Our financial system is crumbling this week.

[AWvsCBsteeeerike3]

Does anybody trade stocks while at work?

[Arthur Dent]

I don't know the situation in St. Louis, but in general home prices are dropping because they were way above their long term trend values. So, unless you think another bubble will develop, it's not necessarily a good idea to buy. Many people are convinced that buying a home is always a great investment, but on average, in the long term, house prices have simply tracked inflation making them a poor investment. Of course, there's a huge variation depending on location and many other factors, so it's definitely possible to make good money, but unless you're really a gambler, I think it's much smarter to make housing choices based on where you want to live rather than in the hope that you can sell to some other sucker at a high price.

[sighyoung]

Refinancing might make sense, though. I'll wait and see where mortgages rates go in the next week or so to see if it's worthwhile to refinance. I'm in this house for the long haul, and if rates fall to 4.5%, I'll give it a look.

[AWvsCBsteeeerike3]

I don't know the situation in St. Louis, but in general home prices are dropping because they were way above their long term trend values. So, unless you think another bubble will develop, it's not necessarily a good idea to buy. Many people are convinced that buying a home is always a great investment, but on average, in the long term, house prices have simply tracked inflation making them a poor investment. Of course, there's a huge variation depending on location and many other factors, so it's definitely possible to make good money, but unless you're really a gambler, I think it's much smarter to make housing choices based on where you want to live rather than in the hope that you can sell to some other sucker at a high price.

I would disagree just about completely with that other than living where you want to.

It's not like you are buying a house with the hope another bubble will develop, rather you're buying them under what the long term trend is. There's the market right now which is widely varied. You can still find people trying to sell homes at $100/sf. And, then you can find banks trying to unload them at $10/sf. That's a large gap and the market is somewhere in the middle.

Obviously, there are more homes selling at the banks price than at the owners price which is seriously driving the prices and the market down. Owners are being forced to compete with foreclosure prices if they want to sell right now which is next to impossible. On top of that, there are so many foreclosures, that banks are taking less than what they normally would for foreclosures which is further driving the market down. In other words, there has always been a foreclosure market. It has just never been this big before, and because of the super-increased portion of the market it now controls, it is having a much, much larger impact. And, on top of that, there are less buyers now than ever.

That's why establishing a market right now is so tough; the large variation, not only between what banks are selling them for amongst themselves, but also the original owners holding on to their original (now outrageous) asking prices. The market still has ~5% above historical average home ownership, and that is going to lead to even more foreclosures in the future. So, it's likely the market is still going to drop a bit which is why the buyer has even that much more power. It's not outrageous to go in and offer a bank 20% of what they're asking. If you can get a house at $10/sf in a decent neighborhood, you're almost guaranteed to make money when the market rebounds in 3 years or so and all these foreclosures are off the books..... unless you think 3BR/2BA roughly 1500 sf houses are going to remain at 15K (or less than a new car) forever.

If that does happen, we're straight [expletive] on so many levels you might as well have the keys to everything you can get your hands on b/c the market will be so depressed and assets will be so devalued everyone will be in bankruptcy except those that have buried their money in the back yard....if paper money still has value.

Edit: I should say I am talking largely about my area. I don't know how it is in StL. I know we have a + growth rate. So, that influences my logic. A couple years ago (2006, I believe) a study came out saying at the current rate of house sales, there were enough houses for sale to last 3 years and enough graded lots w/o houses on them to last 8 years.

[Popeye_Card]

If you can get a house at $10/sf in a decent neighborhood, you're almost guaranteed to make money when the market rebounds in 3 years or so and all these foreclosures are off the books..... unless you think 3BR/2BA roughly 1500 sf houses are going to remain at 15K (or less than a new car) forever.

I guess that depends on your definition of "decent". I don't think many homes in most city neighborhoods are selling even from the banks at $10/sf. For years you could get foreclosures and even free houses from the city in more sketchy parts of town.

[AWvsCBsteeeerike3]

If you can get a house at $10/sf in a decent neighborhood, you're almost guaranteed to make money when the market rebounds in 3 years or so and all these foreclosures are off the books..... unless you think 3BR/2BA roughly 1500 sf houses are going to remain at 15K (or less than a new car) forever.

I guess that depends on your definition of "decent". I don't think many homes in most city neighborhoods are selling even from the banks at $10/sf. For years you could get foreclosures and even free houses from the city in more sketchy parts of town.

Yeah, 'decent' is largely different for me than for St. Louis. I guess that is what this all boils down to.

[cardinalkarp]

Refinancing might make sense, though. I'll wait and see where mortgages rates go in the next week or so to see if it's worthwhile to refinance. I'm in this house for the long haul, and if rates fall to 4.5%, I'll give it a look.

I'm thinking about doing the same thing. Typically how much is it to refinance?

[TimeForGuinness]

Refinancing might make sense, though. I'll wait and see where mortgages rates go in the next week or so to see if it's worthwhile to refinance. I'm in this house for the long haul, and if rates fall to 4.5%, I'll give it a look.

I'm thinking about doing the same thing. Typically how much is it to refinance?

It's the same process as getting a normal mortgage...you have to pay closing costs, get an estimate of your house's worth, etc, etc, etc...

[cardinalkarp]

Refinancing might make sense, though. I'll wait and see where mortgages rates go in the next week or so to see if it's worthwhile to refinance. I'm in this house for the long haul, and if rates fall to 4.5%, I'll give it a look.

I'm thinking about doing the same thing. Typically how much is it to refinance?

It's the same process as getting a normal mortgage...you have to pay closing costs, get an estimate of your house's worth, etc, etc, etc...

We didn't have any closing costs (or at didn't have any out of pocket). What you said is what I thought but it's probably worth looking into if the rate drops significantly.

They should be able to tell me what rate I can refinance at before going through the process shouldn't they?

[TimeForGuinness]

Refinancing might make sense, though. I'll wait and see where mortgages rates go in the next week or so to see if it's worthwhile to refinance. I'm in this house for the long haul, and if rates fall to 4.5%, I'll give it a look.

I'm thinking about doing the same thing. Typically how much is it to refinance?

It's the same process as getting a normal mortgage...you have to pay closing costs, get an estimate of your house's worth, etc, etc, etc...

We didn't have any closing costs (or at didn't have any out of pocket). What you said is what I thought but it's probably worth looking into if the rate drops significantly.

They should be able to tell me what rate I can refinance at before going through the process shouldn't they?

yup...went to the bank a few days ago just to get some information.