Or White Water?
Posted on 08/20/2008 6:30:46 PM PDT by SeekAndFind
>>>I bought my first house in 1968 for $37,500, and five years later I sold it for $43,000. It took 6 months to sell, which wasn’t unusual at the time, and the profit was about right. I bought a bigger house for $44,000 and 3 years later I sold it for $72,000 over a weekend.<<<
that was then, this is now.
and folks are not as excited.
“I bought my first house in 1968”
I wonder if he has any older friends or relatives that bought a house in 1929 that he could go talk to?
1.The baby boomers are done buying houses to raise their kids in.
2. Part of the recent runup in prices was due to bubble behavior in lending, and due to Mexican illegals buying houses on no-doc lending, and people buying houses on spec. Those days are gone, and now there is a surplus of housing as laws are tightened on illegals (e.g. Oklahoma, Arizona) and as limited sanity returns to lending practices.
There is a glut of houses on the market and most are over priced.
There is a global shortage of silver bullion in the markets and it is selling for dirt cheap.
I am putting my money into physical silver bullion. One of these days maybe I will get a house for only one silver ounce.
and it isn’t a great return after taxes, improvements and inflation.
Illegal Mexicans, anybody with a pulse and even some documented cases of people without pulses.
Loan brokers generated worthless mortgages to SELL to gullible Wall Street investors.
The worthless mortgages included not only Mexican illegals but solid middle class folks with good middle class jobs that bought $400,000 houses with $800,000 of borrowed money that they could never afford to repay once the "interest only" grace period expired.
Three years ago, FR real estate threads were flooded with such people.
They all claimed that the worst that could happen was that, once the "interest only" grace period expired and their income did not magically jump to make principal PLUS interest payments possible, they would simply sell the house for a cool $1 million and laugh all the way to the bank.
IF they have children they could live in mom and dad's house or live in all the houses about to empty out by the dying boomers and elderly.
Once the prices come down to a more reasonable level, won't the following people start buying ? A) Legal Immigrants B) Those who have been saving to buy a house C) Foreigners with cash
Not nearly enough of those to keep the market rising.
It is difficult to get excited when a house in some places means $3000 a month payments for 30 years.
My youngest just turned 21 today. I have plenty of "house". It would be nice if two of the "kids" would vacate for their own digs.
If you think the return is bad now, just consider that BHO wants to levy a 28% federal sales tax on the "profit" from selling your home. It doesn't matter whether that "profit" was simply your home price keeping up with inflation as the fed endlessly prints more money.
I’m going to be investing in a new start-up company which specializes in manufacturing 8-track tape players. They’re gonna make a BIG comeback!!
Yes, technology is cyclical!
that’s a lot of money!
for the return, as you say.
I believe the correction is just in phase 1. Now some people with more money than brains and realtors always looking for their next 6% payday are claiming the bottom is in and its never been a better time to buy.
The bottom is not in. Not even close. Its going to take years for prices to correct where they should be with the monsterous glut of homes on the nationwide market.
If it keeps them out of bankruptcy, why not rent?
If you can only afford the price of a house by stretching your budget to barely make "interest only" payments, you are FAR worse off than you would be renting. Renting at a reasonable price is not a disaster waiting to happen like buying at a price you can only afford with gimmick loans.
If you want to buy my San Diego, CA rental house at current Bubble prices and pay three times more in mortgage payments than you would pay me in rent, let's make deal!!
Once the prices come down to a more reasonable level, won't the following people start buying ?
True.
The problem is that you are advising people to buy those houses BEFORE they have come back down to the pre-Lending Bubble insanity prices. Those prices were prices that people could afford paying principal PLUS interest without going bankrupt.
You are advising people to catch a falling knife.
So...give them their walking papers...
Let's just say that telling you exactly how the real estate market will go, is "above my pay grade" to coin a phrase.
Look at this chart (numbers are from 2000): 
See the 2 longest segments for male and female? That is the baby boomers (roughly). Now add 8 years to each range, and that gives you an idea of how old the largest 2 segments of the population are.
On the point you raise about kids needing to buy houses, the answer is that those "kids" are not having children as early, nor in as great a number, as the boomers. So they need less house.
Your point about houses coming down to a reasonable level is accurate, however, what I pointed out was that some houses were bought on spec, that is, the person buying the house, already had a house to live in and bought a second one, hoping to hold it for only a brief period of time before selling it at a profit. That creates an excess of houses for people to actually live in.
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