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Outline of the 1980's housing cycle. we are in 1981


By toothfairy   Follow   Wed, 11 Jan 2012, 9:43am PST   5,673 views   61 comments   Watch (0)   Share   Quote   Permalink   Like (1)   Dislike (3)  

I found this interesting site outlining the 1980's housing cycle based on the headlines it looks like the point we're at now is about similar to 1981.

So you've still got some time...

http://njrereport.com/80sbubble.htm

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David Losh   befriend   ignore   Sun, 10 Mar 2013, 1:36am PST   Share   Quote   Like   Dislike     Comment 22

Bigsby says

don't attack him because he has a cleaning business.

Oh man, I have heard the same thing a hundred times over from my buddies in the Real Estate business.

I sold some properties before the crash when they were stilling pumping the market place. They told me I was nuts.

Then when I didn't jump back in and concentrated on our side business a lot of people called me stupid.

Come on, they still do, because today they are catching up from losses that they had.

My income has steadily risen.

As an example: we net $1300 per month per employee. We can add as many employees as we want, without a huge cash investment.

We don't advertise, I simply blog for business the way I do here.

Patrick.net is a great Real Estate site, and some of his ideas are very much on target. We service more individual home owners than Real Estate agents.

I think there is a shift away from Real Estate commissions, and more one on one Real Estate transactions. It was that way in the 1970s, and 1980s, more people did business direct as Principles Only, but we lost that in the rapid appreciation of the price of housing.

We'll see what happens, but there's no rush, Real Estate isn't going anywhere.

The Professor   befriend   ignore   Sun, 10 Mar 2013, 1:39am PST   Share   Quote   Like   Dislike     Comment 23

robertoaribas says

Though, in actual point of fact, this may be the only intelligent thing he has ever said: that I should sell my real estate investing techniques, rather than writing about them for free, only to suffer insults from him, callmecrazy, etc on here, who are too stupid or jealous to actually think.

We are not jealous, but we are amused. Nobody is buying your real estate advice, there is too much free advice on the Internet and it seems to me that most people selling "real estate investment techniques" are scambodians.

Having said that, you do seem to be doing OK with your purchases. What worked for YOU in phoenix may not be applicable elsewhere.

I know you have an exit plan if things go south, but what would you do if the market crashed so hard that you did not have a chance to sell before the market is flooded with cheap houses and rentals?

Bigsby   befriend   ignore   Sun, 10 Mar 2013, 1:51am PST   Share   Quote   Like   Dislike     Comment 24

David Losh says

As I pointed out our condo in Atlanta Georgia never recovered from the crash. We paid $60K back in 1984, but it sold for $30K last year. How does that figure into your analysis? It doesn't.

And why should it?

David Losh   befriend   ignore   Sun, 10 Mar 2013, 9:01am PDT   Share   Quote   Like   Dislike     Comment 25

Bigsby says

And why should it?

Exactly right!

Today we were discussing our acrage in Pinedale Wyoming. We have owned it forever, but I don't think it was wise to hold on during the crash, or then soon after.

I held because I thought fracking might boost the value of the mineral rights, but as we discussed today there are bigger players who own substantially more acrage that can play a waiting game.

I'm thinking there are other places I would put my money.

toothfairy   befriend   ignore   Sun, 10 Mar 2013, 9:48am PDT   Share   Quote   Like   Dislike     Comment 26

CameronCrazy says

David Losh says

Once again you are another sales person with hype.

You're wasting your time. His peers even started a thread on Zillow telling him to shut up (www.zillow.com/advice-thread/Roberto-Ribas/6491/) and was apparently telling people 2008 was the bottom.

toothfairy says

it's probably more like 2003 than 1981

People say it's more like 1991 (A False Glimmer Of Hope). But that's just good news for you, right? Less competitors to buy up all these cheap houses. If people would rather invest their money somewhere else, like the DOW which is at an all-time high, why try to sell so persistently these houses with prices that are about to skyrocket?

My point with this article is that housing prices go up and down (but mostly up). It's not like we haven't been through this before. So it's a bit naive to think oh, this time it's different and housing prices only go down.

thomaswong.1986   befriend   ignore   Sun, 10 Mar 2013, 10:29am PDT   Share   Quote   Like   Dislike     Comment 27

CameronCrazy says

Just like 1981. Except we don't have Reaganomics spurring economic growth but instead have Obamacare showing the downside of the Laffer Curve. And the personal savings rate is currently around 2% rather than 10%. Oh, and mortgage rates are at an all-time low, not high. Wait, how is this anything like 1981?

people keep forgetting this...

thomaswong.1986   befriend   ignore   Sun, 10 Mar 2013, 10:31am PDT   Share   Quote   Like   Dislike     Comment 28

toothfairy says

My point with this article is that housing prices go up and down (but mostly up).

no, adjusted for inflation home prices have been flat...
and every decade has been flat since 1945.

for SFBA there is plenty to go...

for SoFlorida they are back to 1975 prices...

Bigsby   befriend   ignore   Sun, 10 Mar 2013, 12:34pm PDT   Share   Quote   Like   Dislike     Comment 29

David Losh says

Bigsby says

And why should it?

Exactly right!

Eh? So you just posted it to demonstrate you were one of the very few people in the country who managed to sell a property in 2009 for less than you paid in 1984. Half the price in fact. OK.

toothfairy   befriend   ignore   Sun, 10 Mar 2013, 8:44pm PDT   Share   Quote   Like   Dislike     Comment 30

thomaswong.1986 says

toothfairy says

My point with this article is that housing prices go up and down (but mostly up).

no, adjusted for inflation home prices have been flat...

and every decade has been flat since 1945.

Maybe we are looking at different graphs then because the one you just posted shows prices going up.

David Losh   befriend   ignore   Mon, 11 Mar 2013, 12:26am PDT   Share   Quote   Like   Dislike     Comment 31

Bigsby says

Eh? So you just posted it to demonstrate you were one of the very few people

There were no buyers, number one, and the second is that the building had reached it's obsolescence.

That's not to mention the number of bank owned properties that have been selling at these prices. We did nothing to improve the property, so it was all income.

The point is we aren't one of a very few. The building could be torn down to make way for something bigger, and better.

There are many market places where this is the same. When you want to sell, you sell for what the market will bear. There is no magic in the idea the price of property always goes up.

At the time in 1984 this part of Atlanta was considered a technology hub for software development. Today it's kind of mortibund.

So when people say they bought in the 1980s and they have an equity, that depends on if the property gets sold. I don't see Atlanta coming back, do you?

David Losh   befriend   ignore   Mon, 11 Mar 2013, 1:54am PDT   Share   Quote   Like   Dislike     Comment 32

This is very simple. I don't see an upside to Atlanta Georgia, any more than I see an upside in owning property in Phoenix Arizona.

You followed the exact market timing plan that I had recommended since 2006, sell before the crash, and buy after the crash.

The problem is that the Real Estate market was never allowed to crash.

We got the tax credit, QE 1,2,3, and ended up with historically low interest rates. The banks got bailed out and are allowed to pursue more profits, cash reserves, all with very little risk. The Fed, and government seem very pleased with the housing recovery, but I don't see it as sustainable.

Now Atlanta Georgia in the 1980s was the home of Peach Tree Accounting. Back in the day that was a big deal. Today I don't see any economic viability to Atlanta so why hold on?

In the mean time, say in the past ten years, thousands of housing units were added to Atlanta, many have ended up in the hands of the bank. So I don't see prices rising there. I don't see rental potential there in Atlanta.

You're going to find many more people with the same idea. There are much easier ways to make a buck than being a land lord. I talk with Real Estate investors, who are older, who are looking to sell the properties, and put the money into something that will give greater returns, or safer returns.

Which reminds me, Real Estate is a 24/7 business. My side business was directly related to my Real Estate business, school teaching doesn't match that.

So you are either a full time Real Estate agent of not an agent at all.

You are one of thousands of people who are puffing the brilliance they had in the past seven years, but we are just getting started on this cycle.

Bigsby   befriend   ignore   Mon, 11 Mar 2013, 2:10am PDT   Share   Quote   Like   Dislike     Comment 33

David Losh says

So when people say they bought in the 1980s and they have an equity, that depends on if the property gets sold. I don't see Atlanta coming back, do you?

I have no knowledge of Atlanta, but if I'd bought a property back in '84 pretty much anywhere in the world, I'd be more than a bit surprised that its value had halved 25 years later. Atlanta doesn't create the images of Detroit, for example.

Bigsby   befriend   ignore   Mon, 11 Mar 2013, 2:14am PDT   Share   Quote   Like   Dislike     Comment 34

David Losh says

You followed the exact market timing plan that I had recommended since 2006, sell before the crash, and buy after the crash.

That's not exactly a novel recommendation in all fairness.

Bigsby   befriend   ignore   Mon, 11 Mar 2013, 2:17am PDT   Share   Quote   Like   Dislike     Comment 35

David Losh says

I talk with Real Estate investors, who are older, who are looking to sell the properties, and put the money into something that will give greater returns, or safer returns.

What do they have in mind? The stock market looks like a far from safe proposition at the minute.

David Losh   befriend   ignore   Mon, 11 Mar 2013, 2:33am PDT   Share   Quote   Like   Dislike     Comment 36

Bigsby says

I'd be more than a bit surprised that its value had halved 25 years later

The problem there is the bank foreclosures.

In 1980 Atlanta was booming, it lost financial momentum, then over built into the 2000 mortgage backed securities scheme.

Alright, to be fair we could have changed the carpet, painted, redone the kitchen, and bath for about $10K, but still the market place is a crap shoot.

Bigsby says

That's not exactly a novel recommendation in all fairness.

Exactly right.

David Losh   befriend   ignore   Mon, 11 Mar 2013, 2:58am PDT   Share   Quote   Like   Dislike     Comment 37

Bigsby says

What do they have in mind? The stock market looks like a far from safe proposition at the minute.

The video in this article talks about entrepreneurship. The article is about Blackstone, the biggest holder of residential Real Estate.

http://www.cnbc.com/id/100542594

In 1986 I had a restaurant listed for sale no one wanted, so I bought it. For three years I lived that place, it bacame one of the top ten places to be in Seattle. I sold it for many, many times more than I paid for it, and had good daily income.

People need more income, and less expenses today. I think more people are looking for good paying jobs than a high priced rental.

I see under utilized businesses every day, but that is just me.

As for my investor clients they would sell to go into safer havens, like bonds, or dividend income. I would encourage them to invest in small business, but they just want a simplier life.

No more renters calling, no more repairs, no more evictions from people who lost a job, got divorced, or went crazy.

The concensus is that when rents go down, they will sell.

David Losh   befriend   ignore   Mon, 11 Mar 2013, 4:22am PDT   Share   Quote   Like   Dislike     Comment 38

robertoaribas says

The last post is so idiotic, it doesn't even warrant a response.

Then why bother yourself?

It's because what I do is contrary to the very simplistic view you have about Real Estate.

Phoenix is the third cheapest palce to buy Real Estate in a metropolitan areas in the United States. It is just ahead of Detroit, then Atlanta, then there is Phoenix Arizona.

Detroit done, Atlanta done, how far is Phoenix away from being done?

Bigsby   befriend   ignore   Mon, 11 Mar 2013, 4:42am PDT   Share   Quote   Like   Dislike     Comment 39

robertoaribas says

Yeah... The twit who lost money on 20 years of investing, and cleans toilets and carpets day to day, calls the math professor who made over a million dollars and climbing in real estate simplistic... My investments pull in 6k in net rental income, plus pay off 1k in mortgage debt each month. How many toilets do you scrub, to match that?

Do you have a winning smile?

David Losh   befriend   ignore   Mon, 11 Mar 2013, 4:48am PDT   Share   Quote   Like   Dislike     Comment 40

robertoaribas says

The twit who lost money on 20 years of investing,

I made money, why do you think I didn't? Cutting losses on a property paid for many times over is a pretty simple concept.

robertoaribas says

calls the math professor who made over a million dollars and climbing in real estate simplistic...

I thought you were a big time Real Estate agent. You sure talk that way.

robertoaribas says

My investments pull in 6k in net rental income, plus pay off 1k in mortgage debt each month. How many toilets do you scrub, to match that?

Like I said, I make more money than you do.

Look it, I just came back here to post this chart, and found you whining, again:

http://www.bankrate.com/finance/real-estate/total-monthly-homeownership-costs-by-city.aspx?ec_id=cmctre_02_comm_RE_image_headline

You just seem so bitter about your lot in life. You made a million dollars, live it, breath it, but don't try to lord over the people here. Save that for your renters.

David Losh   befriend   ignore   Mon, 11 Mar 2013, 4:50am PDT   Share   Quote   Like   Dislike     Comment 41

Bigsby says

Do you have a winning smile?

I do have a winning smile, and firm handshake, that is all it takes.

Well that, a closet full of suits, and my collection of Cole Haans.

David Losh   befriend   ignore   Mon, 11 Mar 2013, 5:07am PDT   Share   Quote   Like   Dislike     Comment 42

robertoaribas says

that until just recently, it was you, your wife and your kids....

Now you're resorting to lies about me to make yourself feel better.

So you are a college professor, and part time Real Estate Investor.

I take it this is your first cycle so you really only have this experience to share.

Being a college professor with limited Real Estate experience gives you what insight?

You bring your simplistic view of price versus rent like it works for all market places, when I've shown you repeatedly it doesn't.

If you have a million dollars in equity I would cash that out so you can keep it, but where will you put your money next?

Mobi   befriend   ignore   Mon, 11 Mar 2013, 5:20am PDT   Share   Quote   Like   Dislike     Comment 43

David Losh says

robertoaribas says



that until just recently, it was you, your wife and your kids....


Now you're resorting to lies about me to make yourself feel better.


So you are a college professor, and part time Real Estate Investor.


I take it this is your first cycle so you really only have this experience to share.


Being a college professor with limited Real Estate experience gives you what insight?


You bring your simplistic view of price versus rent like it works for all market places, when I've shown you repeatedly it doesn't.


If you have a million dollars in equity I would cash that out so you can keep it, but where will you put your money next?

I don't get this. One is a landlord from Pheonix and the other is a small cleaning company owner in Seattle and they are arguing who has a better business? It's like comparing apples to oranges. Power of the internet.

It's clear to me Robert could care less about cleaning business since he has a daytime job and David does not want to be a landlord since he does not want to deal with tenants. So, what's the problem here? Robert may generalize it a bit more but a sensible person should understand real estate is highly location dependent. He did not claim his business model is the best among all.

Patrick, would you stop a dog fight like this? We all like to argue on internet but this is a bit over IMO.

David Losh   befriend   ignore   Mon, 11 Mar 2013, 5:27am PDT   Share   Quote   Like   Dislike     Comment 44

robertoaribas says

I have 17 years at this, and sold my properties in 2005. Unlike you, I saw the bubble coming, took my profits, waited out the crash, and bought more...

Well, if you found me online you know I did sell, but didn't buy, for all the reasons I outlined here, and everywhere.

There are reasons why you can't sell everything when you want. It depends on the market you sell into.

So your million dollars today will be worth what it sells for in a future market. What does your crystal ball say about that?

The fact still remains the Market place in Atlanta did go steadily down. I see you over giving your same tired advice about Detroit. How about that Detroit?

The Real Estate market is screwed up, manipulated, propped up.

So I don't see a comparison to the 1980s. In the 1980s there was a lot of upside potential in the economy. PCs, software, and the technology revolution were all on the horizon.

That was the point about the Atlanta property. In the 1980s it was in the hub of software development, before any teen ager on the planet could write code. What is it today? Nothing.

Real Estate markets are different all over the country, and your one size fits all approach is childish.

David Losh   befriend   ignore   Mon, 11 Mar 2013, 5:34am PDT   Share   Quote   Like   Dislike     Comment 45

Mobi says

Power of the internet.

I'm sorry, but that is the point. This is all internet related.

I blog for business, and maintain a dozen, or so sites.

My business depends on internet presence which, you're right, should be my work today.

Mobi says

Patrick, would you stop a dog fight like this? We all like to argue on internet but this is a bit over IMO.

Once again, my fault no one elses. I made the mistake of visiting Robertos forums before I realized they were his. I mean I just read the comments, and the avatar didn't register.

My fault, sorry.

Bap33   befriend   ignore   Mon, 11 Mar 2013, 2:55pm PDT   Share   Quote   Like (1)   Dislike     Comment 46

rob,
renters ability to pay higher rent is not fixed, is it?

thomaswong.1986   befriend   ignore   Mon, 11 Mar 2013, 3:27pm PDT   Share   Quote   Like   Dislike     Comment 47

robertoaribas says

Robert Shiller is DEAD WRONG when he quotes his famous "homes aren't a good investment, they only rise with inflation" quote. Really? if my home values and rents all rise with inflation over the next 10 years, I make an utter fortune.

from a classical investment POV .. RS is right since for many if RE is illiquid and extended time to sell. I can buy/sell a stock or bond on a moments notice.

Home as investment is too concentrated within its own economies... stock portfolios can be diversified across industries and locations. Your home is stuck in your location no matter how desirable or not.

Tax benefits favor securities.. can you take a loss provision on sale of residence. No!

God forbid you get a storm or earthquake wipes out your home.

You get the general picture...

thomaswong.1986   befriend   ignore   Mon, 11 Mar 2013, 3:31pm PDT   Share   Quote   Like   Dislike     Comment 48

robertoaribas says

My rent grows at twice the inflation rated, since half the expenses are fixed mortgage. the home value goes up at 2.5% a year, while the mortgage debt drops at $12,000 a year.

see you on midnight RE infomercial....