The bad news is that if the "animal spirits" return to the real estate market (and they have in certain markets), at some point you lose the appeal and will have to pay the higher taxes as the assessor and taxing board are very eager to use the newer comps to extract more money out of your pocket. Some counties/states make no pretense about needing more tax revenue..they don't even care that properties are still selling more than 30-40% off peak value, they just change the multiplier and voila, your property taxes could be higher than they were at peak 2006-07 values, even while your property is worth significantly less. (Regarding the need for a lawyer...there are definitely some instances where if you go the "pro se" route, the judges will really give you a rough time. I'm sure they view it as a protected racket and want to discourage individuals from representing themselves as they are more than likely on friendly terms with the most prominent lawyers that do property tax appeals. If they intimidate enough self-represented homeowners, eventually they'll seek out their attorney buddies.)
1) True, but with stocks you dont get 5x to 20x leverage, plus stocks go down in value alot more often than real estate does. 2)Fed will not raise rates until we inflate out of this mess. 3) Thats what property managers are for. 4) you don't have to pay a 6% transaction fee. You can sell yourself. 5)Unlike stocks people do not HAVE to own them. Everyone HAS to have a place to live. 6) You sell as soon as you get wind of the largest employer leaving an area then. Be the first one out the exits if you are scared. True there are some risks with real estate, but there are greater risks with stocks. Bear sterns was international and lost 98% of its value in 2 days. You never see that type of volatility with real estate. More people have made their millions with real estate than with stocks. (even with the 6% realtor fees.)
What burned a lot of people was ignoring the charts and buying homes in the middle of nowhere when prices peaked because thier neighbor bought a home. Location location location is key. Just buying property anywhere at any prices is dumb. There were entire neighborhoods of cookie cutter mcmansions built in the middle of nowhere selling at insane prices just to fleece the dumb money during the bubble. neighborhoods for the sole purpose of attracting investors, and these places had no intrinsic value.
they would have been ok if they hadn't lost their jobs. No matter how high they bought, no matter how bad the mortgage was, no matter how stupid the neghborhood was, somehow they could have hung on if they just hadn't lost their sole source of income. That started a chain reaction that affected all of us. Big difference from a neighborheood where everybody is working and spending almost everything on their mortgage, with nothing left over, and a neighborhood full of vacant houses owned by the bank.
Would they have been ok? How did they expect a strawberry picker who makes $300 per week(and thats seasonal work!) to pay on a $720,000 home? http://www.sfgate.com/entertainment...the-emerging-face-of-the-subprime-2565428.php
whatever happened to the old rule 25% of your income for the mortgage? I agree that was definately predetory lending although the buyers were certainly not without blame didn't realize it got that bad
the US government was putting pressure on banks to extend loans to minorities in order to avoid discrimination charges. ___________ inflation will make these buyers look like real estate geniuses. with low interest rates you would be an idiot not to borrow if you can. all over the world people are buying property. http://www.moneycontrol.com/news/wi...ermans-best-friend-this-christmas_797790.html of course if you feel that we are going into the dark ages then you shouldn't buy.
+ 7) Prices are dependent on local property taxes. In the coming years, unless FED monetizes the dollar to extinction (depends on the military's enforcement of petro-reserve status, perhaps), I can't see how rates and taxes won't be going up.
The "strawberry picker," in the above article, obtained their mortgage from New Century Mortgage. They were not subject to the CRA, thus the govt did not force or put pressure on New Century or other similar subprime brokers to make mortgages. The CRA only applies to deposit taking institutions.