patrick.net

LOL !
How many people had the same idea about making
a million from the Tech Bubble and retire.
How did that materialise?

Consequences of being wrong are serious. If housing
crashes and the amount you owe becomes much greater than
the Curent Market Value of the house, the renter is way better
off by having saved his money in the bank.

Yep some did, but prolly not enough to retire and move to
Florida I guess. And when housing crashes, they will be the
ones who will either be left with mortgages several hundred
thousands more than the Actual Market Price of the house.
Or just see a chunk of their dot com wealth disappear in the
housing bust.

And yes, the Smart ones actually make money from
an opportunity.

*Warren Buffet just sold his CA house*

I am not gonna need a lot of patience, just a few more months, or may be
till the end of the year.

The process has already begun in a few markets.
Las Vegas is stalled at around 285K Median for over 6 months. The year-over-year appreciation is now under 25% , after setting a record
of 52% appreciation in 2004.
The smarter one's are getting out, before the panic of -ve/flat year-over-year appreciation hits the masses, and the market crashes.

Las Vegas Business Press

Similar indications from San Diego and NE.

Foreclosures are increasing in the not so hot markets of Denver, Texas, FL ( not South FL, the rest of the state).

But you sure are gonna need a lot of patience for decades to keep paying
for a house, which after all was'nt really that much.
Not to mention a lot of *money*.

To make things worse once the Bay Area Housing Crashes, companies may reduce salaries, as high home prices is often the justification given for high salaries in the Bay Area.

Good Luck to you as well !!

Just some thoughts from a hotspot on the East Coast. I decided to move 1 year early because the housing prices in the DC area are obscene.
We moved in in 2000 and paid 320. We are closing in 9 days (God willing) for 685.

You don't need a weatherman to know which way the wind blows.

I decided to move a year early and avoid the jam at the door when I heard the following:

Equivalent house down the street sold for 650.
9 out of 10 buyers in Fairfax county are buying with interest only loans.

I heard enough and decided I could much more easily live getting out 400 feet from the summit rather than well down the mountain on the other side.

The best part? the market in CT that I'm moving to is stagnant. I've been following 15 houses, and in 3 weeks only one has gone under contract. The REALTOR TM in CT told me it was a seller's market there. Yeah, thanks for the hand job, but no thanks. You want a seller's market? The bid on our house came in on day 1, buyer waived inspection and financing contigencies, and we got a free two month rent back. Now that's a seller's market.

Anyway, even if the market goes up another 20% this year and I end up losing out on 140 grand, I'll live with that.

All these arguments aside, where has our fearless host been these last few days? Patrick has not posted anything new since last week. Did he throw in the towel and buy this weekend??

I'm here. Just went camping for a few days and now I have 98 emails to answer.

I won't buy until prices are reasonable compared to renting.

Patrick

MONTHLY HOUSING STARTS (2001 - CURRENT)

Check out the above link to get a sense of what the home builders themselves are planning.

A drop of 18% from Feb to March. I think the builders see the crash coming in a few months and are adjusting the supply accordingly.
If March to April drop is just as dramatic, it should only confirm the
bubble busting sooner than later.

The Oct to Nov drop, I think represents a caution when Las Vegas
cracked a bit and appreciation stopped, stalling the market at 285K.

Population growth rate has been just under 1% , but the houses
have been increasing at the rate of over 1.5%.

Where are we gonna find all the people to live in these new houses
and all the high rise condos that have been built?

Re this article posted above: http://money.cnn.com/2005/05/12/real_estate/re2005_100markets_0506/index.htm

These people are still very bullish on the Bay Area. However, these same people also predict a Zero Percent growth for Salt Lake City for the coming year and that will NOT be happening. Salt Lake market bottomed in 2004, has gained significatn strength, and is already seeing double digit percentage increases compared to last year - the biggest increases in at least 7-8 years. This alone makes me think this research company has its vision firmly set on the rearview mirror and shoots its credibility.

Here is an example of how housing prices can go down. The person who owned my condo before me (in Los Angeles) purchased in 1991 for $250K. He had a 30-year fixed mortgage, but he put down a low down payment so after 6 years he had barely paid off any principal. By early 1997, due to an illness, he had to sell. But now his property was worth much less. I put an offer in at $155K and he accepted it, but the bank would not accept the 'short sale' (they would eat up way over $50K in loss) so he walked away and the home went into foreclosure. I waited and bought it 7 months later from Fannie Mae for $165K. I remember staying up the night I put in the offer worrying that I had paid too much because the housing market was so bad. But that was right when prices started to go up and I made out well when I sold in 2003...just by luck, really.

Hey kc, I agree, except about 2nd homes that are bought for non-invesment purposes.

I don't see demand, per se, as the main issue. I see interest rates as the main issue. Once interest rates go up, it will lower the number of people who can afford the higher prices.

East Bay. Good point. The second home is like the new car - the first can be sold and the second can be deferred in times of need.

P, I DID CLOSE~ Whoop whoop whoop.

You should have seen the face of the closing attorney when she asked me in which form I would like the proceeds, all ~400k of it. I said, with a straight face, "cash."

Anyway, my life just changed. In 1.5 months I will occupy a house I own outright and the focus will shift from monthly bill payment, inlcuding 2500 for the house, to finishing the kids' college funds. The total tax+insurance will be less than about 800 per month. If all goes well, I'll retire in 4 years when I'm 40 with all kids tuition set aside. My wife, who is younger than me, gets her degree in December and she'll start working full time. When I retire, she'll keep working to pay for our retirement.

Not too shaby for a guy who, at one point, didn't get his first college degree and was working 11 years ago at a textile mill making 7.50 (yes, dollars) per hour.

Of course, I would be remiss in my obligation as a truist is I didn't mention that I have been much more lucky than good. In the end I did profit from this credit bubble. In return, I will try to help those in need if a major depression comes along. If it doesn't, and we just have a recession or cycles of recession, then I hope everybody is paying attention and learns from the mistakes of the last 10 years.

Congrats DC!! I don't know why more people aren't doing what you are doing? I don't know where this keeping up with the Joneses mentality comes from...everyone wants bigger and better. I know I don't want a big house...too much to clean and keep up! I have already told my husband I never want a house more than 2000 sf and 1500 is fine by me. And I would gladly move out to the middle of nowhere if we found jobs there. I had many years enjoying the city life in LA but now my happiness is being with my family and I can do that anywhere. I do want to be somewhere with a decent public school system though.

ptiemann says

Owners who made 300,000 or 600,000 appreciation are happy though the gain is only on paper. Unless the owner of such a highly valuable place wants to move out of the area, the gain is not worth much beyond the ability to borrow more money.
Let's say that Jack bought a place for $140k and now it's worth $800k. Maybe he owes $80k on the place. What's the big deal.

When you say Jack bought the place for $140k (does it include the interest and property tax/insurance as well).