Glutted market, wary buyers hit region's homebuilders hard

So have I. However, those were were poor decisions by the homeowners. All I said was buying is better than renting. I have no advice for the stupid. Alot of properties were(and are) obviously overpriced. It was out of control. There is a large pool of homes out there that current home seekers will find to suite them. Renting is dumb. If someone in the scenario you provided is waiting out the market to buy a 400-700K property for less, this really is not an indication of the general market but an example of someone waiting for an opportunity to take what they want, not need.

Well Ira, it sounds like you are in defense of buying.

If you remove emotion and turn to logic, there is a case for both. Current property values are a result of a speculative mania, and will revert to those at which the median income can support. In addition to this, times are changing and we are in a global economy. Part of this is the loss of jobs as corporations find cheaper workforce. So young people have to be prepared to move.

Owning a home has a carrying cost. Mechanical systems, taxes, roofs, pests, etc. It's cheaper to rent from someone who bought pre-bubble than to buy at peak prices. I can lay all this out. I've already seen cases where people have lost $220,000 to $300,000 on home purchases at the $600-700K level. That's a serious amount to loose.

"Primary residence is an expense, not a nest egg."

Your wrong. While it should never be depended on, home ownership is the number 1 way for American families to advance their wealth. Exactly who is it that cannot use the interest deduction on a home mortgage?

While your response didn't really respond, Iwould like to point out that your perception seems to be nothing more than a defense of renting...by a renter. There are very few instances in this country where renting is beneficial in this country. I feel bad for those people who have spent all of these years "waiting" for a buyers market only to find tougher mortgage standards. Your throwing away your money.

Ira, first, not everyone qualifies to itemize and use the tax deduction. Second, condos are for seniors, I'd *NEVER* buy one unless I was 70. Third, my playstation comment was in regards to the mania that happened last Christmas. It was an example of a speculative mania. People who didn't really want them lined up to buy them for $600, then they tried to sell them for $2000+ to wealthy parents bent on ensuring Snotly jr. gets what he wants for Christmas. Many didn't sell and on Dec 27th they were on Craigslist. No one wanted them after Christmas at high prices, and there was no real use for the system at that time because it was months before good games were released. Replace people in line for a playstation with people in line for a purchase option contract for a Miami condo. Primary residence is an expense, not a nest egg.

Your both dead wrong. You use broad generalizations to paint a false picture. This is a line of thought that will always fail. The tax deduction alone makes renting more expensive. Obviously buying overpriced homes will reduce the ability to build equity but that is due to perception of the market which you all want to disparage. Then Ethan begins bird walking about Playstations and such while admitting he lives in a condo he cannot afford to buy. I assure you renting is not a smart path and never will be. Your reasoning has failed you on this issue. BTW, I am no fan of realtors but dispensing bad economic adive and ignoring fundamentals will not lessen your ire and help you afford the condo you want.

Ira recites the lines of realtors. Your primary residence is always an expense. If I take my rent, multiply it times 120 I get around $145K. This is what my apartment is worth (old metric is 100 months rent = purchase price.) A condo a few doors down, with NO view, with NO parking, lower ceiling, but the lipstick (granite/hardwood/stainless) was on the market for $400,000. I save money by renting. I would buy if prices were logical, and if I knew I was going to remain in the area. For young people, jobs are more volatile than our parents, and owning a house that won't sell without a huge loss can be like an anchor weighing you down. It is generally my goal to try to save $2,000 a month in cash. My frustration is with what I see is the ruining of America, and our gov'ts participation. I think housing is stupid, it's nothing more than $2,000 playstations or beanie babies supposedly worth $5,000. No I'm not t

Renting vs. buying is a simple decision. If you can rent for significantly less than the price of home ownership and save the difference, it is a very wise thing to do. Buying a house at the very top of the market is practically the definition of "throwing your money away." Renting a modest dwelling and saving will leave you in a far superior position in the long run than overpaying for a house.

And your suggestion that inflation is good for the poor is simply obscene. The poor spend the highest percentage of their income on necessities and are by far the hardest hit when the cost of fuel, housing, food, etc, rises. Inflation saps away the worth of our bank accounts and paychecks, and is no friend of anyone who works for a living.

I know of a newly renovated condo in OV for $89,500. There is affordable housing out there, but you really have to look.

They have taken advantage of easy money, gotta-have-it-all-now marketing and compliant politicians for years, and made mega-bucks.

Let them suck it in for a while then return to a more common sense business approach.

I cannot agree w/ Ethan's advice that people should rent. Renting is literally throwing your money away. A large part of the downturn is a result of perception. In fact, people like Ethan are to blame. Sure, things got out of hand and the mortgage industry in particular acted very unethically. However, it is a market cycle w/ a couple of variables. Every one of them has town cryers like him that are bitter over something. I like the guys letters but these diatribes about the economy are fueled on partial facts. Renting is dumb. You are burning money. Those of you who were smart and have low mortgages should be hoping for inflation. It is the enemy of the rich. It will reduce your debt and their worth.

The buying opportunity will probably be around 2012 ... sorry, but you're going to have to wait. The good deals will not be next year. There could be so much damage it sinks the entire US economy, as well. The other side of it is if we get hyperinflation... but I don't see that happening. Greenspan, the guy who helped make the mess by causing repetitive bubbles just made a speech today about how there is much much more losses to go. Yea, where was he when he was in office, and not retired collecting $100,000 per speaking engagement. Oh well, rent, be prepared to follow the jobs, keep your skills up.

Re-elect no one to city council. Especially the Mayor. Part of the housing problem in the Beach is every developer that builds a house over $450,000 get approved. Traffic is horrible. Salaries do not meet the current price of housing. Teachers, firefighters, and police can not afford decent housing in the Beach w/o two salaries. Get rid of the City Manager and City Council! Council always wants to spend more of our money. Higher fees, etc.

Homebuyers pay heed...

I am not into preying on foreclosure candidates. It's a pretty sad affair.

But, if you are intending to buy a home, and you can wait until November-ish...prices will be a-falling across the board. This is a excellent buying opportunity if you can wait, prices will continue to drop, values will be X-cellent, and the activity might turn the market around for the spring.

The market self-corrects. It's not always pretty, but there are ALWAYS opportunities if you look for them.

...right here in Tidewater. Lenders were eager to loan money, municipalities were hellbent on boosting their property tax bases, Baby Boomers are retiring here or buying second homes/condos, and the military drastically boosted housing allowances. There's a market for more affordable housing, but developers and local gov'ts are too greedy to go there.

We moved here from GA in 2006 to take a job, hoping for a "correction" so we could afford a house. Not much of a correction has happened yet, and what is around here for $200-$250 are shoddy, trashed cracker boxes. Other co-workers making less than me are leaving town, and we're looking too. $150/s.f. is insanity when you can get more house for less money in another locale.

Ed, I think you are right, except when someone tries to dump fly ash down and build a golf course on top,

You do realize that Norfolk is losing population do you not? Not just a little population. A year ago losing population faster than any metro area in the nation. The area is not exactly growing. Go to some real cities and watch what is going on.

Chris33? Are you serious? Or have you only lived here 2 years? There has been over 100% appreciation in around 3 to 4 years in Virginia Beach. $160K became $330K in around 4 years, meanwhile salaries stayed mostly stagnant.

Am I missing something? As far as I know, you have to have around 3 acres, not only for the septic system, but also for the well water to not become contaminated, especially in this area where there is no slope. Maybe in more hilly areas where the aquifer has a more definitive flow, you can get away with smaller parcels by locating the well upstream.

OK, first of all, keeping significant areas off limits to development reduces supply, so scarcity drives prices up.

But so do the "proffers" cities demand to approve new developments. These cash fees demanded by the cities can be as much as $50,000 per lot. That cost is passed along to the buyer, like any tax or fee charged to a business and becomes part of the purchase price. Let that sink in a moment. A proffer is a hidden tax that becomes a part of your property's "value." So, up to $50,000 of your assessment on which you pay property tax is a tax charged on your home in advance. A tax on tax.

Further, the size lot needed for a septic system is dependent on soil type. 3 acres is rarely necessary. It would be simple enough to test percolation and assign lot sizes to a subdivision based on testing instead of an arbitrary 3 acres.

My views are normally at variance with Dr. Tabor but I have to agree that zoning and development requirements do add significant cost and does drive up the cost of building a home. Now, especially, we are paying the price as a society for this zoning induced sprawl in extra highway costs, lost employee productivity, and lack of greenfield sites for new development. The answer is to allow multi use projects with higher density and more vertical forms of development adjacent to transportation and public transit corridors. It is like going back to the future; that's the kind of place in which I grew up 60 years ago.

This area doesn't have the problems that other areas of the country have because we did not have the speculation that occurred elsewhere. Plus a lot of people are moving into this area from the Northeast.

There are too many homes already in Virginia Beach. Far too many. Can't these idiot builders find another way to live?

If all construction of new homes stopped today, there is a two and one-half year supply of previously owned homes currently on the market according to the National Association of Real Estate Brokers. Not a good time to be in the home construction or real estate business. However, it wasn't too many years ago that real estate was in the same situation. Builders, brokers and agents who had jumped on the bandwagon to make a killing found themselves migrating to other forms of employment when profits dried up. The market has a way of correcting its deficiencies providing that the government doesn't intervene and screw things up. Those who recently bought McMansions with little or nothing down and no proof of income or employment (NINJA loans) deserve whatever befalls them, as do the lenders.

Think local governments weren't skewing things to more expensive housing? Think again! For a good while they encouraged housing developments that were "Tax Efficient". That Means, high sale value to generate tax revenue, focus on established older families with money to spend and fewer children in the school system. With incentives & proffers, it did make sense to build more expensive homes. This added to a shortage of affordable housing. As a result, you've seen the articles pointing to area population loss, above avg. cost of living/below avg. incomes, and VB schools looking at closing 2 elementary schools due to a lack of students that age(tax efficient and unaffordable to young couples remember?). Next expect a coming spike in business labor costs as they fight for remaining labor pools. Workers can't afford it here.

Well said. Captured the problem in a nutshell. Too many people don't recognize that debt is risk, and surprise, surprise, the lenders still expect repayment.

In 1970 when buying our first home we needed $4.000 down to buy a $18.500 house. In 2006 our daughter/son in law needed $6,000 down on a $350,000.00 house. He's an enlisted man in the Navy and she works for the City. They got their mortgage without any help financially from anyone. When I saw this happen first hand my wife and I both realized that these banks/builders/buyers are in way over their heads. A month of no paycheck and they are probably on their way to foreclosure. There are way too many of these people in the same situation because of their I need the best right now mentality and others telling them you deserve it right now even if you can't really afford it. "Stupid is as stupid does."
(Not my words)

I do not live with my momma. I make a pretty good salary, and have opportunities to continue doing so in other markets should something happen here. I've already seen proof of listings in NoVA area and others declining 30% to 40%. I look at the numbers, and have observed people talking about their own losses during the previous run-up in California (early 90s). I know where to watch the mortgage brokers discussing their business (brokeroutpost.com). Reason for 2001 prices, is salaries haven't really increased since then adj for inflation. Many job losses due to housing mania collapse. 100% of jobs created since Bush took office can be attributed to Real estate mania. Pullback in lending due to losses. Truth in appraisals forced. Number of loans that have yet to reset. Number of foreclosures, many banks are not putting their full inventory on the market as they are trying to slow the rate at

Blame gov't for dropping some of their standards, and the ownership society. Blame people for taking on too much debt, and fueling the mania. However, some people really did believe they would be "priced out forever" so I can cut a few some slack. Blame mortgage brokers for fixing numbers, and telling appraisers to hit the marks to make loans work. If you haven't been keeping up, the amount of fraud with the loans is MASSIVE. Billions and billions of dollars of loans are now selling for 22 cents to the dollar. This means, the financial world thinks your load is really worth 1/5th the face value. Ouch. Blame Realtors for their stupid lines (It's different here, RE only goes up, never a better time to buy (or sell) a house), yadda. Blame the media for doing nothing but quoting real estate salespeople during the good times. Very few were objective. Like I said, the fraud runs very very very VERY deep. Billions and billions and billions and billions and billions of dollars.

I totally agree with your 'order of blame'.

It is ridiculous to rescue an unaffordable housing market. It will create an even bigger credit problem in the future.