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| 2002/10/10-11 [Reference/RealEstate] UID:26148 Activity:insanely high |
10/10 Housing bubble in the Bay Area:
http://list.realestate.yahoo.com/re/story.html?s=n/inman/realestate/20021009/20021009601
\_ Cool! If I wait three years, I can actually buy a home here.
\_ uh, did you actually read the article?
\_ uh, did you? Train harder. It's at the end.
\_ I'm still waiting for the Big One to scare everyone away.
\_ When I was in 2nd grade we had this whole big thing about
safety and earthquake training and whatever because "they"
were +_certain_+ the Big One was coming Real Soon Now. Still
waiting....
\_ Just for info, Inman is a real estate INDUSTRY "news source."
I do not need to read the article to know that this
article will indicate that there is no housing bubble (not
saying there is or isn't just saying that this source
has stong incentive to say "there's no bubble.")
\_ That article says Bay Area prices are vulnerable to a 10% correction.
Consumer Reports says SF home prices are 15% above historical
price/income ratios and Oakland and San Jose are 25% above. All
this points to a correction. But this is not the same as a "bubble."
\_ How is a price correction different from a bubble bursting?
\_ A correction is prices drop back to historical price/income
ratios. A bubble burst is if drops below that level. Some
argue it's more the percentage drop. Six of one, yada, yada..
\_ sez who?
\_ motd wisdom
\_ Wow so you're like totally fucked if you bought in Oakland or
SJ in the last few years, huh? That was a bad bet I guess.
\_ the article suggests a 10% price drop over 7 years. If
you bought 3 years ago in a reasonable area, your home has
already appreciated 50%. -tom
\_ What's a "reasonable" area in Oakland? I wasn't aware
there were any. Have they taken the Murder Capitol
crown from Palo Alto this year yet?
\_ 30+ percent in 10 years? Not disastrous but not
wonderful either.
\_ it's a leveraged investment so your return is
actually much greater than that. A $200K house
with $20K down payment that appreciates to $300K
and then drops to $270K gives you $70K return on
your $20K investment. Plus tax benefits, minus
transaction fees. It's still pretty damn good.
-tom
\_ When did any property in Oakland ever hit $200k
much less go up to $300k?
\_ when was the last time you were in oakland?
of course, by the same rights, when did you
last talk with your head out of your ass?
\_ this was useful. thank you for participating
\_ houses in the hills go for millions.
3/2 in Rockridge is $600K. 3/2 in Temescal
or Piedmont Ave is $500K. The median home
price in Oakland was $341K in August. -tom
\_ Wow! That's amazing! There really *is*
a huge bubble waiting to burst in Oakland.
There's only just so many suckers with
money willing to buy in Oakland....
\_ Oakland's crime rate is lower than
Berkeley's, and is only slightly
above SF's. And really, the crime
rate on Hegenberger and East 14th
really isn't meaningful to someone at
College and Shafter. -tom
\_ Don't forget the 10 years of house payments,
those would count as part of the investment.
\_ Not really...that money would be going to
rent, otherwise. -tom
\_ A typical house payment is larger than
the rent you would otherwise pay to
rent the same space.
\_ Certainly not true in my case. We
went to a bigger house in a better
neighberhood and reduced our net
monthly cost. -tom
\_ So you were paying too much rent??
That's nothing to brag about.
\_ no, we were paying below-market
rent at the time we moved out. -tom
\_ Uh huh. That makes a lot of
sense. My rent on a 2BR was
about $1200 which was typical for
what I had in most of the BA. My
mortgage was $2550 on a non-jumbo
30 year with a decent rate. The
only way you could've ended up
paying less is if you were
renting a house and paying too
much. Let's see some numbers.
\_ we were renting a 2/1 house
for $1450--the tenants after
us paid $1750. Our net monthly
mortgage cost is about $1400
on a 3/2. -tom
\_ Leveraged means additional risk, and you may
lose more than your principle. Also, it's
a huge investment in terms of time and effort.
\_ fine, keep paying rent, I'm sure that's
more rewarding. -tom
\_ I think the idea is more money down, less
risk, still no rent, and buy in a better
area than Oakland. Depressed areas with
high crime rates are always going to be
the first and hardest hit.
\_ Buy a house if you need it. As
an investment it may or may not
work out but be prepared to spend
lots of time and effort on it.
\_ How overinflated are prices in various parts of the LA area?
Particularly the South Bay of the LA area.
\_ South Bay of the LA area? We used to call that Orange
County. Don't fuck with Mickey Mouse, you goon!
\_ No, that's NOT Orange county. It's
basically the SW part of LA county, the
area south of LAX that includes Torrance,
Manhattan, Hermosa, and Redondo Beaches,
Palos Verdes, etc. Definately not Orange
County, doesn't even border OC. I believe
it refers to the southern part of the Santa
Monica Bay, which only extends down to Palos
Verdes, which is probably 15-20 miles west of OC.
\_ Look, boy, I told you before and this is the last
time, DON'T FUCK WITH MICKEY! He has his own
Congressman and will utterly destroy you!
\_ South Bay is bordered by Marina Del Rey and San Pedro.
Coastal cities only. You can find a small place for $400k
in Redondo, but all the other cities will run you $600k+
for almost anything. --lives in torrance
\_ OK. But how overvalued is it? How much will
it likely go down, and how soon, as compared
with the SF Bay Area? Is it as "bad" of an
investment as Oakland or San Jose, which is
apparently 25% overvalued? And, BTW, I live
in Torrance too. Who are you and where in
Torrance do you live? -asb
\_ that article doesn't say "Oakland and San Jose
are 25% overvalued." It's not that simple. -tom
\_ Right now I rent a room in a house near the RH AMC.
If you ask me, I don't think prices will come
down too much in the next few years. The 30% tax
writeoff should offset any losses. But making $70k
I can't afford more than $250k, which means going
inland, which sucks.
\_ You could get a decent condo in the South
Bay of LA for that price, though probably not
in Manhattan or Hermosa. I looked at a condo
for $180k near Vermont and Torrance Blvd.
It was a pretty decent 2 bedroom condo,
around 1000 sq ft.
\_ Condo != house. It's a lousy investment.
\_ Why is it so much worse of an
investment? Sure, you have to pay
big HOA fees, but you save time and
money. You don't have to hire a
gardener or reroof your house, etc.
Is it really such a bad investment,
and if so, why?
\_ Actually, I was considering a new condo
in a decent part of Gardena, but I decided
I'd rather live closer to the beach and in
a better neighborhood. ($220k)
\_ So where exactly did you buy
this $220k condo? Redondo?
\_ I made $72k and with 10% down I could afford $440k
at wash mutual using their hybrid ARM. the 10% down
is what opened doors (borrowed from relative). too
bad I got laid off (luckily before buying anything). |
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| list.realestate.yahoo.com/re/story.html?s=n/inman/realestate/20021009/20021009601 -> realestate.yahoo.com/re/story.html?s=n/inman/realestate/20021009/20021009601 Terms of Service - 10 Copyright Policy - 11 Privacy Policy Yahoo! Real Estate 12 Choose Location 13 Home 14 Find a Home 15 Find a Rental 16 Mortgage and Insurance 17 Moving 18 Tools 19 My Real Estate 20 Real Estate > 21 Resources & Tools > 22 Real Estate News > Article This Week in Real Estate 23 Real estate repairs a springtime priority Apr 30,2004, Inman News 24 Fed caught in economic tug of war Apr 30,2004, Inman News 25 Online real estate service speeds into auto clubs Apr 30,2004, Inman News 26 How to avoid buying bad real estate Apr 30,2004, Inman News 27 more news Wednesday October 9 4:57 PM ET Housing Bubble: Fact or fiction? Part three argues for continuing strong and healthy housing markets and house prices, despite the existence of a few scattered local markets where prices might weaken. The housing bulls all point to the same evidence and intone a similar mantra. The Conference Board economist said the task is akin to telling Chicken Little the sky isn't falling. He said anyone looking for a bubble isn't likely to find it this year or early next year. Could record home sales, record home price appreciation and record low interest rates add up to a weakening housing market? Assumingas economists so often warnthat the past isn't an accurate predictor of the future, there still are many other factors to consider. Demographic trends, Americans' view that housing is a good investment, government policies that keep interest rates low and encourage homeownership, and zoning and growth restrictions are expected to sustain a healthy demand for and constrained supply of homes and help prevent house price declines for the foreseeable future. Economists generally agree that historically low interest rates have been the primary fuel driving record-high home sales. These buyers contribute to the huge demand for housing that results in escalating and arguably sustainable higher house prices. The fact that Baby Boomers are in their peak earnings years also argues for a strong housing market. Boomer homeowners today can sell their current houses at attractive prices to entry-level buyers, then use their accumulated equity and low-cost mortgage financing to buy higher-priced bigger or otherwise more desirable houses. DataQuick analyst John Karevoll pointed to the current ratio of entry-level and mid-level buyers to the move-up and prestige-home buyers and said he hasn't seen a more balanced housing market in the last 15 years. Equity enables homeowners to leverage their starter-home investment into their next home, then leverage that next home into a luxury-class home or a second, vacation or rental home. Californian homeowners enjoyed 10 percent house price appreciation from 2000 to 2001, according to the California Association of Realtors. Innovative mortgage products also add to the seamless flow of houses between first-time buyers and trade-up buyers and consequently have contributed substantially to booming home sales. Almost all of the demand is going into homes and the reason primarily has to do with rising homeownership among the Boomers," he said. Burns added that 54 percent of home buyers purchase their first home by their mid-30s, but homeownership rises to 80 percent by age 70. That means the nation is due for a "huge surge" of home buyers in their '50s and '60s as the Boomers age. Adding to housing demand is a shift in the way Americans view their homes. A recent Milken Institute study found housing today is the psychological equivalent of gold. After all, the strong housing industry brought the broader national economy through the recent recession with far less damage than otherwise might well have been sustained. Bullishness among home builders is another sign of continued optimism. The total value of single-family housing construction activity last year set a new record of $206 billion, according to Harvard's report. Yet even the most bullish economists and experts who discount the existence of a housing bubble don't foresee continuing double-digit home price appreciation. Nicolas Retsinas, director of Harvard's housing studies center, is among those who said double-digit home price appreciation isn't sustainable. But he thinks home values will more or less hold their ground due to strong demand and tight supply. He said voters aren't going to be reading ballot measures asking whether they want to remove tracts of land from open space rolls and make them available for development and that lack of buildable land will limit the production of new houses. The housing market is not one all-encompassing national market, but rather real estate is and always has been local. That means some markets naturally are more vulnerable than others to housing price corrections. Economists said vulnerable markets could be hurt by rising interest rates, higher unemployment, a double-dip recession or other factors that would adversely affect consumer confidence and the local economy. And if you look at those markets over time, they're the markets that tend to cycle the hardest. They tend to have 80 percent appreciation over three or four years, followed by a 10 percent decline over seven years or something along those lines. Markets that meet supply and have buildable land don't experience a lot of appreciation and they don't decline because of it," he said. |