My grandmother bought her house for 30,000 about 40 years ago. when the price "trebled" to 90,000 people thought it could never get higher. When it hit 300,000 people thought the market had peaked.
She recently sold it for 800,000. Those that discount the values of homes and property tend to be wrong more than they are right.
That doesnt mean it will go up each and every year. THere will be downswings and the market will eventually level off, but people have been saying this for years. I bought my coop 3 years ago and some of my friends thought i was nuts because it was "inflated"i can now sell it for double.
This is nothing like the stock market crash. property is a neccessity. People need homes to live. There is substance behind the market. The market crash occurred because there was nothing behind some of these stocks like enron. it was a pyramid scheme.
If you have the option of renting or buying and you choose renting because the market is too high, i think you would be making a huge mistake.
She recently sold it for 800,000. Those that discount the values of homes and property tend to be wrong more than they are right.
That doesnt mean it will go up each and every year. THere will be downswings and the market will eventually level off, but people have been saying this for years. I bought my coop 3 years ago and some of my friends thought i was nuts because it was "inflated"i can now sell it for double.
This is nothing like the stock market crash. property is a neccessity. People need homes to live. There is substance behind the market. The market crash occurred because there was nothing behind some of these stocks like enron. it was a pyramid scheme.
If you have the option of renting or buying and you choose renting because the market is too high, i think you would be making a huge mistake.
The conventional loan limit outside of Calf and Hawii is currently $359650 about this time each year Fannie Mae announces the new limit. Many of the larger investors start raising the conventional limit in anticipation of the new limit to attract business at conventional rates vs jumbo rates knowing in January they can sell them off. Bank of America raised its conventional limit to $385,000. Fannie Mae will announce the new limit in about a month. This limit is determined by the average increase in home values nationwide thats a 7% increase in values.
I personally think the appreciation levels will need to slow to a rate closer to the 3% range. Some investors have what they call soft markets. They are areas that they deem to have potential for decreasing prices. You tend to see these in markets where their economy is closely tied to some industry, example oil and the Houston market back in the late 80's. Buying in a market with a more diverse economy and a growing population lowers the risk of depreciation
I disagree with the assement that interest rates rising will result in home going down in value. Interest rate of roughly 6% are still near historic lows. Rates going up to 8% should mean a strong economy. The housing market does well with the strong economy because people have jobs and most want to buy a home. If rates rise to double digits then we have another story.
Values will continue to go up because the last I heard there weren't making any new land. The population is continuing to grow and that fuels the demand. Our nation is going towards a two class system of the haves and the have nots. The middle class of the 40's, 50's and 60's has disappeared. The former decent paying manufacturing jobs are being sent over seas so you can buy your big screen tv for $2,000 instead of $15,000. The jobs are being divided into low paying service jobs and the educated service jobs like nurses. Pretty soon the need for more housing will be filled by investors buying rental units for the have nots of the U.S..
Our tax laws support the housing market and that won't change. The wealthy have been able to avoid paying taxes by having interest deductions larger than the average guy. It is like the welfare system of the wealthy. The 1031 exchange is an absolutely great way to hold onto your net wealth which is not allowed for other investments like stocks. If you are unaware of them learn about how you can buy real estate and sell it and avoid taxes. I read a great book on the subject that is at my office.
Can you name one other investement that has done as good? Leverage another key factor. Unless you are in it for a short term there is no reason to wait. The number two way in the US to become a millionare (if you guessed gambling you are wrong) is real estate. Just for completeness number one way is through inheiritance (leaves me out). Buy and don't look back. Wait and you will wish you hadn't waited.
I personally think the appreciation levels will need to slow to a rate closer to the 3% range. Some investors have what they call soft markets. They are areas that they deem to have potential for decreasing prices. You tend to see these in markets where their economy is closely tied to some industry, example oil and the Houston market back in the late 80's. Buying in a market with a more diverse economy and a growing population lowers the risk of depreciation
I disagree with the assement that interest rates rising will result in home going down in value. Interest rate of roughly 6% are still near historic lows. Rates going up to 8% should mean a strong economy. The housing market does well with the strong economy because people have jobs and most want to buy a home. If rates rise to double digits then we have another story.
Values will continue to go up because the last I heard there weren't making any new land. The population is continuing to grow and that fuels the demand. Our nation is going towards a two class system of the haves and the have nots. The middle class of the 40's, 50's and 60's has disappeared. The former decent paying manufacturing jobs are being sent over seas so you can buy your big screen tv for $2,000 instead of $15,000. The jobs are being divided into low paying service jobs and the educated service jobs like nurses. Pretty soon the need for more housing will be filled by investors buying rental units for the have nots of the U.S..
Our tax laws support the housing market and that won't change. The wealthy have been able to avoid paying taxes by having interest deductions larger than the average guy. It is like the welfare system of the wealthy. The 1031 exchange is an absolutely great way to hold onto your net wealth which is not allowed for other investments like stocks. If you are unaware of them learn about how you can buy real estate and sell it and avoid taxes. I read a great book on the subject that is at my office.
Can you name one other investement that has done as good? Leverage another key factor. Unless you are in it for a short term there is no reason to wait. The number two way in the US to become a millionare (if you guessed gambling you are wrong) is real estate. Just for completeness number one way is through inheiritance (leaves me out). Buy and don't look back. Wait and you will wish you hadn't waited.
Today's news only furthers an argument that was started in JULY. The top was called.
Toll Brothers Cuts 2006 Sales Forecast
Tuesday November 8, 1:56 pm ET
By Joann Loviglio, Associated Press Writer <TABLE height=4 cellSpacing=0 cellPadding=0 border=0><TBODY><TR><TD height=4></TD></TR></TBODY></TABLE>Toll Brothers Trims 2006 Sales Forecast, Citing Delayed Openings for New Developments
PHILADELPHIA (AP) -- In a sign of trouble for the housing industry, luxury home builder Toll Brothers Inc. cut its sales forecast for fiscal 2006 Tuesday, citing delayed openings for new developments and weakened demand in several markets.
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</NOSCRIPT></TD></TR></TBODY></TABLE>Toll Brothers' shares tumbled nearly 12 percent in afternoon trading and the news pushed down share prices for many large homebuilders as Wall Street, already nervous about the health of the housing sector, was rattled by the news. KB Home fell 4.8 percent and Pulte Homes Inc. lost 7 percent. </P>
A national housing sector index, a benchmark maintained by the Philadelphia Stock Exchange based on share prices for 21 companies in the U.S. housing construction market, fell 4.7 percent in afternoon trading.
The strong housing market is widely credited for having supported the economy for some time, but concerns about its sustained health have been increasing along with the upward creep of mortgage rates. The Philadelphia exchange's index is down 17 percent from its midsummer peak.
Rates on 30-year mortgages jave climbed to the highest level in 16 months, and have been above 6 percent for the past month.
Toll Brothers, based in Horsham, projected home sales at between 9,500 and 10,200 homes in fiscal year 2006, down from an earlier target of 10,200 to 10,600 homes. In fiscal 2005, it reported 8,769 sales.
"The shortage of selling communities, coupled with some softening of demand in a number of markets, negatively impacted our contract results," said Robert Toll, chairman and chief executive officer. "It appears we may be entering a period of more moderate home price increases, more typical of the past decade than the past two years."
Houses in new communities were taking longer to go on the market, a delay the company attributed to an increasingly complex regulatory environment. Roughly one-quarter of Toll Brothers' communities have backlogs at least 12 months for houses to be built, and are not available for sale on a regular basis, it added.
For the fourth quarter, the backlog jumped 36 percent to $6.01 billion, while contracts to build rose 4 percent to $1.59 billion.
Toll Brothers also cited lagging consumer confidence stemming from Hurricane Katrina and rising energy prices.
Toll Brothers' concentration in the mid-Atlantic region puts it in a tougher climate than other home builders, said Gregg Schoenleber, an analyst with Deutsche Bank North America. Some 30 percent of Toll Brothers' market is in the mid-Atlantic -- compared to builders like Pulte Homes with 8 percent, D.R. Horton Inc. with 9 percent and KB Home with virtually none in the region, he said.
Municipalities in the region, concerned about the strain of development on schools and roads, often have more restrictions when approving new developments than places like Colorado and Texas, where such approvals are easier to get, he said.
"It's not all a function of (decreasing) demand by any stretch; a big part is entitlement delays," Schoenleber said.
He said it's not clear whether Toll Brothers' home prices -- at an average of $633,000 -- are too high. In some New England markets, for example, "that's considered a teardown," he said.
For the fiscal year ended Oct. 31, Toll Brothers' home building revenue climbed 50 percent to $5.76 billion, while contracts increased 27 percent to $7.15 billion. Its shares dropped $4.63, or 11.7 percent, to $34.78 in afternoon trading on the New York Stock Exchange, down from a 52-week high in July of $58.67. KB Home shares fell $3.39 to $64.06 in afternoon trading on the NYSE, while Pulte shares fell $2.92 to $38.55.
Toll Brothers Cuts 2006 Sales Forecast
Tuesday November 8, 1:56 pm ET
By Joann Loviglio, Associated Press Writer <TABLE height=4 cellSpacing=0 cellPadding=0 border=0><TBODY><TR><TD height=4></TD></TR></TBODY></TABLE>Toll Brothers Trims 2006 Sales Forecast, Citing Delayed Openings for New Developments
PHILADELPHIA (AP) -- In a sign of trouble for the housing industry, luxury home builder Toll Brothers Inc. cut its sales forecast for fiscal 2006 Tuesday, citing delayed openings for new developments and weakened demand in several markets.
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A national housing sector index, a benchmark maintained by the Philadelphia Stock Exchange based on share prices for 21 companies in the U.S. housing construction market, fell 4.7 percent in afternoon trading.
The strong housing market is widely credited for having supported the economy for some time, but concerns about its sustained health have been increasing along with the upward creep of mortgage rates. The Philadelphia exchange's index is down 17 percent from its midsummer peak.
Rates on 30-year mortgages jave climbed to the highest level in 16 months, and have been above 6 percent for the past month.
Toll Brothers, based in Horsham, projected home sales at between 9,500 and 10,200 homes in fiscal year 2006, down from an earlier target of 10,200 to 10,600 homes. In fiscal 2005, it reported 8,769 sales.
"The shortage of selling communities, coupled with some softening of demand in a number of markets, negatively impacted our contract results," said Robert Toll, chairman and chief executive officer. "It appears we may be entering a period of more moderate home price increases, more typical of the past decade than the past two years."
Houses in new communities were taking longer to go on the market, a delay the company attributed to an increasingly complex regulatory environment. Roughly one-quarter of Toll Brothers' communities have backlogs at least 12 months for houses to be built, and are not available for sale on a regular basis, it added.
For the fourth quarter, the backlog jumped 36 percent to $6.01 billion, while contracts to build rose 4 percent to $1.59 billion.
Toll Brothers also cited lagging consumer confidence stemming from Hurricane Katrina and rising energy prices.
Toll Brothers' concentration in the mid-Atlantic region puts it in a tougher climate than other home builders, said Gregg Schoenleber, an analyst with Deutsche Bank North America. Some 30 percent of Toll Brothers' market is in the mid-Atlantic -- compared to builders like Pulte Homes with 8 percent, D.R. Horton Inc. with 9 percent and KB Home with virtually none in the region, he said.
Municipalities in the region, concerned about the strain of development on schools and roads, often have more restrictions when approving new developments than places like Colorado and Texas, where such approvals are easier to get, he said.
"It's not all a function of (decreasing) demand by any stretch; a big part is entitlement delays," Schoenleber said.
He said it's not clear whether Toll Brothers' home prices -- at an average of $633,000 -- are too high. In some New England markets, for example, "that's considered a teardown," he said.
For the fiscal year ended Oct. 31, Toll Brothers' home building revenue climbed 50 percent to $5.76 billion, while contracts increased 27 percent to $7.15 billion. Its shares dropped $4.63, or 11.7 percent, to $34.78 in afternoon trading on the New York Stock Exchange, down from a 52-week high in July of $58.67. KB Home shares fell $3.39 to $64.06 in afternoon trading on the NYSE, while Pulte shares fell $2.92 to $38.55.
Fishhead said:
That may be true in the purest since, but the market dictates what you have to pay for a house. I sold a house in Iowa and bought a smaller house in Florida and paid much more for the house in Florida, than the one sold for in Iowa. And now the house in Florida, is worth at least 10 percent if not 20 percent more than when I bought it, less than a year ago. Location, Location, Location.
I would like to know the answer to this. When a person says he/she doubled or tripled their money on a home, they are just taking into account the amount they paid for the house vs. the selling price. No one seems to take into account the amount of money paid in interest, home improvements like painting and landscaping, room additions etc.
So what is the real profit from selling a home for double or triple the purchase price. I know in the California market the last 10 years, you could buy and sell regularly with the market jumping up 15% a year. But that would involve a lot of moving and what not during those years!
So what is the real profit from selling a home for double or triple the purchase price. I know in the California market the last 10 years, you could buy and sell regularly with the market jumping up 15% a year. But that would involve a lot of moving and what not during those years!
