You know you're in a bubble when....

[cute fuzzy bunny]

Quote:

This is for Anne, aspiring real estate magnate.

I'm aspiring to become a refrigerator magnate.

[Nords]

That'd be an impressive 28% cap gain, though. We've MACRS-depreciated the heck outta that place while its value has been bubbling up in the other direction.

Unfortunately the current tenants are the best we've ever had-- my spouse's parents. And if they leave after the next five years, we'd put our kid (and a few roomates) in there. Compared to the threat of any of them moving back in with us, we'll take the low yield!

I recall in my active investing days a realtor might ask me "What are you looking for? Cash flow, tax advantages or appreciation?" My answer?
"Why, all three of course!"

John Galt

[wabmester]

I'm in it for the property taxes, endless maintenance, and nightmare tenants.

Ah, a masochist!

John Galt

[honobob]

Quote:

Originally Posted by wabmester I just saw the surest sign yet that we're near the top of a real estate bubble. * A *blurb in our local paper announced that a group of little old ladies is forming a new real-estate investment club. * It's deja vu all over again, I tell ya.

Is this your prediction over three ago! The property I closed on in August 2004 is now worth $178,000 more than what I paid. Got a graph for that?

[twaddle]

Quote:

Originally Posted by honobob Is this your prediction over three ago! The property I closed on in August 2004 is now worth $178,000 more than what I paid. Got a graph for that?

Why yes, I do!

[honobob]

Quote:

Originally Posted by twaddle Why yes, I do!

Isn't that upside down..nevermind, that's the stock market not the real estate market

[tryan]

My local market (north of Boston) has corrected just about to where it was as of the start of this thread - 8/2004. Spoke to a realtor today (will be listing a SF next month) who seemed pleased/excited about the having pulled some of the excess out of the market.

The zero down buyers (aka speculators) are gone; lots of shady mortgage companies are gone. Buyers have decent credit and are actually putting DEPOSITS into the deal. And low ball offers are acually considered.

The healing has begun.

[brewer12345]

Quote:

Originally Posted by tryan My local market (north of Boston) has corrected just about to where it was as of the start of this thread - 8/2004. Spoke to a realtor today (will be listing a SF next month) who seemed pleased/excited about the having pulled some of the excess out of the market. The zero down buyers (aka speculators) are gone; lots of shady mortgage companies are gone. Buyers have decent credit and are actually putting DEPOSITS into the deal. And low ball offers are acually considered. The healing has begun.

So would a typical SF property in your market flow cash to an investor, assuming a 30 fixed mortgage and 20 to 25% down? Still a ways to go by me, despite very healthy rents.

[audreyh1]

Interesting. Folks felt that we at advanced bubble stage in 2004. But it didn't really reach its peak until 2006, TWO YEARS LATER. That's the problem with bubbles - they last far longer than anyone can imagine.

Audrey

[honobob]

Quote:

Originally Posted by audreyh1 Interesting. Folks felt that we at advanced bubble stage in 2004. But it didn't really reach its peak until 2006, TWO YEARS LATER. That's the problem with bubbles - they last far longer than anyone can imagine. Audrey

Audrey
Try THREE years later in Hono and SF Bay Area and Still NOT a bubble!! Even in Vegas "the Bubble" is mainly confined to new construction. Where and why do you think there was a 2006 peak?

[twaddle]

Quote:

Originally Posted by audreyh1 Folks felt that we at advanced bubble stage in 2004. But it didn't really reach its peak until 2006, TWO YEARS LATER.

Well, we did reach a volume peak in 2004. Ed Leamer argues that housing cycles are more of a volume cycle than a price cycle since prices are so sticky on the way down.

What that says to me is that it's actually easier to time a housing bubble than a stock bubble. Once you see the volume peak, wait a year or two and sell your real estate (if you can find a buyer).

[laurence]

Quote:

Originally Posted by honobob Audrey Try THREE years later in Hono and SF Bay Area and Still NOT a bubble!! Even in Vegas "the Bubble" is mainly confined to new construction. Where and why do you think there was a 2006 peak?

Goodness, mercy, captain of industry! I think you should just make, "Real Estate rocks and never has a bubble!" as your signature, you surely post it enough!

Meanwhile, we poor simpletons are seeing our neighbors sell their houses for 10%+ less than what they were selling for a year ago, both in San Diego and in San Fran (friends there). Those stats from the real estate industry about home prices increases are a bit disingenuous considering the median is being buoyed by the fact that a larger % of homes being put on the market are more high end luxury homes, skewing the results.

But hey, you are still making big bucks with your rapier business wit, good on ya mate. Just please don't tell me the overall RE market isn't down, the official reports on wall street and the signs in my neighborhood can't both be wrong.

[W2R]

Quote:

Originally Posted by laurencewill Goodness, mercy, captain of industry! I think you should just make, "Real Estate rocks and never has a bubble!" as your signature, you surely post it enough! Meanwhile, we poor simpletons are seeing our neighbors sell their houses for 10%+ less than what they were selling for a year ago, both in San Diego and in San Fran (friends there). Those stats from the real estate industry about home prices increases are a bit disingenuous considering the median is being buoyed by the fact that a larger % of homes being put on the market are more high end luxury homes, skewing the results. But hey, you are still making big bucks with your rapier business wit, good on ya mate. Just please don't tell me the overall RE market isn't down, the official reports on wall street and the signs in my neighborhood can't both be wrong.

The latest quarterly reports show that median prices in New Orleans are down over 7% compared with a year ago, the local real estate association has said that the housing inventory here has grown a whole lot. My neighborhood is sprouting "For Sale" signs right and left. Still, when I mentioned the local housing crunch at work, a co-worker loudly contradicted me and said houses were selling like hotcakes for prices as high as ever. WTF?

Viewpoints do seem to differ on the housing crunch (or lack of same) for reasons that are puzzling to me. Maybe some people are looking at very small regions just within a few blocks of their homes, and not the Big Picture statistics?

[REWahoo]

Quote:

Originally Posted by laurencewill Goodness, mercy, captain of industry! I think you should just make, "Real Estate rocks and never has a bubble!" as your signature, you surely post it enough!

C'mon Laurence, don't be yankin' HB's chain. After all, this time it might be different. Really.

[ats5g]

For Home Price stats, check out

S&P/Case-Shiller® Home Price Indices

[justin]

The shiller data does say SF and San Diego are down 4% and 7%, respectively, year over year. Laurence, you aren't imagining things.

The only areas that are up YoY in nominal terms are Atlanta, Portland, Dallas, Seattle, and Charlotte. In real terms, knock Dallas and Atlanta off that list.

Nationwide we are down 3.5-4% (plus inflation).

(Shiller data is nominal dollars, right?)

[audreyh1]

It seems that in much of the US, prices peaked in 2006.

Audrey

[W2R]

Quote:

Originally Posted by audreyh1 It seems that in much of the US, prices peaked in 2006.

That is what I *THINK* I am seeing here. Of course, in New Orleans we have a really complicated situation.

In 2006, there was a huge demand for homes because so many were destroyed and rentals were sky high as well. By now, most of those who couldn't return seem to have found jobs and homes in other cities, and the demand is down.

It is difficult to compare median prices because the availability of so many damaged homes, whether gutted, ungutted, or renovated, are skewing the curve. Theoretically, median home prices are down over 7% here compared with a year ago - - but newly available damaged homes might be causing a lot of that. Or, maybe undamaged homes are dropping in price as well (which from my own observations seems to be the case in my neighborhood).

However, just looking at homes in my immediate neighborhood, I would say that prices skyrocketed in 2006 and homes were selling like hotcakes, but now prices have fallen below 2005 (pre-Katrina) prices and you couldn't sell a home to save your life.

The question to me, is this: how long do we expect for it to take, after a bubble-inspired sales slowdown, for sales to pick up and for the inventory of homes to return to more usual numbers?

I have zero experience in this and have been guessing these things are very transient - - maybe just 2-3 years, but haven't a clue.