Real Estate - do we still have holdouts?

[Ronstar]

According to the Arizona Republic, my zip code and a few others had housing flat to plus 5% in 2007. Other areas around Phoenix were down.

 

[DangerMouse]

I just checked the address on Zillow of a friend's residence in San Diego. They paid $468k in 2003. They listed the place in 2007, had it on for 6 months and only got one offer - $505k which they turned down as it wasn't enough. However, when I check on Zillow it tells me their place is worth $576k. They are thinking of relisting in 2008, however they do not believe they will now get the $505k that they were previously listed, they think they will be lucky to get much above their purchase price.

 

[tryan]

Zillow - by design - is a rearview mirror. When past sales are high the zestimate will be high as well. To sell in a down market, one needs to set the price below the trend. Otherwise, if you're behind the trend (too high), you'll be sliding down until it bottoms. I suspect they'll wish they took the 505k.

Just dropped the price of 2 lake view condos 15k each (30k off the duplex price). After 4 months, only 5 showings ... this is not good. Trying to get ahead of the slide.

 

[jazz4cash]

Zillow - by design - is a rearview mirror. .

Why do you say 'by design"? Just curious.

 

[lazygood4nothinbum]

To sell in a down market, one needs to set the price below the trend...Trying to get ahead of the slide.

that was my thinking when i first put the inherited house up for sale. i kept mine priced to compete well with houses in areas lesser valued.

but turns out they didn't sell either so that trick did nothing. from how it seemed so many other houses were following my lead-weighted lead down, maybe all i did was help bring down the entire damned town as other houses raced to beat me to the bottom. i haven't noticed many price cuts in the past few months but also sales are far & few between.

so, screw it. i've repriced to still be the best price in my area but no longer the best price in the lesser areas. there is currently a 32-month supply of houses at my price range throughout that county. i've got a for rent sign on the property and am receiving quite a few calls though no takers yet.

 

[tryan]

Why do you say 'by design"? Just curious.

Zillow uses past sales data to compute current sales prices. It does not account - well - for market direction. So in a downward market Zillow is artificially high. In an upward trend, artifically low.

but turns out they didn't sell either so that trick did nothing.

Well, one thing for sure, it wouldn't have sold at a higher price either.

 

[Kougar2]

Guess we were lucky

We bought 1550 sq ft house in SF east bay in 1997 for $215,000. We sold out in Dec 2006 for $660,000. Purchased our ER home for $258,000. 1850 sq ft with mountain view.

Considering what happened to us in Houston in the 80's and 90's, we consider ourselves lucky!

Wahoo! It finally worked for us.

 

[REWahoo]

Wahoo! It finally worked for us.

I'm very happy for you.

 

[honobob]

We bought 1550 sq ft house in SF east bay in 1997 for $215,000. We sold out in Dec 2006 for $660,000.

WOW 9 years of over 13% annual appreciation.


4% Appreciation my *ss

 

[ladelfina]

Honobob, calc link above shows that example as 12.15% but let's not quibble. I don't know exactly what you are smoking, pumping, or whatever.. but using an example of a person who got in at a good deal and came out at the top is not instructive or indicative of long term trends or reasonable valuations. It's speculation (not that Kougar was speculating). Ya know, maybe salaries in SF can support such prices indefinitely (but I doubt it). Maybe houses in Hawaii are always going to attract moneyed buyers (of that I have little doubt).

Maybe whoever bought from Kougar has $200k-$300k in household income to sustain a 1500sf house. For how long? What will be instructive is what Kougar's buyers eventually sell it for down the road. The rest of us live in the real world that follows certain laws of gravity.

 

[Texas Proud]

WOW 9 years of over 13% annual appreciation.


4% Appreciation my *ss

Most of us live in the 'real world'....

I am IN Houston... and I bought my house in the last downturn 20 years ago... and my appreciation rate...

A whopping 3.1%.... I would LOVE to have the 4% "my ass" appreciation...

 

[honobob]

You can't handle the truth

Honobob, calc link above shows that example as 12.15% but let's not quibble. I don't know exactly what you are smoking, pumping, or whatever.. but using an example of a person who got in at a good deal and came out at the top is not instructive or indicative of long term trends or reasonable valuations. It's speculation (not that Kougar was speculating). Ya know, maybe salaries in SF can support such prices indefinitely (but I doubt it). Maybe houses in Hawaii are always going to attract moneyed buyers (of that I have little doubt).

Maybe whoever bought from Kougar has $200k-$300k in household income to sustain a 1500sf house. For how long? What will be instructive is what Kougar's buyers eventually sell it for down the road. The rest of us live in the real world that follows certain laws of gravity.

WOW, , feeling a little down about the market? Looking to get a little satisfaction smacking Honobob around? Not to quibble but Kougar2 never named the month of purchase so we're both only hand grenade close. Plus I never saw where Kougar2 stated he got in at a good deal or went out at the top. If you've read my other posts you'd be aware that he missed 12-16% appreciation in 2007. Instructive or indicative of long term trends? Didn't know that was my goal. Ten years seems pretty long term to me though and also supports my earlier posts that support double digit appreciation of real estate over 30 years. I'll put you on the doubters list along with all the people that said prices can't double in the 60's, oh and the 70's also..Hell even the 80's/90's and 00's! Yep, this time it will be different.

Can't we all just be HAPPY for Kougar2s (and all the other double digit appreciaters) good fortune. If I was tryan to piss off all the naysayers I would have pointed out how Kougar2 made 30% annual compounded return over 9 years on his initial 20% down payment!! And walked away with almost half a million tax free dollars! People would think I was a real estate cheerleader. Go Kougars Go, Yeah Kougars. K O U G A R 2 Go!
Smoking, pumping? Just the facts.
So what is this real estate law you're referring to?

4% Appreciation my *ss

 

[mb]

Most of us live in the 'real world'....

I am IN Houston... and I bought my house in the last downturn 20 years ago... and my appreciation rate...

A whopping 3.1%.... I would LOVE to have the 4% "my ass" appreciation...

Don't live in the real world Live in that fantasy land called California

 

[ladelfina]

honobob, I am not feeling "down" or any other way about the US market personally since I am not in it. I got out in 2003 or thereabouts after having sold my house that I bought for $130k in 1993 to a school teacher for .. (wait for it).. $630k (after putting in about $90-100k in improvements). If you think said schoolteacher is going to have realized another half-million PLUS 2003-2013 you are dreaming. A schoolteacher's salary cannot support a $1mm+ house, I am sorry. You live in a dream world. Others have been sucked into it.

Housing obviously cannot support rises grossly beyond people's ABILITY TO PAY.. i.e, WAGES, which are overall flat (the minority) if not receding (the majority). Oddball places like Hawaii and Nantucket or downtown Manhattan may to continue have a rich contingent that's able to squeeze out the "average" worker/homeowner, but that's just a symptom of a growing income and wealth divide... Honobob, get a grip. Go sell your enthusiasm to the huge number of folks who are upside-down on their mortgages.. 10% of them.

Fine. Go go Kougar and go go me.. we bought low and sold high. That is NOT the norm. I'm absolutely sure my $630k sale in 2003 did not have 12-16% appreciation in 2007. I'd be surprised if it even had 16% appreciation 2003-2008.

I still don't get why you are assuming that asset price increases during an obvious bubble (as shown above and basically anyplace else you care to look) can or should persist into infinity, when you are talking about overall regular RE prices and not Hawaii or the Hamptons or 5th Avenue.

 

[honobob]

WOW! I guess you're right and I'm wrong and you were the only one to buy low sell high. I'm happy for you.

4% Appreciatiom my *ss!

 

[haha]

I still don't get why you are assuming that asset price increases during an obvious bubble (as shown above and basically anyplace else you care to look) can or should persist into infinity, when you are talking about overall regular RE prices and not Hawaii or the Hamptons or 5th Avenue.

We all have our niches in the ecology of this board; otherwise the board could not exist as a thriving system. Honobob's niche is gung-ho real estate booster. Others are real estate naysayers, or skeptics, or just plain folks.

But without Honobob, they would quickly tire of posting to one another.

Go honobob!!

Ha

 

[REWahoo]

Go honobob!!

Ha

I second your recommendation that he go...

(Sorry. The set-up was way too good to pass up.)

 

[Delawaredave5]

{quote]So a $250k "average" house today will be $500k in 10 years, and a million dollars in 20 years? Where is the wage/GDP growth to sustain that? They are desperately pumping their own sector.
hmmmmmmmmmm.

My parents bought their house for 20K in 1965, so in retrospect:

1965 -- 20K
1975 -- 40K
1985 -- 80K
1995 -- 160K
2005 -- 320K

That looks about right, actually. Their house IS worth about $320K now, so maybe 10% isn't that far off, on average. Of course, if you'd told them back at 20K that they'd be sitting on 320K today they'd have laughed you out of the room.

I don't know whether to feel good or bad about this.

My parents bought their home in the midwest in 1965 also for just under $20K. It's now worth $120K tops.

Real Estate, on the average, truly tracks "inflation plus a percent or two". And this assumes historical real wage growth. Wage growth going foward will be nowhere near historical levels.

And I am not convinced that there are "no brainer" appreciation locations over the next 20 years. The coastal, south, and waterfront addresses are so "bubbly" that few will see 10% annual growth (read: "inflation plus 7%").

 

[haha]

And I am not convinced that there are "no brainer" appreciation locations over the next 20 years. The coastal, south, and waterfront addresses are so "bubbly" that few will see 10% annual growth (read: "inflation plus 7%").

Well, that sure beats TIPS. And likely beats stocks too.

Ha

 

[Texas Proud]

Most people are only looking at what they see... and only very close...

Hono might be getting the huge increases he says... and good to him...

But we all know that 'location' is the important part of RE...

Take my Mom's house... bought in 1959 at $10,500... in what is now a VERY BAD part of town... and the slab is cracked (it was 'fixed', but still horrible), the walls are all cracked... and there is CRACK in the neighborhood... she would be lucky to get $50K today...

Now.. if they would have bought for the same amount in a different place in the city... which has been the hot spot in last two decades... her LAND would be worth $750,000...

So, just having bought about 12 miles away cost her a huge bundle of money....

RE for the vast majority of people is taking a big hit... I am looking at moving into a house that would have sold for $220 a year or so ago... but I might get for $170.... and I will take the loss on mine, because it is not even near as much...

 

[calmloki]

Most people are only looking at what they see... and only very close...

Hono might be getting the huge increases he says... and good to him...

But we all know that 'location' is the important part of RE...

......

And that is perhaps the crux of honobob's arguement. Buy in the right area and you're golden. And really, is that any different than buy the right stock, or pick the right asset allocation, or pick the right amount of foreign to domestic equity?
I guess a difference is that for most people, they are going to buy in the place where they work, but even small towns have better areas and worse, or areas that will appreciate at a disproportionate amount. Maybe it's unknown what area will do better, but is that different than whether Google or Yahoo will go boom or bust?

 

[honobob]

More Paired Resales

Housing slump? San Francisco condo resales.

188 Beulah #1 Sold 3/4/2002 $615,000
Resold 11/30/2007 $805,000 7.8% appreciation rate or about $2500 a month! Bad location on busy street across from stadium entrance in GG Park.

154 Carmel Street Sold for $961,000 on 8/20/2004
Resold for $1,510,000 on 11/9/2007 That would be 16% appreciation rate or about $15,250 a month!

The history of 1209 Cole Street
Sold 8/12/1997 for $400,000, resold for $881,000 34 months later appreciation rate of 30% or $14,147 a month. Resold 11/12/2004 For $1,050,000 only appreciated 5.5% or $3,189 a month. Resold again for $1,215,000 on 11/30/2007 a gain of $4,583 a month! Now if the first owner had held as Honobob suggest in chapter 27 of his book "buymybook/buymybook" his 10 year plus ownership would have resulted in ...wait for it... a long term annual compounded appreciation rate of 12%!!! or $6,626 each and every month.

Now here's a perfect example that illustrates the idea put forth in Chapter 232 of Honobobs book "buymybook/buymybook". Condo/Townhouse/Co-Op - 239 Brannan St Unit: 18A, San Francisco, CA, 94107 - Realtor.com This property was bought 7/2002 for $1,500,000. The owners never lived in it, they're from Colorado. Yet they invested in SF and are looking at appreciation of $850,000 which is an appreciation rate of 18%!


So why would anyone want the American Public to believe there is a housing slump?

Foreclosure bill a delight for lobbyists / Many Senate tax breaks would not focus on homeowners at all

CrazyakoleHonobob? Or akamai? Time will Tell. Oops, it already has.

 

[spideyrdpd]

Bob
You do realize that over the next few years that price are likely to be lower or at best flat ? This will lower your overall rate.
With stocks you can buy a mutual fund that suppose to represent the market as a whole. With real estate you buy your local market so everyones milage will defer. During the last downturn there were still a few areas that increased. If I remember the article correctly the Watts area actually went up, but the boom areas did trend down slightly. Of course most people just choose not to sell when real estate turns stale.
Rob

 

[honobob]

Bob
You do realize that over the next few years that price are likely to be lower or at best flat ? This will lower your overall rate.

Rob

Rob, oh sure! If you look at the 10 year example I gave from late 1997 to 12/2007 that returned 12% remember the events over that time. Just recovering from the 1991/92 meltdown and a few flat years until 1999-2001 dot.com boom to the quick bust and then pretty quick recovery for real estate (actually most of SF downturn was in "loft properties") to the 2004/05/06? real estate/finance disaster??. And still a 12% compounded return over that time. I'm only saying 11% long term so if things go 8% down I'm still at 11%. I've never "lost" more than 9% in value in over 20 years in SF. But then recent resales comparing 2004 to 2007 are in the 16% plus range.

If I had major bucks I'd jump in and grab the 30% appreciation but with the transaction costs I have to settle for 11%. May go under that at some point but will be above it at some point. The next "jump" may be sooner than people think. The last sure was. If you're not in the market you stand to lose a lot if you can't act quick enough.

 

[Texas Proud]

Hono.... I bet that if you were on the Titanic you would be saying...

"We aren't sinking... look, my side of the ship is going UP... sinking my a$$"....

Just as an FYI... my company had to write off $125 mill on a building they rented at the high of the comm market at $85 per foot and could not sublet even at $20....

I am watching house after house in decent neighborhoods being repoed and the people who actually want to sell not being able to reduce their price fast enough to get ahead of the declining curve...

They had an article on the news.... they used to do 10 evictions in a month here... now up to 40... and growing...


Some of the people here got in the life boat... others still think that they are on an unsinkable ship....