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Originally posted by MRuss
Hey, I lived in Atlanta more than 20 years ago at the crest of the building boom. They were slapping up mini mansions while you slept. You could buy a beautiful four bedroom home for a bit less than $100,000 then.
It's a different world now, isn't it?
Originally posted by brokedown
This is a market correction.
I can understand those who purchased their homes when they were vastly over priced would think that the bottom has dropped out.
This is a PUMP & DUMP scheme and we are witnessing the Dump side right now.
Think this through.
What is the TRUE value of the Lot the home is built upon ?
$30,000 ? $40,000, more, or is it in reality much, much less.
At $30,000 for one third acre lot puts the land value at $90,000 per acre. Come on who in their right mind would pay $90,000 per acre for subdivision land? Subdivision land is not worth more than $10,000 per acre, so right off we have these people who are willing to pay 9 times its value, what are they thinking ?
Next is the construction cost. If you have the skills and time a lone person can construct a home start to finish for between $10 to $25 dollars a square foot. This puts the construction cost for a normal 1500 sgft home at $37,500. WHY would someone pay $75 to $150 dollars per sgft running the cost well in excess of $200,000 for something that cost less than $40,000 to build ?
What are the thinking ?
I did build my own home, I did 100% of all the work, I spent $37000 for 10 acres and had $25,000 in construction cost. I have a 1200 sgft home on 10 acres for $62,000.
Sure, not everyone can take the time or has the skills to do what I was able to accomplish.
BUT, Don’t over pay for a home and then say the market crashed when you can not get someone else to make the same mistake.
Home buying Rules:
1, Never, Ever pay over $10,000 for a home lot.
2. Material cost will not exceed $25 dollars a sgft for a NORMAL home. ADD 10% for a brick home.
3. Contractors usually work on the Cost plus basis. That is normally 12-15%. But watch this as the contractor raises the Cost so he raises his share.
4. Rule of thumb is Double the material cost, this will pay the labor. i.e. materials $100 labor is $100. Any more than that you are getting taken.
4. NEVER, EVER pay more than $53 dollars a sgft for the TOTAL cost of a normal home. Anything more and YOU have overpaid.
As you can see the Home Market is way over valued.
People are waking up and the Smart ones are refusing to over-pay for homes. It is getting harder to find people who are willing to OVER-Pay by three or Four times the TRUE value of a home.
UPDATE:US Taking First Steps To Wind Down Fannie, Freddie-Official
WASHINGTON -(Dow Jones)- The Obama administration plans an immediate, if gradual, increase in fees, capital standards and down-payment requirements as it looks to wind down mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC), a senior Treasury Department official said Monday.
"There are a number of policy levers the administration can use to wind these two institutions down," Jeffrey Goldstein, the Treasury Department's under secretary for domestic finance, said in prepared remarks to credit unions. "We will work with the [Federal Housing Finance Agency] to begin this process immediately."
The FHFA regulates Fannie Mae and Freddie Mac, which the government took over in 2008.
The Obama administration earlier this month outlined its plans to begin shrinking the government's broad support of the nation's crippled mortgage market, a process that officials said could take several years and would include phasing out the mortgage giants.
Goldstein highlighted raising the fees that they charge for guaranteeing home loans sold to investors, increasing the amount of capital they must hold to protect against potential losses and higher down-payment requirements on house purchases.
Together with federal agencies, Fannie and Freddie have accounted for nine of 10 new loan originations in the past year.
-By Jeffrey Sparshott, Dow Jones Newswires; 202-862-9291; firstname.lastname@example.org
--Nick Timiraos contributed to this article.
(END) Dow Jones Newswires