Short Housing

rs7 · Jul 24, 2002

Originally posted by crackedback
RS7 - As far as watching real estate gyrate in price, it always appears to happen. If you aren't comfortable selling, stay put. Housing really shouldn't be looked at as an investment. it's shelter. If the cost of that shelter is acceptable, stay. The new tax regulations really changed the outlook of a great number of home owners regarding housing as an investment.

Come on 10% interest.... not realistic anytime soon, but, I can hope!!!!

I understand that a home should not be looked at as an investment. I agree. It is just that it seems an unusual time. I have only been in my house for 3 years. Because I have a mortgage (like most people), it is a leveraged "investment". I put down 10%, and now the value of the house has gone up so that my ROI (on my down payment) would be almost 600% (total for the 3 yrs). Hard to ignore, especially since I lost so much in my personal stock holdings.

PS: Why do you hope for higher interest rates?

crackedback · Jul 24, 2002

PS: Why do you hope for higher interest rates?

High rates would smash the housing market, allowing me to go pick up one of the overpriced homes 500-750K homes for 50% or more below the current prices. I'd rather pay 3K/month on a 250K home than the same payment on a 600K home. Better risk/reward profile and avoid the potential negative net worth issues if you ask me.

chasinfla · Jul 24, 2002

"100% Financing Available" -- Wells Fargo Home Mortgage.

When they get to 110%, we might be near the top...

Actually, now, all this reaching and stretching to get everyone bought is a sign of the weakness of the market, not it's strength.

ddog · Jul 24, 2002

Thanks for the pm. When you have time could you look over my response? Thanks.

"A couple of things to look for are avg time a listing is on the market, total units available for sale".

It sound like you are watching this very closely. Have you seen any weakness in your area?

rs7 · Jul 24, 2002

Originally posted by crackedback

High rates would smash the housing market, allowing me to go pick up one of the overpriced homes 500-750K homes for 50% or more below the current prices.

When was the last time this happened to residential housing?...(not specific to one economically impacted market)....I mean has there been a nationwide bust because of high mortgage rates?
Thanks!

mattjclark · Jul 24, 2002

Originally posted by chasinfla
"100% Financing Available" -- Wells Fargo Home Mortgage.

I'm curious what happens when 20% of the mortgagers default on their homes. Is the government going to bail out the banks like it did the Savings and Loans?

That's going to tic me off if I end up paying for these overzealous creditors 10 years down the road.

chasinfla · Jul 24, 2002

that is what happens. the housing market gets flooded with auction block material.

The last time it happened though (that I remember) was in the 80s in New England. As I posted elsewhere, the buy and hold strategy worked then....who knows about now?

The speculative bubble has to pop. That doesn't mean that housing doesn't have any intrinsic value.

crackedback · Jul 24, 2002

When was the last time this happened to residential housing?...(not specific to one economically impacted market)....I mean has there been a nationwide bust because of high mortgage rates?

That's the rub with the realtors association. They love to quote the national number. Problem with that is lots of people stay in the areas where they grew up. I grew up in So. Cal and would like to stay here. RE here has been appreciating at NASDAQ 5000 style rates, 25%+ per year. My brothers home 4 years ago was appraised at 310K, today 680-700K. I stay pretty specific to this area and No. Cal. Other areas have been hit hard, Dallas for one. When you have a large sample population like the national number, it smooths the areas that were hit hard the last time this occurred.

Will there be a nationwide burst, I don't think so, but areas that have seem hyper-appreciation will definitely see a burst.

Companies here are having a hard time attracting skilled labor because of the housing costs. What might be the Long-Term effect on business, inflation, and the cost of doing business increases dramatically.

Real estate to live in is generally a decent place to put money versus rent. The problem arises when people all want it at the same time, like a pirahana feeding frenzy. Soon the fish are eating each other, whether on purpose or by accident.

Later,

Cracked

mattjclark · Jul 24, 2002

Originally posted by crackedback

Real estate to live in is generally a decent place to put money versus rent.

I disagree.

Real Estate is not a better place to put your money if the market is going down. Buying is only better if you can't rent the same place for more than the monthly mortgage on the house (adjusted for tax deduction, transaction fees, equity gains, etc.).

chisel · Jul 24, 2002

Originally posted by rs7
Originally posted by chisel
I rent my house. I refuse to pay the agent's 6% fee

Sellers pay the commision, not the buyer. So how does that affect you?

Correct, but I think it gets figured into the price, so maybe 3% each way.

I agree that Prechter has been wrong many times, but the evidence he presents makes sense to me.