US house prices freefall continues

[Guynemer]

Of course no one can time a market bottom. But all indications are that the housing market still has a ways to go; I wouldn't be a hurry to buy were I in his shoes, that's all I'm saying.

[Ben Kenobi]

Finally. This is good news. I'm waiting for the prices to crash here, the sellers still haven't gotten the point that they should be waiting rather then dumping their places on the market.

The good thing is that rents are down. My apt is only 300 a month.

[Dinner]

They can't give away houses in Detroit any more. Literally people are just abandoning them including banks who went to all the trouble to foreclose and kick people out.

[Dinner]

The good thing is that rents are down. My apt is only 300 a month.

Yes, but you have to live in a crappy place.

[Drake Tungsten]

Only if you think we've hit bottom. And I think we're still a ways off from that.

I'm not moving until September, probably.

[Ben Kenobi]

Yes, but you have to live in a crappy place

I have a balcony too. It's a nice apartment. I'd agree with you that the city isn't great, and I'll be moving when I find work elsewhere, and the family stuff is done.

[Dinner]

http://www.voiceofsandiego.org/this_just_in/

[KrazyHorse]

Of course no one can time a market bottom. But all indications are that the housing market still has a ways to go

What indications would those be?

[Ben Kenobi]

Still only down to 2003 levels.

Wow, if the stocks fell to 1997 levels, housing still has quite a ways to fall. They could probably halve again and still be overpriced.

[Dinner]

The prices to average family income are still much higher then historical averages in many areas. That would seem to indicate prices are likely to fall further until they get closer to the historical ratio of price to average income.

[KrazyHorse]

The prices to average family income are still much higher then historical averages in many areas. That would seem to indicate prices are likely to fall further until they get closer to the historical ratio of price to average income.

The median house price to median household income ratio in DC was ~4.7 in Q3 2007 and is down by ~30% since then

That would put this ratio close to its historical average for DC (~3). Some housing markets are still far overpriced by this measure. Some are not.

[Dauphin]

Then your house was almost certainly bought prior to some substantial and unexpected increases in local property values which the recent housing downturn have not wiped out.

Or he had a large deposit, or he paid off a chunk of his mortgage, etc.

You could say that he has opportunity costs, but I don't believe that is what he means.

[KrazyHorse]

By the way, here is some ACTUAL advice for people thinking of the rent/buy split:

a) avoid buying in markets which are OBVIOUSLY overpriced by historical ratios
b) in other cases, don't worry too much about it; for most people the net benefit/loss between buying and renting probably amounts to <5% of a home's value
c) if you're exceptional in some way then the difference can be more important; if you might have to move then buying can open you up to all sorts of transaction costs, and exposes you to greater price movement risk; if you have a poor credit history then you will pay more of a premium than most others to buy a house. In all cases, remember that the market has already done the calculation for you; in a certain sense, the average individual in the market for housing in your price range and area should be ambivalent about buying or renting; if one was much cheaper relative to the other then the relative prices would adjust. Compare yourself to this average individual (this already assumes that the average individual is pricing in, for example, tax subsidies on mortgage interest).

[Dauphin]

Internet advice on house buying. The best advice you can get.

[KrazyHorse]

Sadly enough it's a lot better than what he's likely to get from most financial "professionals".