Back in the early 1990s...a work associate of mine went off to Florida and got high-end contractor work (IT-related). He found this great house near a waterway...three-car garage...dock behind the house...small pool...and spent around $160,000 for it. For roughly eight years, he lived there and did well....but the contract deal was coming to an end, so he found work elsewhere. He rented the house out for four years....then decided to sell it when the renters left. The real estate people valued other houses around him and finally advertised his place at roughly $900,000.
When he was telling me this whole story...I didn’t have a lot of belief in it...buying a house and a dozen years later...it goes up by $750k? He showed me pictures and I just shook my head. The house sold in two months and he was very friendly with the new buyer. Around 2008 as the market collapsed, the new owner was putting it up for sale to move on (bad job market). This guy, a year prior, had anticipated the house might sell for $1.2 million. In the bad market....the real estate people told him to expect no more than half-a-million. Huge loss going on, if it sold. So the new owner found someone to rent it to and simply held on to wait this out. Four years later, he was still holding on. And I imagine that even today....he is still renting it out.
I bought my home before the bubble (thankfully), and would never have paid the prices that were being asked during the bubble (basically twice as much). In fact, when we bought our home, we were about to give up and look for an apartment; this area (northern NJ) is too unstable to assume you could make those high mortgage payments for 30 years (on top of the high property taxes, which also kills the housing market here) - and events have unfolded that have borne this out. We’ve lost a lot of good jobs in the last twenty years (which won’t be coming back), our taxes are still very high, and there has been no housing recovery here. In fact, the area is being reduced to Third World status as 1) immigrants, often illegal, are trafficked here to keep our schools and housing full, and 2) many single family homes are being illegally modified into multi-family rental units since Americans don’t need so much space anymore (but can’t sell the homes) and need help paying the property taxes. In the past, when such modifications were made, towns would force the removal of the additional apartments; now they let them stand and increase the taxes on such properties.