US real estate

Whats the current status of US real estate? Just curious. I watch a lot of real estate tv shows and realize of course “US” is a wide and varied market but it seems everything I’ve seen heard is crazy low and impossible to sell. Is it really that way?

I’ve seen 5 bedroom houses 20mi outside dallass for $200k. Places in some place in virgina for $100k. Places someplace in Georgia on the market for 10 months. I’ve seen instances where people have to PAY money to sell their place!

I admit I have no idea to the market and NYC is not Florida or detroit but just want to know what I’m seeing on tv. Of course I also don’t know when these things are filmed.

Here in Toronto for comparison I’d say a new 600sf condo is about 400k and a semi Victorian starts at 700k downtown. No idea what suburbs are like or more uptown. Average is maybe 500-600 per sf with fancy places up to $1000/sf.

Just curious. Hope this doesn’t come off as too naive or ignorant.


I just sold my Minneapolis house last week (divorce motivated sale). Sold for $30,000 less than I paid 8 years ago and will walk away from the closing with a cool $1,000 in my pocket - after putting down $80,000 when I bought. It’s the first time I’ve EVER lost money on a house sale. I’m taking my $1K and sitting out the market for a while by renting a nice townhouse. Plenty of rental inventory because the smart people aren’t selling if they don’t have to.

I’ve got a Minneapolis area home I’ll gladly sell you for much more than it’s worth, but exactly what I paid…

It’s not good. If there has ever been a buyers market, it’s right now. Of course, I’m one of the idiots who bought at the height of the market. At the time, if I hadn’t bought, I wouldn’t have gotten a house. Looking back, I wish I’d been a month too late to the table and been denied credit just to save me the hassle of owning a house in the worst economy since the 30s.

If I could afford to lose $60k, I’d certainly sell today. But, obviously, I can’t do that.

I know that we were one of the worst hit in terms of lost property value (nothing like Arizona or Vegas though). I’ve only lost 22% (only!) and I’m sure there are others who’ve lost much much more.

Your house is 22% less than what? I bought 7 or so years ago and can likely sell for more than 225% of what I bought for. Is it that much different south of the border?

Is it an urban vs. suburban thing? East. Vs. west? Us vs. Canada in total? I’m totally boggeled!

My wife bought the 2 bedroom one bath condo we live in now in 04. It appreciated by $60k by the time we got married, but we decided to stay at “fix it up” in hopes of having a nice investment to sell later when we decide to have kids. Now the place is beautiful, we are ready to move on, but we are even if we are lucky. The worst part is if we would like to move on to a larger home, we still need to pay a Realtor to sell our place. After they take their 5% we loose money. I refuse to sell the condo without getting at least my down payment back.

Back to your question…If you were looking to move to the greater NYC area (NJ/CT/NY) you are looking at spending at least 400K on a starter home. That being 3 bedroom 2 bath with a bit of property. If you want to go bigger than that you will go 500K and above. WE have been hit with the housing crash, but the homes still are quite high.


22% less than what I owe, essentially. If I sell today, I’d be out close to $30k. And 7 years ago, is much different than 5 years ago. But, yes it is much different south of the border. Canada did not see nearly the financial collapse that the US did.

So I live in Minneapolis, upper Midwest. Us, Chicagoland, Milwaukee, Detroit (for several reasons) all had huge drops in home values. Depending on when you entered the market, you stand to lose a considerable amount of money. Or, you’ll make some but not nearly what you should.

The West Coast, California in particular was hit the hardest. Something like 66% value lost in some areas. But, the amount you lose or gain all depends on when you bought. If you bought a home in Las Vegas in 1985, you could probably sell today and make a good amount of money. But, if you sold 6 years ago? You’d probably have made double.

I have been noticing the same thing as you, R. I watch a lot of the real estate shows on my saturday/sunday mornings, and wonder how the hell the prices are so high. Then I realize the show is taped in Canada.

We purchased our home in February when it was 2 years old. The original owner lost paid $15k more than us, so he lost quite a bit. My brother also just recently sold his home. They had to get out due to a downgrade of the neighborhood. Original purchase of 190k in 2004, sold 135k last month.

With such low rates and large supply of homes, it is a definitely a buyers market. Its a great time to buy if you have the money and stability to do so. All said and done, I pay $85 more a month for a nice 2400 sq foot place than I did in a crappy 900 sq foot apt with annoying neighbors that smoked all day/night.

Valuations are around 2001/2002 levels. I don’t think we have reached bottom yet, but my crystal ball has been proven to suck. Either way, housing prices will be stagnant or will have incredibly low gains for quite some time.

Most of the economic types wring their hands about the US following Japan’s lost decade after their housing bubble burst. Personally, my friends in Japan still have a fantastic standard of living and could afford to buy a home because of the depression in pricing.

My friend got a 2700 sf house, in good shape but in need of updates and remodeling for …$2,700.00 That’s right one dallar/ sq ft. She got the empty lot behind it for $900. Her total project budget is $27,000. The house now has a new kitchen with all high end appliances, three new baths, radiant heat on all three floors, new furnace/ boiler, new roof. She was interviewed a few weeks ago by Italian Vanity Fair about the project, it’s neat. But Youngstown, Ohio is about the cheapest place to live in the nation, or at least the north. I pay $375/mo +utilities for a small apartment with a nice size kitchen and the whole place was redone three years ago, and I have a privet garage.

Wow, I don’t know what to say.

How about urban centers, such as Boston, New York, Portland, SF… is it the same story?

Given from what I know salaries are pretty much at par Canada vs. US, does that mean that everyone lives in giant house or has tons of extra cash to burn? Hard to believe such a difference across the border!


Extra cash to burn? Ha! It’s just the price of living here. And as they say, timing is everything.

NYC proper is absurdly expensive. 300-400 square foot studio usually start at 400k. That’s a bare bones, non-remodeled place in a fair location. You can find much cheaper property in the outer boroughs, for a price, as well as astronomically expensive places.

The rental market is actually even scarier.

Yeah, here on Long Island (outside of NYC) a tiny little cape will start at $300k and that’s usually assuming there’s lots of high value fixes needed or it’s in a rough area.

My fiance was really convinced that home ownership made complete sense and I had to break down via spreadsheet exactly what it meant to buy a house vs renting. Between the insane cost of property taxes (easily $5-15k for a normal middle class home depending on the area), and the cost of repairs buying a house that you don’t plan on dying in is a pretty tough deal these days. Even if you assume decent growth (which I think the bubble proved was all a myth) in your houses value, the amount dumped into interest on a traditional 30 year mortgage is almost as much as the house.

Stinks having to deal with landlords, but I’m quite OK with renting for some time. Like was mentioned above the rental market is much bigger because people are renting properties they can’t sell just to keep paying the mortgage and hoping to weather the recession.

Interesting discussion going on here.
You guys know I am not from the U.S. Over here in europe the picture
is as fragmented and fragile as your U.S. vs. Canada view. In Germany
the prices for family homes are surging as everyone wants to invest the
dwindling euroes into something “safe”. In the southern europe holiday
resorts, though, the bubble has gone bust in 2009. (Much like California)

My question is: How do you american guys finance a home?

What percentage of down payment is required (normal), how long do
the loans run and what kind of interested do you have to pay ending up
at what typical monthly rate?

For some 2-3 years I am following the market over here and have been
outbid two times on a nice home. (the nicer ones often do not come to the
open market, me thinks…)

At the moment I am calculating with 3,5% Interest and 1,5% payment, which
means it would take up t0 25 years to pay for a 250.000 small semi attached
suburbian home, that I still have to come to accept, mentally.

This whole shit scares me crazy sometime at night as I want to provide my
kids a nice invironment despite all the economic desaster around us. (Which
for me is mostly on TV, I must admit. Business over here is still going strong.
(knocking on wood.)

What I have heard our british and spanish friends have come to only paying
the interest in their monthly payments waiting for their grandchildren to pay
their debt after it was devalued through inflation within 30-40 years.

Is there a logic to that?


Typical US Mortgage is a 30 year term. 20% down, financing 80%. Rates at the moment are historically low, somewhere around 3.9% or so.

The real problem arose from Adjustable rate loans. People jumped into the market after 9/11 when rates were crazy. Then 5 years later everyones rates jumped up 5-6%, effectively doubling their monthly payment. Many of these people were not supposed to be issued mortgages anyway, and were bankrupt and foreclosed on in months.

And that’s just the tip of the iceberg…

My brother left Florida two years ago, but I still have friends there. My parents live in Phoenix. So, I know a thing or two about two of the places with the biggest drop in value.

In both places, good deals are hard to find because people are just staying in their houses. One of my college buddies is actually redoing his whole house. “it’s not like I can move”, he said. Many of the places for sale have been on the market since the recession hit, people just refuse to lower the price, so they sit.

Phoenix is horrible. Some of the developers are uber-rich. One guy hasn’t stopped building new suburbs. “When the economy picks up, they’ll need somewhere to live.” Big problem with squatters and construction material theft in the ghost town subdivisions.

Two years ago, Florida was pretty amazing. I drove through a very quiet Daytona Beach in summer. It seemed like every home was for sale. No one buying though. Pretty similar in Orlando.

If you want to know about renting v. owning from an economist view point check this out:

You can’t tell now what is going to happen to house prices over the next ten years. But there is one thing you can sort of estimate: the current ratio of house prices to annual renting costs. David Leonhardt‘s rule of thumb is that if the ratio is below fifteen, owning will probably work out better than renting, and if the ratio is above twenty, renting will probably work out better than owning.

Thanks for the swift reply. Could you educate me about the “adjustable rate loans”?
If the interest is 3,9% the monthly rate surely must be something like 1/12 of 3,9%
plus amount X of payment.

Over here at the moment it is possible to get the low interest booked in for up
to 15 years (half of the running time of the wole financing.)

So in my eyes it would be advisable to pay 30% down and pay back within 2o years
in order not to get bent over during the last 10 years (when approaching retirement).


Adjustable rate mortgages are for 1, 3 or 5 years. After the term is complete, the interest rates adjusts to something based on the prime rate. That adjustment is largely determined by your credit score. It gives you a lower rate than fixed and should be used if you are planning to move near within the timespan of the mortgage.

The 20% down NURB wrote is more of a rule of thumb. Prior to the bust, people even with poor credit could borrow up to 110% of a home’s value. Now, with stellar credit, I could get a 100% loan if I chose.

There are 20 and 15 year fixed mortgages here in the US. Using them is a choice. You can shorten the time to pay the 4%, but you need to have a higher monthly payment. That “extra” money for the 15 year could be used to invest in another place if you go with a 30 year. If your investment is paying more than 4%, it would be better than doing the 15 year loan.

I don’t know if you can still do this, but when you see a 27 year old buying a $750,000 house, I’d guess they are sticking 5-15% and going 45-60 years on the mortgage with the idea of refinancing when they have more money.

The way it was explained to me by my mortgage broker was; if you’re not planning on staying in the same place for 30 years, don’t worry about it. You’ll make a bit on each sale, and eventually catch up.

Of course, now that is becoming quite difficult.