Real Estate Bubble

KingsFourMan · Post by **KingsFourMan** » May 25th, '05, 14:16

3 bedroom Topridge Condo between Bear and Sunrise. was selling for $650,000 last year. current asking price $900,000.

what do you think it will be worth in 2010?

i say $450,000.

yeti · Post by **yeti** » May 25th, '05, 14:32

I say about 1.2 million.

There is no "bubble" - however I live in a recession proof area that will do nothing but grow regardless of economic conditions in the rest of the country - so that is easy for me to say.

Hal U. Dewin · Post by **Hal U. Dewin** » May 27th, '05, 07:28

yeti wrote:I say about 1.2 million.

There is no "bubble" - however I live in a recession proof area that will do nothing but grow regardless of economic conditions in the rest of the country - so that is easy for me to say.

that's what people said about every other bubble....it's different this time...it's a global economy...yadayadayada....

People are using their homes as their personal ATM machines, to buy 2nd, 3rd and even 4th homes as investments, to buy bigger cars, Harley's and other toys.....speculative investments in homes (really the land) that they think are going to go straight up....because this time it's different....hahaha. Friends of mine just settled on their FOURTH rental property in Florida. Mortgages more flexible and more lenient than ever. Not saying there aren't markets that are recession proof to an extent, and that there aren't markets that are attractive investments at this point, but you better do your homework or you're gonna get burned at some point. The retail investor (bagholder) always does. I have a pile of cash that has been invested in Whole Food Market for years....I've already resolved myself to selling 1/2 and buying property when the right "opportunity" in the "right" place presents itself. It isn't now.

yeti · Post by **yeti** » May 27th, '05, 07:32

During the height of the last big recission (not this baby they ended last year) the DC area had an unemployment rate of a whopping 4 percent.

Demand for housing here will simply not slacken to any great extent, unless of course the whole place becomes a radioactive glass paved parking lot.... in which case as I stated before - your mortgage will be the last thing on your mind assuming you are still alive to worry about such things.

Hal U. Dewin · Post by **Hal U. Dewin** » May 27th, '05, 07:47

yeti wrote:During the height of the last big recission (not this baby they ended last year) the DC area had an unemployment rate of a whopping 4 percent.

Demand for housing here will simply not slacken to any great extent, unless of course the whole place becomes a radioactive glass paved parking lot.... in which case as I stated before - your mortgage will be the last thing on your mind assuming you are still alive to worry about such things.

I hear ya...like I said, I agreed that some areas may be latex bubbles and others Kevlar, but you said there is no bubble and that just isn't true. The original picture in this thread isn't anywhere near you I assume.

KingsFourMan · Post by **KingsFourMan** » May 27th, '05, 08:53

Hal U. Dewin wrote:People are using their homes as their personal ATM machines, to buy 2nd, 3rd and even 4th homes as investments, to buy bigger cars, Harley's and other toys.....

i think you are absolutely correct and this is a significant reason why the economy is doing as well as it is. it's also why it's going to get very ugly WHEN this real estate bubble in the northeast and elswhere pops. a lot of people are going to have mortgages, combined with home equity loans, that are more than the value of their home(s).

i wouldn't buy real estate today unless it was for a primary home and i was selling a primary home at the same time.

I too plan on jumping in more after the bubble pops. i think the northeast will see between a 25% and 40% correction when it hits bottom whenever that is.

DMC · Post by **DMC** » May 27th, '05, 08:59

KingsFourMan wrote:i wouldn't buy real estate today unless it was for a primary home and i was selling a primary home at the same time.

There's still deals out there...
We just picked up a 100 year old 6 br farmhouse in Hunter thats a "fixer upper".. Got it via an estate being sold off. Appraised a lot higher then the price we got it for...

3 times more space then the "turn key" stuff up here for the same price...

KingsFourMan · Post by **KingsFourMan** » May 27th, '05, 09:11

DMC wrote:
KingsFourMan wrote:i wouldn't buy real estate today unless it was for a primary home and i was selling a primary home at the same time.
There's still deals out there...
We just picked up a 100 year old 6 br farmhouse in Hunter thats a "fixer upper".. Got it via an estate being sold off. Appraised a lot higher then the price we got it for...

3 times more space then the "turn key" stuff up here for the same price...

yea there are always deals if you are lucky enough to find them. i was speaking in general terms.

DMC · Post by **DMC** » May 27th, '05, 09:15

KingsFourMan wrote:
DMC wrote:
KingsFourMan wrote:i wouldn't buy real estate today unless it was for a primary home and i was selling a primary home at the same time.
There's still deals out there...
We just picked up a 100 year old 6 br farmhouse in Hunter thats a "fixer upper".. Got it via an estate being sold off. Appraised a lot higher then the price we got it for...

3 times more space then the "turn key" stuff up here for the same price...
yea there are always deals if you are lucky enough to find them. i was speaking in general terms.

true true...
I know a few people that will be in trouble if/when the bubble bursts...

whiteout · Post by **whiteout** » May 27th, '05, 09:44

KingsFourMan wrote:
Hal U. Dewin wrote:People are using their homes as their personal ATM machines, to buy 2nd, 3rd and even 4th homes as investments, to buy bigger cars, Harley's and other toys.....
i think you are absolutely correct and this is a significant reason why the economy is doing as well as it is. it's also why it's going to get very ugly WHEN this real estate bubble in the northeast and elswhere pops. a lot of people are going to have mortgages, combined with home equity loans, that are more than the value of their home(s).

i wouldn't buy real estate today unless it was for a primary home and i was selling a primary home at the same time.

I too plan on jumping in more after the bubble pops. i think the northeast will see between a 25% and 40% correction when it hits bottom whenever that is.

basing your guess on "wishful thinking" obviously. worst case in the NE, short term declines will be a 10% or less, with further declines in the over-heated markets.

when the market "corrects" though, how much longer until the market screams again? you better be ready to jump in.

i do agree now is not the time for flips. buy and hold.

KingsFourMan · Post by **KingsFourMan** » May 27th, '05, 10:15

whiteout wrote:
KingsFourMan wrote:
Hal U. Dewin wrote:People are using their homes as their personal ATM machines, to buy 2nd, 3rd and even 4th homes as investments, to buy bigger cars, Harley's and other toys.....
i think you are absolutely correct and this is a significant reason why the economy is doing as well as it is. it's also why it's going to get very ugly WHEN this real estate bubble in the northeast and elswhere pops. a lot of people are going to have mortgages, combined with home equity loans, that are more than the value of their home(s).

i wouldn't buy real estate today unless it was for a primary home and i was selling a primary home at the same time.

I too plan on jumping in more after the bubble pops. i think the northeast will see between a 25% and 40% correction when it hits bottom whenever that is.
basing your guess on "wishful thinking" obviously. worst case in the NE, short term declines will be a 10% or less, with further declines in the over-heated markets.

when the market "corrects" though, how much longer until the market screams again? you better be ready to jump in.

i do agree now is not the time for flips. buy and hold.

after the last correction in the late 80's it was 10 years before prices started to rebound (about 1997) and about 15 years before they were at the same level before the correction and those prices were not as inflated as the current prices. you better be able to hold for a long time.

yeti · Post by **yeti** » May 27th, '05, 10:19

The APR and interest only crowd have something to worry about, along with those that are flipping properties... but in general Harr(y/iet) Homeowner with a fixed rate is and will be fine.

KingsFourMan · Post by **KingsFourMan** » May 27th, '05, 10:25

yeti wrote:The APR and interest only crowd have something to worry about, along with those that are flipping properties... but in general Harr(y/iet) Homeowner with a fixed rate is and will be fine.

Harry/iet won't be fine if his/her fixed rate mortgage plus his home equity loan (which is usually adjustable rate) is more than his house(s) is/are worth.

also, 1/3 of all mortgages today are adjustable rate, that's a lot of housholds.

yeti · Post by **yeti** » May 27th, '05, 12:01

Sure they will - if they don't plan on selling.

"Plan" is one of those funny words, however. However those who stay put will be sitting pretty.

One thing is for sure - just my opinion, but don't look for a large drop in housing prices. It isn't going to happen. Flat for several years? Sure. A < 5% drop, perhaps at the worst (but that won't happen in my market).

whiteout · Post by **whiteout** » May 27th, '05, 13:39

KingsFourMan wrote:
yeti wrote:The APR and interest only crowd have something to worry about, along with those that are flipping properties... but in general Harr(y/iet) Homeowner with a fixed rate is and will be fine.

Harry/iet won't be fine if his/her fixed rate mortgage plus his home equity loan (which is usually adjustable rate) is more than his house(s) is/are worth.

also, 1/3 of all mortgages today are adjustable rate, that's a lot of housholds.

that does not compute. if Harry's ability to cover debt service is compromised, then he'll have issues. but home values enter the equation only upon disposition or financing.