Trees Grow To The Sky: Poll
Bloomberg has this out on a new study. “Fewer than 15 percent of Americans surveyed in a Bloomberg/Los Angeles Times poll expect home prices in their neighborhood to fall during the next six months. More than twice that, 36 percent, see prices rising during that time. The majority of those polled, almost seven in 10, expect the value of their homes to appreciate by 5 percent to 30 percent during the next three years.”
“Affluent investors are again more optimistic, with almost eight in 10 predicting such price gains. ‘Real estate is always a good investment because land is finite,’ says Richard Hoffman, a psychologist in Tampa, Florida, who owns two condominiums and an office in addition to his home.”
“More than 40 percent of the affluent investors in the poll own a second home or an investment property, compared with more than a quarter of investors making $100,000 or less annually.”
“More than one quarter of those who have adjustable-rate mortgages say they aren’t sure they’ll be able to make their monthly payments if their interest rate goes up. These loans have been particularly popular in California and other states with high housing costs. The yield on the U.S. Treasury’s 10-year note, which serves as a benchmark for 30-year mortgage rates, rose to the highest in more than a year on March 6 on expectations that the Federal Reserve will keep raising interest rates to rein in the economy.”
“Of those who have adjustable-rate loans, the poll found that 21% said they were ‘not too confident’ about making their payments if they adjusted higher. Five percent said they were ‘not at all confident.’ The rest were ‘very confident’ or ’somewhat confident.’”
“Lillie Oliverof Alvertville, Ala., said she got an adjustable-rate loan a few years ago when she refinanced her house to pay for improvements. But her loan rate recently jumped a full percentage point, and it could adjust again in six months, she said. ‘I’m at the point right now where I can barely make the payments,’ Oliver said. ‘If everything keeps going higher, like groceries and everything, I don’t know how I am going to make it.’”
“Jackie Arnold, 41, and her husband used an adjustable-rate loan to buy a home in suburban Atlanta 18 months ago. Now, as interest rates rise, she’s worried that the loan may have been a mistake. ‘Our dilemma is, do we sit on the [loan] that we have and wait … or do we refinance now and pay considerably more right away?’ Arnold said. ‘We are caught between a rock and a hard place.’”
“Some consumer advocates say home buyers haven’t been fully aware of the risks involved with adjustable-rate mortgages. Homeowners with ’substantial income or assets could well weather the storm of higher payments on these loans,’ said Stephen Brobeck, head of the Consumer Federation of America. ‘But we know that a fairly high percentage of people who have taken out these exotic loans aren’t in that situation.’”
And CNN had this, “Individual investors are moving back into stocks at the fastest pace in years. Uh oh. as history makes clear, by the time individual investors are jumping in, that’s the time the bull market is pretty much over. Individual investors are often the last hurrah, when most of the advance has already happened. For one recent example see the end of the Internet bubble, circa 2000. As Barry Ritholtz wrote, ‘This is how sucker rallies draw people in. Once the most naive and least informed buy in, who else is left to drive prices higher?’”
Can you believe this? Here’s what one of our Fed Governor’s has to say about the housing bubble:
“Indeed, given that bubbles always burst — if there is no burst there was no bubble — clear advance evidence of a bubble can never exist,” Pool said. “If the evidence was clear, then everyone would know about the bubble and forthcoming burst, but then the buying that created the bubble would never occur in the first place.
This is a great example of the cluelessness that got us into this mess in the first place. Of course you can see a bubble developing! All you have to do is compare price appreciation and price levels to historic ratios and also consider factors such as the availability of credit, the effects of lowered lending standards, and the level of speculative buying vs. buying for owner-occupancy. A housing bubble has got to be one of the easiest things in the world to predict! We’ve seen them before so we know exactly what the warning signs are. His argument seems to hinge on an assumption that investors always behave rationally and we know that’s not the case. Irrational behavior on the part of investors is as common as it is easy to spot (look at the NASDAQ in 1999).
I can’t believe that this is what passes for logic at the Fed.
The polls just show how naive and brain washed people are now. The easy money has been made and those coming aboard now will go down w/ the ship
Yes…and for my sake hope the cluelessness continues for another few weeks in AZ until I dump my house and happily become a renter. My planned marketing gimmick will be to let the buyers believe they are really taking me to the cleaners - “oh yeah…this thing would have sold a few months ago for 300 but I’m asking 15% less and am willing to bargain. I just need to get out.” All my neighbors are still pricing from summer levels. They’re nuts - but that’s good for yours truly. Thank God for cluelessness.
get the job done - whatever it takes
I’m seeing lots of garbage around here still priced at summer levels and that are not selling. I think you are smart to get out.
..except there’s rarely any such thing as “easy money”. Even the “developers” who are doing slap-dash condo conversion, etc, have to lay out some real $$$ to get started, hire builders and manage the project, market and sell, etc. They may make money, but it’s a lot of work.
Speculator/Flippers are fooling themselves if they think there’s such thing as easy money! Even if you have 10 apartments financed and can charge more for rent than your payments cost, you now have a full time job as a landlord: collecting rents, performing repairs, keeping the units occupied, etc.
If people accounted for the real cost of doing buisness, even the “successful” R-E investors would realize they’re making less than they thought they were.
(As an aside, how many times does someone subract the years of property taxes, repairs, and the 6% commission, and inflation when they tell you how much money they made by selling their house!)
Robert,
I agree that a lot of effort, knowledge, $$ and risk go into Real Estate investing. It is a job and the returns are commensurate with the “work” put in. Personally, I think that you have to really enjoy the business and be smart enough to buy “right” and choose good tenants. It is not a game for amatures.
He’s assuming that everyone acts “rationally” in an economic sense. But that’s clearly not been the case in the last few years. Quite stunning he can’t see that.
I think what he means to say is this: “We only knew for sure that there was a bubble in 1999 & not really new internet based economic fundamentals when we raised borrowing costs considerably to see if they survive the duress. We are going to do the same again, so market is underestimating our resolve on short term rates. Obviously there is no housing bubble, and therefore, we can easily raise short interest rates to 6-7% and long rates will go to 7-8%. We will know whether there is a housing bubble or not at that point of time.”
The Fed is run by bankers, for bankers. Its purpose is to create bubbles so that insiders can ride the inflation all the way up, then bail out at the top and finally buy up assets at fire-sale prices in the ensuing panic.
Of course, it would hardly be better if the Fed were elected by the people. Years of being raped by inflation and the corporate kleptocracy have taught them to avoid wasting time producing anything and to join in the plundering instead. They would simply elect Fed officials who promised to generate more asset bubbles.
Wow I bet you’re a glass half empty kind of guy. I agree with you completely.
Of course this passes at the Fed…If he tells the truth then everything might collaspe…think about it…propaganda to the masses…
His point is that if a bubble is obvious to most people before it pops, most people wouldn’t buy, and there’d be no bubble. That simple bit of logic is correct.
However, what he’s wrong about is that a bubble is obvious to informed and objective observers. The fact that this makes up a small portion of the general public is what makes bubbles possible, and possibe to detect in advance.
To be more accurate, there’s a bigger minority that also sees the bubble in advance, but gets swept up in the euphoria of the bubble and buys anyway.
Of course, there’s also another group that just wants a bigger/newer/whatever house and gives little thought to the future of housing markets.
The bottom line is that he’s just continuing the CYA that Greenspan espoused. If you can’t spot a bubble in advance, you can’t blame the fed. for not preventing it.
“The people have always some champion whom they set over them and nurse into greatness…This and no other is the root from which a tyrant springs; when he first appears he is a protector.” -Plato
This comment and similar ones over the last few years ARE ACCURATE. That I and others believe we are in a bubble does not mean that we are. The definiton of a bubble is the burst which may or may not be happening. This has been pointed out before on this and other blogs. At this time there is not sufficient evidence to claim the bubble is bursting or that this is a minor respite until outrageous appreciation resumes.
Compare the percentage of people with over 50% of household wealth in real estate, and the percentage of people who think RE will keep going up. Same percentage. Same people? Seems likely.
Well, more than 50% of my wealth in in home equity (at least if you beleive Zillow) and I certainly beleive house prices are going to go down significantly.
‘Homeowners Expect Prices to Keep Rising’
Homeowners with ’substantial income or assets could well weather the storm of higher payments on these loans,’ said Stephen Brobeck’
CNN has this: ‘The national savings rate for Americans is at its lowest point since the Great Depression, yet 78 million Americans will retire in the next 20 years.’
‘Real estate is always a good investment because land is finite,’ says Richard Hoffman, a psychologist in Tampa, Florida, who owns two condominiums and an office in addition to his home.’
How hard would it have been for the reporter to ask if those condos are cash flow positive, or are they sucking cash out every day?
tell that to tohiko yamasuki over there in tokyo
How does one equate ownership of land with an ownership interest in a condominium? Sure there is a fraction of an ownership interest in the underlying land, but the fact is that condominiums are not really real estate. Condos are great for the developer because they are enjoying a massive wealth spinoff for only a finite amount of dirt - maybe even less than an acre. But after the fools buy the condos and cash the developer out, the condo owners are holding just a sliver of real value (the land). Owning a condo is much closer to owning a mobile home with a leasehold interest on a parking spot than like actually owning real land. The fools who don’t understand this are about to get decimated.
value of home = value of land + cost of construction - depreciation. (at least in places where population is expanding and they’re still building homes) Now people sometimes argue that a house is only worth what the land costs and what it cost to build the home. They have it backwards. Unless you plan to grow crops, park cars or mine for minerals, the value of the land is determined by what people will be willing to pay for a home there. Since the cost of construction is relatively stable, Bubbley house prices=bubbly land prices.
The problem with condos isn’t the fact that land value portion of the above equation is so small. Theoreticly this should make them LESS speculative since there is LESS land involved IMHO. The problem is that depreciation is larger and less under the control of an individual purchaser.
The problem with condos, according to your equation, is that the entry prices are so insane. Both the land value and the cost of construction are significantly lower than SFRs for obvious reasons. But condos right now are selling for what…50%, 60%, 70%(?) of SFRs. That leads to the ultimate conclusion: there is relatively little value in the condos in the first place. The fact they are so overpriced is perhaps what makes them paticularly vulnerable in bear markets.
Empericly, I’m wrong. I’m trying to figure out exactly why. The question isn’t “Are they currently overpriced?” it’s “Why does their price swing more widely than SFHs?” Is part of the problem that rental housing is a much better replacement for a condo? Apartment living suppresses many of the advantages of ownership except for the strictly economic (and therefore speculative) ones. Or is it simply that in the face of an oversupply of housing, the least desirable housing takes the greatest hit?
I agree buying real estate and not owning the underlying land outright is foolish.
I also think there are still good real estate investments out there if you look long and hard enough. Ones that produce strong ROI for current income and are purchased at below market to allow for capital gains when sold. These “value investments” are just what books like “The Intelligent Investor” and “How I turned $1000 into $1 Million” are all about.
It’s getting harder and harder right now, but hey, that additional effort filters a lot of the competition out of the race!
“More than 40 percent of the affluent investors in the poll own a second home or an investment property, compared with more than a quarter of investors making $100,000 or less annually.”
I wonder what their definition of “investors” is. The idea that anyone making less than 100k in LA would think it’s sensible to own multiple homes is mind boggling.
I just started reading Benjamin Graham’s The Intelligent Investor. In the very beginning he emphasizes the distinction between an investor and a speculator and the danger in blurring the distinction between the two. How very right he was.
Until recently I believed I was basically stupid about things like investing and real estate because a lot of what I saw going on around me seemed to defy all common sense, and I assumed that it was because I just didn’t understand. Now I’m starting to realize the my common sense is right on, and that common sense in general just isn’t very common. My mind continues to boggle.
that’s a great book. every time people start to think that value investing is outdated, Graham is soonafter proven right again
The book’s been in print and regularly updated for almost sixty years - even thirty years after Graham’s death. The observations on which he bases his investing philosophy (which largely hold true today) go back hundreds of years. How could any reasonable person dismiss this as “outdated” and believe that assertions of “this time it’s different” are anything other than wishful thinking? He had me hooked at the part about not getting emotional or enthusiastic about one’s investments. I wish a lot more people had received and taken that advice before they “invested” in the current-soon-to-be-former RE boom.
Their definition of “investor” is someone who invests in stocks, bonds, and/or money market accounts. 21% of those surveyed own some bonds, and 57% of those surveyed own some stocks. Not sure what the total percentage of “investors” is though.
The survey is here:
http://www.latimes.com/media/acrobat/2006-03/22315063.pdf
Here is the ‘flip’ side of the RE bubble…high property taxes…quite an interesting read!
Want your cake and want to eat it too?
if you can’t afford it, sell. property tax caps just increase the burden on younger people. I have no sympathy for this BS
I was not aware that “younger people” were treated any differently than other people. Thanks for clearing that up for us. I have no tolerance for misrepresentation of Prop 13 or its’ kin.
Obviously Prop. 13 doesn’t specifically treat younger people differently, but given that longer term property owners tend to be “older” the net effect of prop. 13 is that a higher proportion of property taxes are almost inevitably paid by “younger” people than would be the case if there was no prop. 13.
I’ve benefitted greatly by prop 13, but I still think it’s the wrong solution to the problem.
exactly. I’m all for cutting taxes across the board. taxing the same resource differently based on when you bought it is assinine however
Gee, and here all this time I thought everyone paid the same 1% of purchase price plus 2% per year. Now you claim otherwise. Just look at that however. Long term owners are paying more! I bought in ‘85 so this year I paid 1.5% of the purchase price in property taxes while someone who bought in ‘05 is only paying 1%. Totally unfair that two properties side by side pay different tax rates.
I’m sure most of your neighbors would love to trade tax bills with you. The reality is tax caps like you have in Cali subsidize older homeowners. Long term homeowners likely enjoy the benefits of living in a nice town with good schools and all of the value that adds to their properties, but they pay far less for these benefits than their neighbors who bought more recently.
Tax caps subsidize old people’s ability to remain in big old houses that they don’t need anymore, while young people with kids are crammed into tiny places that might be more suitable for one or two people. Maybe if we didn’t have such subsidies and people were forced to sell in towns that they really can’t afford, we would have a more rational market
What in the heck is all this “older” business? Can you show me any of this age discrimination in the law? In practice? Come on, repetition is not evidence.
My neighbors surely would love to trade tax bills with me but wouldn’t touch an offer to trade tax rates. But since you are such a fan of the “fair” method here’s what you can expect from the department of motor vehicles: “Dear recent auto buyer, at the time you purchased your vehicle you were assessed 7.5% of the sales price which was reported as $20,000. Recently however your neighbor purchased a bigger, more expensive auto for $40,000. Please remit another $1500 in the interests of fairness. Thank you for supporting your DMV.”
I pay 1.5% of the purchase price of my home annually in property taxes. I have neighbors who pay 1.9% of their purchase price and others that pay 1%. We all did this with no coercion. Anyone who objects to Prop 13 can either try to change it or not participate. I’m tired of all this crap about fair or winners and losers. It’s a TAX! It by definition CANNOT be fair. It cannot be perfected, etc., etc. And any attempt to “fix” it would involve politicians so again by definition a fix would make things worse. It is clear that people posting here have no idea about the reasons behind the consequences of and protections afforded by Prop 13. This clearly isn’t the place either. Either Ben can start an exclusive Prop 13 thread or we can move it over to my moribund blog.
Gee, and here all this time I thought everyone paid the same 1% of purchase price plus 2% per year. Now you claim otherwise.
Nope, try again.
“Nope, Try again?!?”
What kind of juvenile knee jerk response is that? Are you talking about the exceptions and loopholes or are you just trying to troll? I’m generous, you were binging up the several exceptions such as the retirement transfer that allows owners to transfer some of their existing basis to another property under conditions designed to make it applicable to retirees. There’s also the shell transfer of commercial property scam where a business forms a holding company and the holding company is sold and thus while the property changes hands the reassessment is not triggered.
“Nope, try again” is such a miserable display of disrespect and waste of time I considered not replying. I’m clearly the only one in this fight that has even the slightest idea about Prop 13 so I’ll show a little tolerance for this unwarranted personal abuse.
Your response to my comment has an utter and complete non-sequiteur. As I said, you need to try again and come up with a more rational response.
I should have also have added you merely put words into my mouth. So much for “respect”.
I have posted about this in detail earlier
Prop 13 is a wealth transfer from new homeowners to old homeowners.
Anyone who says “try to change it” is at best dishonest.
A fair system would have had taxes fixed for everyone.
It’s funny how all the talk about taxpayer justice and stopping government bilking the taxpayer has turned into the “try to change it” line, when it’s a situation in which you can exploit another.
As I’ve said earlier, Prop 13 supporters dont want fixed taxes, they want their taxes to be paid by their negbours.
Prop 13 supporters are NOT, repeat NOT, anti-tax. They just like to wear the anti-tax mantle and spew hypocritical comments.
And they will get their just desserts when the the market stalls. More fees than taxes. It’s on the way. I sincerely hope the Prop 13 supporters get screwed, along with the I/O ARM flipper, in the housing crash. This is because I firmly believe that people should bear the consequences for what they do - and Prop 13 supporters should really bear the consequences of freezing taxes - crumbling infrastructure and support services (yeah they are crumbling now, but far more worse would it be), rather than freeloading on the new, young and poor.
And the stupidest arguments is this - I want my taxes fixed when I buy the property. Really? How about asking the neighbourhood grocer that ? “I want my tomato at the price it was when I moved to the neighbourhood”.
Prop 13,was a honest attempt. Like any other human intervention, when some set found that they could exploit others with it, it became dogma, and whatever just principle was behind it was sacrificed long ago. Over the course of time it has created exploiters and exploited, all in the name of tax justice. What a crock!
Robert,
Although I’m no fan of prop. 13, I feel the biggest flaw in it is that it doesn’t consider refinancing as a basis for reassessment. Sure, we shouldn’t tax people out of their homes based on unrealized paper gains, but what about those who have tapped their housing ATM? I believe if you refinance beyond your original mortgage, they your tax basis should change to reflect the balance of the new loan.
Hey, @sshole. Here’s your damn QUOTE: “Nope, try again.”
I put no words in your mouth but not to worry, you’ve used up all my tolerance for assine juvenile braggadocio. You need not worry about my feeding your illness henceforth.
Apologies to the rest of the readers for engaging this child for so long.
Sigh. One more time. I wrote:
The net effect of prop. 13 is that a higher proportion of property taxes are almost inevitably paid by “younger” people than would be the case if there was no prop. 13.
to which you responded:
Gee, and here all this time I thought everyone paid the same 1% of purchase price plus 2% per year. Now you claim otherwise.
That is classic non-sequiteur.
I’d agree that is a reasonable modification. In essence you are reselling a portion of your asset with a refi or HELOC that includes a cashout provision. A simple refi even including reasonable fees is a different matter. I’d probably be kind and limit the reassesment to the higher of the original sales price (plus 2%/yr increases) or current encumbrances.
You are correct this is one of the most glaring loopholes.
Why hasn’t anyone offered to pay 1% of the current value of their homes as a protest of the unfairness of Prop 13? The County will gladly find a way to spend the extra money. People seem to be objecting to paying a fair tax just because they think someone else might be paying a less than fair tax. There’s a Nobel waiting for anyone who can produce a economic model for a fair tax but I don’t see any of those here either.
Just a quick observation on one blogger’s conduct here.
Why should anyone who addresses other bloggers as “@sshole” demand the respect they don’t give others? Get a grip.
Because the @asshole in question has repeatedly lied, incorrectly claimed he was misquoted, tried to revise the evolution of the thread, used derogatory language, been condescending, unresponsive, juvenile, and recalcitrant. He’s accused his opponent of being ignorant and he has consistently personalized an issue of public policy. The only reason he hasn’t earned the title f@cking @sshole is because of my gentle forgiving nature and the fact that I no longer read his exudations. That’s why.
I feel no need to demand respect but I don’t let instances of disrepect pass by unnoticed either. I couldn’t care less what the likes of giantaxe and other cowards who need to hide say or think. They hide for a reason, to protect what they think is a reputation. They don’t have the guts to sign the insults they so cavalierly toss out. They can’t deal with the facts so they attack the messenger.
An inordinately small number of 25 year olds bought their houses 20 years ago. A significant proportion of 60 year olds did.
Right on about younger people with kids getting crammed into smaller and smaller spaces. We took the kids trick or treating this year in my mother in law’s neighborhood (Sherman Oaks, CA). Nice neighborhood of large homes built for families, with backyards, pools and mostly with 4 bedrooms. The average age of those answering the door to doll out the candy was about EIGHTY!! Meanwhile, many of my friends in their 20s and early 30s are crammed into little townhomes or condos, or cracker jack box sized homes with no yards, and raising 2 or 3 kids under those conditions. These are people with good jobs, not lazy bums. They just can’t get a decent house because the old farts just won’t move on and give the younger crowd a chance.
Nope, sorry. [Notice, this is not the same as "nope try again." I explain why rather than leave the comment hanging.] The plural of anecdote is not data. Since 1950 the average size of a US home has more than doubled. Occupancy is down by a third. Most of these changes have been since the inception of Prop 13. I know you were speaking in gross generalizations but the average age of Sherman Oaks isn’t readily discernable as it isn’t a real place but a tract in the city called El Río de Nuestra Señora la Reina de los Ángeles de Porciúncula. Regardless it isn’t 80. Good see you you encouraging the old farts to die already and make room for others. Finally some honesty amomg the Prop 13 detractors. I just cannot personally imagine any solution to older familes living longer and staying in places they like that wouldn’t be more harmful than beneficial. I certainly cannot imagine any that are morally defensible.
“Good see you you encouraging the old farts to die already and make room for others.”
hey, I’m just saying that people who live in the same town should get taxed the same. I know tax policy is often unfair, but it can be improved. I also don’t see what’s so bad about grandma selling her 4 BR house if she doesn’t like the taxes. It won’t kill her to get a condo.
They aren’t taxed the same. The longer term residents are taxed MORE. My longest term neighbors regardless of age are paying as much as 1.9% of their purchase price, I an paying 1.5% and my newest neighbors are paying 1.09%. Surely you don’t want we all to pay the same rate? Surely you don’t want them to pay the exact same amount regardless of home size/quality? Surely you don’t want them to all pay more? What is it that you want? I’m not going out on a limb here to say you probably want recent arrivials to pay less and long term residents to pay more. Why? What rationale, real rationale is there so that we can do this thing?
Here’s an example of an unintended consequence. You are house #2 of 3 identical single story residences. #s 1 & 3 tear down and convert to 3 story edge to edge condos. No sunlight, lots of noise, living hell. The nice tax board sends off two letters; 1, the value of your home is tripled and your tax is tripled. 2, tax rates on top of the triple are going up because you are causing a lot more traffiic, crime is going up and there are more voters overuling your outmoded ideas of community values.
you are paying a higher percentage of an artificially low valuation of your property. this does not mean that you pay more taxes; it means that you pay less than just about everyone who bought after you. Value is added to your home because of the services your town offers. Your taxes likely do not reflect this current value. it would be nice if you would make a real argument instead of constantly trying to distort others’.
Who says low? You? No, I paid a fair market value and I can prove it. Are you ready to say I didn’t? Are you ready to allow some bureaucrat to make the call?
If you think property taxes should be based on current market value then fine, you can lead by example and pay vehicle taxes for your 10 year old sedan based upon the current highest price anyone ever paid for this years’ model. Again, no takers? Why not? Come on people. This is getting tiresome. So many people are all so ready to claim fairness but no one seems ready to stand up and put their money where their mouths are.
Well gee. That’s so fair. I pay the taxes I agree are fair and they pay the taxes they agree are fair and you looking in from the outside decide everyone except the actual participants are WRONG. Good for you, I’ll take the open market and democracy thank you.
How do you know this? Come on, where do I live and what are the benefits I get? Come on. You weren’t guessing, you were trying to lecture. So, now, tell everyone about these so called benefits. Boy, do I have no time for lying braggarts.
Of course not. What rock do you hide under? My taxes reflect the price I paid just like almost every other tax.
Try a mirror first.
smart guy: a car depreciates in value. does your house? no. your analogy is way off.
And I’d say the services your town offers increase the value of your home, regardless of the precise town you live in. How much less do you suppose your house would be worth if there were no schools, no police, no firefighters, no sewers, etc, etc?
The cost of providing these services rises constantly. Why should you get them for an artificially fixed price based on when you chose to buy into the community?
skeptic pay your dues pay your taxes and stop whining its called paying dues.if you cant afford it why did you buy.
I didn’t say kill the elderly. But, I see nothing wrong with making some additional tax incentives for the elderly to sell their huge houses, considering they’re obviously done raising children in them, and move to condos.
Why the hell should I move from a house I built that has gone up in value and the city is being built up around my property? I liked it before there were people here and there were no taxes to impair my life style. I would be happy to pay 1% of current market value in property taxes. My current rate is 2.36% and there appears to be no let up in sight.
So I guess you’re planning on doing that when you grow old? Maybe they have memories that they want to hang on to. Maybe, like my little sister, their children don’t want them to sell so that they can come back and visit. Or, maybe they like the family coming home for the holidays, or their house is paid off and they just don’t feel like moving and have better things to do, or… You get my point.
Besides, it wasn’t their generation that went hogwild over real estate investment.
I agree, it would be nice if they relocated, but I don’t see that it will necessarily change prices. And, their able to take out some of the value of their home to finance their retirement. My husband’s grandmother is doing it. It wouldn’t happen if she sold her home and soaked it all up in a new condo with just a little left over. That plan beats us all chipping in to help out, because things don’t cost what they used to.
Yeah, boo-hoo and big pity party for the jerk-off’s who expect a whopping appraisal number for their loan consolidation re-fi; and a pauper’s price for their assessment value. Sorry folks-can’t burn both ends of the candle. I always offer people the following choice when their appraisal number doesn’t meet expectations. You bring a re-assessment of your property by the taxman reflective of your estimate, and I’ll review my number…Never seem to get any takers…Borrowers always seem to go looking for the rubber stamp, number hitter appraiser next.
Wow. The Prop 13 debate again. Prop 13 is the only just way to tax properties (and I’m againsta prop tax as a rule, altogether). If you’ve lived in CA for any amount of time, you will know that prop values are VERY volatile. There is no way that a long-term resident should pay for the idiocy of speculators and newbie investors. Nor should they have to pay for the burdensome and extreme population increases which already reduce their quality of life. We all have a choice when we buy a house. If we don’t like the cost, we can back out and MOVE TO WHEREVER WE CAME FROM. Why should native or long-term residents move away from their homes and families so immigrants (foreign and domestic) can move in? (And The Lingus thinks “slimeball” out-of-staters are bad in Vermont — he should try CA where they think natives should not only tolerate the more crowded and reduced standard of living, but they actually think CA residents should move JUST FOR THEM?) I cannot see one good reason why Prop 13 should be repealed. People pay taxes based on their purchase price which is based on thier incomes. THAT is fair.
Look at it another way: why should “old” people subsidize the schooling of the new residents’ kids???
I agree
Yea, just read that L.A. Times/Bloomberg article. I’m was beginning to think I was the one delusional until I got to the part about people and their adjustable loans. Politicians say you should never believe polls. I guess they are right.
Price plunge on gold and silver today. If ever you had an interest - this might be the time to dip your toes in.
This kind of poll and reporting are not worth the paper they are printed on. There is no mentioning of how their sample population was drawn. There is no comparison to historical data to guage the trend. These %s cited can go either way.
The mainstream media is just neutered to deliver any kind of real news.
If prices do not return to the 50 year trend line which I believe is around 5 - 8 % depending on where you live it will be the first time in history they have failed to do so. I remember the fray and frenzy in South Orange 14 years ago when prices had sky-rocketed to around $300K for a typical nice home and everyone was like if you don’t buy now you’ll never get in - don’t expect prices to fall etc.. 4 years later you could drive up and down the streets and see the white notices and brown lawns on every street. Prices were down 40% and the scene was not a pretty one. Those who were able to cling to their properties finally broke even around 2002… Those who overextended lost all. So I ask those who claim this time is different - why is it different? What is so different today over past housing bubbles? Of course you get the standard spiel about great job growth etc…
normal appreciation for homes is very close to inflation (at most about 1% higher, yoy); there are several good historic studies to prove the fact. I don’t think the US can be any different.
Of course, the inflation numbers have been manipulated big time - that is what IS different today. So it is not so easy to say how far homeprices have to fall back, but I think 50% down in the US and 50-75% down in several EU countries would be a start.
My uncle lived in the OC during the previous boom/crash cycle. He also recalled the frenziness toward the end of the housing boom, with the exception that this time seems much worst. We had dinner this past Sunday & he told me that his hairdresser was bragging to him about just closing on her 2nd home ($650K) when he got his haircut. He shook his head is disbelief that bank would lend over $1.1 MM (her 1st home was $450K) to someone who has no collateral and earns ~ $40K /year (including tips).
And it’s that type of shit that makes me wonder if it is me or the buyer thats on LSD.
In this case this buyer has very little to lose & much to gain. If housing continues to appreciate (in her mind it will), she will make lot of money for doing nothing. If the market crashes, the bank will repossess her houses, she declares BK. Remember the vast majority of her income is in cash, thus even the new BK law has little effect on her.
At the meantime, she is enjoying a good life with her HELOC - driving her BMW and living in a nice house.
exactly, and it’s not just in the US. I see it everywhere around me (in the Netherlands) as well. Many irresponsible (mostly young) people are having a party thanks to the housing bubble. They spend everything they have so someone else is going to pay the bills, by definition.
are you sure the BK laws won’t affect her much? I thought she’d be in debt for the rest of her life in this scenario. I’m having a hard time believing people can get off that easy. If I’m wrong then something seriously needs to be done about that, people like myself and others who are renting and saving right now should *not* be punished for being responsible.
Will her debt to the IRS be forgiven in bankruptcy court? I think not. Let’s not forget that debt forgiven is regarded as income by the IRS.
yeah, great, too bad I bought last Thursday
oh well, live n learn.
So did I and today too. Don’t worry, the mid and long term outlook is outrageously bullish.
I think you two are talking about different “investments”.
Yikes. I’m sorry
Humans love to live in illusion. Since it’s their house of course it’s worth a million bucks but in reality it’s just a shotgun shack on the edge of town.
I would position my holdings with deflation in mind.
I read somewhere that only a tiny fraction of the money out there is available as bills. Most of it is electronic. If the banking system collapses as it has in the past most people will not have any cash on hand so their $90,000 of e-money will evaporate. It’s probably not a bad idea to keep a bit of cash around just in case a virus (or the Fed) takes down the banking system.
Easy there conspiracy theorist…this is what FDIC is for.
The FDIC is just like any other insurance company… it’s designed to help some of the banks some of the time, not all of the banks at once. The FDIC will be toast. Trust them at your own risk.
I fully concur.
“Bloomberg has this out on a new study. “Fewer than 15 percent of Americans surveyed in a Bloomberg/Los Angeles Times poll expect home prices in their neighborhood to fall during the next six months. More than twice that, 36 percent, see prices rising during that time. The majority of those polled, almost seven in 10, expect the value of their homes to appreciate by 5 percent to 30 percent during the next three years.”
******************************************************************************************************************
Don’t you almost want to cry when you read this. All those naive folks out there marching to the slaughter. It interests me that no one has commented on the role of the media in this. Clearly Alan Greenspan is the major culprit in the bubble creation and maintenance, but the media has been deeply complicit. How differently this poll would have been if all those polled had been faithful readers of this blog.
It is difficult to imagine just how bad it is going to be when the ARM’s adjust upward, inflation keeps pushing family costs up, salaries stay the same or drop, and the HB’s just keep building. It looks like depression time to me.
I have numerously commented on the media’s role in this debacle. They are lazy at best and complicit at worse, but there is more to it. I recall the White House weapons of mass destruction sales campaign, where the media just rolled over and drank the Kool-Aid. They took their lumps for that one. In Katrina, you saw a small change where reporters finally started calling politicians out on their patting themselves on the back about the great jobs they were doing while people around them were dying. The problem is vast and has a lot of components, one of the biggest being the huge media conglomerates buying up the smaller media outlets. News directors have bosses, and their bosses have bosses and those bosses have friends in very high places. If you knew how much of the news you recieve is controlled by so few people, you would shudder. I could go on but don’t want to slip into Journalism 101 mode.
I love reading this blog site as it let’s me know that I am not crazy. Loved the artical and survey.I have always been amazed at how people look at figures. If property has an 80% chance of going down, people bet that it won’t happen and hold on for higher prices or will buy. If they have a chance of undergoing an operation with an 80% failure rate then they won’t have the operation.
I’ve met RE spec’s in this area that got in after the stock market crash who feel that RE is the only thing that can’t go down. I’m waiting to hear what their next venture will be.
This seems to contradict the consumer confidence numbers for housing which were reported at a 15 year low about a week ago.
How does that happen?
Easy - neither study/poll is likely to be a Simple Random Sample. Too hard when dealing with monster populations. Sooooooooo easy to fudge numbers either way. Only thing these “data” tell us is where the opinions of the polling party lie.
“Affluent investors are again more optimistic, with almost eight in 10 predicting such price gains. ‘Real estate is always a good investment because land is finite,’ says Richard Hoffman, a psychologist in Tampa, Florida, who owns two condominiums and an office in addition to his home.”
And if it’s not good and people are thinking jumping out of Trump Tower (if it ever gets built) you can charge them $200.00 an hour to make up for your crappy real estate investments.
They’re not going to be affluent for long…
The affluent are going to weather this storm just fine. It is the masses that will suffer.
If this is true, then why didn’t he buy LAND!?
(I can tell you why–you can’t get “mortgages” for unimproved property outside of a development. In fact, if you look at agricultural land just outside some of these bubble areas, the price/acre is still pretty low. Why? People can’t finance it!)
“Jackie Arnold, 41, and her husband used an adjustable-rate loan to buy a home in suburban Atlanta 18 months ago. Now, as interest rates rise, she’s worried that the loan may have been a mistake. ‘Our dilemma is, do we sit on the [loan] that we have and wait … or do we refinance now and pay considerably more right away?’ Arnold said. ‘We are caught between a rock and a hard place.’”
Quite a dilemma, but you can’t blame them. Who could’ve possibly seen this coming?
i saw it are you blind
The poll is biased. Note the use of a three year time frame. This conceals the meager annual price increases most people expect–as low as 1 3/4 percent per year.
That is a good point. Lumping people who see 1.75 percent increases per year with those who see approximately 10 percent increases per year is silly.
I remember a CA poll from last year where a significant number of homeowners were expecting more than 20% appreciation PER YEAR for the next 10 years…
maybe people are getting more realistic, or is it just the way they ask the questions?
At 20% / year a $1 mill house becomes a $1 bill house in about 13 years.
More like 38 years.
‘Our dilemma is, do we sit on the [loan] that we have and wait … or do we refinance now and pay considerably more right away?’ Arnold said. ‘We are caught between a rock and a hard place.’”
A couple of weeks ago I was having lunch with a buddy from Santa Barbara. His payment has already gone up $1,200 per month… due to the rate tick from his adjustable rate loan. He admitted to me that this is hard to swallow and is actually very concerned if rates tick up further.
Of course I LOVE him enough that I withheld my opinion that he is a F*ck’d Borrower in the making.
Why did you not tell him to LOCK NOW?
From the poll, only 55% of people with ARMs are very confident they can make the payment if it adjusts upward. How do you take out an mortgage without being confident that you can assume the risk of higher payments? I just don’t get it.
Because no one holds a mortgage for 30 years any more, they hold them for a few years and the refinance….oh wait, you mean I can’t just refinance again at 4.25%? Nobody told me that!!
Because no one holds a mortgage for 30 years any more, they hold them for a few years and the refinance….oh wait, you mean I can’t just refinance again at 4.25%? Nobody told me that! Where’s my lawyer!?
maybe because if you don’t have to make a downpayment, there is nothing to loose?
if prices keep rising you win big time; if prices go down and you end upside down you walk away (or if necessary declare bankruptcy) and someone else is going to pay dearly.
are you sure that you can just walk away and if necessary declare bankruptcy? b/c if that’s the case why wouldn’t everyone in the world who’s making 30/K a year go out and buy a $1M home? i’m really having a hard time believing it’s that easy for someone to bail out… if it is then this system is screwed up a lot worse than i thought… or perhaps it’s deliberate for some reason (more likely).
The truth is it’s not that easy any more to walk away. Most of the loans being written these days allow lenders to pursue defaulters for the difference between what they owe and what the foreclosed property eventually sells for. If the lender decides not to pursue the defaulter, the defaulter must report the forgiven debt as income to the IRS, and pay income tax on it. And debts to the IRS are not forgiven in bankruptcy court.
Barry just got stopped out of his long SPY position. Just as everything started bouncing. LOL
I’ve been short all indices for 2 weeks now. Convinced we’re on the verge of the “big one.”
Me too, TXChick! And I also am convinced that there is going to be 2 major events that will start the fuse on the implosion…
1. “the big one”
2. Iran
Would you mind describing what you mean by the “big one”
Here in CA we don’t get riots when overpaid baseball players win, we get earthquakes
Though I think TXChick might be referring to a big drop in equities.
I was assuming she was talking about equities as well. I was hoping to get a little more insight out of her. My impression is she is a very active trader.
Yeah, a break under 200 dma support and waterfall down move. Maybe an April 2000 type event. That would put me out of work for about a year. LOL (in a good way).
Bankrate may be making a bold prediction on the direction of interest rates.
It’s gotta be a mistake, but the Home Equity loan graph shows interest rates on 50k spiking to 21.38% from 7.79% last week. I’m sure somebody out there with an 80/20 got an ulcer from it.
http://img104.imageshack.us/img104/3821/picture15ve.png
Weak Housing Data
By Tony Crescenzi
RealMoney.com Contributor
3/8/2006 12:41 PM EST
Click here for more stories by Tony Crescenzi
The Mortgage Bankers Association released its weekly mortgage applications index this morning on home purchases and refinancing. The index for home purchases, which is very strongly correlated with the major housing-related data, fell to 399.0 from 400.8 the previous week. The index has now been below the one-year average in 11 of the past 12 weeks, and the depth of that the decline relative to the one-year average is the most ever, dating back to 1990. The recent data underscore the notion that the housing sector is slowing, and this should become readily apparent in the major housing statistics, albeit with a lag.
Think think think…what happened in 1990? Surely nothing with the housing market. Must be coincidence.
I was in the middle of all that. Did FDIC/RTC work through the whole period.
Obviously the prices will go down at some point. It’s called a market cycle. But it will eventually go back up after the down turn. That’s how it is with the stock market, real estate, and commodities. Don’t worry too much about it…just don’t sell when the prices go down. I feel bad for the people that bought a house and can barely afford it.
Catherine I assume that the big one is March 24th when the gov. stops printing the M3 money supply and March 20th when Iran starts selling their oil in Euro’s. Should be interesting times ahead..
I’ve heard that the US will support the bombing of Iran via Israel to eliminate the nuke risk. But behind the scenes the US wants to stop Iran from selling oil in Euros to protect the dollar. Currently all oil is purchased in dollars. Anyone??
The oil bourse theory is popular but incorrect. Oil producers can already hedge their oil proceeds in other currencies, and of course can convert dollars to other currencies as soon as they are received.
how? isreal does not have enough planes or resources to take iran. they would be lucky to take half of what needs to be destroyed. it is one of those fantasies of the press. unless of course they use their nukes.
Another Iraq bs war (WMD) … Iran - it’s not the nukes… it’s the money!!!!!!
bernanke on commercial real estate loans.
http://news.yahoo.com/s/ap/20060308/ap_on_bi_ge/fed_bernanke
Since the first big batches of teaser-period ARMs is due to re-set this summer, wouldn’t you expect to see increasing refinancing activity these days if people’s strategy was to refinance and start the clock running again on their introductory-rate/interest-only/option period?
Refinancing applications have increased by about 2.6%. I don’t know if that’s a significant increase. If not, that means one of two things:
1. We’re all wrong, and the people who used option ARMs, etc. really are capable of paying doubled monthly payments, or
2. These people aren’t able to refinance, and will have to face the music when the clock runs out.
If 2.6% is a signficant increase, and those application are approved, then the exotic-mortgage time bomb might actually be defused for another few years, as people are able to keep delaying the day of reckoning.
I swear, sometimes I think I might as well just buy a million dollar house with a 1.25% teaser rate. It just seems that there are too many institutions with an interest in keeping the Monopoly money flowing and asset prices inflating.
With the spring market around the corner there is more posturing than before a title bout in boxing. What will count is what the numbers are saying in a couple of months.
For the first time in a long time, single family homes on Realtor.com in 04103, 04101 and 04102 (the city of Portland, ME) have dropped below 200 - to 195. This is a drop of 9 in the last five days.
% of 11/3
Portland Only # SFH High
9/6/05 186 75%
9/19/05 223 90%
9/29/05 224 90%
11/3/05 248 100%
12/5/05 241 97%
1/3/06 210 85%
2/2/06 212 85%
3/3/06 204 82%
3/8/06 195 79%
This is 21% below the six month high back in November. Frankly, it’s a bit of a surprise.
I wonder whether they can hold back listings?
Gayle,
I saw your postings and concerns on Ben’s Bubble Blog. No one in Ben’s Bubble Blog is wishing anyone in particular hate or discontent. The fact of the matter is we realize the Real Estate/Mortgage/Appraisal/Banking systems are going to be in big problems when this Real Estate correction occurs. People should be buying houses/condos as HOMES that they can live in for a MINIMUM on 10 years on a fixed rate loan. If you aren’t advising people that way, you aren’t doing your job quite frankly (due dilligence). Anyone not doing that is getting suckered. We realize the average Real Estate Agent like yourself (most likely) is just trying to carry a job and make a living. We realize you probably don’t agree or know what is about to happen to the housing market. It is not a personal attack on you or your client. We all honestly think it is a VERY SAD situation and it is going to get worse. Our choice is to pull our $$ off the table and let Real Estate do what Real Estate does, remain cyclical (or any other market for that matter). We do have a vested interest to some extent to see the bubble pop because the sooner it does, the sooner we will be laughing all the way to the bank. The sooner the bubble pops, the shorter the down cycle will be and the quicker it will correct. Unfortunately we are in EXTREMELY FAR UNCHARTED WATERS in Real Estate right now. Things will not be pretty. My best and most truly honest advice to you is to sell your property, rent a really nice place by the beach (like me - $600 a month) and find a nice stable government job that will bring you through this Real Estate cycle. You will lose your Real Estate job in the next year. Get out before you are the last one. Save this email.
v/r,
Mark M, MBA, EIT
Project Manager/Engineer
I sent this to the RE Agent that was listed in the San Diego posting earlier today….
Alan Greenspan saw it coming when he said everybody should go adjustable even though fixed rates were at 45 year lows. He wan’t out to help Jackie. He was out to protect his banker friends..
“Real estate is always a good investment because land is finite.”
Now that’s just silly. Everything is finite, including gold, pork bellies, and dirt. What makes those things good investments (or not) is people’s demand for them. Demand, as real estate bulls consistently forget, is a function of desire plus ability.
Demand for real estate rises and falls based on people’s ability to pay. Two things can affect that ability: the health of the economy (lots of people with real money to plunk down) and the availability of credit. Since 1998, central bankers have flooded the world with easy credit. Since real estate purchases are highly leveraged, the result has been an explosion in the purchasing-power component of demand for real estate — and therefore demand itself, and accordingly prices.
Increasing prices lead to increasingly easy credit, as it becomes rational to lend at high LTV ratios when the asset is expected to appreciate quickly and increase the value component of that ratio. Likewise, it becomes rational to allow negative amortization, when the security interest is expected to appreciate faster than the principal balance. It’s a self-perpetuating cycle — easy credit leads to increased demand, which leads to price appreciation, which leads to still easier credit, and so on.
At some point, though, you reach a limit. When credit stops expanding (either by the end of central-bank stimulus or just an inability to get any lower than a 1% teaser rate and 120% LTV and have enough cash coming in to pay the overhead), demand stops expanding. Demand stops expanding, and price appreciation stops. That makes it irrational to extend negative-amortization or high LTV loans, which therefore dry up.
When credit is less available, or when the economy is weak, demand falls. The price point adjusts accordingly (although with real estate, it moves like a barge through molasses.) The same quasi-rational forces that drove the market on the way up should drive it back down.
glad to hear it from some seasoned experts! good grief.
Poll on 10 Year Treasury Yield
http://post.polls.yahoo.com/quiz/financeresults.php?poll_id=12474
Rather lopsided result. Could it be time to be a contrarian and buy some bonds?
After all, commodity bubbles are deflating across the board and that was the fed’s target all along and it looks like they’re close to being able to declare victory. Or, if they continue hiking rates, they risk a recession. Either way, yields on the 10 year are a lot lower next year.
sounds like they no doubt had a tech heavy portfolio. should have diversified. the S&P and dow aren’t back to where they were, but you’re really hurting if you were tech heavy.
Interest rates are rising. Sounds good to me. I’m a saver. Times have nevere been better.
The “Rich House Poor House” article linked by another poster is priceless. I e-mailed the PBS show Frontline recommending that it produce a “Secret History of the Mortgage Banking Industry” show following the hard-hitting format of its “Secret History of the Credit Card,” as penance for PBS putting this guy on during pledge drives.
Now he didn’t day to do anything stupid, he said you need a positive cash flow to have a real asset. But the real asset that made him rich was real estate, and that’s what the less informed heard.
I wasted an hour watching Kiyosaki speak on PBS the other day, and I was very put off. He claims he is not a salesman during that program. I beg to differ. He sells books, games, subscriptions and tickets to speaking engagements. He has everything to gain from convincing you that he has the answers.
He says not to invest in savings plans or 401K’s because they are “risky” and lose value because the the government can print money faster than you can save. But he’d like you to spend your hard earned money for tickets to his real estate “expo” so you can find the “genie in you.” What a crock! And this in the face of an unprecedented bubble. According to his website, one ticket to this extravaganza costs $299. I guess they must be having trouble selling the tickets if they’re “giving” them away (in return for a donation) on PBS for less than a third of that.
And shame on PBS for giving this huckster air time. He gives PBS some books, CD’s, and tickets, writing the expense off as a “donation.” PBS gives him an incredible amount of airtime and their unquestioning endorsement of his views. So much for the respectability of public television. I have more respect for the stations who sell their airtime straight out.
Am I the only person on here that was raised by parents that never even considered taking out anything other than a 30 year fixed loan with 20% down? Don’t even get me started on HELOCs….those were for absolute emergencies and were a family’s dirty secret. We’ve really lost our minds in this country. Yea, we can blame the re agents…the bankers…bush…greenspan and the list goes on. That Times/Bloomberg poll is a sad statement about the “American Idol” becoming a star (or get rich quick) overnight society in which we live. It’s coming alright…..and it’s going to be ugly. I’m sure the finger pointing will last for decades….along with the covering of the mirrors.
My parents were the same…and my husband’s parents even had a “mortgage burning” party when they paid off their home…that was the pinnacle of their financial success - to be able to see they were debt free. It appears that shame has disappeared from the consciousness of certain Americans…borrowing is now seen as a lifestyle enhancer…because we “deserve it”. The current fiscal irresponsibility is a reflection of a “me first” mindset that came about some 30 years ago and has morphed into the horrendous situation we are in now.
I agree that Second Mortgages used to have a stigma attached. They were basically “debt consolidation” loans. Tapping home equity was a last resort used only for the most desperate of financial problems. I don’t know when this started to change.
Multiple mortgages used to be such an obviously stupid idea there was even a joke about them in Ghostbusters.
Are you the Catherine from Reston?
My parents were the same way. I grew up in a suburb of Houston. They were very concerned about the second needed to send my younger brothers to college! Certainly did not do it to buy cars, boats and trips etc.
I also wanted to add that I remember my dad girding up to fight the tax assessor EVERY year for any assessment increase. As he would say…I am not moving anytime soon so WHY would I want to pay more tax. I live in OC now…my how times have changed.
I’ve said it several times before and I’ll say it again:
In 1989 my wife and I bought a 4-bedroom 2 and a half story house on 2.57 acres on Maryland’s Eastern Shore, 1.5 miles from the only public beach on the Chesapeake Bay in Betterton (Kent County). Cost, $99K.
We sold in 2000 after moving to New Mexico. Had made many improvements to the house and property. The house was on the market for almost a year and sold for $110K (below appraisal). Do the math. That’s what a normal market looks like. The last few years have been a historical aberration, and anyone who thinks the easy credit wasn’t intentional political intervention isn’t worth talking to.
Houses are for living, not making money.
John, you bought at the absolute peak in the market ( at least in the metro washington,d.c. market) and sold before the dramatic increases. What can you expect? It took 10 years to get even after the last peak. Did you buy in your new locale in 2000 and not experience any appreciation? You may well have overpaid on the Eastern Shore property- who knows?
I bought a beachfront property in !992 in Va’s Northern Neck and have seen substantial appreciation.
Va_investor, I think that is the point: if one buys now at the peak, then they can expect to barely breakeven over the next 10 years. And this doesn’t count the ~$12,000 after-tax dollars the average person saves PER YEAR renting in the majority of bubble areas. My $3,300 rent pitted against the supposed $1.2mm valuation saves me approximately $24,000/year after-tax by my estimation.
I agree with you Hedge, but you are giving people alot of credit if you believe that they can successfully time the market. If one sells in a down market, as this guy did, I think the safe bet is to buy right back in. In other words - sell low buy low; or, conversely, sell high buy high, Leaves you in the same financial position.
Obviously, the ideal is to sell at the peak and re-enter the market at the bottom. Aside from the difficulty/impossibility to so astutely “time” the market; there are real and practical reasons people don’t/can’t simply pack-up and move.
John doesn’t mention if he bought in his new locale in 2000. It would be informative to know what the appreciation of that market has been since 2000.
I bought in ‘99 in College Park MD. I paid 5k less than the woman I bought from paid in ‘99. And upon inspection I got them to knock $450 off of the price for needed masonry work. Real estate never goes down huh?
Oops, should read this.
bought in ‘99 in College Park MD. I paid 5k less than the woman I bought from paid in ‘95. And upon inspection I got them to knock $450 off of the price for needed masonry work. Real estate never goes down huh?
143 comments? is this a record?
Cant blame long term buyers from wanting to buy when rates were at 5.50 or lower and locking that in . At 7.50 % prices would go down about 10% across the board but long term owner occupied people are not concerned with the upcoming cycle because they got in before the crunch . Flippers will be in a world of hurt . I think that was part of the reason for the big demand in 2005 . Get in before interest rates rise .