housing bubble?
Anoop Ghanwani
I'll be living in the same area long term -- I might,
but I don't know for sure. I live in the Sacramento area.
Out here, new construction seems to be going up like
5% every 3 months. The longer I wait, the more likely
things will get so expensive that I won't be able to
afford a house (at least not comfortably...it's already
somewhat of a stretch when you figure in property taxes
and maintenance costs).
Does it make sense to buy just because the prices are
escalating and I could get "priced out"? The total
cost -- mortgage + property tax + Mello-Roose bond +
estimated maintenance -- is already about twice what I
pay in rent for a 1 BR apt. I feel it's expensive and
there might be a correction coming, but if I'm wrong,
I could have lost the opportunity to own a house.
Any insights?
Anoop
Nashville Pete
rates and housing prices over time and 2. Housing prices and mortgage
interest rates.
Determine the situation in your area and decide. Frankly I sold my house
last year with mortgage rates at recent historic lows and apartment
rental/home ownership differentials in my area the greatest in 40 years and
rental rates continuing to drop.
Here, home prices have increased a bit but time on market has also increased
and high end sales are decreasing. In the event of a 3% increase in home
mortgage rates, say from 5 1/2 to 8 1/2, existing home prices would have to
drop 25% to keep monthly payments the same. Is this possible? Well, the
dollar has dropped 32% against the Euro in the last 6 months and the NASDAQ
has dropped 57% from it's 2000 high even after a strong 2003 recovery.
"Anoop Ghanwani" <an...@alumni.duke.edu> wrote in message
news:50bde0e6.04022...@posting.google.com...
Anoop Ghanwani
The rents have been steady at least for the last 1 year
that I have been around here, and there seems to be more
supply than demand at this point.
Can you point me to any of the studies that you mention?
I would assume if house prices start to drop, rents will
go up because it will mean that more people are choosing
to rent, assuming people aren't moving out of the area.
Anoop
"Nashville Pete" <poremsk...@comcast.net> wrote in message news:<_9OdnRuctvE...@comcast.com>...
Nashville Pete
"Anoop Ghanwani" <an...@alumni.duke.edu> wrote in message
news:50bde0e6.04022...@posting.google.com...
>
> The rents have been steady at least for the last 1 year
> that I have been around here, and there seems to be more
> supply than demand at this point.
>
> Can you point me to any of the studies that you mention?
> I would assume if house prices start to drop, rents will
> go up because it will mean that more people are choosing
> to rent, assuming people aren't moving out of the area.
>
> Anoop
>
differential over time. On a National basis this difference is the greatest
it has been in many decades. You can find studies and links to studies in
the website below.
Nashville Pete
> news:50bde0e6.04022...@posting.google.com...
> > Thanks for the response.
> >
> > The rents have been steady at least for the last 1 year
> > that I have been around here, and there seems to be more
> > supply than demand at this point.
> >
> > Can you point me to any of the studies that you mention?
http://www.cepr.net/publications/Harvard_Housing_Bubble.htm
Anoop Ghanwani
Thanks for the pointer. It makes for an interesting read.
Anoop
Note to Moderator: My posts are still not showing up on google
groups even though the responses do. I'm not using X-no-archive
or any such settings in my messages.
Nona dayo
Ghanwani) wrote:
I can offer one advice if you plan to purchase. Don't buy brand new
house outside of metro area. Buy the worst and cheapest house in the
best established (i.e highest appreciation area) neighborhood and as
time goes by fix it up. When you purchase a brand new house in the
outskirts you will be competing with newer developments continuously
going up if you decide to sell.
Nona
T
"Anoop Ghanwani" <an...@alumni.duke.edu> wrote in message
news:50bde0e6.04022...@posting.google.com...
>
>
years ago, and of course all that's happened is home prices keep going up. I
was in somewhat the same situation as you are, here in the city where I live
now in another state. It took ALL my resources to get this house and I was
concerned that things would be tight for a while. But I also reasoned that
if I waited until I was ready to retire to buy this place, it would be worth
a million dollars by then, and I couldn't really afford NOT to buy now. I've
been in this house for 2 years and it's made me 100K in equity so my
instincts were right. Sacramento real estate is still insane, I know people
there who bought houses 5 years ago for 225K that are now worth close to
650K. If you buy in a decent neighborhood, a house that's in good shape and
you can beat up the realtor and lender a little on their fees, you should do
all right. Everybody is broke for the first 6 months after they buy a house.
There's furniture, appliances, repairs, changes to the place you want,
etc.etc. and everyone goes through that. Whatever work you can do on the
place yourself will save you $$$ over hiring a contractor or handyman. Just
make sure you don't overbuy the house to the point of getting squeezed for
everyday things, but be prepared for a tight budget for a while. In the
meantime, every year you stay in the house is making you money in equity.
As far as the bubble, I expected it to burst long ago but I was wrong like
everyone else. There seems no end in sight, as long as people keep paying
the crazy prices they do. And as bad as the CA economy is, somehow people
keep coming up with the resources to pay the better part of a million
dollars for an ordinary house. Beats me, but there it is.
Good Luck
T
Doug
TTRoberts
<< <i>They are not making any more land.</i> >>
Actually, that depends on just where you live. For example, on the island of
Hawaii more land has been made. . . . and that's not the only place. ;-)