was later extended to Sept. 30) -- it was obvious that sales would get an artificial boost in June as buyers rushed to beat the deadline (since existing-home sales are reported once they close, not at the contract signing). And, by extension, there would be a big drop in July.

Don't think, though, that July is a one-month aberration. Sure, the numbers are record-breakingly bad, and August isn't likely to see any such extremes. But August isn't likely to show any increase in activity, either. And don't hold your breath for September. Or October, November, December. In fact, don't hold your breath at all waiting for a rebound in housing because all you'll do is turn blue and suffocate. ...........(more)

The complete piece is at: http://www.marketwatch.com/story/why-nobody-wants-to-buy-a-house-2010-08-24

[tk2kewl]

1. From the article...

"The only thing that will turn this mess around is jobs"

[Turbineguy]

2. The economy is collapsing!

The Homos are going to give you teh gay!

Obama is going to take your guns!

The government wants to kill your Grannie!

[marmar]

3. "The economy is collapsing!"

At least you got that part right.

[HiFructosePronSyrup]

6. No, the economy's recovering.

That was a serious of absurd comments.

[Subdivisions]

9. Please demonstrate how the economy is recovering. n/t

[HiFructosePronSyrup]

10. Please explain how Obama isn't gonna take my guns

and how homos are not going to give me teh gay.

[madinmaryland]

15. Uhh. It's called sarcasm.

[HiFructosePronSyrup]

24. Right, it's a series of absurd statements.

That need not be debunked.

[madinmaryland]

32. I think that was the intent of his post.

:shrug:

[marmar]

20. "No, the economy's recovering"

Now that's an absurd comment.

[taught_me_patience]

27. Are you nuts? "The economy is recovering"!?!?! WTF

The "recovery" is over and it would not be shocking to have a flat to small negative print for Q3 GDP (unlikely but not shocking). Q2 GDP will be revised down to +1.5% or so. So many indicators are turning down... you can't see the fire because the smoke is too thick.

[Subdivisions]

8. What the flying fuck are you talking about? Please explain. n/t

[SarahB]

12. He or she wants to believe, in spite of the increasing piles of evidence,

that everything's going to be ok if we just keep our mouths shut and believe.

[madinmaryland]

16. It's called sarcasm.

[Subdivisions]

22. It is NOT sarcasm when your first exclamation is actually TRUE but is then followed

by three hair-is-on-fire claims than certainly are not true but are used to make the first claim seem just as outrageous.

The fact is, the economy is collapsing.

[madinmaryland]

29. Uhhmm. The Economy has already collapsed and has been collapsed for nearly

two years. At least that is the way I see it, which is why I can't say it is collapsing when it is already collapsed.

[Subdivisions]

31. Thanks for clearing that up. I suppose a case could be made that the

economy has already collapsed. I choose to give it the benefit of doubt just to be on the safe side, since I'm not an expert and only an interested observer.

[corkhead]

26. You must be one of those muslins that wears a turbine, turbineguy

[Turbineguy]

34. The repubs seem

to have finally found an idea that is gaining traction. As soon as the numbers started to improve they started this. And indeed, the numbers have turned their way. Hopefully the homeless and discouraged will stay away from the polls and let them win the election. That seems to be the plan.

[JVS]

4. I want to buy a house. In fact, I'm getting tempted by the idea of becoming a slum lord.

[Greyhound]

5. The most basic principle of economics; a thing is only worth what people are willing/able

to pay. We saw the price of housing artificially inflated beyond people's ability to pay and masked it with the pseudo-money created by corporate welfare programs.

Now the game has collapsed but our overlords are spending our resources trying to fight the inevitable. There is only one fix for the real estate market; Wages must dramatically rise across the board, or prices have to precipitously drop, or a combination of the two.

Oh, and we have to force the banks back to lending or take them over.

[SoCalDem]

18. a re-set of principal & interest for existing home-buyers who can truly "afford" their homes

would boost the economy. Supposedly, the "banks/lenders" have already gotten their "aid" for those very same "toxic" assets, so it should be a no-brainer.

What happened was the equivalent of a guy selling you a car he did not own, you still "owe" for the car, even though he repo-ed it from you, and now he's still got the car & is selling it again..

Had vouchers been issued to home-buyers, instead of direct lender-bailouts, parity on both sides could have been reached, with both parties getting relief. It could have been super-simple.

1) re-appraisal of homes as of a set-date
2) a govt voucher for the "difference"
3) voucher given to lender as "payment on principal"
4) voucher "redeemed" by government (to the lender)

A mortgage would then be that current balance (principal)..and an upper limit of 4.5% interest for a new 30-yr mortgage..

Imagine the extra buying power for people.. It could have been limited , by region, to comply with higher housing costs that are dictated by geography...and limited to the primary residence only..and could have also been limited in scope, by income ...(why not use that ubiquitous $250K income they always love to use)

And it could have come with a 5 yr minimum residency clause to avoid flipping..(unless a move is mandated by a job transfer)

[Greyhound]

25. That and about a thousand other solutions would have blunted the damages

but they would entail those that benefited most from the scam to bear most of the pain, and we all know this administration is completely committed to propping them up at our expense.
:grr:

[ixion]

7. I bought land

and am building an eco-friendly, off grid house on it. It will cost less than half of what buying a standard house would cost. :)

[mnhtnbb]

13. We are building a house on our lot to replace the one that burned down

three years ago.

Why? You can't sell a lot--even in town--around here (Chapel Hill, NC) now.
The lot still has the detached garage with studio apartment over it that didn't
burn. We get $625/mo rent (graduate student) for the apartment as we are walking
distance to campus.

The house we are building is designed for us to 'age in place'. No going to assisted living.
The house is being built all one level--except for a lower level suite for our college aged son
to use when he's home, that eventually could be occupied by someone to 'live-in' in exchange
for helping us when we hit the old fart stage. If we need income before we need help, we might
also try to rent that space (after our son no longer needs it). The house we are building will be mortgage free.

We're toying with the idea of trying to keep the house we now own and are living in on the same street
and renting it. We figure if we could manage to put an extra $500/mo toward the mortgage on it, we'd own it
free and clear in less than 10 years, while a tenant would be making the mortgage payment. After it's paid off, any rental income would go in our pockets (except for taxes and maintenance).

The $64 million question is, will we have tied up too much money in real estate if we try to keep both places?

[WhiteTara]

14. Not unless you suddenly needs lots of cash very fast

and then you may some problems. But sounds like you have created a lovely old age income.

[tjwash]

17. Check with an accountant before you do the extra rental property.

There are a lot of write offs that that start to get phased out slowly, as you have to start counting that extra income on your returns.

[mnhtnbb]

19. We are planning to do that. Hubby is 68 this year and his income

is dropping. I'll be 60 next year and am planning to file for my SS at 62--if they don't take that option away before then!

[Kalyke]

21. $625 a month for a studio apartment over a garage?!?!?!

:wow:

I realize rent has gone up a lot, but I live one state over in Tennessee in a college town and only paid $250 a month for a two-bedroom over a garage (not walking distance, though, but not far and certainly on the bus line). That apartment still rents for $400 today.

Man... if real estate is that pricey in your town, I'd tell you to go ahead in keep the rental!

I didn't realize it had gotten so expensive over the mountain. :)

[mnhtnbb]

30. The first day I put it up on Craigslist I had someone there within 2 hrs

and he took it: 9 ft ceiling, full kitchen, new stacked washer/dryer, Pergo flooring, entrance directly on same level as street (because we're on a hill and you go down the driveway to get to the garage) and includes water.

Chapel Hill is pricey.

[Kalyke]

33. Sounds nice.

I didn't have Pergo flooring and 9-ft ceilings in my apartment, though.

I have family over in the Research Triangle, so I'm aware that Chapel Hill is a bit more pricey than, say, Bat Cave. LOL (I always loved that exit)!

:hi: neighbor.

[Commie Pinko Dirtbag]

11. Economy recovering or not...

What good is having a house if at the first serious illness in the family you'll lose it?

[CTyankee]

23. True. When I sell my house I will have to spend a lot more on health insurance.

I have Medicare but my supplemental insurance will cost a lot, at least the one with the most coverage will. I plan to downsize and rent...I don't want the worry and the upkeep any more...

[Yavin4]

28. Just Cut Taxes on the Job Creators and Everything Will Be Okay

Now, that is sarcasm.