most people will continue to pay off their mortgages even when their home prices go lower. their monthly payments don't change if they've got a fixed mortgage which the vast majority have. ARM's and interest only's are still minority but seem to be clumped in certain geography like florida, the midwest, Nevada. if those communities lose value, then what happens.. new people come in and buy those homes cheaper and the process recycles. you see, not all americans are homeowners. there are millions who'd rather own but still rent. i fail to see how falling real estate prices will cause an economic catastrophe. in the late 80's, single home prices fell anywhere from 10%-40%. i don't recall people dumping their homes en masse to go rent or live in a trailer park. remember the tech bubble? the nasdaq went from 5000 to 1250, losing much of it's value. yet, america experienced one of the shortest recessions in history during that period.
that is the question? does everyone in the north east need a place in florida? Well right now they are coming in at what a thousand a day. Sarasota a bradenton is projected to be twice the size in 9 years. I am sure you may see similar influx into miami. Now for this fact no one seems to care about. Teh U.S. population is expected to increase by 33% by 2030 according to Arthur Nelson who wrote a report for brookings. 94 million people than in 2000. It was estimated that 60 million housing units need to be built because 20 million will be aging. USA today Dec. 13, 2004.
NY Magazine MAY 23 issue debates the NYC market www.nymetro.com -That Sinking Feeling- -The market for New York real estate in 2005 feels enough like the nasdaq circa 1999 to make a lot of people nervous. A veteran of the tech bust explains why falling prices, lamentably clear hindsight, and indignant legal recrimination could again be on the horizon.- -PLUS: Is your neighborhood on the bubble? A ranking of the most volatile spots. And expert advice on how to protect yourselfâand possibly even profitâfrom the teetering market.-
^^^^^^^^^^^^^^ There is some charted light on the situation, Lights; , long term downtrend in 30 year fixed rates, and most any trend eventually corrects , not bubbles.
if your willing to hold for 30yrs...im 100% positive you'll make money if you lookin for the 2 year fix....you may have a rude surprise thats all im saying PS..i still own my place and dont inted to sell it even though im up a ton in it d
if your willing to hold for 30yrs...im 100% positive you'll make money if you lookin for the 2 year fix....you may have a rude surprise thats all im saying PS..i still own my place and dont inted to sell it even though im up a ton in it d
sounds very reasonable...and like i said in some cases they will be forced to sell into an illiquid market...it may not be a national thing; but i have to agree with this poster as far as Miami is concerned....crazy i tell ya just crazy....
Thanks Brotha like i said..not tryin to make people angry just don t like innocent people losing money esp when CNBC hypes them into believing this is a safe investment
What are you talking about? I watch CNBC everyday and I find them to be very neutral on real estate. I don't see them hyping anything. They have guests who come on from both sides. Some of them may try to hype it up, while others may call it a bubble. Real estate is a rising financial sector. There is nothing wrong in reporting it.
OldTrader, I'll happily stipulate all of that but it still doesn't explain the divergence between rents and asset prices. All the factors you cite were just as true in 2000 as they are today. Yet, in the San Francisco Bay Area, rents have dropped ~30% and house prices have risen ~30% since the beginning of 2000. Incidentally, a similar divergence was observed in Japan prior to its real estate crash in the early 90s. Martin