Author |
Topic: The Real Estate Market (Read 395 times) |
|
notseinfeld
New Board Hall of Famer
Enough is Enough. Vote Libertarian
 
 
Gender: 
Posts: 648
|
 |
The Real Estate Market
« on: May 19th, 2005, 1:01pm » |
 Quote  Modify
|
Holy Shit.
My sister bought a house on Hilton Head Island for 410K 3 years ago and it is currently valued at nearly 900K. We're talking a metoric rise of better than 100% in 3 years. Now the cheapest lot, with NO house on it is running near 450,000.
Real Estate around the entire country has risen an AVERAGE of 50% during the last 5 years.
What I believe we're seeing here is a repeat of the 'irrational exhuberance' witnessed in the stock market in the 90's and what goes up, comes down.
I'm wondering if there are any r.e. investment gurus here (R.E.I.T's not included) and if your finger is on the pulse of the market, what's your reading?
I'm considering that once I sell my investment home to sit on the proceeds until the market gets back into line providing it's closer to 6 months than to 1 year. Scoop up a bargain perhaps.
Economically speaking there can/will be some big bankruptcies and foreclosures occuring when a correction happens. Here in East Cobb, GA the average new home listing is well over 600,000 and ultimately given the easy financing to get in folks will not have much invested. That being the case if the market corrects even 20% a homeowner may be paying a note that's considerably more than the value of what they own. It would make more sense for them to just walk away, hence the foreclosures.
All input welcomed!
|
|
 IP Logged |
-----------Democracy is three wolves and a sheep voting on what's for dinner. ---------------------
|
|
|
seasonalboomer
CH.com Alumnus
New Board Hall of Famer
If I think hard enough maybe it'll go away.....
Gender:
Posts: 2248
|
|
Re: The Real Estate Market
« Reply #1 on: May 19th, 2005, 1:16pm » |
Quote Modify
|
on May 19th, 2005, 1:01pm, notseinfeld wrote:
Real Estate around the entire country has risen an AVERAGE of 50% during the last 5 years.
|
|
That's a return of about 7.5% compounded annually. While pretty good, it's not exactly AMZN prior to the internet bubble. Unlike AMZN, which people could sell in with a "less than 30 second guarantee" on the execution of their trade, the selling of real estate doesn't lend itself as well to manic exhuberance because of the illiquid nature of the asset.
Will markets correct? It seems it would depend on the definition of a real estate correction. Real estate, except in isolated markets where things do get frothy, generally just tends to grow a little slower, or settles at a price range for awhile when a correction occurs.
So, IMHO, the average real estate "investor" with a house and vacation house or a rental property never really see's the blood in the streets that a full scale stock market correction evokes. Now, if you're fully leveraged and have been playing the "no-money down", squeeze every bit of equity to buy more real estate game, then it might be worth paying a little closer attention.
|
|
IP Logged |
-----------------------------------------------------
seasonal boomer
-----------------------------------------------------
|
|
|
notseinfeld
New Board Hall of Famer
Enough is Enough. Vote Libertarian
Gender:
Posts: 648
|
|
Re: The Real Estate Market
« Reply #2 on: May 19th, 2005, 1:33pm » |
Quote Modify
|
Thanks SBoomer for the input.
Now, since historically (other than late 80's in Houston and subsequent crash that fingered the Japanese) real estate could be relied to return est. 3% per year. The current rate of >130% yearly return at 7.5% on the mean properties around the entire country does seem lofty, no? How long can this possibly last? And perhaps more importantly I can get a reading on WHY it's appreciating so rapidly!
|
|
IP Logged |
-----------Democracy is three wolves and a sheep voting on what's for dinner. ---------------------
|
|
|
floridian
Guest
|
|
Re: The Real Estate Market
« Reply #3 on: May 19th, 2005, 1:45pm » |
Quote Modify
 Remove
|
Why?
Low interest rates are a big factor.
Herd momemtum is another.
|
|
IP Logged |
|
|
|
floridian
Guest
|
|
Re: The Real Estate Market
« Reply #4 on: May 19th, 2005, 1:47pm » |
Quote Modify
Remove
|
on May 19th, 2005, 1:16pm, seasonalboomer wrote:
Will markets correct? It seems it would depend on the definition of a real estate correction. Real estate, except in isolated markets where things do get frothy, generally just tends to grow a little slower, or settles at a price range for awhile when a correction occurs.
|
|
A soft landing is the norm for real estate, but I have seen stats that indicated that this bubble is larger than any real estate bubble in the past 60 years.
|
| « Last Edit: May 19th, 2005, 1:48pm by floridian » |
IP Logged |
|
|
|
floridian
Guest
|
|
Re: The Real Estate Market
« Reply #5 on: May 19th, 2005, 1:50pm » |
Quote Modify
Remove
|
I am going to sell my house while prices are still high, and put all the money in Beany-Babies!!
|
|
IP Logged |
|
|
|
seasonalboomer
CH.com Alumnus
New Board Hall of Famer
If I think hard enough maybe it'll go away.....
Gender:
Posts: 2248
|
|
Re: The Real Estate Market
« Reply #6 on: May 19th, 2005, 1:57pm » |
Quote Modify
|
I agree with Flo. And being in parts of Florida and you in the Atlanta area, some values are frothy.
Not to get into the whole media-hype thing that every other thread seems to go to, but the GREATEST majority of people will be unaffected by slight-to-moderate changes in the interest rates when it comes to real estate. Or even a flattening of appreciation on their real estate value.
Yes, there will be pain, but only to those people who have set themselves up to squeal the loudest. Far fewer people are "speculating" in real estate than were jumping on board the bull market. And the value of your home, if you're planning to continue to live there, doesn't make you squeal as much as the monthly statement of your retirement account.
I've ridden through Charlotte's market where I lived in a "hot" area that flattened for awhile and then picked back up. Real Estate, like the stock market, was never really intended to be a place where you "flip" investments, like they're being done in many beach markets today. And if you're doing it, and the music stops, hope that you're near a chair.
|
|
IP Logged |
-----------------------------------------------------
seasonal boomer
-----------------------------------------------------
|
|
|
BarbaraD
CH.com Alumnus
New Board Hall of Famer
Hugs to ya
Gender: 
Posts: 5164
|
|
Re: The Real Estate Market
« Reply #7 on: May 19th, 2005, 3:32pm » |
Quote Modify
|
I've been buying and selling real estate (even got my brokers license about 30+ years ago). Don't think I've ever "lost" any money in that market.
My mama told me a long time ago -- when everyone else is buying expensive property -- buy cheap properties, hold them a little while, put a coat of paint on them and SELL when the market goes up. Always worked for me. I've bought so many "ugly" houses, I can't even remember the count, but a coat of paint, a little wall paper and some cleaning usually make a profit a lot faster than a $450,000 property. Bank repos are a great game. My office building I bought for nothing because the banker didn't have any imagination and couldn't see it "fixed up".
Like I said, I've never lost money investing in real estate.
As to what the market is going to do right now... a crap shoot at best. Everyone is saying that low interest rates are what's causing it to boom, but I did well back in the 80s when interest rates were 17-20%.
hugs BD
|
|
IP Logged |
What don't kill ya, Makes ya stonger!
|
|
|
Bethany1
CH.com Alumnus
New Board Hall of Famer
Always do whatever's next.
Gender:
Posts: 1612
|
|
Re: The Real Estate Market
« Reply #8 on: May 19th, 2005, 4:26pm » |
Quote Modify
|
These are fun to poke around:
http://www.hud.gov/homes/homesforsale.cfm
cheap homes/land/foreclosures/etc.
|
|
IP Logged |
I am sofa king we todd did.
crack is wack
|
|
|
Giovanni
New Board Hall of Famer
I love YaBB 1G - SP1!
Gender:
Posts: 764
|
|
Re: The Real Estate Market
« Reply #9 on: May 19th, 2005, 4:27pm » |
Quote Modify
|
One out of four houses now are purchased by investors instead of home owners. The middle age people in their peak earning years are now buying real estate instead of stocks. There might be a bubbles in certain markets, ie San Diego, Denver, Boston and beach properties but some other areas are depressed.
Who knows? It's a game like anything else. With cheap money this type of speculation will probably continue--but for how long?
One acre lots (if you can find one) near me are now $70,000. Washington DC had almost a 70% rise in value in the last 3 years.
I'm placing my house on the market soon and plan on downsizing. Hope all this good news transulates into some $$$ for me.
|
|
IP Logged |
|
|
|
Bob P
New Board Hall of Famer
Shut up Bob!
Gender:
Posts: 3436
|
|
Re: The Real Estate Market
« Reply #10 on: May 19th, 2005, 6:17pm » |
Quote Modify
|
This little gem is going here for only $440,000:
|
|
IP Logged |
Mrs. Barlow, I never, and I repeat never, ever pissed in your steam iron.
"SHUT UP HUB!"
|
|
|
Marc
New Board Newbie
Gender:
Posts: 39
|
|
Re: The Real Estate Market
« Reply #11 on: May 19th, 2005, 6:58pm » |
Quote Modify
|
Bob,
Just to amplify your example, this house is across the street from me. Two bed, 1 bath, 900 sq. ft., built in 1953, never remodeled. They turned down $810,000. yesterday. The bidding war has started and it hasn't even been listed yet.
|
| « Last Edit: May 19th, 2005, 7:00pm by Marc » |
IP Logged |
|
|
|
Jonny
CH.com Alumnus
New Board Hall of Famer
Give me a shovel Ill dig my own grave!
Gender:
Posts: 26213
|
|
Re: The Real Estate Market
« Reply #12 on: May 19th, 2005, 7:18pm » |
Quote Modify
|
Man, you guys are making me hard (Did I just fucking say that? )
My digs....built 1950, 3 bedroom, 1 bath, 4 car drive way (I added) 20X20 deck, all new windows,2 new concrete walk ways, new castle like cobbles stone wall around the front W/ stoneGargoyles at the end of the front walk, custom built aluminum arch trellis, custom built 18 foot tilt aluminum flagpole, brand new heating system, radon suck system...and ....its been lived in by ME!
Any offers?....LMMFAO
|
|
IP Logged |
It is up to YOU to educate yourself and then help your doctor plan your treatment. If you just sit down in front of your doctor and say "make me better" you are setting yourself up for a great deal of pain.
- Guiseppi
|
|
|
Giovanni
New Board Hall of Famer
I love YaBB 1G - SP1!
Gender:
Posts: 764
|
|
Re: The Real Estate Market
« Reply #13 on: May 19th, 2005, 7:28pm » |
Quote Modify
|
Heck,
You guys need to move south and east. Richmond-Raleigh would be a bargain. I live in 4 bedroom, 2.5 bath, 2500 square foot house, 2+ car garage that I built in 1978 on an acre lot and will be lucky to get $265 for it.
The chicken coup that I buy will probably cost as much
|
|
IP Logged |
|
|
|
Kevin_M
CH.com Alumnus
New Board Hall of Famer
withered branches grow green again.
Gender:
Posts: 6184
|
|
Re: The Real Estate Market
« Reply #14 on: May 19th, 2005, 7:35pm » |
Quote Modify
|
on May 19th, 2005, 1:33pm, notseinfeld wrote:| historically (other than late 80's in Houston and subsequent crash |
|
Early '80s, moved from Detroit to "growing like a weed, funtown" Houston, until... price of oil went from $32.00 a barrel down to about $14.00 down there. I followed the exodus in '86 back to Detroit which has the opposite economy. High oil, Houston is fine, but Detroit sells low margin subcompacts, cheap oil and the Houston market dropped big, while in Detroit the high margin Caddies start rolling again. Autos aren't doing well right now, especially the parts suppliers which are being squeezed by the big auto makers. Don't know about housing though.
Kevin M
|
| « Last Edit: May 19th, 2005, 7:51pm by Kevin_M » |
IP Logged |
|
|
|
Jonny
CH.com Alumnus
New Board Hall of Famer
Give me a shovel Ill dig my own grave!
Gender:
Posts: 26213
|
|
Re: The Real Estate Market
« Reply #15 on: May 19th, 2005, 7:38pm » |
Quote Modify
|
on May 19th, 2005, 7:28pm, Giovanni wrote:
The chicken coup that I buy will probably cost as much |
|
Thats the thing bro....you cannot sell and upgrade nowadays......only down grade and bank a few bucks.
|
|
IP Logged |
It is up to YOU to educate yourself and then help your doctor plan your treatment. If you just sit down in front of your doctor and say "make me better" you are setting yourself up for a great deal of pain.
- Guiseppi
|
|
|
Renee
CH.com Alumnus
New Board Hall of Famer
May we all find some pf time! Is it summer yet?
Gender:
Posts: 1060
|
|
Re: The Real Estate Market
« Reply #16 on: May 19th, 2005, 7:57pm » |
Quote Modify
|
Maybe it's a Texas thing since BarbD has been successful as well.
I'd say invest, invest, invest.
Some get lucky and buy raw ranch land for cheap and 10 years later find they sit above the barnett shale.
Investment properties are good IF the tenants take care of the place. I've been lucky on most of my houses.
I know where an entire warehouse of beanie babies is....going for CHEAP!!! 
|
|
IP Logged |
23 years of battling the beast, 9 years chronic......uneducated docs/nurses make me irate.
The fungus among us is for real!
|
|
|
notseinfeld
New Board Hall of Famer
Enough is Enough. Vote Libertarian
Gender:
Posts: 648
|
|
Re: The Real Estate Market
« Reply #17 on: May 20th, 2005, 2:05pm » |
Quote Modify
|
I KNEW those rotten Chinese were behind this somewhere:
The Chinese Connection
By PAUL KRUGMAN
Published: May 20, 2005
Stories about the new Treasury report condemning China's currency policy probably had most readers going, "Huh?" Frankly, this is an issue that confuses professional economists, too. But let me try to explain what's going on.
Over the last few years China, for its own reasons, has acted as an enabler both of U.S. fiscal irresponsibility and of a return to Nasdaq-style speculative mania, this time in the housing market. Now the U.S. government is finally admitting that there's a problem - but it's asserting that the problem is China's, not ours.
And there's no sign that anyone in the administration has faced up to an unpleasant reality: the U.S. economy has become dependent on low-interest loans from China and other foreign governments, and it's likely to have major problems when those loans are no longer forthcoming.
Here's how the U.S.-China economic relationship currently works:
Money is pouring into China, both because of its rapidly rising trade surplus and because of investments by Western and Japanese companies. Normally, this inflow of funds would be self-correcting: both China's trade surplus and the foreign investment pouring in would push up the value of the yuan, China's currency, making China's exports less competitive and shrinking its trade surplus.
But the Chinese government, unwilling to let that happen, has kept the yuan down by shipping the incoming funds right back out again, buying huge quantities of dollar assets - about $200 billion worth in 2004, and possibly as much as $300 billion worth this year. This is economically perverse: China, a poor country where capital is still scarce by Western standards, is lending vast sums at low interest rates to the United States.
Yet the U.S. has become dependent on this perverse behavior. Dollar purchases by China and other foreign governments have temporarily insulated the U.S. economy from the effects of huge budget deficits. This money flowing in from abroad has kept U.S. interest rates low despite the enormous government borrowing required to cover the budget deficit.
Low interest rates, in turn, have been crucial to America's housing boom. And soaring house prices don't just create construction jobs; they also support consumer spending because many homeowners have converted rising house values into cash by refinancing their mortgages.
So why is the U.S. government complaining? The Treasury report says nothing at all about how China's currency policy affects the United States - all it offers on the domestic side is the usual sycophantic praise for administration policy. Instead, it focuses on the disadvantages of Chinese policy for the Chinese themselves. Since when is that a major U.S. concern?
In reality, of course, the administration doesn't care about the Chinese economy. It's complaining about the yuan because of political pressure from U.S. manufacturers, which are angry about those Chinese trade surpluses. So it's all politics. And that's the problem: when policy decisions are made on purely political grounds, nobody thinks through their real-world consequences.
Here's what I think will happen if and when China changes its currency policy, and those cheap loans are no longer available. U.S. interest rates will rise; the housing bubble will probably burst; construction employment and consumer spending will both fall; falling home prices may lead to a wave of bankruptcies. And we'll suddenly wonder why anyone thought financing the budget deficit was easy.
In other words, we've developed an addiction to Chinese dollar purchases, and will suffer painful withdrawal symptoms when they come to an end.
I'm not saying we should try to maintain the status quo. Addictions must be broken, and the sooner the better. After all, one of these days China will stop buying dollars of its own accord. And the housing bubble will eventually burst whatever we do. Besides, in the long run, ending our dependence on foreign dollar purchases will give us a healthier economy. In particular, a rise in the yuan and other Asian currencies will eventually make U.S. manufacturing, which has lost three million jobs since 2000, more competitive.
But the negative effects of a change in Chinese currency policy will probably be immediate, while the positive effects may take years to materialize. And as far as I can tell, nobody in a position of power is thinking about how we'll deal with the consequences if China actually gives in to U.S. demands, and lets the yuan rise.
|
|
IP Logged |
-----------Democracy is three wolves and a sheep voting on what's for dinner. ---------------------
|
|
|
pattik
CH.com Alumnus
New Board Hall of Famer
Gender:
Posts: 2404
|
|
Re: The Real Estate Market
« Reply #18 on: May 20th, 2005, 2:16pm » |
Quote Modify
|
When Greenspan spoke today (supposedly about energy), he went off on a tangent about the housing bubble--actually used the term "bubble". And he is not going to stop harping about the dangers of Fanny Mae and other agencies getting too gigantic. I think he is still smarting from the tech bubble bursting and he is trying to get things to change through words, before the Fed actually has to take action through the banking system. He sees a lot of risk potential in real estate as an investment medium these days.
|
|
IP Logged |
The voyage of discovery is not about seeking new landscapes, it's about having new eyes--Marcel Proust
|
|
|
|
|
|
Home
Help
Search
Members
Member Map
Login
Register
Reply
Notify of replies
Send Topic
Print
test rss