Posted on 06/18/2005 4:38:36 PM PDT by Torie
Very interesting - thanks for posting!
when there are probably local bubbles, Housing prices have risen more in most other western countries than in the USA.
even in the worse areas of the country, like Massachuttes, housing prices divided income are still lower today than in 1989.
There is a housing bubble but it is probably not as bad as it was in the last 1980s
i dont think there is much of a bubble anywhere i nthe midwest.
Las Vegas is a special situation. one fo the fastest growing cities that soon will be restricted in its ability to grow
It's worse. IN the late 1980s you didn't have the same kind of investment in real estate going on by amateurs and you didn't have the wacky lending schemes.
I am not so sure that is true.
I do agree about the financial instruments but it was untrue that amatures werent in the housing market in the 1980s
In the late 1980s lending institutions were worse financial shape that they are today.
Also the decline of the defense industry in So Cal made the poping of the housing market worse than would be the case today.
Everything Ive seen said a bubble poping will not be as bad as it was in the period 1990-94
Reason is even in bubble areas the price of a home divided by disposal income while rising is not as hig has it was in the early 1990s
Also dont forget the 1986 tax reform act made it no longer possible to deduct mortages from income taxes for more than one home.
In regards to financial institutions -- they seem to have lost their minds. They are financing houses for incredible amounts, using all kinds of wacky interest only schemes, and then handing out home equity loans like coupons at a supermarket. I'm sure that some of this debt is being sold off as bonds, etc. but it's still a lot of debt that could go south.
Yes, buying into a "craze" is the quickest way to lose money in the housing market. I knew a family that rented when I bought. Three years later they were buying after the crash and they had their choice of hundreds of houses.
There was a human toll in the crash of the '80s in Austin. Many couples were divorced. From this I learned the very important principle of buying at what I was comfortable with rather than buying to the max.
bttt
Well, I just got a new job in Mentor so in a few months I'll be moving to the snow belt.
Very cool.
Lots of folks up this way.
You can find nice homes in Willoughby, Willowick, Concord, Mentor, Menter-on-the-Lake, Mentor Headlands (stay away from Painesville - especially if you have kids), Chardon, Kirtland, etc.
As a cash investment US real estate has slightly underperformed the S&P 500 since WWII. What makes RE attractive is that it's the one very highly leveraged investment readily availaible to small investors.
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