Posted on 06/21/2005 9:42:59 AM PDT by ambrose
Remember in the late 90's when they said the era of business cycles was over because of the "new economy"?
I live in Northwest DC and I can attest to the rise in prices and their rationality. Not only is employment boomng here, but, as in So Cal, commutes are getting more impossible than ever. (We are only behind LA in length of commuting time.) If mortgage rates go up substantially, prices may level off but I do not see a "pop". The only time the housing market here was troubled was during the presidency of Jimmy "the putz" Carter when financing even at very high rates was hard to get. Many people who could afford those rates couldn't come up with the necessary 20% downpayment, Houses in my neighborhood stayed on the market longer, but prices remained fairly stable even then.
Quote: Remember in the late 90's when they said the era of business cycles was over because of the "new economy"?
There will never be a housing collapse because things are different this time. (sarcasm)
Seriously I remember all the people, many on this site that said there may be a slight hiccup in the nasdaq but it would be 5600 or 6000 by the end of the year 2000. I followed stocks back then pretty heavy and the same exuberence over making stupid money on homes today was the same exact exuberence I remember in 98-00 over the Dow.
That's what I did. My home in Va Beach nearly tripled in value over nine years (most of the increase over the last three years). We cashed in and bought a home 3 miles south of the state line in NC. Everything is dirt cheap down here. I work in the same place, and my commute is not that much more than what I was doing before. We're now debt free, and my wife can be a stay-at-home mom.
I think so. One of my "hobbies", is income real estate investment. In Hawthorne CA, (near LA), a seven unit apt. bldg.. was offered for $1m,395K with rents at only 1/2 the amount to crack the nut on a mortgage with 20% down. It's a bigger fool deal if I ever saw one.
Since the Omnibus Tax Act of 1986, such deals (loosing money for tax advantages) don't make any sense. It's time to hold cash, or notes with 1st. position and equity.
We got pressured to do an ARM (a *2* year arm), or an interest only, but decided to pay a bit more and take the 30 yr fixed. We also were told we should look at much nicer houses, like 250K...
People who are buying such expensive houses that were a few years ago half the price should have their heads examined..
Yes. Clintoon, Podesta, Brown, Rubin, Daley, et. al. Like you could say something and it would become true. Dickheads.
5.56mm
It probably won't "pop" or burst in 95% of the country. It very well may and probably will flatten off as Merrill Lynch predicts. Shaving a half point off GNP will hardly be disasterous. CHICKEN LITTLE WARNING.
Your "pizza delivery rule" has several holes in it. The most gaping being the bubble bursting in the pizza industry. Since everyone is on low-carb diets, you may have to have a back-up plan such as a fish delivery truck or Jenny Craig counselor.
Can you define "new" housing. I suspect it goes way beyond my normal definition, especially since there is very little space available for traditional new housing. In addition, can you offer the percentage of total housing that "new" housing represents.
Thanks.
:) Funny..
You should make up the $150 difference at tax time (interest deduction).
Not all markets are exhibiting bubble behavior. For example, Texas real estate has done little more than grow at the rate of inflation.
I remember the question being asked... how do you make money shipping a 40 pound bag of dog food (free UPS second day shipping!) at 40% off retail price... people would shrug their shoulders and note that the price of the stock was going up and would buy anyway.
It's kind of inconvenient to do the research now, perhaps later. However, "new housing" is basically defined as a new building. There are probably some loop holes in which you can take an older building, gut it and call it "new housing," but overall the commonsense definition applies.
However, I think I know where your confusion stems from -- to the outside eye, NYC looks like a finite amount of land into which you couldn't possibly cram another building. In reality NYC is constantly under construction. New buildings going up all the time to meet some new need. This is largely due to the amount of money available. Want to build a new hotel? Here, take this $300 million and buy a couple of 1970s era buildings, tear'em down and start building. It's a constant process of tearing down and building back up...
Thanks.
The house I bought 4 years ago has gained so much in value that if I sell it today for a reasonable price, I will get more back than I paid in mortgage payments.
Why would anybody pay any amount of rent, if they can live in a nice house and get paid doing it?
Not that I think this will last forever. But I've seen predictions of "bubble bursting" for years, while the So. Cal market has continued to climb into the stratosphere for decades with no end in sight.
Yeah, they had a 10% slump in the 90's, and it might happen again soon. But big deal. There's no way people will pay buyers to take a house when they've got a 95% mortgage. They'll either refuse to sell, or walk out and let it be repossessed. In Houston in the 80's, they had entire neighborhoods up for sale for years, and even the repossessed houses that sat empty for 5 years weren't sold for less than 90% of the original price.
One should never confuse Wall Street with Elm Street where the home owners have a mortgage to pay. Those houses WILL NOT drop in price like the stock market does. They may go flat, or gain only a little, but home prices will never seriously drop.
I think it would be interesting to see if the majority of "doom-sayers" are renters and if the majority of "no problemos" are home-owners.
If so, one group is involved in "wishful thinking", IMHO.
BTW, I'm an home-owner...
Because to some buying a house now that may drop a good deal in value, and pay mostly interest in the first couple of years is not a great idea. Then there are people who realize ARM's are very very evil little things and may not qualify for a straight up fixed interest mortgage for the amount of many hyper inflated homes..
I'd say both groups are involved in wishful thinking and both are due for some disappointments.
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