Great to hear from you.

Dave

In the early years of owning a home, don’t go overboard and buy fancy new cars and eat out and take expense vacations. With the passage of time then move up to that nicer home we’ve had our eyes on for a while, thus permitting the family in that home to consider moving up. This way the residential real estate market moves in a steady, responsible manner.

There is a way out of this and it involves being hard working responsible people who save and remember the most important things in life are our family, friends and the community. If we can do this then, with the passage of some time, we can return to the glory that was once our legacy.

I hope the people who read your wonderful site understand and appreciate the highly competent professional that you are and the invaluable service you are providing the people of Tucson, and those who want to live here, by continuing your site. Good luck to us all.

Good to hear from you. I guess time will tell. I agree with almost all of your analysis. As to renting vs owning. I’ll take owning. I can’t rent a house like I have now for my house payment. If I’m renting, I’m buying for the owner. And the combination of interest rates below or at 5% is an historic low. Combine that with the price of real estate and it makes sense to own. I’m not talking here about real estate as an investment. I always leave that to others. I’m talking about a house as a home.

Renters have found themselves evicted all across the country because they were paying their rent, but the owner wasn’t paying the mortgage. Suddenly they found they needed to move.

As to the rest of your analysis, I’ve been saying the same thing for years. We can’t live on plastic, paying the minimum amount each month and have all the things you mentioned above and still afford to own a home.

The market may be flat for a long time. There isn’t anything wrong with a flat market for a home owner. The investor looking to make money by flipping, not so good. The investor looking to turn a property into a rental. It’s fine to have a flat market. But don’t forget, people do have to live somewhere, and not all of them want to be in an apartment. For me it makes more sense to drive an older car. Pay my credit card off each month and own my home.

Dave

Sadly, our country has been going through convulsions since that now infamous week. You might remember the next day, September 16, AIG had to be nationalized because it was going down, and right about the same time Fannie Mae and Freddie Mac, holding 50% of America’s mortgages, also had to be nationalized. In late September ’08 over the course of 8 consecutive business days the Dow Jones Industrials dropped 2,200 points.

Is it any wonder that the national housing bubble burst? People can forget about buying a house as an active investment, it is now the passive investment it was meant to be. That is, expect small gains year after year, and after several years of paying the mortagage, the home is owned free and clear.

All this is to say, that yes Dave continue with your statistical analysis, but you know what? The real estate gravy train is over and it just might make more sense to rent right now, and in the years ahead, than to own. So, I think your comment about people saying, “Oh gosh, we should have bought back in 2010″, is more than a little off the mark. The residential real estate market will be flat for many, many years– unfortunately.

Sorry to be such a party pooper folks, but unless you are a banker, lobbyist or politician it’s going to continue to be gruesome times as we all work ourselves to the bone to pay off the massive debt brought on by prodigious consumption based on money that wasn’t ours.

We had this coming to us; did we really think we could own SUV’s, homes beyond our incomes, have cell phone family plans, pay over $100 a month for Directv, Dish, Comcast, whatever, take regular trips to Costco dropping 2 to 3 hundred dollars per visit and put it all on plastic? The Economic Rules of the Universe are asserting themselves with full force. Reality bites!

In every real estate market, whether it is high or low there are unrealistic sellers and buyers. When home prices were going up $5000 a month there were unrealistic sellers and buyers. In this economy where as you say “the number of short sales and foreclosures that are starting to make their way into the comparables used for appraisals” there are still unrealistic buyers and sellers.

And in almost every case on the seller side they are not really sellers. They are toe-dippers, water testers, Oh lets put it on and see what happens. At any given time these “sellers” I would guess, make up 20% of the homes on the market. But they aren’t really on the market.

You said, “If they want to sell” they don’t really want to sell unless someone is willing to pay their price. They don’t care if it won’t appraise in their minds it is worth what they are asking and if a bank won’t fund that’s the buyers problem not theirs.

There are aspects of the real estate market (and not just in Tucson) that for a rookie make no sense. Well, rookie, as someone who has been writing and observing this market for over 5 years now it doesn’t make sense (common sense at least) to put a home on the market when you aren’t really interested in selling it. To them it is like buying a lottery ticket. They might find a cash buyer that falls in love with their home and will pay their asking price to get it. That is like winning the lottery.

On the other side of the equation are the buyers that spend their time looking at these homes, making offers on these homes and in general wasting their time, because the home isn’t really for sale. These properties, muddy the market and frustrate buyers and the agents working with them because they truly do waste the time of everyone on the buyer side of the equation.

Dave

It’s Valentine’s Day and if I take the time to respond to you tonight, I’ll be the rookie.

I’ll get back to you tomorrow.

Dave

I said it a lot. I kept saying it through out both years. There are a number of posts in both years about unrealistic expectations on the part of sellers asking way more for their homes than they were worth.

I talked about them riding the market down instead of pricing right.

I talked about the housing market in terms of Valentine’s Day. Right now Roses are selling for $60 a dozen. Fry’s has them for less. But once Valentines Day is over I can buy that same dozen roses for $9.99. Where is the value? What is the difference. (It is what people are willing to pay) I won’t pay $60 for a dozen roses anytime.

I talked about the horrible lending practice of “Fog a spoon get a loan”.

I reported on what the prices were in statistics reports.

Every where in the media and the blogosphere was saying “This can’t last, it is unsustainable” I agreed, but people have to live somewhere. It was and is our job to find homes for people that need them that they can afford. We bought during that same time. We needed a home. We didn’t buy an investment to flip. We bought a home.

Sometimes you don’t get to pick when to buy. For Valentines Day lasting one day, I can pick. But in a housing market where homes were going up in price $5,000 a month, you buy what you can when you can. Overpriced, of course, it was obvious but we couldn’t live in our cars.

We have been fortunate. Our clients bought what they could afford and as far as I know they are all still in those homes with a couple of exceptions that moved for job relocation.

If you want links to some of those posts I could look them up. But they are all there.

Have a Great weekend.

Dave

We did? I don’t remember you saying this in ’07 & ’08…