  Dsmith Member Username: Dsmith Post Number: 127 Registered: 07-2005 |
http://www.housingtracker.net/ askingprices/Michigan/Detroit- Warren-Livonia/ From the market's peak of $178,378 in 06/2006, the median asking price in the Detroit MSA has dropped to $150,000 as of yesterday. The pace to the fall seems to be accelerating. Your thoughts? | ||
Cambrian Member Username: Cambrian Post Number: 1472 Registered: 08-2006 |
Sad! But this is a national trend though. Just another case of a middle class doing everything it was supposed to do and getting screwed for it. | ||
Pffft Member Username: Pffft Post Number: 1352 Registered: 12-2003 |
Naaah I think it was sparked by people being approved for houses they couldn't begin to afford. What else is sprawl but people putting a paltry sum down on way more house than they need or can afford? (Message edited by pffft on August 21, 2007) | ||
Professorscott Member Username: Professorscott Post Number: 657 Registered: 12-2006 |
This is a national trend but we may be getting more than our share as fear of the goings-on in automotive cause people to pull up roots. Several friends, metro fixtures all, have left Michigan in the past year. Of course, part of the problem (as Pffft alludes to) is that with easy credit people bought up beyond their means, and as Econ 101 would tell you, that pushes up the price. So housing, maybe not here as much as some places, was priced beyond any rational valuation. | ||
Buyamerican Member Username: Buyamerican Post Number: 150 Registered: 02-2007 |
I would question "why" this is happening. Could it be that it is linked to the ailing American auto industry in Michigan? My thoughts are this: People who have been or are considering purchasing a foreign automobile in Michigan need to remember that their pocketbook will be hit as hard as everyone elses. Instead of adding to the decline of Michigan's economy by purchasing foreign, purchase an automobile from one of the Big 3 and help out the state you live in. | ||
Miss_cleo Member Username: Miss_cleo Post Number: 810 Registered: 05-2005 |
What else is sprawl but people putting a paltry sum down on way more house than they need or can afford? ------------------------------ ------------------ Thats not sprawl, thats stupidity | ||
Iheartthed Member Username: Iheartthed Post Number: 1416 Registered: 04-2006 |
^Trainman's evil twin, lol. | ||
Sirrealone Member Username: Sirrealone Post Number: 30 Registered: 01-2007 |
How much did it spike the past five years? This only goes to 2006 but I bet if you ran a trend line over 10-20 years, you'd find that we're right at where we ought to be in the long term. | ||
Sirrealone Member Username: Sirrealone Post Number: 31 Registered: 01-2007 |
Sprawl's to blame for everything, apparently. My cat got sick all over the carpet last night. I now know that sprawl was to blame. | ||
Miss_cleo Member Username: Miss_cleo Post Number: 811 Registered: 05-2005 |
^ Its the only thing Detroit can cling to, makes em' feel better. Blame Sprawl for all the ills of Detroit! | ||
Dsmith Member Username: Dsmith Post Number: 128 Registered: 07-2005 |
Sirrealone, Check out the Case-Shiller data for a ten year chart: http://www.macromarkets.com/cs i_housing/MSA/detroit.asp | ||
Cambrian Member Username: Cambrian Post Number: 1473 Registered: 08-2006 |
Yes it is true that people have taken equity out of thier homes to purchase things like new cars. I would never do this of course, but then most people regard me as odd because I drive a 16 y/o truck. Hey, it's what I can afford. Rather then thanking these folks for keeping our economy going these past years by borrowing against thier homes, we are talking of them like buffoons of the day. Where would this so called economic growth experienced since 2001 have been without them? | ||
Sirrealone Member Username: Sirrealone Post Number: 32 Registered: 01-2007 |
Ds, thanks. Yes, Detroit never spiked so we are 'below' average. But I guess that's to be expected when we're in a one-state recession. However, look at Phoenix. And probably others. Almost a perfect line except the bubble the last five years. Now it's almost where it would be if you kept at the original line. From a state perspective, bad. Still, from a national level, more of a correction. | ||
Detroitplanner Member Username: Detroitplanner Post Number: 1372 Registered: 04-2006 |
My house value is going down (big time) but it is in Detroit, in a dense neighborhood, and near four buslines. Sprawl is not the reason. Its economics. - People being foolish and taking out home equity lones/credit to buy stuff like boats. - A general lack of demand for housing in the region. - Foolish practices such as no money down mortgages with easy teaser terms. - unscrupulous bankers taking advantage of people. - a public with too many who are too stupid to read and convinced they do not need a lawyer's representation. | ||
Pffft Member Username: Pffft Post Number: 1353 Registered: 12-2003 |
Nobody's saying they shouldn't be buying houses and cars, Cambrian...it's, what can they reasonably make payments on? Predatory lenders and mortgage brokers who only cared about racking up another sale can be blamed. They sold the zero money down mortgages then dumped them on the banks and secondary market. Instead of buying a reasonable bungalow or ranch house somewhere, Joe Sixpack bought that dream mansion with six bathrooms in Washington Township. In a lot of cases, the broker would lie on the application about how much money the person made, just to get a bigger loan. It's nutty. | ||
Pffft Member Username: Pffft Post Number: 1354 Registered: 12-2003 |
I agree, Detroitplanner, it's not just mansions out in the exurbs ...people in older suburbs and in Detroit over-extended themselves as well. But I have to believe a lot of those mcmansions are now in foreclosure. | ||
Sirrealone Member Username: Sirrealone Post Number: 33 Registered: 01-2007 |
The banks have a lot of blame. That's why i don't feel sorry for them that they are hurting now. They decided to expand their business by expanding their customer base. Previous to the mid-90's or so, you could really only afford a house if you were able to put down 20 percent, maybe a little less. Suddenly, they wanted more business so they started opening the doors and taking riskier and riskier loans. For the first few years, this worked out OK, but they kept opening the doors wider, and then people who had no business ever owning a home were able to sneak in. Meanwhile, all those extra buyers created by relaxed lending processes only increased the demand, which in turn increased prices. Now, they're starting to let less people in the doors. It'll take a while before it hits equilibrium again. Until then, it'll be rocky. | ||
Professorscott Member Username: Professorscott Post Number: 658 Registered: 12-2006 |
People who post that the solution to our problems is for Michiganians to buy American cars are missing two important points. 1. If everybody in Michigan (who can afford a new car) bought a Ford, GM or Chrysler product, which the majority of us already do, it would not materially affect sales, because the enormous bulk of all auto sales take place outside Michigan. 2. People in other states do not have any loyalty to Detroit-brand automobiles, in general. Many import brands have U.S. factories and very few people bother about that anymore anyway. The solution to our one-industry economy is to diversify. We can't bring money into our state by buying our own cars. We can't convince other Americans to buy our cars. We will hold onto the industry as long as we can, but automotive can never again make Michigan a boom state. | ||
Cincinnati_kid Member Username: Cincinnati_kid Post Number: 9 Registered: 07-2006 |
Some of you guys kill me ,calling people stupid who have bit off more than they can chew so to speak, in regards to mortgage purchases. A lot of these people were able to afford those mortgages before though no fault of theirs, lost a job. Do you realize how hard it is to make it on one income? Some of these people made bad decisions, while others didn't have a choice through job loss or sickness etc.. I don't think its fair to bunch everyone into one group that made these decisions, when simply, that wasn't the case. | ||
Exmotowner Member Username: Exmotowner Post Number: 397 Registered: 06-2005 |
When you can buy one of my beautiful homes in the BE district for less than $100,000, I'd say the bottom has fallen! Not Falling. I've always wanted to live in the BE area (Virginia park specifically). | ||
Spartacus Member Username: Spartacus Post Number: 220 Registered: 07-2005 |
I wouldn't draw too many conclusions about those housing figures. I know that they can get skewed by new construction. New construction sales have plummeted and this will have a tendency to lower average list numbers. In a tight housing market there may also be less of a spread between the asking price and what you ultimately are willing to sell it for. My point isn't that home values haven't fallen; I just don't think that they've fallen 14% (as those figures would suggest). Honestly, I'm not sure how anyone didn't see this coming. It made me sick to see people buying homes that they could only afford because they got an ARM (when fixed mortgage rates were at historic lows). If you can't afford to make payments on a home with a thirty year fixed mortgage then I'm sorry, you can't afford that home (I understand that their are advantages in very limited circumstances to an ARM, I'm just saying that if the only reason you got one is so you could afford the cash flow then that's a problem). This on top of the fact that many people were putting no money down. Seller's concessions became common place. When you buy a home with no money down you are, in theory, underwater by 6% the moment you move in (assuming you need a broker to achieve the price you just paid). When people were required to put down 20% (or at least 10%) there would be a cushion. If they suddenly coulnd't afford the house anymore (because rates went up) they could still sell the home and salvage some equity and their credit. I blame stupid consumers and unscrupulous lenders. A lot of people don't know when you go to a lender/mortgage broker for a loan that person has no fiduciary responsibility to you. They do not have to look out for your best interests. This is unlike going to say a stock broker. There has been some discussion about changing this legislatively, something that probably won't solve the problem, but might help. That said, people have to take responsibility when making the biggest purchase of their lives. | ||
Thejesus Member Username: Thejesus Post Number: 1891 Registered: 06-2006 |
I'm not happy that the local economy is doing bad, but anyone who bought a house in the past 3-5 years has only themselves to blame... If the price you paid for your property is double what it sold for less than 10 years ago, chances are there's not much upside for your property value's growth potential, and there's probably some negative growth potential there... Seriously, did these people honestly believe that home prices were going to continue to double every few years??? | ||
Sstashmoo Member Username: Sstashmoo Post Number: 292 Registered: 02-2007 |
Thejesus, I agree. Talk to folks a few years ago and they acted liked they were on speed or something talking about home prices. With a blank stare they proudly declared "todays" value on their homes. It was laughable almost. The fact is the real estate market is way over inflated here as it is around other parts of the country. Not sure of the mechanics of it, but the house prices and labor rates don't jive. No doubt easy mortgages and anxious "better get it while we can" buyers and plain buyer ignorance have much to do with the once escalating values. The prices re-aligning to some normalcy is the first steps in rejuvenation. I recall just 5 years ago, folks doing a hitch at the local community college, get a degree, go to work for Visteon or Delphi and buy a 400,000 dollar house. This was going to go on forever? Back then I told many of these "Detroit can be an unkind place, I'd be careful".. I went through the late 70's here, this is still eutopia compared to that. | ||
Livernoisyard Member Username: Livernoisyard Post Number: 3776 Registered: 10-2004 |
The start of the housing boom (and busting) dates back to the dot com days. When the dot coms went poof, those investors had little to no tangible assets after they poofed. But because real estate is tangible, those assets hold on longer to their value and speculators and foolish home buyers fed into this frenzy by paying the going price. After all, real estate sales are essentially auctions, and some people get carried away sometimes. And have buyer's remorse afterwards. However, after a frenzy of auction sales, the market might be tapped for cash for further transactions, as now. The same occurred during the late 1970s and the early 1980s, when house prices nearly everywhere in the US came tumbling down and many buyers had negative equity in their homes. Their unpaid mortgage balances exceeded their worth and many of them simply walked away and let the banks and S&Ls have them. This scenario helped feed the S&L meltdown during the 1980s. | ||
Cambrian Member Username: Cambrian Post Number: 1475 Registered: 08-2006 |
The problem with you scolds is; If someone were looking for a house between let's say 1997 and 2006, what would you have had them do? Look for that one house out of a hundred thousand that was "fairly" priced for market correction? | ||
Professorscott Member Username: Professorscott Post Number: 659 Registered: 12-2006 |
Cambrian, It's much simpler than that. If the prices are high, then you have to buy something more modest than what you might have preferred. The alternative is to go in over your head and hope for the best, which many did. Scott | ||
Cambrian Member Username: Cambrian Post Number: 1476 Registered: 08-2006 |
Even the modest priced homes from that period have lost value though. So the only ones that came out unscathed either bought thier homes before 1997, or just said screw it and continued to rent. | ||
Spartacus Member Username: Spartacus Post Number: 221 Registered: 07-2005 |
I would have told them to buy something that they could realistically afford. If that means renting for a couple years first, or moving into a smaller place then so be it. I believe Livernois is right, a lot of people that lost money in the early 2000s in the stock market looked to real estate as the one place where the market never fell. People looked at real estate as a sure thing. | ||
Ray1936 Member Username: Ray1936 Post Number: 1833 Registered: 01-2005 |
"The banks have a lot of blame." Let's be careful about terminology. A legitimate bank would never have approved most of these people in foreclosure for a mortgage in the first place. It's the MORTGAGE COMPANIES, many fly-by-night, that have as much relationship to a real bank as the Lions do to a football team. | ||
Livernoisyard Member Username: Livernoisyard Post Number: 3777 Registered: 10-2004 |
Outside of car fleets, who buys modest things anymore? And if people do buy them, they are subject to peer pressure for being so cheap and impractical. So, the foolish among us continue to overpay for functionalities which few of them really need. House, cars, boats, restaurant food, it's all the same for a significant percentage of consumers. I only bought ONE new car in my life--a 1970 Plymouth Road Runner with four on the floor w/ a 440 cubic-inch "wedge"--46 degree valve overlap and 10.5 to 1 compression ratio--plus 6-barrel (oversized--1100 CFM) carb and a 4.10 limited-slip differential rear end. Got 9 MPG on the highway. Don't ask what it was on surface roads in traffic... I must admit that cars (and super premium gas @ 28 cents/gal) were more modestly priced back in October 1969. And having to pay only $100 over my parent's neighbor (a Mopar dealer) price--$3400, in all plus sales tax). After getting that out of my system once and for all, I continued buying vehicles for anywhere from $100 to $1000 for the next forty years. Over the course of one's lifetime, most will spend more for motor vehicles than for their residential real estate. So, it pays to start being frugal with transportation costs first over housing. |
