Posted on: 12th Jun, 2008 02:32 am
I've been following the housing market on the news and have heard roumours that housing prices are due to drop by up to 50% over the next 5 years. How could this kind of drop effect people who took out 97-100% mortgages during the peak and/or rise of the market prices?
Hi chloejoanna.
This is really horrible thought if home price really drops by up to 50% over the next 5 years. I don't really know what is going to happen if home price really drops so much. The number of foreclosure may increase and the Government will come forward to help the delinquent borrowers. But I personally feel that the Worst has gone out and everything is going improve slowly.
Feel free to ask if you have any further questions.
Best of luck,
Larry
This is really horrible thought if home price really drops by up to 50% over the next 5 years. I don't really know what is going to happen if home price really drops so much. The number of foreclosure may increase and the Government will come forward to help the delinquent borrowers. But I personally feel that the Worst has gone out and everything is going improve slowly.
Feel free to ask if you have any further questions.
Best of luck,
Larry
i have no idea who would be forecasting something as drastic as a 50% reduction in home values. could it happen somewhere? sure. could it happen everywhere? i really don't think so.
there's an opinion out there for everything.
there's an opinion out there for everything.
Well, I haven't heard of a 50% reduction in prices but of course home prices will drop down especially in softened markets. In certain parts, home prices are likely to improve in the second half of 2008. And there may be some good news for all. The legislation for tax credit for home-buyers has been passed by both chambers of the congress. The White House has opposed the Economic Stimulus Bill but it hasn't directly opposed the home-buyer tax credit concept. This tax credit can make market conditions much better.
Regards,
Jessica.
Regards,
Jessica.
If you are staying in your home for the next 5-10 years, who cares!
Unless you need to access equity, like many people did within the past 5-years, the actual 'price' of your home means nothing, except to the tax man. You are still making monthly payments with interest that credits your income-tax payments each year with your Form 1098.
Unless you need to sell you home in this environment, or within the next 5-years, who cares! Unless you intended to move-up to a larger home within the next 5-years, you're sitting pretty. Not to worry, my friends.
The brightest note I can relate is the treatment of property taxes in my local county -- even though they went up this past year, we have already been notified of a reduction for year 2009 -- due to lower assessed values. I'm sure this practice will ring true for all homeowners, everywhere in the US -- I've heard from many folks who confirm this.
Unless you need to access equity, like many people did within the past 5-years, the actual 'price' of your home means nothing, except to the tax man. You are still making monthly payments with interest that credits your income-tax payments each year with your Form 1098.
Unless you need to sell you home in this environment, or within the next 5-years, who cares! Unless you intended to move-up to a larger home within the next 5-years, you're sitting pretty. Not to worry, my friends.
The brightest note I can relate is the treatment of property taxes in my local county -- even though they went up this past year, we have already been notified of a reduction for year 2009 -- due to lower assessed values. I'm sure this practice will ring true for all homeowners, everywhere in the US -- I've heard from many folks who confirm this.
It's been really great reading all your opinions. I am aware a 50% drop accross the boared would be both very dramatic and very unlikely but it's good to know the potential risks or lack of for those in sensitive areas. The property market is on everyones minds at the moment with an unfortunate clash of opinions, people like myself who are looking to hop on the property ladder in the next 5 years or so are willing a crash - in some ways the more dramatic the better for us. But then there are those who already own property and may or may not be wanting to move on both of whom are not going to be willing a drop. Is there a happy medium? Or is it a case of one party having to face up to the potential disadvantages?
i will forward that paper cloe-joanna.
as for values, if they continue to go down, they cannot go much lower. from there on, the numbers will again march forward but not at the same pace as in recent years.
an investor owning 3-5 rental properties is usually in 'it' for a good period of time, certainly 10-15 years. recently, investors were contracting to 1-3 year fixed products and selling them within that time frame. many of them who should've know better, (i.e. -- should've interpreted ultra-low contract rates from 1% to 4% as a recipe for disaster if rates were to double, which they did) they are suffering the pain of negative rental income -- they'll weather the storm if they're in it for the long haul....if not, they are mailing the keys to the lender.
just like buying stocks at the bottom of the curve, investing in real estate today is likely a smart move for those who intend to hold properties for 10+ years. and, when rates move down again in 5-7 years or so, they can refinance the current 6-7% rate it costs to buy investment properties today, with 10% down.
as for values, if they continue to go down, they cannot go much lower. from there on, the numbers will again march forward but not at the same pace as in recent years.
an investor owning 3-5 rental properties is usually in 'it' for a good period of time, certainly 10-15 years. recently, investors were contracting to 1-3 year fixed products and selling them within that time frame. many of them who should've know better, (i.e. -- should've interpreted ultra-low contract rates from 1% to 4% as a recipe for disaster if rates were to double, which they did) they are suffering the pain of negative rental income -- they'll weather the storm if they're in it for the long haul....if not, they are mailing the keys to the lender.
just like buying stocks at the bottom of the curve, investing in real estate today is likely a smart move for those who intend to hold properties for 10+ years. and, when rates move down again in 5-7 years or so, they can refinance the current 6-7% rate it costs to buy investment properties today, with 10% down.