I am telling you I don't care VT. I know at some point in the future I am going to get more money than I paid for my house. It has nothing to do with my interest. I made the decision to participate in the Las Vegas housing market and through thick and thin I plan on being here. If my house is worth 20% less than the mortgage so be it, I will keep on paying it off monthly because my payments are far below what I can afford and I happen to like it. In my line of work being forced to move to another town is a possibility, but unless it happens I see no reason to think I won't just ride out whatever the local housing market does. That is how a rational person looks at housing and buying a home. The speculators and those worried about getting 5% extra out of the house can worry about the other factors.
Kermit, just remember that a 1031 exchange merely postpones your tax liability to the IRS. At some point you are going to have to settle up with them.
A few things to keep in mind if you think that the South Florida housing market is going to crash hard: Money from Latin America (kidnapping is rampant in many Latin American countries), Money from Europe (they still have a favorable exchange rate), Money from the northeast (houses are cheap compared to New York and many people are buying second homes for the winter, same thing from Latin America) are all keeping the demand high.
A few things to keep in mind if you think that the South Florida housing market is going to crash hard: Money from Latin America (kidnapping is rampant in many Latin American countries), Money from Europe (they still have a favorable exchange rate), Money from the northeast (houses are cheap compared to New York and many people are buying second homes for the winter, same thing from Latin America) are all keeping the demand high.
One thing I did was buy the house off of the subdivision plans, a lot number. I got next to a 4 acre kiddie park, one side of house, on a loop street, no traffic but residents. For no lot premium, while others are paying 15-30K. My house went up 50k before it was even done. I got one of the least expensive, actually the realtor said I paid the least, because I got in first, took the best available lot without premium, and built the least expensive house on it, with almost no upgrades. I have had craftsman come in after the fact. But that is another story. By being first in line I obtained best location, best available lot and best price. The model home was a temporary modular single wide. The models were barely started. Now I have the park near completion, my own house upgraded big, and quiet street in best neighboorhood with best public schools. It has appreciated 5 to 6k a month, last 24. Of course it is relative, the property I want went up comparably. If you are ahead of the mob, they build equity for you.
Best Wishes...OF:howdy:
Best Wishes...OF:howdy:
Like I said previously, I've been a licensed Real Estate Broker sine 1966 and you may say Real Estate will never never go down but you can never ever know that for sure. I believe Real Estate is a great investment for a lot of reasons but believe me if the rates go up to 20 percent.... it can and will go down !Just take your Amortization book and figure out what a $ 300,000 loan is at 20 percent over 25 years. Interest alone starts at $ 5000. a month not counting property taxes or home Insurance. I have already lived though 15 % Interest and anyone in Real Estate will tell you it was not a good time.miked429 said:
joeyfitzclick said:I am from Newport RI and since May '99 proprties values are up 140 %
arty:
Beautiful city. I used to make the 3 hour drive from NY just to see the awesome bridges connecting Jamestown (I think that was it) to Newport.
Did the walk a few times, but wish I had done the mansion tours to see how high rollers like Dante live it up.
The real estate market has always had it's ups and downs. These moronic RE agents in their quest to make more money, scare the bejeezus out of buyers that if they don't buy today, they will pay more tomorrow. Unfortunately the idiots go for it. There are no more "old school" buyers around that know how to negotiate a deal. New buyers just don't know how to say NO! so the suckers keep pushing the prices higher.
If you own a home, it only really makes a difference if you are selling the house and moving. If you're not, what the hell is the difference what the house is worth, unless you plan on selling and buying something cheaper.
The market here in Calif. is on full blown tilt. There is no way to go but DOWN. People cannot keep qualifying for the loans if the prices keep going up, New buyers can't by the house they want to sell, so both are in a stuck position. Since companies are not exactly making money like the .com days, salaries are not increasing. Since the stock market is also churning along, there's no meaningful money being made there either.
All I see all around my area is acres upon acres of houses being built int the $700,000 and up range. I don't know who's going to buy these, apparently no one since they are almost all vacant! The housing depression has started, it's just that people don't know it yet!
If you own a home, it only really makes a difference if you are selling the house and moving. If you're not, what the hell is the difference what the house is worth, unless you plan on selling and buying something cheaper.
The market here in Calif. is on full blown tilt. There is no way to go but DOWN. People cannot keep qualifying for the loans if the prices keep going up, New buyers can't by the house they want to sell, so both are in a stuck position. Since companies are not exactly making money like the .com days, salaries are not increasing. Since the stock market is also churning along, there's no meaningful money being made there either.
All I see all around my area is acres upon acres of houses being built int the $700,000 and up range. I don't know who's going to buy these, apparently no one since they are almost all vacant! The housing depression has started, it's just that people don't know it yet!
Today's Times!
This is the way the bubble ends: not with a pop, but with a hiss.
Housing prices move much more slowly than stock prices. There are no Black Mondays, when prices fall 23 percent in a day. In fact, prices often keep rising for a while even after a housing boom goes bust.
So the news that the U.S. housing bubble is over won't come in the form of plunging prices; it will come in the form of falling sales and rising inventory, as sellers try to get prices that buyers are no longer willing to pay. And the process may already have started.
Of course, some people still deny that there's a housing bubble. Let me explain how we know that they're wrong.
One piece of evidence is the sense of frenzy about real estate, which irresistibly brings to mind the stock frenzy of 1999. Even some of the players are the same. The authors of the 1999 best seller "Dow 36,000" are now among the most vocal proponents of the view that there is no housing bubble.
Then there are the numbers. Many bubble deniers point to average prices for the country as a whole, which look worrisome but not totally crazy. When it comes to housing, however, the United States is really two countries, Flatland and the Zoned Zone.
In Flatland, which occupies the middle of the country, it's easy to build houses. When the demand for houses rises, Flatland metropolitan areas, which don't really have traditional downtowns, just sprawl some more. As a result, housing prices are basically determined by the cost of construction. In Flatland, a housing bubble can't even get started.
But in the Zoned Zone, which lies along the coasts, a combination of high population density and land-use restrictions - hence "zoned" - makes it hard to build new houses. So when people become willing to spend more on houses, say because of a fall in mortgage rates, some houses get built, but the prices of existing houses also go up. And if people think that prices will continue to rise, they become willing to spend even more, driving prices still higher, and so on. In other words, the Zoned Zone is prone to housing bubbles.
And Zoned Zone housing prices, which have risen much faster than the national average, clearly point to a bubble.
In the nation as a whole, housing prices rose about 50 percent between the first quarter of 2000 and the first quarter of 2005. But that average blends results from Flatland metropolitan areas like Houston and Atlanta, where prices rose 26 and 29 percent respectively, with results from Zoned Zone areas like New York, Miami and San Diego, where prices rose 77, 96 and 118 percent.
Nobody would pay San Diego prices without believing that prices will continue to rise. Rents rose much more slowly than prices: the Bureau of Labor Statistics index of "owners' equivalent rent" rose only 27 percent from late 1999 to late 2004. Business Week reports that by 2004 the cost of renting a house in San Diego was only 40 percent of the cost of owning a similar house - even taking into account low interest rates on mortgages. So it makes sense to buy in San Diego only if you believe that prices will keep rising rapidly, generating big capital gains. That's pretty much the definition of a bubble.
Bubbles end when people stop believing that big capital gains are a sure thing. That's what happened in San Diego at the end of its last housing bubble: after a rapid rise, house prices peaked in 1990. Soon there was a glut of houses on the market, and prices began falling. By 1996, they had declined about 25 percent after adjusting for inflation.
And that's what's happening in San Diego right now, after a rise in house prices that dwarfs the boom of the 1980's. The number of single-family houses and condos on the market has doubled over the past year. "Homes that a year or two ago sold virtually overnight - in many cases triggering bidding wars - are on the market for weeks," reports The Los Angeles Times. The same thing is happening in other formerly hot markets.
Meanwhile, the U.S. economy has become deeply dependent on the housing bubble. The economic recovery since 2001 has been disappointing in many ways, but it wouldn't have happened at all without soaring spending on residential construction, plus a surge in consumer spending largely based on mortgage refinancing. Did I mention that the personal savings rate has fallen to zero?
Now we're starting to hear a hissing sound, as the air begins to leak out of the bubble. And everyone - not just those who own Zoned Zone real estate - should be worried.
<NYT_AUTHOR_ID>
This is the way the bubble ends: not with a pop, but with a hiss.
Housing prices move much more slowly than stock prices. There are no Black Mondays, when prices fall 23 percent in a day. In fact, prices often keep rising for a while even after a housing boom goes bust.
So the news that the U.S. housing bubble is over won't come in the form of plunging prices; it will come in the form of falling sales and rising inventory, as sellers try to get prices that buyers are no longer willing to pay. And the process may already have started.
Of course, some people still deny that there's a housing bubble. Let me explain how we know that they're wrong.
One piece of evidence is the sense of frenzy about real estate, which irresistibly brings to mind the stock frenzy of 1999. Even some of the players are the same. The authors of the 1999 best seller "Dow 36,000" are now among the most vocal proponents of the view that there is no housing bubble.
Then there are the numbers. Many bubble deniers point to average prices for the country as a whole, which look worrisome but not totally crazy. When it comes to housing, however, the United States is really two countries, Flatland and the Zoned Zone.
In Flatland, which occupies the middle of the country, it's easy to build houses. When the demand for houses rises, Flatland metropolitan areas, which don't really have traditional downtowns, just sprawl some more. As a result, housing prices are basically determined by the cost of construction. In Flatland, a housing bubble can't even get started.
But in the Zoned Zone, which lies along the coasts, a combination of high population density and land-use restrictions - hence "zoned" - makes it hard to build new houses. So when people become willing to spend more on houses, say because of a fall in mortgage rates, some houses get built, but the prices of existing houses also go up. And if people think that prices will continue to rise, they become willing to spend even more, driving prices still higher, and so on. In other words, the Zoned Zone is prone to housing bubbles.
And Zoned Zone housing prices, which have risen much faster than the national average, clearly point to a bubble.
In the nation as a whole, housing prices rose about 50 percent between the first quarter of 2000 and the first quarter of 2005. But that average blends results from Flatland metropolitan areas like Houston and Atlanta, where prices rose 26 and 29 percent respectively, with results from Zoned Zone areas like New York, Miami and San Diego, where prices rose 77, 96 and 118 percent.
Nobody would pay San Diego prices without believing that prices will continue to rise. Rents rose much more slowly than prices: the Bureau of Labor Statistics index of "owners' equivalent rent" rose only 27 percent from late 1999 to late 2004. Business Week reports that by 2004 the cost of renting a house in San Diego was only 40 percent of the cost of owning a similar house - even taking into account low interest rates on mortgages. So it makes sense to buy in San Diego only if you believe that prices will keep rising rapidly, generating big capital gains. That's pretty much the definition of a bubble.
Bubbles end when people stop believing that big capital gains are a sure thing. That's what happened in San Diego at the end of its last housing bubble: after a rapid rise, house prices peaked in 1990. Soon there was a glut of houses on the market, and prices began falling. By 1996, they had declined about 25 percent after adjusting for inflation.
And that's what's happening in San Diego right now, after a rise in house prices that dwarfs the boom of the 1980's. The number of single-family houses and condos on the market has doubled over the past year. "Homes that a year or two ago sold virtually overnight - in many cases triggering bidding wars - are on the market for weeks," reports The Los Angeles Times. The same thing is happening in other formerly hot markets.
Meanwhile, the U.S. economy has become deeply dependent on the housing bubble. The economic recovery since 2001 has been disappointing in many ways, but it wouldn't have happened at all without soaring spending on residential construction, plus a surge in consumer spending largely based on mortgage refinancing. Did I mention that the personal savings rate has fallen to zero?
Now we're starting to hear a hissing sound, as the air begins to leak out of the bubble. And everyone - not just those who own Zoned Zone real estate - should be worried.
<NYT_AUTHOR_ID>
vaulted you sound like the people 20 years ago that said vegas would out grow itself and then crumble.....LOL.....WELL trillions of dollars laters and about 30 hotels later that armageddon hasn't come.....If you spend your whole life looking for 'Armageddon' you may die before it comes. Live for today. My family thought i was crazy for paying what I paid for the house I bought 5 years ago and thought I was crazy when I bought the one 2 years ago....well just moved into my 3rd kick ass house in 5 years and I have pocketed nearly a quarter million dollars. I live South of D.C. without getting to specific. Renting is a great option depending on your location(depressed area....my old hometown for example.....Union City PA), but for a booming area you are just throwing money away.....PERIOD!
GL,
MN
GL,
MN
Some very interesting reading in this thread, funnily enough, I've been talking about the current real estate situation a lot lately.
While the positive thinkers wish to believe that real estate will simply continue to increase in value indefinitely, I take a very different view.
I've recently been trying to get accurate info regarding the costs of mortgages today in comparison tho the costs say 20 or 30 years ago.
It'd be great if anybody can recall the approximaye costs of maortgages back then as compared to today.
I seem to recall reading somewhere that typically, in the sixties, an average house was normally equivalent to around 3 years income (single income in those days as well).
I'd be interested in finding out more about the 'good old days' because, quite frankly, I do think that new home buyers are being seriously 'plundered' these days.
While the positive thinkers wish to believe that real estate will simply continue to increase in value indefinitely, I take a very different view.
I've recently been trying to get accurate info regarding the costs of mortgages today in comparison tho the costs say 20 or 30 years ago.
It'd be great if anybody can recall the approximaye costs of maortgages back then as compared to today.
I seem to recall reading somewhere that typically, in the sixties, an average house was normally equivalent to around 3 years income (single income in those days as well).
I'd be interested in finding out more about the 'good old days' because, quite frankly, I do think that new home buyers are being seriously 'plundered' these days.
Supply and demand drives market prices. Geez, what a shocking revelation. Here is a little food for thought as to why Vegas and now to a degree Phoenix are getting priced up. Part of it is indeed the lack of buildable land, much more so here in the Valley of Slots than in the Valley of the Sun. But another part is look at the way the towns are evolving. For much of the period since I first moved into Vegas, the perception is seriously changed. Vegas used to be a place you moved just because you either needed a job and didn't have an education, or you wanted to afford a house and it was cheap. Those things are changing now. Its still not the most educated place, but its had some stunning increases in the education level of residents, mostly because very educated people are moving in here. As the prices went up, the town drew in less "because its cheap" types and more people that just thought it was a cool place to live. That sort of mentality is worth a lot in valuation. Comparing the town today to what prices were relatively speaking 10 years ago does it no justice. Phoenix is becoming compelling in the same way. Since the early 90s they have added sports teams, major companies, new arts venues, tons of higher end developments...the stuff that draws in people looking for more than a cheap house.
This is just to point out the dynamics of housing costs are much more than rote statistics. Combine the lack of buildable land and the "cool" factor Vegas has now and you can't tell me this place should just track housing prices of places like Salt Lake City or Tulsa. There is just so much to it beyond affordability. People in San Francisco have always paid more of their income to housing than people in Buffalo, for obvious reasons. Some cities today are booming in price because the equation still holds true. As people become less connected to old industry and live a more wired lifestyle, the ability to move out of the traditional job centers of the past and into the hot new areas becomes more viable. Problem is everyone is rushing into it. Prices will definitely slow because cost of living is a killer in many places, but the desirability and buzz of cities is defintely something that justifies some of the price appreciation. Unless the cities do things or have things happen that kill off some of that buzz, much of the premium will always remain.
This is just to point out the dynamics of housing costs are much more than rote statistics. Combine the lack of buildable land and the "cool" factor Vegas has now and you can't tell me this place should just track housing prices of places like Salt Lake City or Tulsa. There is just so much to it beyond affordability. People in San Francisco have always paid more of their income to housing than people in Buffalo, for obvious reasons. Some cities today are booming in price because the equation still holds true. As people become less connected to old industry and live a more wired lifestyle, the ability to move out of the traditional job centers of the past and into the hot new areas becomes more viable. Problem is everyone is rushing into it. Prices will definitely slow because cost of living is a killer in many places, but the desirability and buzz of cities is defintely something that justifies some of the price appreciation. Unless the cities do things or have things happen that kill off some of that buzz, much of the premium will always remain.
