Iheartthed Member Username: Iheartthed
Post Number: 1630 Registered: 04-2006
| Posted on Tuesday, September 18, 2007 - 11:15 am: | |
Evidently, the housing overbuild in the outlying suburbs, coupled with the rash of houses pumped into the market by foreclosures has crippled the metro real estate market. Many people, like the couple from Warren in the article below, have banked on their home equity to be their retirement nest egg. So, if home ownership is to be marketed as an investment, as opposed to just a dwelling in which to live, shouldn't there be more control in regards to the housing trends of the metro area? Does this make the case that there are too many homeowners in the area and not enough renters? House prices tumble 18% (Message edited by iheartthed on September 18, 2007) (Message edited by iheartthed on September 18, 2007) |
Quozl Member Username: Quozl
Post Number: 1445 Registered: 07-2005
| Posted on Tuesday, September 18, 2007 - 11:21 am: | |
quote:Error 404 We're sorry. The page you are looking for could not be found. It may have been removed, or is otherwise unavailable at this time. |
Craig Member Username: Craig
Post Number: 366 Registered: 02-2007
| Posted on Tuesday, September 18, 2007 - 11:21 am: | |
Cannot link to the article, but individual home ownership was once viewed as an indication of the area's wealth. If your thought is correct then someone should tell the Habitat for Humanity crowd to put away the hammers. |
Rb336 Member Username: Rb336
Post Number: 2310 Registered: 02-2007
| Posted on Tuesday, September 18, 2007 - 11:26 am: | |
I think the reference was to the McMansions. there was one built off woodward about a year ago -- never been occupied. I've seen several where there is hardly any furniture, but, damn, "i've got a giant house!" |
Mackinaw Member Username: Mackinaw
Post Number: 3674 Registered: 02-2005
| Posted on Tuesday, September 18, 2007 - 11:27 am: | |
I think it does indicate that, Iheartthed. Homeownership is still a good economic indicator and a powerful investment, but if the structure it is based on crumbles with poor lending practices, low credit standards, and a system which encourages over-building, then it's not such a good investment anymore. More diversity in the Detroit housing market, i.e. different housing types and a greater mix of rental, would do us well. Nobody respects renters though. |
Thejesus Member Username: Thejesus
Post Number: 2134 Registered: 06-2006
| Posted on Tuesday, September 18, 2007 - 11:28 am: | |
All this says is that builders overestimated the number of home buyers that would exist in the region at this time, so either the builders are paying the price for their miscalculation or the people who thought it was a good idea to buy while prices were jacked way up are paying the price...that's the risk they take... and any existing home owners assume a level of risk too...buying a home is never guaranteed to be a good investment, regardless of what people choose to believe Personally, I welcome this because prices were so overinflated to begin with...I was looking to buy in 2004 but when I saw how ridiculous prices were (i.e., having doubled in past 5 years), I decided to wait for the market to bottom out...I think we still have another year and a half before that happens, and once they hit bottom they will probably remain flat for while... I'm not sure what you mean about "control over housing trends"...If anyone chose to assume the risk of home ownership before now, and their decision to assume such risk did not pay off, then it's only fair for them to suffer the consequences and for people like myself who chose to wait the market out to reap the benefits... |
Thejesus Member Username: Thejesus
Post Number: 2135 Registered: 06-2006
| Posted on Tuesday, September 18, 2007 - 11:35 am: | |
"I think the reference was to the McMansions" On a side note, I sort of take issue with therm McMansions... What some people consider "McMansions" are really just standard issue Middle Class housing nowadays... I think that people from certain urban areas, especially Detroit, are so accustomed to being surrounded by poverty that their perception is skewed...they see these things are big, gawdy houses that people can't afford when they are really just the typical, affordable single-family residence at present 80 years ago, gigantic two story houses were standard...then it moved to tiny 3 bedroom, single bathroom ranches....now we're back to gigantic houses again...it's just the latest trend in residential building really.. |
Iheartthed Member Username: Iheartthed
Post Number: 1631 Registered: 04-2006
| Posted on Tuesday, September 18, 2007 - 11:35 am: | |
Personally, I welcome this because prices were so overinflated to begin with...I was looking to buy in 2004 but when I saw how ridiculous prices were (i.e., having doubled in past 5 years), I decided to wait for the market to bottom out...I think we still have another year and a half before that happens, and once they hit bottom they will probably remain flat for while... So you were waiting on the local and national economy to crash so that you could buy a house? |
Iheartthed Member Username: Iheartthed
Post Number: 1632 Registered: 04-2006
| Posted on Tuesday, September 18, 2007 - 11:37 am: | |
I think that people from certain urban areas, especially Detroit, are so accustomed to being surrounded by poverty that their perception is skewed...they see these things are big, gawdy houses that people can't afford when they are really just the typical, affordable single-family residence at present :::scratches head::: No words. |
Thejesus Member Username: Thejesus
Post Number: 2136 Registered: 06-2006
| Posted on Tuesday, September 18, 2007 - 11:41 am: | |
"So you were waiting on the local and national economy to crash so that you could buy a house?" Uh, no. I'm waiting for the fluctuation in regional hosing prices to bottom out before I buy. Everyone tries to do this. Some people miscalculate and some don't. So far, I'm happy with my decision not to buy in 2004, and I'm waiting at least another year before I do in order to get the most bang for my buck |
Gazhekwe Member Username: Gazhekwe
Post Number: 528 Registered: 08-2007
| Posted on Tuesday, September 18, 2007 - 11:43 am: | |
We've been lucky enough to lose money or just break even on every house we've owned. Trend is continuing with my mom's co-op near Belle Isle, can't even get anyone to look at it. Sigh. |
Pffft Member Username: Pffft
Post Number: 1371 Registered: 12-2003
| Posted on Tuesday, September 18, 2007 - 12:01 pm: | |
What middle-class family needs six bedrooms and as many bathrooms, unless it's the Brady Bunch? Who buys a car that they never have any hope of fully owning? People are living way beyond their means, or they tried to ...it's a very painful correction. |
Dougw Member Username: Dougw
Post Number: 1894 Registered: 11-2003
| Posted on Tuesday, September 18, 2007 - 12:20 pm: | |
quote:"Personally, I welcome this because prices were so overinflated to begin with...I was looking to buy in 2004 but when I saw how ridiculous prices were (i.e., having doubled in past 5 years), I decided to wait for the market to bottom out...I think we still have another year and a half before that happens, and once they hit bottom they will probably remain flat for while... " So you were waiting on the local and national economy to crash so that you could buy a house? What's wrong with that? |
Iheartthed Member Username: Iheartthed
Post Number: 1633 Registered: 04-2006
| Posted on Tuesday, September 18, 2007 - 12:24 pm: | |
>What's wrong with that? Nothing if you prefer depressed economies. |
Belleislerunner Member Username: Belleislerunner
Post Number: 358 Registered: 12-2003
| Posted on Tuesday, September 18, 2007 - 12:36 pm: | |
I'm a renter who has never owned a house. And have funneled the income into a variety of financial investments, all of which have seen double digit gains in appreciate each of the past five years while the housing market here has crashed. Owning a home can be a worthwhile investment only to the extent proper research goes into the location/structure. To say "owning a house" is good for retirement is just as crazy as saying "pick any fund at random to invest your 401(k)" to fund tour retirement. Too many 20 somethings are incorrectly trained to think "I need to own a house immediately" to bank on appreciation as a valid investment. No two investments (financial, real estate, commodity or equity) are alike and each need to be thoroughly examined. Stock markets can crash just as easily as housing. The moral of the story is research. People who didn't think through their mortgage purchases wisely are realizing their mortgages are now costing them an ARM and a leg =) |
Thejesus Member Username: Thejesus
Post Number: 2137 Registered: 06-2006
| Posted on Tuesday, September 18, 2007 - 12:37 pm: | |
"No words." Interesting. Also, can you elaborate on what you mean by "controls in regards to housing trends" |
Thejesus Member Username: Thejesus
Post Number: 2138 Registered: 06-2006
| Posted on Tuesday, September 18, 2007 - 12:43 pm: | |
"Nothing if you prefer depressed economies." So by waiting for prices to return to realistic levels, that somehow means I prefer depressed economies? You care to explain yourself to the rest of us? |
Danny Member Username: Danny
Post Number: 6534 Registered: 02-2004
| Posted on Tuesday, September 18, 2007 - 12:48 pm: | |
Lack of jobs means a lower housing market. I smell a recession coming. |
Johnlodge Member Username: Johnlodge
Post Number: 2512 Registered: 10-2003
| Posted on Tuesday, September 18, 2007 - 12:49 pm: | |
I bought my house recently and got a heck of a deal. I'm not fond of depressed economies, but why pay more for the same thing? Generally these things go in cycles, and prices will likely go back up at some point. I don't think TJ's statement was odd at all. |
Rooms222 Member Username: Rooms222
Post Number: 41 Registered: 04-2005
| Posted on Tuesday, September 18, 2007 - 1:02 pm: | |
Renters in Detroit are generally poorer than in much of the US, perhaps because houses have been relatively affordable, or perhaps because homeownership is so much the norm here (we still have one of the highest percentages of homeownership in the US). There was a demographic article in the NY Times today. There were two areas where Michigan and NY were both in the top 5 of so: The percentage of renters who paid more than 30% of their income for housing and the percentage of people who stayed in the state they were born in. Many of the people renting in Detroit and the close in suburbs are not doing too well and paying a large percentage of their income in housing, even if rents are lower than the coasts. http://www.nytimes.com/imagepa ges/2007/09/18/nyregion/18cens us.graph.web.html The rush to continually move to a better and/or further out neighborhood is perhaps particularly destructive in Detroit, because we do not have immigration (either from inside the US or outside the US) to support it. In other places, new arrivals buy the properties as locals leave, propping up and even revitalizing neighborhoods. Here, the properties are rented (or subprimed) to people that can barely afford it. After some economic difficulty, the house is often empty. |
Lmr Member Username: Lmr
Post Number: 100 Registered: 03-2007
| Posted on Tuesday, September 18, 2007 - 1:25 pm: | |
We've never bought a house as an investment, only as a place to live. Like Belleislerunner, we funnel most of our income into investments like mutual funds, 401k's, stock, etc. Those investments have done well. That said, we've broke even or made money on our houses as well, but then we've tended to stay in them quite a long time. We also like owning our own house vs. renting because our mortgage payments are less than rent, we can make changes as we like, and we can have our garden and our dog without problems. We used to benefit from the mortgage interest but that is now such a small amount that it hardly matters. |
Iheartthed Member Username: Iheartthed
Post Number: 1634 Registered: 04-2006
| Posted on Tuesday, September 18, 2007 - 1:27 pm: | |
or perhaps because homeownership is so much the norm here (we still have one of the highest percentages of homeownership in the US) Which makes the Detroit economy particularly vulnerable to real estate market woes... |
Danindc Member Username: Danindc
Post Number: 3297 Registered: 10-2003
| Posted on Tuesday, September 18, 2007 - 1:42 pm: | |
Belleislerunner- AMEN. I think the WSJ had an article on precisely this topic a few weeks ago. They argued that those who see owning real estate as "an investment" are missing out, especially in markets with high prices. Instead of shelling out for property taxes, home repair and maintenance, and the like, people tend to miss opportunities to invest in markets and earn far greater returns. Over 30 or 40 years, that can translate into hundreds of thousands of dollars. Nothing against owning real estate. I just think that a lot of people wrongly see it as an investment instead of a place to live. After all, you wouldn't dump your entire 401(k) into your employer's stock, would you? |
Iheartthed Member Username: Iheartthed
Post Number: 1635 Registered: 04-2006
| Posted on Tuesday, September 18, 2007 - 1:55 pm: | |
Here is an alternative opinion on home ownership: Why Homeownership? Well, obviously, there are a lot of reasons a person might want to own a home. The question is less why would one want to own a home than why the country has so much public policy aimed specifically at encouraging homeownership. Roger Lowenstein's New York Times Magazine article on the housing market doesn't directly address this point, and neither does the chart from that article that I've reproduced to the left. Still, look at the chart. The highest homeownership rates are in West Virginia, Michigan, Delaware, and Mississippi. I couldn't say for certain, especially since I don't know much about Delaware, but the common factor here seems to be economic stagnation leading to relatively low housing costs plus relatively small numbers of new people moving to the state. Now, it'd be dumb to say that high levels of home ownership are making Mississippi so poor (try history) or causing Michigan's current economic woes (try to auto industry) but it does seem to indicate that boosting homeownership rates doesn't produce any miraculous consequences. If we didn't subsidize howmownership, people would own less home and own more stocks and bonds instead. Some of that owning "less home" would come from people renting rather than buying, and some would come from buyers simply buying smaller houses. That's be good for the environment, and more capital would be available for business operating in non-housing sectors. Meanwhile, I feel like if we weren't specifically encouraging an ideology of home ownership ("American dream" and all that), you might get less of the risky behavior that seems to be causing trouble of late. I feel like there are a lot of people who would never dream of doing something so exotic as margin trading who've been basically willing to do the same thing with their investment in the housing market. If anything, it seems to me that we should be work at the margin to discourage people from treating their homes as speculative investment commodities.
link here |
Dave Member Username: Dave
Post Number: 167 Registered: 10-2003
| Posted on Wednesday, September 19, 2007 - 9:14 am: | |
My house has dropped in value about $15,000 in the past 3 years. Bad investment? 35 years ago I paid $84,000 less than its current value. Could have made more if I had invested in something else? Maybe, but a family of five has a hard time sleeping in a 401(k). House payments are forced savings. If I had been paying rent it is very unlikely I would have invested anywhere near as much money. dave |
Iheartthed Member Username: Iheartthed
Post Number: 1644 Registered: 04-2006
| Posted on Wednesday, September 19, 2007 - 9:45 am: | |
^So did the value of your house outpace the rate of inflation? |
Sstashmoo Member Username: Sstashmoo
Post Number: 408 Registered: 02-2007
| Posted on Wednesday, September 19, 2007 - 9:47 am: | |
Of course the housing market is going to continue to tank. 5 million sub-primes are due to reset over the next 18 months nationally, and of those 57 percent will not qualify for alternate financing. Of course, thats dependent upon if the job market doesn't worsen over the next 18 months. House prices are way over-inflated. They were compounding monthly in an assenine fevered pitch to buy homes with "F-U I got mine mortgage deals". It's just the market re-aligning with reality. Thejesus is smart waiting till it bottoms out. Thats what responsible investors do. If everyone thought like that we wouldnt be in this mess. Would anyone buy a stock that was dropping to help out the DJIA? |
Iheartthed Member Username: Iheartthed
Post Number: 1645 Registered: 04-2006
| Posted on Wednesday, September 19, 2007 - 9:56 am: | |
>Would anyone buy a stock that was dropping to help out the DJIA? Well, the DJIA is an index that measures the financial markets... Now why would anyone buy a stock that is dropping in order to help the economy? I dunno, ask the U.S. Government. They just bought a lot of them to do that very thing... But that is beside the point. The real point of my rhetorical question is on what basis is he deciding the market is/was over-inflated? Also, the market can't "bottom out" if nobody buys anything. Somebody has to start buying in order for values to rise...... Furthermore, all of that is also beside the point of the original question. The original intent of this thread was to promote discussion on whether the promotion of high rates of home ownership was more detrimental than not to the overall health of the metro economy. |
Danindc Member Username: Danindc
Post Number: 3304 Registered: 10-2003
| Posted on Wednesday, September 19, 2007 - 10:01 am: | |
Frankly, I think home ownership rates have a lot more to do with population stability than investment potential, but that's just my perspective. |
Yelloweyes Member Username: Yelloweyes
Post Number: 189 Registered: 02-2007
| Posted on Wednesday, September 19, 2007 - 10:09 am: | |
I figure if I pay my house off in 5-8 years at least my family will have a place to call home. That is basically the one major aspect to survival. Like Dave said, you can't live in a 401k anyway. |
Iheartthed Member Username: Iheartthed
Post Number: 1647 Registered: 04-2006
| Posted on Wednesday, September 19, 2007 - 10:09 am: | |
Frankly, I think home ownership rates have a lot more to do with population stability than investment potential, but that's just my perspective. Maybe. But there have been articles posted on here before that suggested that even when Detroit was "booming" there were high rates of home ownership. How many people lost their asses economically in the "flight"? That was probably padded to an extent by the black middle class buying into those neighborhoods. If there wasn't anyone to "sell down" to, it could have been worse, no? |
Danindc Member Username: Danindc
Post Number: 3305 Registered: 10-2003
| Posted on Wednesday, September 19, 2007 - 10:14 am: | |
^Yes, but that relies on the same "bigger sucker" philosophy of real estate that has driven prices sky-high on the coasts in the past ten years. What I meant by "stability" is not necessarily the lack of a mechanism to sell and move onward (and outward), but that homeowners tend to live in the same location for several or many years, as opposed to renters, who tend to move more often. I would argue that homeownership provides more sociological benefits to the community than economical. |
Iheartthed Member Username: Iheartthed
Post Number: 1649 Registered: 04-2006
| Posted on Wednesday, September 19, 2007 - 10:18 am: | |
What I meant by "stability" is not necessarily the lack of a mechanism to sell and move onward (and outward), but that homeowners tend to live in the same location for several or many years, as opposed to renters, who tend to move more often. I would argue that homeownership provides more sociological benefits to the community than economical. I would have thought that too before I moved to New York. It's not uncommon for people here to rent the same apartment for decades. Some even pass it along to their kids when they retire and move on. Especially the rent stabilized places. |
Sstashmoo Member Username: Sstashmoo
Post Number: 409 Registered: 02-2007
| Posted on Wednesday, September 19, 2007 - 10:24 am: | |
"The real point of my rhetorical question is on what basis is he deciding the market is/was over-inflated?" Sure it's over-inflated. One only needs to look at wages. How well did they align themselves with the ridiculous increase in real-estate values? The flood of way too easy to get subprimes caused such a demand for housing that people were signing anything put in front of them. The same way some people use credit cards. We got it, might as well keep it maxed out. It all stems from greedy financial institutions, ignorance and irresponsibility. Interest only mortgage and a few hundred at closing on a $200k?? I don't need a calculator to see the bad math there. I just wonder why it was allowed to happen in the first place. |