there, i'm smiling again.
Very intersting Adnaan: But for the long term, I think the same thing about the stock market. Here in the US, so many areas have such poor building codes and shoddy housing stock being built (and we have so much land) that you can see in new develpoments of today the slums of tomorrow. Nice areas get over-heated markets and whole sections of cities left to rot.. Not a pretty picture. The scarcity of land in the EC and more homoginized cultures keeps property a much better investment I am sure...
So let me get this straight... Don't put your money into real estate because the market is about to crash. Don't put your money into stocks because they are currently in favor. Don't put your money in cash because rates are too low. Don't start a company and hire people because all the jobs are going overseas. (I suppose you could start a company and hire overseas workers...) Just exactly where are "smart" investors putting their money today?
1) ya need to live somewhere, so even if you eventually wind up losing money might be able to equate the loss to rent. 2) market may go up/down. it's always a stock pickers mkt. 3) how does jobs outplacement effect your decision to start a company?
All of you that talk of these huge increases in real estate value are assuming said real estate will actually sell for that much. I haven't raised prices on my executive homes for 2-3 years. My smaller homes have actually dropped in price about 5k from 250 to 245. I have/had 2 spec homes for sale. One, a 3,600 sq. ft. ranch with a 4 car garage sold for 385,000. It sold during the blizzard 2 weeks ago and it wasn't even finished being framed. The other a 4,200 sq. ft. 2-story sold last week, just before drywall, for 405,000. As soon as the ground thaws a little I'm going to slam in 2-3 more 375-400k spec homes. A person earlier in the thread stated that the existing 400-500k homes are sitting for literally years. He also said that the builders in his area are building the same price homes as fast as they can because everyone wants new. That is so true. In my area the 5-10 year old 500k homes with 3 car garages, oak cabinets, corian counters, square corners, plain applinces are collecting dust. We are building the same sq. footage with 4 car garages, birch cabinets with 42" tall uppers, granite tops in kitchen, bar, and master bath, rounded drywall corners, and built in architectural appliances for about the same money. The housing bubble that may burst is the market for existing. Plywood/OSB prices are coming down again, rates are cheap, lumber is very cheap. I guarantee you that I could build a new home of the same size with better specs than what you live in now for the same if not less of a price of what you may try to sell it for. Problem is, you may have better location, location, location........
All this housing talk got me thinking about my personal situation. I don't know much about the housing market, and am a recent immigrant to this country (8.5 years). So I will lay my situation out, and would like some comments. We bought our first house 4 years ago, for 225K. House is 25 years old, 2 car garage, 3 bed, 2 bath, 1700 sq feet. Land area is 7400 sq feet. Three weeks ago my neighbor sold a very similar house with 7200sq feet for $455K. My realtor said I should expect about the same for my house. In the meantime I have a 21K deposit on a new house that should be built by August. That house has 13K sq feet land, 3800 sq feet house. 6 bedroom, 5 bath, and 4 car garage. Cost is about 750K. I was going to sell my current house and move into that. With 20% down, my payments would be about 3600-4K a month give or take. I thought the interest rate for 30 years on my new house would be fixed. If that is the case, how is a consumer like me get affected weather the housing bubble bursts or not? If the question is rather stupid, my apologies. However I would like to take your predictions and apply it to a real world situation like mine. I still have time to back out of my housing deal, thus I was asking. P.S. This is in Simi Valley, CA. A suburb about 27 minutes north west of Los Angeles in Ventura County. Thank you.
Well if the housing bubble bursts, you'll have paid 750k for a house which you could then resell for much less than 750k, perhaps around 500k. In Ferrari terms, that would mean spending 800k on an Enzo only to have Ferrari announce next year they're making 3000 of them for 250k each =) You still have your nice house, but it doesn't have the same resale value.
Thanks Joe. However if one was to live in that house say 10-15 years, the immediate resale value in the market is not so important right? I am just wondering if the bubble burst the interest rate cant suddenly go up and allow my payment to double leaving me bankrupt or anything, correct?
If you get a 30 year fixed, the rate is set... No worries on a jump in the rate. As for the value of the home, I think you're right. The only time the value actually matters is the day you buy it and the day you sell it. If you plan on staying there 10 years, who cares what happens in the meantime... -R
geez, $1.5 Million barely gets you 3500 sq ft in westchester....the market has NOT softened at all here....even the higher $3MM + houses are still selling...an acre lot will cost you $1 to $2MM...
This has been a great thread. Wouldn't actually having EQUITY in your house be beneficial if the value dropped and you had to sell? Imagine putting 0%-5% down on your new starter mansion and financing the rest. You buy during the bubble for $400k (5% down=$384k mortgage). Now the bubble burst and the house is worth $340k and you have to sell. Unfortunately you have lost your initial $16k downpayment, plus you still owe $44k on the mortgage and have no additional cash to buy the next home regardless of size. If you had 20% down you would lose the same amount of money, but would still have $20k and be able to get out of the house without filing for bankruptcy. I don't want to get off the subject but when we bought our house a year ago, we stretched to make sure that we had the 20% down, and my goal now is to have the house paid off in the next 7 years (mortgage in 2010=$0.00). I know many here will say that that is crazy, why tie up all of your capital when you could be investing it. You still save significantly on the total cost of the mortgage, and from that perspective it is a very safe investment. A penny saved is a penny earned, right? It would make me personally sleep better at night knowing that as long as I can come up with a few thousand per year in taxes, nobody can take my house, regardless of whether there is a bubble or not. To compare the cost of living and housing try this link: http://houseandhome.msn.com/move/moveoverview.aspx Housing is <gulp> 762% more in Newport Beach, CA than in my city!
Just stumbled across this thread-- I live in Chicago, a more stable midwestern market and I'm a full time real estate investor. This thread started the hand-wringing back in 2003. Here at the start of 2007, I'm still amazed that people consider the real estate market to be a "national" thing like the stock market (I'm especially amused by those that confuse real estate investing with REITs and Housing Stocks-- if your name isn't on the title, and you don't own the dirt, you're NOT a real estate investor). There's definitely a cooling off- and in some markets like Las Vegas and Phoenix we've seen an actual decline in housing prices-- actually even a 2% decline in assessed value (not that anyone will see a tax brake- during the run up tax caps in these markets held increases in assessed values for tax purposes to around 3% while the market was running up 30% and even 120% a year). I have definitely a speculator (of sorts) but I have never invested primarily for appreciation. I've been a "wholesaler" and a "rehabber". I would buy low, and either sell just a little bit higher to another fixer, or I fix them myself and retail them. However, with the US market the way it is- and in particular the tax situation ($800 - $1,200 a month for property taxes, let alone all the other BS taxes and 'fees') I've moved to investing internationally. In fact, in addition to being an investor, I'm now the North American Director of Marketing for http://www.resintoproperty.com which brings me most of my deals. I'm moving to get all my US property liquidated and outta here. Now, I "see the light" so to speak- and I invest primarily for income-- and simultaneously enjoy staggering appreciation and tax advantages. I'm letting the markets do the heavy lifting now. No hammers, no more paint.
bubble not poping here,,,, they are not making anymore beach front property. Image Unavailable, Please Login
