[2banana]

Real estate has never been cheaper in the US. It has never been more available in the US. It has never been more accessible by the rest of the world than right now. Roughly 30% of the potential buyers in the world for US Real Estate will come from Europe and the Middle East over the next ten years. Think they know something we've forgotten?

I throw a huge BS flag. Real Estate is STILL massively expensive. It needs to drop a minimum of another 25% to even get back to historical ranges. Europe and the ME are in their own soon to be popping RE bubbles. They ain't coming.

PS - what are historical norms?

1. 100 x monthly rent = cost of the house
2. 2.5-3.0 x yearly gross income = cost of the house
3. 40% (MAX) monthly take home pay should equal cost of monthly carrying costs of the house (PI, taxes, utilities, upkeep)

We are SO not there yet...

[griswold3]

http://www.rbauction.com/twincities/index.jsp

Attention Twin Cities
Absolute Auction!!
26 new homes for sale!
Good luck!

[fireforeffect]

1. 100 x monthly rent = cost of the house
2. 2.5-3.0 x yearly gross income = cost of the house
3. 40% (MAX) monthly take home pay should equal cost of monthly carrying costs of the house (PI, taxes, utilities, upkeep)

Used these when I bought, weirded out my search realtor.

Never have had trouble making a payment.

[misterrob]

Your numbers are out of whack. If you suppose that a 3 BR house with 2 baths in a nicer area is going to rent for $1,400 per month with a yard and some parking that house is supposed to be worth only $140K? If you can get $17K per year in cash from the place and pay out only $8.5K in mortgage and interest, not to mention getting depreciation benefits that reduce your taxable profit to only $5K, with even a 3% appreciation rate per year it’s a killer investment with 20% down on the property.

[NVDave]

In some regions of California, we’d have to see housing prices decline by 50% to reach a level of 2.8X household gross incomes.

I agree with your BS flag. Too many people simply haven’t crunched the numbers and they’re deluding themselves here. The housing run-up was fueled by rampant speculation and easy credit, and the easy credit is going away. It won’t be coming back.

[org.whodat]

It would need to drop much more than that just to get back to a normal growth amount, all the speculation and bad paper added fake value!

[underbyte]

“”” PS - what are historical norms?

1. 100 x monthly rent = cost of the house
2. 2.5-3.0 x yearly gross income = cost of the house
3. 40% (MAX) monthly take home pay should equal cost of monthly carrying costs of the house (PI, taxes, utilities, upkeep)”””

It’s never the price you pay, its the deal you make. You have to factor in the carrying cost. A 5% loan on 500k for the homeowner is pretty much the same as 10% loan on 250K.

Prices have not gone crazy if the homeowner is looking to how much do I pay per month? IMHO

I am not an optimist on the economy or housing market But the potential disaster of huge price drops seem a little overstated to me.