How much did Real estate price "plummet" in the 90s?

 

quite a bunch. you can look it up. or talk to any real estate person who is honest, has a good memory, and has been in the business for more than a few months. i personally know more than a few people who bought from sellers losing bigtime.


i'm not going to convince you. that's ok.

but things don't go up in a straight line forever, especially not real estate, where players are heavily leveraged. at least in the stock market there's a minimum maintenance requirement of 30% equity. alot of people in real estate today are starting with zero down, interest only, and will most assuredly be in a negative equity position. they're just hoping to be able to sell it for more later. they're gonna be wrong.

 

quite a bunch. you can look it up. or talk to any real estate person who is honest, has a good memory, and has been in the business for more than a few months. i personally know more than a few people who bought from sellers losing bigtime.


i'm not going to convince you. that's ok.

but things don't go up in a straight line forever, especially not real estate, where players are heavily leveraged. at least in the stock market there's a minimum maintenance requirement of 30% equity. alot of people in real estate today are starting with zero down, interest only, and will most assuredly be in a negative equity position. they're just hoping to be able to sell it for more later. they're gonna be wrong.

 

I'll give you this, you are right when you say things don't go up in a straight line forever. What you are referring to as plummeting prices in the 90s only hit people who bought when housing prices hit their peak, then prices went down, approximately 10%, freaked overnight, and decided to sell. Real estate is an investment. the rate of increase will slow down, or you might have a small decrease, but overall the trend is for it to continue to increase, especially in this area. So the "bubble" bursts? Wait it out a couple of years and you'll more than make back what little if any you lost. Also, the return on an investment is seen over the life of an investment. If you buy a property for 200,000, it increases in value to 400,000 then the bubble bursts and you end up selling it for 350,000; you still made a profit of 150,000. Lately in the area we are talking about values increasing yearly at a rate of about 20%. If you bought more than 3 years ago, it is likely that the value of your home has doubled. Prices would need to drop more than 50% for you to lose money. If you took out all your equity, or if you pourchased no money down, or negative equity in order to just be able to affor a house lately (which is something a lot of people have been doing, if prices stagnate, or decrease, you will have negative equity, but that negative equity will only be temporary.

But hey, don't take my word for it.

if anybody cares to read:
http://www.realestatejournal.com/buysell/s...0412-spors.html

 

The housing costs in Vegas have already started their re-adjustment phase. At one point, you had to get on a serious waiting list to have a home built. If you didn't want to wait, you paid dearly. Supply has caught up to demand(relatively speaking) and prices have begun to equalize.

As for today's consumer, many are too far leveraged. I've done it. I cashed out some equity, refi'd at a super low rate, and now get to deduct the interest off the loan versus getting nothing for the interest paid on a vehicle loan. After $100,000 cashed out without puttingsome back into the home by way of improvements or repayment, you will not be able to deduct the additional amount. That said, I cannot sell my house and buy another in the same area.

Personally, I think many of our society's problems stem from the lack of individual accountability. This applies to financial, social, and spiritual accountability.

 

At what point did anyone say real estate was going to continue to rise until the end of time? The most likely scenario is a simple lesson in economics. The current supply of houses on the market is too low for the demand in our area. Combined with incredibly low interest rates the value of property has increased significantly. Eventually there will be a point where people decide that if they sell they won't be able to get the house of their choice for the price and interest rate that they desire. It is at that point that sales will taper off, prices will level off and that is where the potential for the growth in value to decline. Read growth in value decline, not the actual value. Seeing an increase in your property value of 4% as opposed to 23% would be the most likely scenario of any bubble bursting and you will still be seeing a return on the property, but not as great as the glory days that we have experienced the last few years. Property values will plateau and the market will settle into potentially another period of flat growth.

Chug, remember the days of 12% interest rates? Guess what, people are locking in rates of 6% or less for the same houses that were on the market back during higher interest rates. The values of those houses are much higher today, but that is the result of growth and the market.

Are you all forgetting one of the biggest factors here? Real estate is an investment, but it serves a practical necessity. Hence the fact there will always be real estate sales regardless of conditions. People need a roof over their head. You are buying a tangible asset. Maybe I am wrong, but last time I checked I didn't see people using stock certificates as umbrellas or roofing material. Unlike a stock certificate a house provides utility to the user as it fluctuates over time. If Lucent goes out of business you are left with nothing. If this so-called real estate bubble bursts, guess what, you still have a roof over your head and hopefully a low interest rate to work with. People don't purchase stock out of need. They do purchase real estate as a need, and that makes up the majority of the activity in the housing market. I analyze this data on a daily basis. Since clearly you don't believe any of this, feel free to look it up.

If people are buying houses with interest only loans and they default that is their problem and the market will move on. Again the market isn't responsible for your personal finances. If you can't afford your mortgage you should buy a cheaper house. If you can't afford a house in this market you need to go elsewhere.

 

Yeah, try finding a "cheaper house" that you can actually live in. theer is no such thing anymore.

Warren

 

And Eric, when the heck are you getting this Cusco CC? :tapsfoot:

 

Yes, you can, Warren. It just won't be in the same area. I did the ol' folks' meet in WV this past weekend... there are homes available.




BTW, I love this conversation. When I get back from Europe, who knows what kind of housing market I'll find wherever I go next. Just to give you some idea of what kind of perspective I have, I bought my first home, 1180 sq.ft., for $57,500 at 9% in '95. Ten years later, the "value" of my home(1850 sq.ft. and a ski slope ) is nearly a quarter of a million dollars.

 

Jeff- check pms.