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The Godfather · Dec 11, 2007, 10:23 PM

In my 8-mile commute to work, every day I see about 8 foreclosure signs on the side of the road, two of them are sub $100k, in areas where normal prices are over $200k.

Now that the house market is fantastic, are there any MacNN potential first home owners who are looking at a nice foreclosure, and vulturing around some pretty savings?

Big Mac · Dec 11, 2007, 10:27 PM

I wouldn't say the housing market is fantastic, but it's definitely a good time to be a buyer as long as you can afford to buy.

peeb · Dec 11, 2007, 10:29 PM

Originally Posted by Big Mac

as long as you can afford to buy.

Well isn't that the truth? That's the reason we're in this mess in the first place.

Cold Warrior · Dec 11, 2007, 10:59 PM

keep in mind that if too many homes are foreclosed in a neighborhood, it'll price the area low enough to ensure the neighborhood's value goes down the tube. Once it goes to crap, it'll look like ass in 4-6 years. Your resale value will suck.

smacintush · Dec 11, 2007, 11:00 PM

This is a great time to buy. You can get good deals and mortgage rates are still low.

SSharon · Dec 11, 2007, 11:08 PM

I just got married so I would be in the market if I didn't have to finish up with school first. Maybe when I am looking in 2 years something cheap will still be available in an area I want. In the meantime I spent the last 6 months working in a real estate firm that specializes in foreclosures so believe me when I say I know what's out there.

imitchellg5 · Dec 11, 2007, 11:38 PM

Originally Posted by SSharon

I just got married so I would be in the market if I didn't have to finish up with school first. Maybe when I am looking in 2 years something cheap will still be available in an area I want. In the meantime I spent the last 6 months working in a real estate firm that specializes in foreclosures so believe me when I say I know what's out there.

Don't worry, foreclosures won't be going down anytime soon. Americans need to learn a lesson or two about money management.

The Godfather · Dec 12, 2007, 12:32 AM

^ Actually, those third world countries which are turning second world countries this decade are filled with financially illiterate people. Lenders are already vulturing this human prey, 'til the moment they qualify for credit, and siren songs begin.

torsoboy · Dec 12, 2007, 04:39 AM

There deffinitely aren't any sub-100k houses around here... five years ago, yeah, but now even the forclosure ones don't get under $180k. You might say it is a buyers market, but in my oppinion it wont be ready for most buyers until non-forclosure homes have come down another 20-25% (a $100k home four year ago, $250k a year and a half ago, $200k right now, and $150k would make it almost affordable (and realistic) again).

Teachers, grocery store workers, policemen, etc. can't afford to buy a house anymore, and they wont be able to for a little while still. According to this calculator (Mortgage Calculators) you need a $56.5k salary to afford a $200k home with an annual property tax of $1200 and $0 other monthly responsibilities (and I consider that to be too low of an estimate). For a $100k loan it says you only need to be making $27.8k... so four years ago someone making half the money that is now required could afford the same home. It's frickin insane how much housing has gone up.

Sealobo · Dec 12, 2007, 06:57 AM

Yes, buy a house with a big mortgage. work your ass off for the interest payment in the next 15 or 20 years; cross your fingers and hope the housing market will boom, but really won't do you any good because you're owning ONE house only and you cannot cash in anything unless you move to a lesser location, or a smaller house, or refinance your house with a larger monthly payment.

for a 15 years $200k mortgage over a flat 5% interest rate compounded monthly:

1st monthly payment = $1,423
interest payment portion = $833 (58.5%)
principle repayment portion = $590

13rd monthly payment = $1,423
interest payment portion = $803 (56.4%)
principle repayment portion = $620

61st monthly interest payment portion = $666.12 (46.8%)

Nah... i wouldn't want that.

moonmonkey · 12:57 PM

Why don't you buy in Hong Kong, should be even lower rates.

MacosNerd · Dec 12, 2007, 08:34 AM

Is there any excuse not to own a house in this market?
Yes.

The most important reason, you cannot afford it. the reason why foreclosures are going through the roof is that people used risky loans to buy a house they probably couldn't afford in the first place.

second is that credit is tightening, because banks have been burned its getting harder to get a mortgage.

I think with the housing market continuing to go down, I'd wait and see prices go down further.

JoshuaZ · Dec 12, 2007, 09:49 AM

A college friend of mine is building a condo. I have no idea why. They've been building it for 6 months now, and he's getting married next summer. Every time I hear about it I roll my eyes. He's a smart guy, but someone should have smacked him across the face when he first thought up this idea. Oh well. His loss of money.

Eug · Dec 12, 2007, 09:51 AM

In Toronto, basically every month has hit RECORD HIGH prices.

Young professionals are being priced out of the detached home market.
Two bedroom condos downtown are in the $400000 range now.

MacosNerd · Dec 12, 2007, 09:51 AM

Depends on how much its costing him. not know the specifics its hard to judge him. The thing about getting a house or condo built, is that you get it the way you want it. People are still buying new houses, though new construction is slowing, its still an active industry.

MacosNerd · Dec 12, 2007, 09:55 AM

The wife and I were and are tempted to sell our house and move somewhere warmer but given what we're seeing in the housing market, we are holding off. Houses in our neighborhood that are up for sale have been that way in some cases a couple of years. Clearly if something isn't moving, you need to lower the price or take it off the market.

We also have a friend who is looking for a larger house since they're expecting their second child and their first house is too small for two babies. The problem they're facing is people do not want to accept an offer that has a contingency on the sale of the buyers house. Basically this couple has to sell their house first. While its a nice house, I'm sure what they think they can get and what they actually finally get will be two different numbers. With so much inventory you need to price the house down low enough to sell it, but then that reduces any profits.

macmonkey · Dec 12, 2007, 10:17 AM

Pretty decent time to be buying a house as an investment - with lots of foreclosures, there's lots of people looking to rent. If you've got enough for a solid downpayment, your mortgage rates would be low enough that the renters would pay the mortgage. You'd pay property taxes and that's it. If it's in good condition and you do some 'hardening', it could last 30 years with minimal repairs, then you just sell it when the mortgage is paid off, or keep collecting the rent as 100% profit.