With summer on the way ,usually the busiest time for home buying, are the price of homes ever going to go down? They seem to be rising as fast as the custom boat marketIm glad we bought when we did. Also how long will intrest rates stay low? Who has the crystal ball?
Well, my balls are as fragile as crystal but, why do you ask?
The home prices in our area are INSANE. We bought our home in Chino in 1996. The prices on homes half our size have increase to three to five times what we paid.
You will most likely see prices level or drop slightly if interest rates increase...
My .02
Prices will remain on the upswing at least thru the election and probably thru the end of the year. After that.....probably intrest rates will rise and the housing market will slow down. Just my un-educated guess
Paid 183000.00 in 98 for a three bdrm home in misssion viejo, two years ago added a fourth bdrm and inlarged the family room,plus kitchen upgrades. Now same homes are selling for 540000.00 INSANE
Rates have already increased. They will have to go up substantially to affect the market. Problem is people are paying the inflated prices. As long as that continues many will be priced out of the market.
Soon in Ca (it's already happening) the limiting factor won't be price or interest rate, it'll be Property Taxes!
I know of a few people how have bumped up to bigger houses with the equity of a home sale, put a large amount down to keep the payment the same, and then were hit with property taxes of 8-10K/year. In one case I heard it was $16,000/year because of all the taxes added in a new community. I think property tax is something people don't consider when shopping, but they will soon. An $800,000 house in Ca, has taxes of at least 8K/year, on top of Principle, interest, and insurance.
I know of at least one person how added a large addition & remodel with their equity. Then the when they were finished the property taxes re-adjusted for the additions, and the people can't afford the taxes and are moving now.
BTW, I suggest everyone try to keep at least 40% equity in their home, just incase we get a worst case scenario drop of 20-25%.
RTJas
You guys don't have shit to worry about untill you try to buy in the San Francisco Bay Area--particularly on the peninsula.
The house my folks bought 30 years ago for $39,500 has just dropped in value to under a million because the Silicon Valley economy is not great at the moment.
The house my brother bought ten years ago fo $291,000 is valued at $950,000.
2/1 apartments fetch monthly rent of about $1400 (also down because of the local economy.
I recently had the chance to walk though a 5-bedroom apartment my friend was renovating in San Francisco. Rent was gonna be $5000/month, personal lubricant not included.
LO
Originally posted by RiverToysJas
Soon in Ca (it's already happening) the limiting factor won't be price or interest rate, it'll be Property Taxes!
I know of a few people how have bumped up to bigger houses with the equity of a home sale, put a large amount down to keep the payment the same, and then were hit with property taxes of 8-10K/year. In one case I heard it was $16,000/year because of all the taxes added in a new community. I think property tax is something people don't consider when shopping, but they will soon. An $800,000 house in Ca, has taxes of at least 8K/year, on top of Principle, interest, and insurance.
I know of at least one person how added a large addition & remodel with their equity. Then the when they were finished the property taxes re-adjusted for the additions, and the people can't afford the taxes and are moving now.
BTW, I suggest everyone try to keep at least 40% equity in their home, just incase we get a worst case scenario drop of 20-25%.
RTJas
RTJ hit on a very good point here! Home values have increased so much in the last couple of years that most people don't think of them little minor details. Every time you refi, pull out some $$, or do an equity line against that home that has doubled or tripled in value, your assessor knows and makes the necessary adjustments to your property value and your taxes. That will be a shock to some who may not know that at the time they pull $$ out but when they open that tax bill....Good news for California's revenues though.
We already see interest rates trying to come up a bit, but with 10 million people projected to migrate to California in the next 10 years I don't think we will see a drop in the market anytime soon..
The only time the tax accessor can make a basis change to the value of a home is when there are significant improvements made to the property or if title has transferred. Taking out an equity line or refinancing doesn't impact your property taxes (unless you make improvements to the property).
I think interest rates will have some effect on property values. However, supply and demand for housing has a much greater impact overall. And supply is forecast to still be lean for quite some time. I think values will stay strong.
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