Michigan Real Estate Continues to Plunge

[Michigan Badger]

At a meeting last evening one person told us about his father's recent real estate sale.

Years ago his dad purchased a beautiful home on a Michigan lake. The price was then considered a bargain at $700,000.

Several years ago he turned down an offer of $500,000 for the property.

He just recently sold it for $300,000.

I also have investment property and received the sad news a couple weeks ago that my investment has decreased in value nearly 50% in the last few years. Yet my taxes on said property remain the same.

The last two years has witnessed the biggest plunge down in real estate history.

One wonders what's next?

 

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I hear ya MB, I know the feeling. My wife and I are looking for a whose and dont want to spend over 70K

 

[Michigan Badger]

I hear ya MB, I know the feeling. My wife and I are looking for a whose and dont want to spend over 70K

What a lot of people are doing up here is letting their present homes go back to the bank and they're buying much nicer homes that are now less than they owe on their present homes.

I've seen small houses in the lower peninsula go for $10,000 or less. These are run-down houses that would cost $100,000 or more to build new. Some can be had for about the price of the land. The reason being no area jobs and the places have been neglected.

I have a friend who is a real estate broker and he told me that houses on one of Michigan's most popular inland lakes are now up for sale at 1/3 their original cost. In other words, a small cottage on that lake that cost $300,000 to build 10 years ago is now $100,000 and would probably sell for much less.

The really alarming thing is, he told me it's going to get much worse. In few years it will be mostly a matter of being able to pay the taxes on a place.

The bottom line is no work means no money. Since we gave most of our jobs away and import everything else, well, there ya are.

I might also add that the wealthy with many of them being foreigners are buying up our real estate when they can get it for nothing. The brokers call these people "bottom feeders."

 

[FarmerChick]

yes it will get much worse
anyone who requires selling home now or whatever are in for a shocker

I don't see it so much as bottom feeders, I see it as a time for those who can to make investments, do it and get possibly richer. hard times for some means wealth for someone else and it just truly works that way....always will

I have seriously been thinking of buying a few real estate investments but I truly think since being near 50...I don't know if in about 10-15 years they truly will be worth more. Cause times are hard and they are going to get worse and I don't think recovery is in the scope for at least 25 years or so.....but if I was younger and could swing it, darn right I would be checking out major real estate as a future investment.

in bad times the key is stay put. pay off debt as fast as you can. cut your bills anyway you can.

 

[Saturna]

Good, I'm glad to see real estate plummet, considering the crazy increases in the last decade was based on unsustainable speculation.

Maybe now young people might actually be able to buy something, considering wages haven't changed much in 20 years.

 

[truckinbutch]

Guess I can't be too sympathetic to the 'want it now' crowd that made the decision to live beyond their means and are now crying when their bubble burst .
Seemed like a whale of an obligation for a 13 year old to commit to helping purchase an adjoining
135 acre farm for $125 an acre in 1963 . However , we made it . I moved into a 3 room house on that
farm in 1970 and started growing it as my family grew . Never borrowed a dime . Paid for it as I went .
Still working on it and still debt free . Very unlike my contemporaries in the community that went to the bank on the getgo and are still payiing for their fine homes .

 

[Michigan Badger]

yes it will get much worse
anyone who requires selling home now or whatever are in for a shocker

I don't see it so much as bottom feeders, I see it as a time for those who can to make investments, do it and get possibly richer. hard times for some means wealth for someone else and it just truly works that way....always will

I have seriously been thinking of buying a few real estate investments but I truly think since being near 50...I don't know if in about 10-15 years they truly will be worth more. Cause times are hard and they are going to get worse and I don't think recovery is in the scope for at least 25 years or so.....but if I was younger and could swing it, darn right I would be checking out major real estate as a future investment.

in bad times the key is stay put. pay off debt as fast as you can. cut your bills anyway you can.

Very well put

 

[FarmerChick]

hard times are thoughout history obviously.

I think for each it is truly at what age you get nailed or thrive.

younger, with good savings, etc. --this can be their opportunity to shine.
older wtih savings, stay put, be careful you will survive
older without savings gets hit hard, very hard
younger with low jobs or no jobs are struggling

it is just who can make it thru or improve---those who stagnate and survive fine tho---those who crash.

same but it is just a circle of who at the time can do well or hang or crash....I can't see it any other way ya know.

if you are younger and can improve yourself!! in any way in this bad economy then go for it and I hope they do well.

 

[Michigan Badger]

Good, I'm glad to see real estate plummet, considering the crazy increases in the last decade was based on unsustainable speculation.

Maybe now young people might actually be able to buy something, considering wages haven't changed much in 20 years.

Yes I see your point but the problem is we don't have the jobs anymore that once enabled the young to buy homes. It doesn't matter how cheap houses get if one in unable to make those monthly payments.

I found this even as a landlord. I no longer rent houses simply because it's nearly impossible to find people who can even come up with $400 a month which in my case wouldn't even cover taxes, etc. And too I discovered that renters abuse rentals and they'll steal anything they can possibly carry off. So, mine sits empty but people still steal stuff from them.

The plunge in house values is the tip of the iceberg, I'm afraid.

 

[FarmerChick]

Good, I'm glad to see real estate plummet, considering the crazy increases in the last decade was based on unsustainable speculation.

Maybe now young people might actually be able to buy something, considering wages haven't changed much in 20 years.

Yes I see your point but the problem is we don't have the jobs anymore that once enabled the young to buy homes. It doesn't matter how cheap houses get if one in unable to make those monthly payments.

I found this even as a landlord. I no longer rent houses simply because it's nearly impossible to find people who can even come up with $400 a month which in my case wouldn't even cover taxes, etc. And too I discovered that renters abuse rentals and they'll steal anything they can possibly carry off. So, mine sits empty but people still steal stuff from them.

The plunge in house values is the tip of the iceberg, I'm afraid.

well said, I was thinking how to respond to that and word it right. You nailed it.

young can't even afford a cheap home wihtout a job to pay that mortgage. And now banks are super tight on lending so a young needs alot more to 'just buy a home' as the banks won't hand out like they did before.

I also read an article saying that the 30 year mortgage is going to phase out. No more lending for so long. Haven't seen more on it but they are backing up to 20 year loans etc. That home you 'kinda could' afford with a 30 year, most won't be able to afford on a 20 yr loan. (this might happen, like I said the article said the banks are 're-thinking' everything...God help us all LOL


my MIL has 11 rental trailers. she is having tons of troubles now. people stay a month and vanish. it is not like it was and won't be for a long time....and if you get out this wtih hard times but make it, consider yourself a winner LOL

 

[Michigan Badger]

Mostly the houses that have dropped the most in value are houses young folks couldn't afford to keep up even if given to them (taxes, insurance, etc.). The houses under $90,000 are holding their values better if in a good location and in good condition. But even they have dropped 10% to 30% over the last decade. But still, payments on $90,000 plus yearly taxes is a lot of money to a young couple with a household income of under $30,000 (and that's really where most are today).

I looked it up a while back and 25% of American families have less than $25,000 yearly income.

Frugal living is returning to America.

I believe in coming years we'll see a major return to home gardening and many other such things that were common in America 60 years ago. People are changing fast. I know of few professionals who don't have concealed weapons permits. A decade ago it would have been virtually unheard of. The best companies making laser guided handguns are swamped with orders. Times are changing.

 

[bigscoop]

I don't think home prices will ever recover from what they were even 10 years ago, I think hoping they will is only fooling ourselves. We still have a lake property in Indiana that has lost 50% of it's value and it's still delining, as expected. Japan is the only other country that ever experienced the same rate of housing over-inflation and then this same type of decline. This happened back in the 70's and their housing never did recover, not even close. Regardless what you read in the various reports, housing is still going to continue to decline in most areas because there is no economic base to support the recovery. You can't lose $20 per hour jobs with benefits and replace them with $10 jobs and no benefits and expect a recovery. Basic math is a perfect science, and the math says, "It can't happen."

 

[fistfulladirt]

Am I missing something? How are people walking away from their mortgages and buying nicer homes, as mentioned earlier?

 

[Michigan Badger]

I don't think home prices will ever recover from what they were even 10 years ago, I think hoping they will is only fooling ourselves. We still have a lake property in Indiana that has lost 50% of it's value and it's still delining, as expected. Japan is the only other country that ever experienced the same rate of housing over-inflation and then this same type of decline. This happened back in the 70's and their housing never did recover, not even close. Regardless what you read in the various reports, housing is still going to continue to decline in most areas because there is no economic base to support the recovery. You can't lose $20 per hour jobs with benefits and replace them with $10 jobs and no benefits and expect a recovery. Basic math is a perfect science, and the math says, "It can't happen."

So true. I agree.
I guess if there's any consolation in all of this, at least most real estate is also declining in value so those who have their homes paid for should come out alright if selling and buying another home. That is, if they can sell their present one!

But you're correct, the base or basic problem is not enough decent paying jobs to go around. One broker told me the goal is to make Americans into renters. He tends to subscribe to some conspiracy plot to control us.

As for me I think we did this to ourselves. Too many years of laziness, greed, and wasteful thinking. For the last few decades we've been living in "Never Never Land." What's happening is reality has come to town.

My friend is a postmaster in a small Michigan town. She now makes about $33 an hour or approx. $68,000 a year and can barely get by (so she says). Her post office (like thousands of others) is being downgraded and she will lose about $25,000 a year. This means she will be making about $43,000 a year and she sees this as dooms day. "I can't make it on so little money" she says. But the fact is 25% of Americans now make under $25,000 a year (total household income) and they can make it.

Soon the post office will break contracts and thousands will loose their jobs ( I heard this from a top source). More unemployment!

I think I've heard about every theory in the book when it comes to our present financial distress. But after all the theories are told the bottom line is we have at this time no way to recover ourselves. Very scary!

 

[hombre_de_plata_flaco]

Am I missing something? How are people walking away from their mortgages and buying nicer homes, as mentioned earlier?

I wish I knew.

I guess they are walking away while tossing a match over their shoulders.

You would get out from under your mortgage but your credit would be destroyed.

 

[Michigan Badger]

Am I missing something? How are people walking away from their mortgages and buying nicer homes, as mentioned earlier?

Not sure exactly how they're pulling it off but I've heard this from several who either are doing it or have already done it. If I see one in the next week or so I'll ask them how they went about it.

Maybe someone else here knows how the game works.

But I do know people are doing it.

One possibility being so many live together today without being legally married and the house might be in one significant other's name. So they stop making house payments to the bank, stop paying taxes, etc., and save that money for a future down payment. Then when the bank closes on the one partner, the partner with a clean record buys the new house in his or her name. Anyway, this might be how some do it but this has never been my thing so this is just a guess.

 

[hombre_de_plata_flaco]

This is pretty funny. We might be upside down, but we never did do one of those home equity loans. A bunch of people down here were doing that stuff. They would buy their home on a liars loan, then borrow against it to buy them a new truck or jet ski. I never really understood how they worked, but I always felt it was akin to using your home for an ATM and couldn't work out good in the end.

 

[Michigan Badger]

This is pretty funny. We might be upside down, but we never did do one of those home equity loans. A bunch of people down here were doing that stuff. They would buy their home on a liars loan, then borrow against it to buy them a new truck or jet ski. I never really understood how they worked, but I always felt it was akin to using your home for an ATM and couldn't work out good in the end.

http://www.youtube.com/watch?v=bNmcf4Y3lGM

LOL

 

[stefen]

What has been described is happening all the country...however do not look for a bail-out from O'Bammy...

Every time he opens his mouth, things get even worse than before...

 

[Sheldon J]

The price of real estate has been driven far too long by real estate agents, and the got to have it, got to have it now regardless of the cost crowd, now they have lost their rear and all I can say is too bad.

1/2 acre Lots not worth a grand have sold for 30k or more, homes that can be bought as kits for 45K and erected for another 30 (labor, permits etc) were sold for upward of 300K once built, netting the seller huge profits..

Recently a beach home in Florida in the St Pete area that was valued close to 1.3 million sold for 300K, bad news is the property taxes are based on the highest selling price are over 2K a month....

I watched people go out and buy a new home for 3-4 times what it was worth, go out and fill it with the best furniture their credit could buy, put 2 new SUV's in the drive, boat, ATV, and a swimming pool, then work 2 jobs to pay for it... For the last 15 years I kept saying this cannot continue, and finally it has ended... About time!!