From the NYT:
Negative Equity a Drag on Home Sales
While existing home sales are up nearly 5 percent from last year, economists say activity would likely be more brisk if it weren’t for the negative equity overhang that has lately worsened in many markets.
Completed sales on existing homes rose 4.7 percent in February compared with a year ago, reaching an annual rate of 4.88 million, according to the National Association of Realtors, a 1.2 percent increase over January. But Mark Fleming, the chief economist at First American Financial Corporation, a national provider of title insurance and settlement services, says his research tells him that home sales ought to be even higher. The labor market has improved considerably. And home prices are higher, which, though it may sound counterintuitive, have historically correlated with rising home sales, he said.
“Rising prices only crimp affordability for the first-time buyer who doesn’t yet own the asset,” Mr. Fleming said. “But the vast majority of home sales are to existing homeowners. And for existing homeowners, what changes affordability is their own income and the price of money.”
Both of these factors are running in homeowners’ favor. The problem, though, is that many are still unable to participate in the housing market because of insufficient equity.
…
The share of homeowners underwater has, in fact, declined dramatically from the 2011 peak of 31 percent. As of the fourth quarter of 2014, the national rate was closer to 17 percent, according to Mr. Humphries.“A big part of that is because of robust home value appreciation in the last three-plus years,” Mr. Humphries said. But he emphasized that the decline in underwater homeowners is “now slowing as the housing cycle matures. As price gains moderate, the pace at which we work out negative equity slows down.” By the end of 2015, the share of homes with negative equity will likely still be above 15 percent, he said.
Zillow’s 2014 fourth-quarter negative equity report even shows rising negative equity levels in 21 of the top 50 housing markets, compared with the third quarter. The reason is that the bottom 10 percent of homes in these markets, where negative equity is highly concentrated, are declining in value, Mr. Humphries said.
Homeowners in the bottom one-third of housing stock by price are three times as likely to be underwater than homeowners in the top third, Mr. Humphries said. What’s more, the Zillow report found, they are also far more likely to be deeply underwater, or owing at least twice what their home is worth.
…
In the New York area, 13 percent of owner-occupied homes had a mortgage in negative equity. These homeowners were underwater by an average of $125,550, compared with $67,797 nationally.
50-10 years in the wilderness. First, motherfcuker!
Goddam hotel wifi.
Poor Vegas, they can never get off the “worst” list in these articles.
http://www.marketwatch.com/story/ramshackle-san-francisco-home-sells-for-12-million-2015-03-27
Luge is back!!! Wasn’t the same without you.
4- I want fast Eddie’s opinion on this home. He just might lose it after seeing this. If fast Eddie was searching for a home in sf, he would need to be put on suicide watch. It would send him over the edge.
This article is proof of how much money can be made on real estate. In 1997, it sold for 340,000. 18 years later it sold for 1.2 million. Not bad return, esp if you used the banks money to purchase. 68,000 (20% down payment) turned into 1,132,000. Not bad at all. Try doing that with any other investment based on the risk to reward ratio. Barely any risk to lose it all and you get to use someone else’s money. Only an idiot writes an article claiming real estate is a bad investment. The only bad investment is a bad purchase bought at the wrong time in the wrong location.
7- hell, if they rented that house out instead of living in it for 18 years, spectacular return on your investment of 68,000.
This article is proof of how much money can be made on real estate. In 1997, it sold for 340,000. 18 years later it sold for 1.2 million. Not bad return, esp if you used the banks money to purchase. 68,000 (20% down payment) turned into 1,132,000. Not bad at all. Try doing that with any other investment based on the risk to reward ratio. Barely any risk to lose it all and you get to use someone else’s money. Only an idiot writes an article claiming real estate is a bad investment. The only bad investment is a bad purchase bought at the wrong time in the wrong location.
Barely any risk? The entire state of California went through a period in 2006 where every single person that bought a few years prior lost 100% of their money down if they were forced to sell. You have one feel good story and ignore the hundreds of thousands of people that lost. Try to cite examples of this outside of SF, NYC, or Washington. SF has had tons of money poured into it through the tech boom. NYC has had tons of money poured into it via bailouts and QE. Washington has had tons of money poured into it via printing press.
There’s a girl at my work that bought a townhome a few years back right after she got married. She then got divorced a year later and they had to sell. They had to sell for $60k less. That’s not even counting the property taxes and the closing fees. Had they rented instead of chasing the so called American Dream, they would have both been way ahead. What other options were there? I suppose she could have waited until 2019 to “break even”. One thing is for sure, the return on a townhome bought in NJ in 2009 is no return at all.
Pumps, if you’re so convinced investing in real estate is a no-brainer sure-fire way to riches then what’s stopping you from purchasing your average million dollar fixer upper in good old SF? Just think, in 18 short years it’ll be worth triple!
Show me a real estate investment in a good location that became worthless. That’s what I meant by no risk. There are winners and losers. I don’t care about losing investments in real estate. Imo, people that lost made mistakes. If you are smart and make sound decisions, you won’t lose in real estate. If you are buying real estate and put yourself in a position where you are forced to sell, that is your mistake. No one else’s. That’s doesnt make real estate a bad investment, it just means you made a bad investment with your money. Countless people lose it all in stocks, that doesn’t make stocks a bad investment. It just means the people losing their money are bad investors and should have no business investing their own money on their own. Same thing applies to real estate.
“Barely any risk? The entire state of California went through a period in 2006 where every single person that bought a few years prior lost 100% of their money down if they were forced to sell. You have one feel good story and ignore the hundreds of thousands of people that lost. Try to cite examples of this outside of SF, NYC, or Washington. SF has had tons of money poured into it through the tech boom. NYC has had tons of money poured into it via bailouts and QE. Washington has had tons of money poured into it via printing press.”
Come on, you know it’s not as easy as that. Although, sf climate and location should dictate that most of the real estate in that area will be worth significantly more long term. It’s a highly desirable location to live.
Thomas says:
March 28, 2015 at 12:10 pm
Pumps, if you’re so convinced investing in real estate is a no-brainer sure-fire way to riches then what’s stopping you from purchasing your average million dollar fixer upper in good old SF? Just think, in 18 short years it’ll be worth triple!
Troll.
12-Past performance is no guarantee of future returns.
The strength of the DC, NY and SF markets can all be traced back to the printing press. They conduits are different, gov spending, Wall St and the VC/IPO mania respectively.
With that said, no one knows when and where it will end, so for this one instance I think idiot has a point.
nwnj,
Yes. According to the idiot, you can’t lose in those markets… as long as you ignore all the examples of people that have lost.
It’s easy to make money investing, just don’t make any mistakes.
See, it’s not hard.
Can it core a apple? lol! You can’t lose, pal! I can see Ralph Kramden now! I wonder what form the troll will take next?
Please…I think you can easily lose in SF if you buy now. The runup has been insane and with the average home in the area running at about a million, I’d say its a safe bet that there will be no more run up. Now, if you want to argue against a massive crash, that’s one thing. But it ain’t doubling from here.
Everyone that lost in the last real estate bubble, lost due to greed and stupidity.
Yes, I truly believe property values in the nyc, sf, and dc areas will be worth at least double what they are today, 20 years from now. One thing that has held steady throughout all the real estate markets in the world; the most expensive/desirable real estate locations only become more expensive over time. It doesn’t go on a one way trajectory, but over time, it always becomes more valuable.
joyce says:
March 28, 2015 at 2:56 pm
It’s easy to make money investing, just don’t make any mistakes.
See, it’s not hard.
You can only lose if you sell. Yes, the immediate buys carry some major risk, but long term you will not lose.
Ben says:
March 28, 2015 at 3:25 pm
Please…I think you can easily lose in SF if you buy now. The runup has been insane and with the average home in the area running at about a million, I’d say its a safe bet that there will be no more run up. Now, if you want to argue against a massive crash, that’s one thing. But it ain’t doubling from here.
#20 Pukin’ out the other end
“Everyone that lost in the last real estate bubble, lost due to greed and stupidity”.
I had tenants that all of a sudden decided to quit renting and buy because they could (I would have NEVER given them a loan). They wanted a place THEY owned. Two out of five are still in the houses they bought/mortgaged and don’t have ANY intention of leaving, any time soon. Maybe a bit ‘underwater’ (50K at the most) but the places are their homes.
“EVERYONE”?. No.
I dumped my old rentals (single family meticulously maintained 2-3 bedroom stuff in Morris County) just prior to the peak when tenant quality took a dive…
What kind of quality was left to rent to? Well, unless I wanted to rip out the walls after ever lease expired (or before) because of curry saturation…
Uncle Sam ruined my plans of retiring before 40 by giving anyone a mortgage.
Repealing Glass-Steagall was a disaster…for me and other landlords across the country.
I’ll stop now.
G.P.
Your generalize statement needs to be thought out. There are societal, economical, and unknown trends, all which are unknown, unless you got time travelling skills. Your generalize “RE is a great investment” statement is null without taking into account the variables.
Example, some frequent poster wrote a bit back about her ” grandpa, uncle ,etc” buying a Newark 2-3? family right after they got off the boat from WW2 Europe; and how this relative went on to lose his “investment” because he did not read, understand, believe the signs of white flight out of Newark in the 60’s.
GP, you are like one of those famed late 90’s day traders that lose everything then went postal with the family, neighbors, and co-workers.
I understand and that’s why I state you have to be on top of your game. If you don’t read about real estate and keep up with what’s happening, you are going to get burned like this posters grandfather in Newark. That was his mistake. Every smart investor sold ahead of the crowd. Her grandfather unfortunately made a terrible mistake. Don’t blame real estate for that, blame that on bad investing.
“Your generalize statement needs to be thought out. There are societal, economical, and unknown trends, all which are unknown, unless you got time travelling skills. Your generalize “RE is a great investment” statement is null without taking into account the variables.”
You sum up my point that idiots lost in the bubble. If you bought in that bubble, it’s your own fault. No one else’s. Any smart investor would have been selling their properties bought in the low part of the cycle into the upward cycle. Anyone caught holding was plain stupid or overcome by greed. That’s why buy now, and sell into the next upward cycle that is approaching and will be here by 2020.
You obviously we’re smart, you bought low in the 90’s and sold high in the bubble. Well done.
NJT says:
March 28, 2015 at 6:09 pm
#20 Pukin’ out the other end
“Everyone that lost in the last real estate bubble, lost due to greed and stupidity”.
I had tenants that all of a sudden decided to quit renting and buy because they could (I would have NEVER given them a loan). They wanted a place THEY owned. Two out of five are still in the houses they bought/mortgaged and don’t have ANY intention of leaving, any time soon. Maybe a bit ‘underwater’ (50K at the most) but the places are their homes.
“EVERYONE”?. No.
I dumped my old rentals (single family meticulously maintained 2-3 bedroom stuff in Morris County) just prior to the peak when tenant quality took a dive…
What kind of quality was left to rent to? Well, unless I wanted to rip out the walls after ever lease expired (or before) because of curry saturation…
Uncle Sam ruined my plans of retiring before 40 by giving anyone a mortgage.
Repealing Glass-Steagall was a disaster…for me and other landlords across the country.
I’ll stop now.
25- you also sum up my point; you never lose in real estate if you don’t sell. Only case is if the area becomes overrun by poor or pollution. Otherwise, if you bought at the top, you now have to wait till the next upward cycle to come around.
7 years for firearms possession in NJ
https://m.youtube.com/watch?v=Fdm1sqx8mfM
27
And they wonder what (will) creates the next Chris Dorner or Clyde Shelton (fictitious)
You can only lose if you sell. Yes, the immediate buys carry some major risk, but long term you will not lose.
So in your opinion, even if you buy at peak, housing always yields a positive inflation adjusted return if you hold onto it long enough? The entire price history of real estate 1900-2000 disproves that notion.
You know, there are people that bought yahoo at peak in 1999 that still have their stock. One day, they will sell for more than 100 and “win” in your book and even pathetically have to pay 15% of their so called winnings. But they’ll always be losers.
“you never lose in real estate if you don’t sell”
False. You lose every month when you pay 30-40% more than your neighbor for the same house.
I relish, cause I discovered just what I was taking a look for. You have ended my 4 day lengthy hunt! God Bless you man. Have a nice day. Bye
Simply wish to say your article is as astonishing. The clearness in your submit is simply great and that i could assume you’re knowledgeable in this subject. Fine along with your permission allow me to snatch your feed to keep up to date with approaching post. Thank you one million and please continue the rewarding work.