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Re: The sky is falling
Old 04-17-2004, 03:35 PM   #21
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Re: The sky is falling

Sac RE is definitely due for a bubble pop.

In the 80's through 1989 there was a rush around the area...lot of people running around looking at empty lots with their checkbooks in hand. Lots of 800-1000 acre parcels the farmer owners "would never sell because they'd been in the family for generations". By the way, most of those are covered in homes at this time.

From 89 to 96 real estate fell back by 30-40%. I started looking up here in 96. Just about ever fourth house had a for sale sign out front. Many had been for sale for six to 12 months. A lot of foreclosure and bank owned property, although surprisingly the banks werent even close to making a good deal on a vacant home. Several builders that had gone bankrupt and were squatting in the homes to keep them from being seized. A lot of people saying they'd take a short sale to get out of the house before the bank took it.

Incredible deals on opulence. I looked at nearly 100 homes, most of them over 4000 square feet with unbelievable finish work, all sitting on half acres or better. I looked at (I am not making this up) a 10,000 square foot house on several acres overlooking a good sized lake that I could have offered and closed on for under a million. Probably nearer to 800k.

A somber buyers market, but for a bargain shopper like me I was like a kid in a candy store.

I bought a home that had sold new in 89 for well over 400k for just a hair over 300 at the end of 96. Construction cost on the home minus depreciation was almost 280. Put almost nothing except occasional repairs into it.

Then the "house millionaires" and "house retirees" from the SF bay area discovered that it wasnt really that much hotter up here, there really was a lot of stuff to do, there was a lot less crowding and crime, and their $50k homes they bought in the 60's and 70's were worth 1-2M. They came up in droves. They're still coming. Now Sac features traffic jams, every hillside covered with housing sprawl.

Prices skyrocketed. I sold it in 2003 for almost 500k. I would probably get 530-540 for it now, almost a year later.

Drive an hour in any direction except southwest and you can get the same house for 1/2 price.

Time to get out.

As far as the sky falling, I havent heard anyone outside of the fed feeling complementary about our monetary policy, and plenty of folks scared to death of the implications. I see scarcity of investments with more than limited upside and a lot of them with big pending downsides. If I read one more article that says CPI isnt accurate and nobody really knows if we're facing inflation or deflation, I'm gonna pop.

Dont know about everyone elses neck of the woods, but around here over the last three years, housing is outta sight, cars cost more but there are a few deals in the financing area to be had, food costs more, especially meat, and almost everything else seems to have nicked up a little.

Of course some technology items offer bargains...computers, tv's, etc.

Wages have remained at about the same level. A few folks are seeing tiny (sub 3%) raises in the tech areas I'm still in touch with. Layoffs and reassignments loom over my ex company even though they're announcing 80-something percent hikes in revenues and spiking earnings.

Experiments with out-of-countrying or whatever the nice name is they're applying these days are mixed. Prices are cheaper, but productivity is lousy and customer reaction is piss poor. Some experiments are being retracted, some are being extended. Still seems to be ambivalence around it.

So I dont know if the sky is falling, but I wouldnt wanna go up and put any weight on it. :P
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Re: The sky is falling
Old 04-19-2004, 08:15 AM   #22
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Re: The sky is falling

RE is moderately nutty around Seattle too - even during the relatively anemic job market in the past few years, houses were sprouting up like weeds. I was discussing this with a co-worker once and we were trying to figure out who all these houses were being sold too. Still not sure.

As far as I've been able to tell, people are again overextending themselves when it comes to payments (friend lives in a condo complex where people complain they can't pay the $10K assessment, even on a 7 year payment plan) and when interest rates rise, prices will likely drop and people will scratch their heads thinking that real estate just doesn't drop.
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Re: The sky is falling
Old 04-19-2004, 12:50 PM   #23
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Re: The sky is falling

Quote:
(How about those Kings?)
Booyah! If webber can hold his parts together and the injury bug doesnt sink them, we can look forward to a final round disappointment again this year!

Well being a homeowner here I'd love to see more appreciation in my current place just at the edge of the sprawl growth. I'd sell again, take my profit, and move another 45 minutes north or northwest.

You're spot on about the mis-perception of this being an overly expensive place to live. Plenty of areas with reasonable real estate, your property taxes are locked in until you sell, and the income tax is very reasonable if you dont make a ton of money. That 8% sales tax sucks though.

Plus our governor can beat up their governor!

I just think we're due for some kind of correction in the greater sacramento area. Of course I thought that about the bay area too and its still puffing up down there. One good earthquake will solve that problem though.
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Re: The sky is falling
Old 04-19-2004, 05:15 PM   #24
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Re: The sky is falling

If ifs and buts were candy and nuts we would all
have a merry Christmas.

Mavs Rule!

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Re: The sky is falling
Old 04-19-2004, 11:59 PM   #25
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Re: The sky is falling

Quote:
RE is moderately nutty around Seattle too - even during the relatively anemic job market in the past few years, houses were sprouting up like weeds. *I was discussing this with a co-worker once and we were trying to figure out who all these houses were being sold too. *Still not sure.
Seems to be a combination of three factors:

1) low interest rates (sellers and builders cleverly raise prices knowing mortgage payments stay the same)

2) low inventory

3) stock market burn out -- moving money out of "risky" investments into "safe" real estate

All of these factors are at risk of fizzling out pretty soon.
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Re: The sky is falling
Old 04-20-2004, 05:27 AM   #26
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Re: The sky is falling

Yeah you rite!

There's a mini building boom around here - on/near the water, outside of levee protection, inspite of the difficulty/cost of flood insurance, and that fact that Isadore/Lilly in 2002 put the whole area under water causing moderate damage to those not high enough on pilings.

That's a bubble in my book. The 'new' rule says 15 foot pilings above reference ground which requires a survey since you're building in a swamp.
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Re: The sky is falling
Old 04-20-2004, 01:19 PM   #27
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Re: The sky is falling

Ronin,

If Christy keeps smothering Nash it will be a
short series. BTW, Sac is only one notch above
Dallas in the matador defense department.

Marv Rule (at home, sometimes)

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Re: The sky is falling
Old 04-20-2004, 10:10 PM   #28
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Re: The sky is falling

Wabmester - re:home pricing - the cost of materials fluctuates with the interest rate as well. Rates low, materials high when rates rise, the cost of construction dips.

I am seeing a marked increase in foreclosure properties and we are not in a metro market. Another factor coming in to play is the boomers are selling their large homes and downsizing now that their kids are grown. Let's not forget those ARM mortgages everyone has. It's going to be a good investor market.
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Re: The sky is falling
Old 04-21-2004, 08:21 AM   #29
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Re: The sky is falling

Good points, BusyMom. It's pretty clear that this boom cycle is different from previous ones in that lenders are taking much more risk. Lower quality loans, higher loan-to-value, everybody's got a home equity loan, and lots of ARMs.

Eventually, it's got to mean lots of bargain homes on the market and a big hit to financial stocks.
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