Housing market softening....

[analogman]

Just thought I'd post this for you who might be interested in buying a home soon-ish. My wife and I signed a contract on a new house at the end of September with a closing date at the end of November.

Well, it's 4 weeks before we close and I just found out the price went down by 30-40K on our floorplan :eek: Our place lost 10% of its value and WE HAVEN'T EVEN CLOSED ESCROW YET! :mad:

I am pursuing a remedy to this and wanted to let people know to tread carefully when buying a home now or in the near future....

[Winter Storm]

Uh oh!

Quick, somebody, don't let Yankeeyosh see this thread! :0

[pisces2473]

Yeah, but isn't that good, because you won't have to pay so much?

[analogman]

Yeah, but isn't that good, because you won't have to pay so much?

We are contractually obligated to pay the higher price, so that's VERY bad.

[wordsmith]

Not if it's a trend and you're planning on selling it off, I guess.

[pisces2473]

OH SHIT that sucks. Ouch.

And this is why I want nothing to do with buying a home. It's too complicated.

[and1grad]

Just thought I'd post this for you who might be interested in buying a home soon-ish. My wife and I signed a contract on a new house at the end of September with a closing date at the end of November.

Well, it's 4 weeks before we close and I just found out the price went down by 30-40K on our floorplan :eek: Our place lost 10% of its value and WE HAVEN'T EVEN CLOSED ESCROW YET! :mad:

I am pursuing a remedy to this and wanted to let people know to tread carefully when buying a home now or in the near future....
Why are you buying now? I was under the impression that prices are gonna continue to drop for about another year or so.

[Chameleon]

analogman, how much do you stand to lose if you back out now? Or is it too late to do so? (And where the heck in Austin are you buying a $300,000+ townhouse?)

[analogman]

Why are you buying now? I was under the impression that prices are gonna continue to drop for about another year or so.

Good lot in a good location and we got a lot of seller incentives. I was willing to absorb some price decline for the lot and location. Also, new home prices are supposed to be more inflexible than existing homes so I thought it would be ok.

The drop is much more significant than I expected/anticipated. And judging by the amount they slashed the price, the incentives we got weren't that good :neutral:

[analogman]

analogman, how much do you stand to lose if you back out now? Or is it too late to do so? (And where the heck in Austin are you buying a $300,000+ townhouse?)

I live in Sacramento now. I miss Austin though. 300K can buy such a nice house there :)

I can walk away and lose my deposit (much less than 30K) anytime before we close escrow (more realistically any time before I sign the loan docs, which is happening SOON).

[Winter Storm]

Seriously, the more and more I read these kinds of threads (like the one capella had a week ago), the more I love renting. I just cannot deal with the added stress right now. It seems a lot more carefree for me and my lifestyle.

[AshleyJordan]

Ouch! I'm really sorry to hear that. . . I'm planning to buy in the summer, and I hope that by that point the market will have softened enough for me to get a deal, but also not continue to crash so much that I take a huge loss.

[and1grad]

Good lot in a good location and we got a lot of seller incentives. I was willing to absorb some price decline for the lot and location. Also, new home prices are supposed to be more inflexible than existing homes so I thought it would be ok.

The drop is much more significant than I expected/anticipated. And judging by the amount they slashed the price, the incentives we got weren't that good :neutral:
I would've NEVER expected that kinda slashing either. I've never heard of the price slashed by that amount in a short timeframe.

[and1grad]

I live in Sacramento now. I miss Austin though. 300K can buy such a nice house there :)

I can walk away and lose my deposit (much less than 30K) anytime before we close escrow (more realistically any time before I sign the loan docs, which is happening SOON).
Did you buy in the Arden area or something?

[pisces2473]

Seriously, the more and more I read these kinds of threads (like the one capella had a week ago), the more I love renting. I just cannot deal with the added stress right now. It seems a lot more carefree for me and my lifestyle.
Yup, definitely agree.

[PenforPrez]

I would've NEVER expected that kinda slashing either. I've never heard of the price slashed by that amount in a short timeframe.

At the height of the boom, things worked the opposite way. Real estate speculators were buying houses and selling them at handsome profits, sometimes within minutes. That's why house prices got as high as they did to begin with.

Paul

[analogman]

Ouch! I'm really sorry to hear that. . . I'm planning to buy in the summer, and I hope that by that point the market will have softened enough for me to get a deal, but also not continue to crash so much that I take a huge loss.

Thanks. We'll be OK though. It's heart breaking to know we might have to walk away from the house (we've been visiting it weekly to see it's progress) we've grown attached to. People, please do not fall in love with the house until after you close escrow :huge:

From what I've read, housing prices are supposed to soften for the next 18 months to few years depending on the area. I knew it was going happen but the extent is completely shocking to me. We bought in an upscale "desirable" location too which was supposed to be more immune from a crash.

[and1grad]

At the height of the boom, things worked the opposite way. Real estate speculators were buying houses and selling them at handsome profits, sometimes within minutes. That's why house prices got as high as they did to begin with.

Paul
It wouldnt surprise me if a house went up by a lot in a month. Decreasing by that amount that quickly does surprise me tho. Its almost like that "once you drive a new car off the lot" thing.

[Chameleon]

I can walk away and lose my deposit (much less than 30K) anytime before we close escrow (more realistically any time before I sign the loan docs, which is happening SOON).
30K is a lot to be in red from the get-go. When I got my house earlier in the year, I stood to lose about 2K if I walked out (deposit, inspection fee, survey fees etc), I still got the place and spent it seems like 10 times the penalty on repairs and other surprises on the house. You are going to be paying interest on $30K that you have no chance of recouping if you have to sell the house soon not to mention other new house expenses/surprises.

[SmilesSoSweet]

I would've NEVER expected that kinda slashing either. I've never heard of the price slashed by that amount in a short timeframe.

I've seen it here in the Phoenix area. I work in the building industry, too and our clients (builders) have told us to that some of our projects are on hold because of the slow sales. Some builders are offering new home buyers, high end pools, plasma tvs, and thousands of dollars towards other incentives.

I'm glad I didn't end up buying earlier this year. I'll probably look into it next year. I'm fortunate that my parents are willing to help me out with a down payment if I decide to buy a place. The only return I have to give them is that they can use my house as their timeshare whenever they want. That works for me.

Oh and analogman, what kind of incentives were you offered?

[analogman]

Oh and analogman, what kind of incentives were you offered?

40K total in closing costs and free options.

[steph78]

I've seen it here in the Phoenix area. I work in the building industry, too and our clients (builders) have told us to that some of our projects are on hold because of the slow sales. Some builders are offering new home buyers, high end pools, plasma tvs, and thousands of dollars towards other incentives.
Same here in Atlanta - I do a lot of residential design work and things are getting pulled left and right. I just finished designing a really beautiful high-end townhome community (these were 10,000+ sq. ft. places which were going to sell for $2-3 million each) and the project has been put on hold indefinitely because of "uncertainties" in the new housing market. My guess is that it never gets built at all - that's a lot of money for a developer to risk on a spec project.

We have also been seeing the same thing with "incentives" for new home buyers since the market is softening - builders are adding upgrades galore to houses to attract buyers. I have just designed three houses in a row with indoor half-basketball courts in the basement (20-foot ceiling!) - and these are not custom homes, they are spec homes!! Crazy.

[vxmike]

Why are you buying now? I was under the impression that prices are gonna continue to drop for about another year or so.

Try more like ten years. Current prices are so far out of line with the fundamentals they have nowhere to go but down once the idea that "housing always rises" is gone...which I think it finally is. Housing isn't like the stock market where it rises and falls every other years - the trends are much slower and longer term. We've been straight up for 15 years now almost nationwide, so the downtrend in my opinion will be a lot longer than one year to work down the ridiculous prices.

[yankeeyosh]

Uh oh!

Quick, somebody, don't let Yankeeyosh see this thread! :0

Too late :)

But I won't say anything b/c nothing has irked me yet. If you want my opinion on Gen 'Y' and buying houses, just search for "yankeeyosh" and keyword "house". My opinions are well-documented.

[spiritedaway]

40K in closing costs?? Closing costs alone? That seems a bit high.

Just last week, I saw the price of this townhouse slashed by 40K, which is a lot. But factoring in the neighborhood and the square footage of the place, it's still selling for too much. I do expect it to drop some more, and I'll visit when it's low enough to seriously visit/consider.

Most of the incentives I've seen (and I've visited quite a few places this year) have been plasma tv, 3-4k off closing costs, first year of condo fees waived, and so forth.

I think the market correction (over the next 18 months) will hit hardest around places that's over-priced (primarily cities), but over the long term, I don't anticipate this slump to last for too long because people are always looking for a place.

40K total in closing costs and free options.

[spiritedaway]

Great tip. When buying a house (and especially in this market), you always need to know when to walk away (no matter how much love it) if it doesn't meet your bottom line (finances), but it got to be a realistic bottom line to begin with.

Does anyone know if it's more difficult to negotiate on the price of a newly built home (marketed by developers?) Is it rare? I know developers don't like to lower the price of their properties, but incentives rarely make up for the difference in price.

Thanks. We'll be OK though. It's heart breaking to know we might have to walk away from the house (we've been visiting it weekly to see it's progress) we've grown attached to. People, please do not fall in love with the house until after you close escrow :huge:

From what I've read, housing prices are supposed to soften for the next 18 months to few years depending on the area. I knew it was going happen but the extent is completely shocking to me. We bought in an upscale "desirable" location too which was supposed to be more immune from a crash.

[shimma]

Just thought I'd post this for you who might be interested in buying a home soon-ish. My wife and I signed a contract on a new house at the end of September with a closing date at the end of November.

Well, it's 4 weeks before we close and I just found out the price went down by 30-40K on our floorplan :eek: Our place lost 10% of its value and WE HAVEN'T EVEN CLOSED ESCROW YET! :mad:

I am pursuing a remedy to this and wanted to let people know to tread carefully when buying a home now or in the near future....


Oh man, that sucks. So sorry Analogman. I wish you guys better financial luck very very soon.

[analogman]

40K in closing costs?? Closing costs alone? That seems a bit high.

Just last week, I saw the price of this townhouse slashed by 40K, which is a lot. But factoring in the neighborhood and the square footage of the place, it's still selling for too much. I do expect it to drop some more, and I'll visit when it's low enough to seriously visit/consider.

Most of the incentives I've seen (and I've visited quite a few places this year) have been plasma tv, 3-4k off closing costs, first year of condo fees waived, and so forth.

I think the market correction (over the next 18 months) will hit hardest around places that's over-priced (primarily cities), but over the long term, I don't anticipate this slump to last for too long because people are always looking for a place.

40K total for closing costs and free options. It's amazing how many points one can pay upfront to buy down the mortgage rate.

[analogman]

Oh man, that sucks. So sorry Analogman. I wish you guys better financial luck very very soon.

Thank you. We just went and saw the sales executive. She's going to talk to her manager and get back to us today.

[frogleggz]

I bought my house in March of this year when the local market had been flat for about 6 months. Now there are 3 houses immediately surrounding mine that have been on the market for 4-5 months each, and they have all been reduced to about 15% less than what I paid for my place. They are still not selling. I try not to think about how much better our situation would be had we waited to buy, since there's nothing I can do about it at this point, but it's hard to ignore when I walk outside and see the sea of "priced reduced" signs.

Also I am amused by those who think they can so accurately predict the housing market. It varies by location, and unless there is some clear cause in a given location (for example, lots of rich people control your town and are very anti-growth, so prices will go up - or, the main employer in your area is moving operations to another city, so prices will go down) you are kidding yourself if you think you know when the top or bottom of any market will be.

[and1grad]

Kidding yourself? Hardly. All you have to do is pay attention to whats happening in the market where you live. Its not the lottery.

[sondra_finchley]

My parents managed to sell their home in Las Vegas two weeks before everything started falling apart to a pair of women from Florida willing to pay the price for a nice house in a decent area. Since then about 8 or 9 other homes in the subdivision have gone up for sale ( and that was a small one too). My father has a lady in one of his sculpture classes who deals with foreclosures and she said the real shakeout hasnt even begun yet, even though shes has become really busy. Nevada is going to tank pretty well ( north and south)- I know the guys who watch the real estate and housing stock for northern Nevada and they are predicting mid '08 for the market to level out again up there.

I feel bad for the people who bought into the condoization of crappy former apartment homes- man thats gotta hurt.

[frogleggz]

Ok, so in my local market, prices are falling right now. At this time last year they were rising, and when I bought they were flat. Currently, nothing very good or bad is happening in the local economy. So how does any of this information predict how fast prices will be falling in the next year, how far they will fall, or whether the bottom will be next year, the year after that, or in 5 years? That's my point. Accurately pinpointing anything other than what is happening in the immediate future is not possible. There are too many variables and too many possibilities.

[mid30]

geez, that is reall bad.. got the same problem when i bought the house and soon after the price had dropped.. that was a really frustrating situation where i could not be myself in this situation.
Fortunately i went to see a lawyer.. and the seller got a bit frightened and made arrangements with myself and my wife to review the original price.

[Josie]

Analog- What builder and what development?

The reason why the prices are being slashed right now is because for the builder's it's the end of their calendar year and they need houses off of their books. Come January, the prices will go back up to what you paid and the incentives will not be as good.

My husband and I went and looked at some Reynen & Bardis homes last weekend, where the incentive was about $40k off. Totally tempting, cause the house is about 2300 square feet, upgraded etc. We'd have to sell our current home in a month though, and our profit would only be about $30-40k...our builder is still selling too.

[analogman]

Analog- What builder and what development?

The reason why the prices are being slashed right now is because for the builder's it's the end of their calendar year and they need houses off of their books. Come January, the prices will go back up to what you paid and the incentives will not be as good.

My husband and I went and looked at some Reynen & Bardis homes last weekend, where the incentive was about $40k off. Totally tempting, cause the house is about 2300 square feet, upgraded etc. We'd have to sell our current home in a month though, and our profit would only be about $30-40k...our builder is still selling too.

I'd rather not reveal which builder and what development :)

I don't agree with the end of fiscal year thing though. Theoretically we got the 'large' incentives because we bought at the end of the fiscal year so that doesn't explain why the builder is dropping the price.

[spokes]

a $40k price drop - I can say for certain that would never happen in my current marketplace.

i don't know wheter or not to be surprised that there is no wiggle room in terms of having your builder offer you something.

sometimes you just need to forget how much you paid for somehting and move on.

[and1grad]

I don't agree with the end of fiscal year thing though. Theoretically we got the 'large' incentives because we bought at the end of the fiscal year so that doesn't explain why the builder is dropping the price.
She said calendar year.

[analogman]

She said calendar year.

Right, and how much sense does a sentence like that make? Everyone on planet earth has the same calendar year. Therefore I assumed she meant fiscal year.

[pisces2473]

Be nice to her. She's with child.

[analogman]

Be nice to her. She's with child.

and1grad is a she AND with child? :eek:

In all seriousness, the meanness was not directed at Josie. I simply disagreed with what she said. It was and1grad that made a non-sensible comment and meanness was directed at him.

[SpaceMonkey]

I will just be happy if the softening housing market translates into a more stable rental market.

[Xander]

I don't know enough about housing statistics to say anything worthwhile, but in Chicago, there apparently are still "values" to be had. I'm hoping to buy within a year. *cross fingers*

In the 4 city blocks it takes me to walk from home to work, I can count 13 high rises going up (one of them 70-something floors, and the new Trump Tower).

[spiritedaway]

Me too. I'm looking to buy within a year, but it's not the end of the world if I can't find a place or the deal I am looking for. I am in no hurry to move. I am working on saving for a good downpayment right now.

I don't know enough about housing statistics to say anything worthwhile, but in Chicago, there apparently are still "values" to be had. I'm hoping to buy within a year. *cross fingers*

In the 4 city blocks it takes me to walk from home to work, I can count 13 high rises going up (one of them 70-something floors, and the new Trump Tower).