The San Francisco market will be hit the hardest. They have the highest average cost per home anywhere in the US(over 600K) which is unreal. This is just the average! You basically have to be a millionaire several times over to own a home in SF. With the tech bubble long busted there is no way income levels have matched that of the housing market there. Sf is a great city but a debacle waiting to happen.
pokerpills said:
Been in this market my entire life and even when the tech bubble burst, the housing market only dipped slightly. The San Francisco Bay Area region in it's entirety now has nearly 8 million people residing here. Ties with the Pacific Rim and Europe are strong and the demand to live in this region is continually robust and international. You don't need to be a millionare to own a home here as my nephew just purchased a home with no down payment and 100% interest only loan while he and his wife's income are very modest, as they are only in their mid twenties. Fully expect the housing market to cool here as well as elsewhere across the nation, but don't foresee a bubble burst, but more a soft landing, once mortgage interest rates rise. Same thing occurred in 1989-1990 with white hot market, followed by slight depreciation, then slow steady increase, now followed by white hot market once again. This region is routinely listed in the top 3 most expensive areas in the country but continues to grow nevertheless.
I haven't followed real estate long and don't know much history on the subject. When you guys refer to the real estate market crashing, what is the historical basis on those crashes. Has the market declined 50% in 3-5 years? 25% in one year? I have no idea at all. Obviously the stock market has crashed severely, is there similiar examples in the real estate market. Or are we talking about a 15% decrease over two years as a "crash"?
I'm new here, but I've got to say there are some very interesting posters/posts at this forum. Hope to post some winners come football season.
oldmanTED touched on the part I think is very SCARY to me...all these 100% financed, interest-only loans that are being taken out by homebuyers. I've only owned my home for 7.5 years, but we went to buy, we put down 20% for 2 reasons.
One, that meant we had some equity already in our home and, two, so that we didn't have to pay P.M.I.(private mortgage insurance). That 30 or so dollars a month saved has gone right into long-term savings. We also bought much LESS house than we could have, simply because I see houses as homes rather than investments. Unless you are planning on living under a bridge, you always will need a roof over your head. We save a huge amount of our salaries and we hope to retire to a condo on a golf course in 8-10 years...and I am currently a month shy of 41.....
arty:
Everyone is different in how they approach their housing needs and if you think what you are doing is best for you, then give em hell, tiger...
oldmanTED--have a sister-in-law that lives in the East Bay. Whereabouts are you?
oldmanTED touched on the part I think is very SCARY to me...all these 100% financed, interest-only loans that are being taken out by homebuyers. I've only owned my home for 7.5 years, but we went to buy, we put down 20% for 2 reasons.
One, that meant we had some equity already in our home and, two, so that we didn't have to pay P.M.I.(private mortgage insurance). That 30 or so dollars a month saved has gone right into long-term savings. We also bought much LESS house than we could have, simply because I see houses as homes rather than investments. Unless you are planning on living under a bridge, you always will need a roof over your head. We save a huge amount of our salaries and we hope to retire to a condo on a golf course in 8-10 years...and I am currently a month shy of 41.....
arty: Everyone is different in how they approach their housing needs and if you think what you are doing is best for you, then give em hell, tiger...
oldmanTED--have a sister-in-law that lives in the East Bay. Whereabouts are you?
I have been a licensed Real Estate Broker since 1966 and I beg to differ with you on only one point. The interest rate during Jimmy Carter's era were up to 15 %. I know because I was building homes then and I had 8 homes that I built with construction loans of 9 1/2 %. The interest rates went up over 15 % and all 8 homes simply could not be sold. The bank re financed the 8 homes at 15.5 % Interest and I had to rent them all of at a loss of over $ 200 each a month.miked429 said:
Real Estate took a rather steep decline for about 3 years until the rates starting back down.
I just sold a tiny rental house that I have owned since 1979 in Portland,Oregon.
I was shocked when I sold this 699 sq ft. 2 bedroom for $ 143,950. However I was even more shocked when I looked up my old records to discover that I had purchased the home in 1979 for $ 11,000. Of course I had no choice but to do a 1031 tax free exchange to prevent IRS from taking a huge chunk of my profit.
I now have only 33 days to buy another piece of property anywhere, any type. I am thinking of buying some vacant property in Prescott Arizona area or Sedona.
I was shocked when I sold this 699 sq ft. 2 bedroom for $ 143,950. However I was even more shocked when I looked up my old records to discover that I had purchased the home in 1979 for $ 11,000. Of course I had no choice but to do a 1031 tax free exchange to prevent IRS from taking a huge chunk of my profit.
I now have only 33 days to buy another piece of property anywhere, any type. I am thinking of buying some vacant property in Prescott Arizona area or Sedona.
Some valid points here. Some stretches. For one, it is an investment you can live in, your life's dream. Can't do that renting, or with a certificate of stock. Next the correction in 89-93, minor correction, no, a good +30% hit. And those people who were in 100%, walked away, killed their own credit instead of losing 20% more selling. Money they never ever had. People buying on a thin margin get eaten alive on a correction. But if you have the means, you just ride it out. Those years went by slowly, but it all came back plus many times over. You can only have so many homes on the bay, and there is no room for new neighborhoods. I would say there will be a correction, it is inevitable, it will weed out the speculators and people on the edge. And when the dust settles, I will be there to pick up the pieces again.
Best Wishes...OF:howdy:
Best Wishes...OF:howdy:
I have never seen this kind of money in my life. I'm not the kind to come on here and brag about how rich I am like some do, but I am selling properties after they have been completed for a minimum of 50k that I contracted for.
I have one that has gone up 152k in one year.
I am used to making a meager 30k a year in my old occupation so this is like hitting the lottery.
as OF stated, if it goes belly up, I lose my credit rating .
I have one that has gone up 152k in one year.
I am used to making a meager 30k a year in my old occupation so this is like hitting the lottery.
as OF stated, if it goes belly up, I lose my credit rating .
These are "paper" losses you all realize? The people that bought in 1989 and held on got more than a fair amount of gain in California. Markets like CA have lots of variability and understandably some people mistaken these for investments. Further people make the dumb decisions, as most "public" groups do to buy at the top when the hype is highest and sell at the low, when the fear is the greatest. The average Joe won't make market returns because they get this all screwed up.
In the end though most markets with a rising price profile do so because of limits on land. Many markets have very little limit on land in the middle of the country. Places on coasts have very tight limits on land in places with reasonable access to jobs. Prices can undergo some drops due to the demand coming and going, but the usual drop is caused by loss of jobs. Right now there is not even a whiff of job loss out there in most markets.
In the end the thing to do is to decide to participate or not. Don't get into timing the market, housing is first and foremost a place to live. If you decide your area is one you want to stay in a long time buy now. Do what you have to get into a house, even if it is a 100% or an interest only loan. Obviously it is better if you can do better, but sinking your money into equity is actually a generally dumb thing to do. Base your decision totally on if you can swing the payments comfortably and forget about equity in the common view. Equity earns 0% return. Your house gains value through price appreciation, not because you paid down your loan. Put your money elsewhere, just put in the minimum you need to get a decent loan with payments you can comfortably swing, that is the key. Participate in the market, trade up for another house when the market allows you to (price increases and/or interest rate declines), but basically stay in it or stay out of it. Simple advice really.
In the end though most markets with a rising price profile do so because of limits on land. Many markets have very little limit on land in the middle of the country. Places on coasts have very tight limits on land in places with reasonable access to jobs. Prices can undergo some drops due to the demand coming and going, but the usual drop is caused by loss of jobs. Right now there is not even a whiff of job loss out there in most markets.
In the end the thing to do is to decide to participate or not. Don't get into timing the market, housing is first and foremost a place to live. If you decide your area is one you want to stay in a long time buy now. Do what you have to get into a house, even if it is a 100% or an interest only loan. Obviously it is better if you can do better, but sinking your money into equity is actually a generally dumb thing to do. Base your decision totally on if you can swing the payments comfortably and forget about equity in the common view. Equity earns 0% return. Your house gains value through price appreciation, not because you paid down your loan. Put your money elsewhere, just put in the minimum you need to get a decent loan with payments you can comfortably swing, that is the key. Participate in the market, trade up for another house when the market allows you to (price increases and/or interest rate declines), but basically stay in it or stay out of it. Simple advice really.
WildBill, that purchase of Cisco atr 63 is also simply a paper loss at 19. In 10 years it could be back to 63. Would I look like a hero then?
Most people I understand do not want to hear that the housing market is overvalued b/c you own houses and are thusly biased. Who wants to hear that their property is not worth what its going for....I don't want to see people lose money, but the sheer fact that so many people actually try to rationalize this market tells me that's exactly what will happen.
Most people I understand do not want to hear that the housing market is overvalued b/c you own houses and are thusly biased. Who wants to hear that their property is not worth what its going for....I don't want to see people lose money, but the sheer fact that so many people actually try to rationalize this market tells me that's exactly what will happen.
