One additional comment on my part. I've started seeing various predictions for the local housing market in 2006, and I always chuckle when I see the quotes from real estate agents and mortgage brokers. The same people that arguably have the most to lose in a housing downturn are consistently trumpeting that the housing market will continue booming for years to come. Now I live in Alberta, Canada, and things have a bit more justification due to our booming economy, which is due in turn to the massive recent investments in our oilsands projects; but people seem to forget that if oil prices start to turn south, those same oil companies can just as easily reduce or cancel their construction projects.
Not to nitpick, but I said Real Estate, not "houses" (don't forget about commercial property, development, etc.) + it was just something I read and that's if I even remember it right...
Fair enough. I haven't seen any stats regarding commercial real estate, but I would generally doubt that it would be all that much different than the housing market.
Next comes lawsuits over misrepresentation of value. I know that is BS but just watch it happen. John
Homeownership in SoCal is overated. The state is in a huge financial mess. The Terminator has given up and will be raising taxs. By the time you pay $20k in proprerty taxs, $200 a month upkeep on yard, $800 a month on heating a pool and the house, and insurance then it's not worth it to own. I like renting for now. If this makret goes down 50% then I may buy something. It just depends on what shape the state is in and if San Deigo goes bankrupt over pension deal etc John
No way. I just rented two of my properties faster than I've ever been able to for the last 3 years. When rates went down, prices on houses went up, but the overall payments for the buyers still went lower, so more people bought and less rented. Now its going the other way...even though rates are going up, prices are not falling, or falling fast enough...so the typical house payment is now higher than it was, making renting more attractive. I monitor the average rental rate for townhouses as advertised in the local classified ads every single week. I can assure you that they are in an upward trend...at least here in Tallahassee, FL. SM
Yes. This is true. Rents will attempt to peg up since as rates rise landlords know that fewer people can opt out of renting and thus with a hostage customer they can raise rates. Still, the extra rent will not offset a potential loss on a housing correction, and 10 year lockin on residential property if you dont plan (or want) to hold the investment for that time ...... and I might add that for most speculators in So. Ca. they will not be able to raise rents far enough nor fast enough to make the properties positive as rentals, hence the forthcoming skaeout if a correction occurs ...
Actually, if you look at the price appreciation over the last 8 or nine years in So. Ca. you would see that prices tripled (or even quintupled ) in many areas. This was coming off of a 20-30% correction during the early 1990's. The direction of the price spike has in my opinion far overreached the equilibrium point. 1995 pricing was much closer to what the economy of So. Ca. can support. If you go by that analysis - even adjusting for inflation and average earnings growth - we would need much more than a 30% correction to get housing prices back in line with average earnings.....
when people doubled 30% wont hurt them and 30% is pretty extreme. still there will be somewhat of a reverse wealth effect when their house/condo isnt going up every day. Sell SBUX?
People that intend to live in their home or bought for the purpose of long term holds near the bottom of the previous cycle will be OK but people that bought on speculation over the last 4 years or so may have some hard decisions to make .....