To homeowners, if real estate prices (ie market values) drop 15% in the next year, what will change for you?
594827
It won't mean much for me, except maybe lower property taxes.  As long as you're not planning on selling, it's kind of like a drop in the stock market.  The price doesn't matter until you sell.\n\nTami T - I would be concerned about a 15% drop, unless you had a big down payment.  You could end up upside-down on your mortgage and if you HAD to sell (lay-off, relocation), you would end up still owing the bank for a house you don't own anymore.  And I'm sure they'll want that at closing.
316749
You are asking a loaded question. In the next ten years there will be 76,000,000 people retiring, that alone will shift much of life as we know it. Real estate may peter out as baby boomers sell their big homes for smaller ones. Stocks may not do so well with less people working. Commerce (GNP) will slow as there are less buying dollars. Foreign powers will gain strength, economic and political.
1111842
If homes in Mendocino were selling for $75,000 each, then there would be no slump.\n\nSlumps happen when there are no sellers selling at the price that buyers can afford, or wish to pay.  So one of two things must happen for a sale to take place - either the seller must drop the price, or the situation in Mendocino must somehow improve such that buyers want to pay more to live there.
997727
Probably.  It depends how you look at it.\n\nOver the long term, stocks & real estate will probably give you the same return on the dollar (learned this in Finance at University of Chicago nobel prize winner).  However, that may vary in the short run/shorter time horizons (e.g. over 10 yrs or less).  Recognize you usually own a home for longer & usu get a 30 yr loan.  Lately, obviously real estate has been doing better than the stock market.  But, with interest rate hikes, the real estate market seems to be cooling off.  And, real estate can differ greatly pending on the house you buy & its location.  I do not claim to be an expert and you may want to speak w/ an objective real estate agent (if you can find one).\n\nThat being said, in general buying is almost always preferable to renting as your monthly payments will be lower, esp as time goes on.  This, in turn, will allow you to save more so you can invest it whereever you want to.  Usually rent increases year after year; but, your mortgage payments will be the same as they are today for 30 yrs.  I say this as someone who has rented the last 10 yrs & wish I had bought sooner.  My apartment just went condo & I bought it 2 months ago.  In retrospect, I wish I had done it sooner.\n\nI read an excellent book on the subject that was very educational for first time buyers.  It's called "The automatic Millionaire Homeowner" by David Bach.  It explains all the basics & how to think abt mortgage options and what might be right for you.  It was really helpful.   A few months ago, I was a complete moron on the subject...now, I understand what others are talking about.
43091
I doubt that it will be that serious. First of all, most people will not be impacted. The majority of loans made in the past few years were still 30 year fixed rate loans and most buyers made down payments. The small portion of buyers who were speculating and cannot carry the payments long-term will become foreclosures. Yes, those foreclosures will drive prices down in the areas where they happen, but not everyone has to sell. Only those sellers who are in a position where they have to sell will be impacted. Long term holders of real estate will continue to make payments and will not be impacted. If a property's value drops down below loan value there is no requirement that people will have to "come up with the difference" as you put it, unless they are forced to sell. The most likely bunch of investors that will be negatively impacted are the ones that actually follow the advice of "real estate gurus" that preach the no money down, flipping, and similar deals. I don't think they are a significant part of the market and will be glad to be rid of them for awhile. \n\nThe lenders are not stupid. They do expect some impact in places like California and Florida and are taking steps to spread their risk. Many markets are counter-cyclical and have not experienced any part of the bubble you are afraid of, so lenders are spreading their portfolio risk by lending in various markets. Texas is a good example, where appreciation has been low in single digits. \n\nReal estate markets are micromarkets, and do not behave like stocks. As any agent will tell you, location, location, and location are the keys to real estate. Good locations will mostly continue to be good locations in most cities. People will still like living in California and Florida (although the hurricane risk there makes me question their sanity). Much of the money driving the boom in these areas is foreign money. Few people realize that since the dollar has dropped almost 30% that non-US investors have been buying what they see as bargain property. After all, it is 30% cheaper than it was before for them. Many of these investors pay all cash. They will not be impacted by falling values. Unless the dollar recovers value, that money will continue to flow in. \n\nI've been through two real estate reversals, once in the early 1980's when mortgage rates actually went to 19%, and another in the early 1990's when real estate values dropped about ten to twenty percent in some markets. There was a crash in commercial real estate in the late eighties created by the Reagan administration changing the lending regulations at the same time they increased the reserve requirements for banks that led to the savings and loan bailout. That was coupled with a change in real estate depreciation laws, but this mostly impacted commercial properties (and taxpayers who paid for the bailout). Most people's lives are barely impacted by falling real estate values. Like I said the only ones that will notice are the ones that are forced to sell for some reason other than falling real estate values. \n\nBy the way, I own KBH and have made more money off of it in the form of dividends and stock payouts than I initially invested back in the 1970's. The stock has split so many times I have lost count. The stock can go to $1 and I will still show a profit.
1110783
There is no "standard", just what the market will bear.\n\nBut I just heard a figure you may find interesting.  There was a survey done recently by real estate people and the average monthly rent increase is expected to be 5.3%, about double what the average increase was last year.\n\nReason given is that interests rates are rising so home purchases are slowing.  More people are staying in apartments so demand is up.  Supply is also down as many apartments are being converted to condos.\n\nSounds like you did pretty well.
808280
My house has been on the market in Michigan for 1 1/2 yrs. I don't anticipate it selling any time soon as the market in this area is very slow right now. We just dropped the price $10,000 (it was already priced below appraisal) and still no nibbles. The only offers we have had were between 40,000 and 50,000 below the asking price (even after the price drop). Even at what we are asking now it is more than a bargain (it's a newer build on 10 acres). I am trying to talk my ex into letting me list it myself (it was written into the separation agreement that a certain realtor had to list it) so that I can drop the price another couple of thousand but still walk away without owing money on it.
463182
That depends a lot on where you want to live.  Here in Southern CA, I don't think it will.  First of all, LA & San Diego are slowing due to the latest fed hike in interest rates.  But, because the demand is so much larger than the supply, the pressure for new, affordable homes is still strong.  Unfortunately, with the median price of a home at around $550,000, the income necessary to support monthly mortgage payments is above what most in the middle class make right now.  \n\nBut, you are starting to see some slowing and stagnation in less desirable markets.  That is where "the bubble" will burst, first.  Places like Cleveland, Louisville, Nashville, St. Louis, etc.  Watch as the interest rates go up, more houses will dump on the market because people with variable rates cannot afford the increases monthly.
330659
A 50% decline in home values would be unrealistic for the overall market even with a deep recession in effect. Historically around 10-15% has been the -maximum-  depreciation  rate (aggregated over several years) for average national/regional home prices. \n\nFor potential buyers, the good news is that California is easily the most overpriced market in the U.S. and does have a recent history of rapid, long term and most significant declines in prices.  The trick is that 30-40% drops from the peak have definitely been recorded over a 5 year period for very specific zip codes in Southern California during the early 1990's. Be forewarned that this only occurred for only a few homes even in those areas so you have to look hard for them.  \n\nHistorically, long term (last 60 years or so) home prices have risen annualized at an average rate of 3-5% per year. The reason home prices have never dropped more than they have risen even in the worst of times is that owners can simply just take their homes off the market if they feel the prices are too low as long as they can afforf the mortgage payments.  In California, however, many people tend to live beyond their means financially and tend to buy homes that are too expensive for them to afford in the first place, quite a few home owners in California may not have the option to wait out a selling price drop because they may need the cash desperately, so they drop the price severely to get out of an unaffordable mortgage.
616446
Prices grew by over 40% 2 years in a row.  Now prices have stabilized and homes are staying on the market longer.  Prices have not dropped, but with inventory increasing, it will probably happen soon.
1055964
Hi there\n\nThat is a tough question, no one can give you an exact and correct answer.\n\nHouse price inflation has and will continue to fluctuate, the future increases are always a matter of debate.\n\nYou need to consider local factors, such as will there be any new infrastructure enhancements - positive or negative - that will affect local prices?\n\nTaking a personal view i would see house price inflation slowing through this year and next, close to zero in years 3 and 4, and then starting to pick up again.  \n\nIf we assume 5% this year, 3% in yr 2, 1% in yr 3 and 4, 5% in yr 5, then the total increase would be about 16%, e.g. the house would be worth about £116,000.\n\nAs I say, this is a personal view, and you also need to take account of local factors as mentioned above.\n\nI hope this helps.
866603
Never mind. North Sea oil is running out. Public pensions and the NHS and education are going to break the bank.\n\nCouncil tax will, in 2 years' time, turn into an American-style property tax: 1% per year of actual market value of your home.\n\nIncome tax -- stealth taxes -- shall rise. Get ready to be poor.
725005
The market has changed in a lot of areas.   NO BUBBLE THOUGH.  the thing to remember is real estate is a local market.  That being said, these are the reasons a house usually sits on the market:  price, condition.  If it has been on the market since July, relatively that is NOT really a long time, everyone just forgot what a normal market was like in the frenzy of the past few years.  Now if everything else comparable is selling in a matter of weeks then again refer back to the two items above.  Some sellers are just testing the market, some really don't understand that the market determines the value of their home, not them, and some thought appreciation was going to skyrocket forvever instead of normalizing and so kept pulling equity out when they shouldn't have.  (that is a whole other story).  \n\nThere is not standard formula for determining when someone will drop their price.  Sellers are motivated by one of three things generally and which is their strongest determines their pricing strategy.  Time, money, or hassle.  Usually all sellers have all 3 motivations, but one is always the strongest.  If they are being transferred and have to sell in a limited time frame, then they will price slightly below market value, if they want (or need) as much money as possible and have all the time in the world, they may decide to price high (and end up chasing the market usually).  \n\nSo this house may be completely normal in days on market, it may be overrpriced, or it may be in bad shape, or the sellers could have all the time in the world to sell.  Your agent (not the seller's, get your own) should help you by determining market value, based on recent comparable sales, advise you as to market conditons and overall look out for your best interests and try to get you the best deal possible.  The listing agent's job is to do all that for the seller and they do not and cannot represent your best interests.  \n\nGenerally the seller pays the buyer's agent commission (the purpose of the MLS is to offer compensation) so it usually doesn't cost you anything to have your own agent.  I cannot stress this enough, GET YOUR OWN AGENT who will protect you and have a fiduciary duty to you!  And get one that knows what they are doing, that you are comfortable with and that you trust.  Their job is to advise you and help you through the entire process so you need to like working with them.
520904
100%... wait!!  I just sold my home in Nor Cal.  I'm moving to AZ.  Both have been hot markets, and prices are declining.  I'm going to rent for 6-12 months, and hopefully save 50-100K.\n\nSo if you have no need to buy yet... hold on as long as you can.  Real Estate Cycles are sometimes 15 years, so the decline that is just starting might go for 3-4 years.\n\nPlus, interest rates have already bumped up 16 times.  At most, we might see 3-4 more bumps.  Hopefully only 1 or 2 more.\n\nWait, and save your money!
257397
Now is getting to be the perfect time to buy and hold. We just came out of a huge sellers market. Prices are not skyrocketing like we saw last year, and it is taking a lot longer for real estate to sell.\n\nNow is the perfect time to buy, interest rates are on the rise which really brings in a lot less buying competition, sooner or later interest rates will fall again, you can refinance and you will look like a genius, buying when everyone else was selling.\n\nBUY and HOLD, best wishes!!!
1166840
Resale homes in Fresno County have felt the pinch, as a month-to-month comparison shows prices falling from $275,000 in March to $270,000 in April.\n\nPersonally, I think that rising interest costs will force home prices downward, as speculators flee the market.  We're at a pretty high level of foreclosure rate and it's still climbing.  For the long term, buying property is always a good thing, but you need to make sure that you truly can afford it.  Just because you can qualify for a loan doesn't mean that you get to keep the property.  Remember that every person who has ever experienced foreclosure also qualified for a loan.\n\nYou seem like a forward-thinking young person who wants to have a good financial future.  Have you started your Roth IRA yet?  If not, put your money toward that, while you're young and can get time working on your side.  Click on my name and drop me a note if you want to learn a little bit about investing.  In the meantime, I urge you to read a book, "The Only Investment Guide You'll Ever Need" by Andrew Tobias.  It will give you a basic foundation on investing, including real estate.  Good luck!
10258
current real estate forcasts think that So. Cal real estate prices should start heading down soon.  We should see a adjustemnt in asset prices soon.