I met a couple of nitwits in the Cali that thought investing in real estate was in thier words "a sure thing." Let's see, a mortgage in itself is a form of leverage, with 10% down a 3% decrease in your house means a loss of 30%.... They were so confident that prices could NOT fall. Is there some "floor" that somebody has failed to tell me about? These are the same people who probably had money in tech circa 1999. Let it burn... I"ll be there to salvage the pieces...
Kin, Where do you live? Pigs can fly too........... I saw it on a Pink Floyd album cover. Not picking on you, but, get the sense you aren't from this area. The political establishment isn't all that keen on high rise apartments. Good luck to you, Cracked
Just saying what *I* would do. Hey, you could always sell some and keep some. Hate mistiming a peak, but I really hate missing out on easy money.
33' in my neighborhood. If anyone tried to change it, I know we would be out in force, we all love our panoramic views!
I'm very bullish on real estate for the long term, but the market really reminds me of the coin market when they first started slabbing coins back in the 1980s. "Slabbing" is grading and encapsulating by a third party grader. It allowed coins to be traded sight unseen for the first time ever, and did something wierd to the market. Prices exploded, and some coins went up 500% in a couple of years. During the price run, a lot of folks who didn't know anything about coins got into it, and a lot of people got burned buying junk coins that were overgraded and overhyped. What happened was that after slabbing was initiated, suddenly, the only "good" coins were slabbed coins, and there were less of them than unslabbed coins. Back then, they also used the argument "they ain't making any more of them". However, over time, so many coins were slabbed that the supply of slabbed coins met the demand and prices did drop. But not to where they started because inflation was also involved. Here is the similarity: Just like your local county commissioners can only approve condo designs at a given rate, the third party graders could only slab at a certain rate. The reality is, that more ocean front property can be created, by converting large lots with single family residences into multifamily. Heck, there is a bunch of "barely" developed coastline in the big bend area of Florida. Its getting built up, because the prices are high enough for the owners to sell so it can be re-developed. But it does take time. The county commissioners can only approve designs so fast. There are only so many surveyers, geotechnical engineers, structural engineers, etc. to work on them. And people want those condos now, while the interest rates are low! I don't think there will be a "crash" for most areas (the so called "flyover areas"), but I do think that in places where the demand is way ahead of supply, that the supply will eventually catch up. But I also believe that inflation will help cushion the fall somewhat, because the dollar has dropped so much, the prices of "things" need to be higher. I believe that the prices for some of the $800,000 condos that were $290,000 condos a couple years ago will drop back close to those prices because of the competition. It doesn't cost $800,000 to buy small pieces of subdivided land (though parent parcel land is more expensive) and build them. But our weaker dollar does mean that building costs and land costs should be higher, so the prices won't drop back to where they were. Now, that being said. Real estate investing, instead of speculation, with a long-term view, is a viable path to great wealth for the folks who know how to react to changing economic conditions. SM
http://money.cnn.com/pf/features/lists/topzipcodes/ "For that reason, the firm declined to give a forecast for individual zip codes in Los Angeles. "We are very uncertain about what will happen to home prices in Los Angeles this year," Stiff added. Miami's market, however, may still have room to grow. Home prices in the Miami-Fort Lauderdale metro have doubled over the last five years, and Fiserv CSW is forecasting that they will appreciate another 16.4 percent this year. "Unlike L.A., Miami has a higher ceiling [for price appreciation] because affordability is less of an issue," said Stiff."
========================= Many perhaps most RE investors, & RE investment books dont like raw land perhaps one of the several reasons I like to occasionaly buy a certain size & above, senior ELCubano. 25 year flat prices are unlikely, but a POSSIBLE scenerio; correction much more likely perhaps!!! Like to buy & sell , rather than'' buy & hold forever''& keep leverage levels conservative. I hope & trust your lakeland is in more demand than the 3 projects in our county ; last 12 years or more they regulary auction that stuff cheap, its not a good investment & to add to injury: condo like association makes you pay back fees on the forclosed stuff. Nothing new under the sun; and genrally the hotter the trend the greater the correction
in this case there is no leverage whatsoever...taxes are at 30-60 /property and according to recent sales it looks like i may be up 30-40%...even if the local market corrected...i think im still ok...the only thing that scares me is liquidity in a slumping market...peace
What if you get a 50% correction. Many veterans of real estate have told me that this can be expected. Especially in hot areas. Will you still be ok. WIll you really be ok paying money every month for years waiting for that investment to come back. Your best advice is to take some off the table, and then hold some. Remember Bulls make money, Bears make money, PIGS get slaughtered. EIther way, good luck to you! Mike