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.
