March 5, 2006
-- by Dave Johnson
If you are thinking this is a good time to buy a house, think again. Here is a preview of what happens: Shanghai's housing bubble bursts, causing some panic,
American homeowners wondering what follows a housing bubble can look to China's largest city.Now, to the situation in America:
Once one of the hottest markets in the world, sales of homes have virtually halted in some areas of Shanghai, prompting developers to slash prices and real estate brokerages to shutter thousands of offices.
For the first time, homeowners here are learning what it means to have an upside-down mortgage — when the value of a home falls below the amount of debt on the property. Recent home buyers are suing to get their money back. Banks are fretting about a wave of defaults on loans.
Local housing prices have come tumbling down over the last two months, erasing months of drastic increases.Housing under pressure
Just two months ago, the median sale price for homes in Clovis' 93611 zip code was $439,000. But in just 60 days, those homes plummeted $51,000, to $388,000.
That housing bubble has definitely sprung a leak.Maybe this is a good time to wait a bit before making an offer on a house. Why not wait a month or two and pay a lot less? Or wait 6 months and pay half as much? There is a LOT of room for prices to fall this time.
This morning, the National Association of Realtors reported that sales of existing homes fell 2.8 percent in January to a seasonally adjusted annual rate of 6.56 million new units. Existing condominium and co-op sales were even worse, falling 10.6 percent last month.
... oday's bad news comes on the heels of a separate report issued Monday by the Commerce Department that showed that sales of newly constructed homes also fell in January – by 5 percent.
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To understand why I believe this nation is in serious economic trouble please read:
http://www.resourceinvestor.com/pebble.asp?relid=17570 It's a more complete variation of things I've been seeing ever since I started researching what drives housing prices. If you do nothing else, read this. Also, ARMs are being reset at record rates this year and the next. China has almost $850 Billion US dollars in their hands, they only wish to hold 1/3 of that. Inflation will drive up interest rates and some are speculating up to 21%. Thanks, George.
In San Diego, our market hit its' high in the Summer of 2005!
Inventory has been increasing each month while sales have been going way down!
Lots of price reductions!
Sure, this is about San Diego, But, in my opinion will apply to all 'hot' real estate markets of the past five plus years!
For a good CNN quote on buyers pulling out of sales contracts, visit:
Posted by: San Diego for sale by owner at March 6, 2006 6:57 AM
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