Here are some of the posts I wrote 3 to 5 years ago on Calculated Risk. I think they came out pretty accurate and I believe it is still all valid.

http://184.73.225.247/user/2500/recent_c....

This idea student loans is going to impact housing is a big one. All the boomers living in McMansions is going to be hell to pay. I think they put up at least a 3 or 4 year extra supply of SFR's, maybe more. 2014 to 2017 looks more like a recovery to me and what I wrote in the CR posts was all based on my own personal experience in a housing bust, local, but not too different from this national one

for one, the speculators have never quit speculating on single family housing. There is a massive overhang. We just don't see it yet. Acting-man put up an article on FHA, which is going to be bailed out at a very significant cost. Even in Texas where prices have held up very well, we are looking at 20% of the seasoned loans being under water. I recall people being stuck underwater in high LTV loans. Once it comes down to moving, it is all but mail in the keys. There is a pile of crap in this mess few realize exists.

There is another smaller aspect to housing that will affect certain areas significantly.

Where I live I would estimate 10-15% of all the homes in the county are second homes mostly owned by retired folks or affluent non-retired folks. The retired folks spend their winters in Florida and their summers here in the North Carolina mountains. The affluent working folks use them for vacations.Just on my road of the 25 homes 9 are second homes (2 currently up for sale).

Add to that their are no jobs being created here. Before the crash most here were involved in some way to building houses. Now most of the young folks are moving away to find work.

I can see this area seeing the worse case scenario as prices start the next leg down.

mannfm11 wrote..

...we are looking at 20% of the seasoned loans being under water.

According to zillow.com, my house in Phoenix is now worth less than what I paid for it in 1984.

You overpaid in '84

Gable, you, & I are in a Kinda in each end of the state,(I'm on the coast in ILM) yet We are in the same condition, though I believe My/Our area(s) are going to fare alot worse..
We have people that reside in ILM & have "Summer" get-a-ways in the NC Mountains.. There used to be HUGE Ads here advertising *NC Mountain Land/Homes*, I no longer see those..
On the "Other hand" I see & hear of people from *UP Nawth* not being able to sell homes/property etc up there to move here, or have *summer homes* here...No longer able to afford them,(Also a fair number of Canadians too). Our "young people" eg: College Grads from CFCC & UNCW are leaving Wilmington in DROVES, as theres NO JOBS + NO Industry here to speak of.
Meanwhile the *CITY* is trying its darndest to annex anything & everything to increase it tax base... (the City is anywhere I've read, (depending whom)5.5 million to 15 mil *in the hole*).. The "citizens" are fighting every one of these "annexe(s)..
Meanwhile, (non-violent), crimes are increasing, eg: Property theft, car break-ins, Stealing anything not nailed down, CSX rail recently found a "end part" of thier line, which wasn't in use for a couple years, rails gone, sold for scrap.. Not to mention the copper grounding wires on Utility poles, a recent case found some 200+ poles stripped of thier ground wires.
Our "official" un-employment rate is up to 10.5% if i recall correctly.(It's worse than that, most likely around or approaching 20%).
You also have to remember, a "majority" of our county/city .GOV is run by REAL Estate devlopers/realtors, painting a *Rosy* picture, yet when the real "NEWS" comes out, it's pretty darn bad. I suspect the "BUST" here will be EPIC, when it comes. You KNOW things are getting bad when, you start seeing/people offering, LONG TERM RENTAL ads showing up on the section 8 site, (Wilmington housing authority), having OCEAN FRONT beach condo's for rent.. This summer is going to be a real test on truth here in ILM this summer, as MOST of our business(s), are based on Tourism..

I look every week and see a metric ton of foreclosures and shadow inventory added constantly. Buying now is to buy the lie that .gov can set AND sustain the price of housing.

@ Flappingeagle and Sparticlebrane:

Situation is everything, isnt it?

Our first child was born in February. My wife was working extra leading up to it so we would have a nice little nest egg for bills and such when he came. On top of being able to pay all of them immediately out of pocket, we were able to buy everything we needed with cash (furniture, clothes, what I thought would be 3 months of diapers that only lasted about 4 weeks, etc).

The part I didnt plan on, however, was our AGI going up 30%+ and jumping a tax bracket. I changed my withholding at work, but not until October. As of doing my taxes last night, the amount we were short and penalties wiped out the rest of our nest egg and cut into the emergency savings.

If only he had been born 35 days earlier...

That said, I fully expect our income to dip drastically next year since the wife took 9 weeks off to be with our baby and is only doing one job when she goes back to work.

To the question about cars: We own both, titles in hand and all. I wouldnt say they are beaters...but they arent flashy. They are probably a bit nicer than our income allows, but her family gave them both to us as gifts (a 3 year old Subaru and a 9 year old Audi).

In fact, other than a $40 or so balance on the CC that revolves monthly, the student loans are our entire debt load. I expect to be completely debt free in the next 5 years...provided the world doesnt collapse before then.

Quote:

Rafter: how do you think it will balance out for multifamily? On the one hand you have younger people needing to rent for a much longer time period before they can buy even a starter home, and needing to stay somewhat mobile to be able to chase jobs. On the other hand those same people will have lower wages on average and their discretionary income will be lower after paying their exorbitant student loan payments.

I think a great many people have re-thought the 4 BDRM with a white picket fence American Dream (TM). The bust, the horror stories, the increasing taxes/property taxes - everything has tarnished the drive for a house.

Owning a house is an albatross, an anchor really. And as Gen says, it's not an investment but a consumer good that, in time, is consumed. I think as the economy lags and wages stagnate - renting is where it's at for the renters, who have lower fixed costs, and can roll away like tumbleweeds if need be, to landlords, who can build at low interest rates. As a landlord, I do like the inflation protection built into my property; you can increase rents as need be if inflation gets out of hand.

Pulling from memory, I think the homeowner rate was at 40 percent at the end of WWII - many .gov programs, including zero interest loans to vets, steadily pushed this up to ~high 60's.

So, renters will increase as a proportion of the population, local conditions notwithstanding, and it's a function of people seeing through the 'wisdom' of owning a home as an sure-fire investment, and also the decaying financial position most families find themselves in.

Quote:

Owning a house is an albatross, an anchor really.
....
As a landlord...

I'm sure your first statement has nothing to do with the second, seeing as how it is in your financial interest to have people renting from you than buying their own houses. Right?

Don't get me wrong -- if you can make money as a landlord, great. But I think that saying "owning a house is an albatross" is painting with a very broad brush.

@ Seanmiller:

Seanmiller wrote..

The part I didnt plan on, however, was our AGI going up 30%+ and jumping a tax bracket. I changed my withholding at work, but not until October. As of doing my taxes last night, the amount we were short and penalties wiped out the rest of our nest egg and cut into the emergency savings.

Can you put a few grand into an IRA to bring you back down below the penalty box? You've got till the middle of April to make that decision.

@ Uppity:

I thought I had to make the IRA contribution during the tax year (that is, before Jan 1 2012). Beyond that, I would have to find a CPA to figure out how much I need to come down to stop the penalties.

Quote:

I thought I had to make the IRA contribution during the tax year (that is, before Jan 1 2012).

No. You have until April 15 of the next year for an IRA.

About the ONLY reason I would ever look at an IRA or other retirement account now would be if putting the money in would somehow let me dodge some steep taxes/penalties that I would otherwise have to pay.

Personally, I would rather just save my money and buy some Real Estate so that I, AND NO ONE ELSE ESPECIALLY NOT A ****ING BANKER, would have hands on my assets. Maybe you can do a self-directed IRA and that way have control of your money and not have to put it into financial products. Financial produts are toxic to your financial well-being.

Rebuild your emergency fund to say 3K, then put every penny you can scrape together toward those loans and getting out of debt. You will be amazed how fast you can pile up money if you don't have debts constantly draining you.

Flap

I have a mule and forty acres...

@ Seanmiller:

I believe it's till April 17th this year.

Quote:

11. Enter traditional IRA contributions made, or that will be made by April 17, 2012,for 2011 to your IRA on line 11a and to your spouse’s IRA on line 11b ...... .

2011 form 1040 instructions
http://www.irs.gov/pub/irs-pdf/i1040gi.p....

If neither you or your wife have 401k/403b-type retirement vehicles, you're golden.

Quote:

Were You Covered by a Retirement Plan? If you were covered by a retirement plan (qualified pension, profit-sharing (including 401(k)), annuity, SEP, SIMPLE, etc.) at work or through self-employment, your IRA deduction may be reduced or eliminated. But you can still make contributions to an IRA even if you cannot deduct them.

Quote:

If married filing jointly or qualifying widow(er), and the result is
   $20,000 or more ($10,000 or more in the column for the IRA of
    a person who was not covered by a retirement plan), enter the
    applicable amount below on line 7 for that column and go to
    line 8. 
        i. $5,000, if under age 50 at the end of 2011.
       ii. $6,000 if age 50 or older but under age 70 1/2 at the end of 2011

The amount(s) you (and your wife) are able to contribute to the IRA(s) come straight off AGI. It's a drop of about $250 in tax per $1000 at the upper end of the scale.

I'm not a tax guy, so seek your own counsel. Bailed my ass out of the penalty box last year, and I think I'm going to do it again this year. I'm tying up some cash, but I figure the return will be worth it.

Quote:

Topic 306 - Penalty for Underpayment of Estimated Tax

The United States income tax is a pay-as-you-go tax, which means that tax must be paid as you earn or receive your income during the year. You can either do this through withholding or by making estimated tax payments. If you do not pay your tax through withholding, or do not pay enough tax that way, you might also have to pay estimated taxes. If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. There are special rules for farmers and fishermen. Please refer to Publication 505, Tax Withholding and Estimated Tax, for additional information.

Generally, the payments should be made in four equal amounts to avoid a penalty. However, if your income is received unevenly during the year, you may be able to avoid or lower the penalty by annualizing your income and making unequal payments. Use Form 2210 (PDF), Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to see if you owe a penalty for underpaying your estimated tax.

The penalty may be waived if:

1. The failure to make estimated payments was caused by a casualty, disaster, or other unusual circumstance and it would be inequitable to impose the penalty, or
2. You retired (after reaching age 62) or became disabled during the tax year for which estimated payments were required to be made or in the preceding tax year, and the underpayment was due to reasonable cause and not willful neglect.

Please refer to the Form 1040 Instructions or the Form 1040A Instructions for where to report the estimated tax penalty on your return.

@Flapping:

I got mine from my credit union. As you said, fark the Banksters. I would have rather not put in the dough, but was under the gun like Seanmiller here.

==================================

Back to the topic:

After thinking about the comments everyone made, I realized that house ownership will be even more of an encumbrance when the drowning state & local governments desperately wring the last few drops of blood from the cash cow that they can actually see.