I suspect that there are lots of people in the same boat as you (certainly a good boat to be in!), but there are some inicators of a high % of people really stretching to 'buy in' to the current market.

Hey EDT you qualify as Old Joe who has lived in his house for 50 years... it won't effect you....your RE net worth will decline thats all...

What will happen to me here in LV if RE declines 25%....I still will be decidedly in the black on this house...

NOw that Interest Rates are RISING....meaning the Bull market in Bonds is over....your likely to LOSE principle if investing in Bonds..unless held to maturity....

RE...prices have reached the stratosphere.....and the coming indications according to PMI insureance is that ther is a High percentage of chance for decline instead of apprecaition.....

Collectables ...Cars, Guns Art have been running strong since 1998....and in some instances the market appears frenzied....

Commodities have run up in value...take a look at the price of oil, Gold, Silver all at multi-year highs

So where does the investor put his money to make a decent return...one where the risk of appreciation is greater than depreciation....

What asset class has been beaten up in the past 5 years...and the fundlmentals have become strong again....and this strenght has not been reflected with increases in price?????


and thats where the Money is going to go....and U will see a rise in those prices over the next 5 years or so....until it to becomes over priced and we begin the cycle all over again...

Well, the boom may be over but my next door neighbour just came by and told me that his house sold today for $425k, down a bit but still double what they paid for it just 2 years ago.

They are moving on 1.5 acres or so 10 miles North. May just do the same thing to have a nice garage and room for all my toys!

JoeA

I hear what you're saying, but '65 to '83 always freaks me out...

http://finance.yahoo.com/q/bc?s=%5EDJI&t=my&l=on&z=m&q=l&c=

Thats a loooooong time. And the recent flat 5 years followed a seriously booming 15 years.

-bernie

Even in super-over-heated markets like NoCal, folks who buy a house now, with a conventional mortgage that they can comfortably afford at inception and after all adjustments, backed by stable income, and who stay in that house for decades, are not likely to lose money in the long term. They may - in my opinion, are likely to - lose money in the short or even medium term, and over the long run their homes may underperform other investments, but in the long run they are likely to be okay. The problem is, according to the data I've looked at, many current buyers don't meet that description.

Big toothless grin backatcha.

If you - and everyone - were in the same boat, I'd ask why the prices have gone up so far, so fast?

I think it because people have traded up, not caring about the cost because they've had their own house's equity go up at an atronomical rate (ie, taking on a larger mortgage which is a lower percentage). Its the new entrants (taking on unsustainable mortgages in anticipation of capital gains).

What gets me is that banks must have become (essentially) risk loving some time in the past couple of years. The rule of thumb here in NZ was that they'd only lend you 3x your gross income, maybe 4x max. That would make the average house price in my city about 30% lower by my guess (I'm adjusting for various factors).

They also lend against valuation, without (seemingly) making any judgement as to whether "valuation" - based on current market prices - is reasonable. This is not risk-averse behaviour.

I know the answer to that too though - the banks have made record profits over the last few years on the back of our local real estate exuberance.

...I met one speculator, with a limited net worth and a day job as an accountant that earned him approximately $100,000 per year, who owned/speculated in two of those units (100%-financed by four separate interest-only loans that were supplied by the financial institutions without any income or net worth documentation). ...

...Over 50% of the brokers' trailing 12 months' loan production were interest-only loans. Neither has written a fixed mortgage loan in the last 45 days!...

So not good. Banks = risk loving? Taking an uncertain $ in place of a certain $?

Lucky Lucky Lucky that the Speculators have left LV to Greener Pastures like Phoenix....

New housing data shows a 2.9% dip over June but still is 4.7% higher than July 2004...

Also inventories are growing....with a 4 to 6 month supply on the market....

This is truly the begining....when inventories stack up the Desperate will lower their prices which starts the cascade...as buyers say I'll wait awhile and see what happens maybe I'll get a better deal next month....and beofre U know it...POP GOES THE WEASEL....

BTW....My Financial person in Tucson...says it's over....she told me Boston is allready in trouble 2 weeks ago....

I don't think every market is gong to craswh and burn...but certainily the high flying ones will correct to a more reasonable norm...

That being said the overall effect on the economy will not be so bad...after all the Stock Market was flyin high in the 90's when RE was in the toilette....and when the Market crashe in 87 housing was booming along with Ferraris and Art....

So should we hold onto our Kincaides?
http://www.villagegallery.com/big025...lightManor.jpg

Just curious, but what was the source of this article? There's quite a bit of fluff there. Sold out BMW and MB dealerships? Please!:rolleyes: How many of the "facts" in this article are as exagerated?

As U know DD74 Kincaids are quiet the investment....for a person interested in art it is a fool proof investment...my recommendation to U DD is to buy as many Kincaids as U possibly can... I guarntee that you will get a lesson in art you will never forget...SmileWavy

Sorry Tabs, but I stand behind my taste in art; not value, if any. Of course, the first lesson learned about taste is it's all in the mouth. The wallet is a foil and rids "those collectors" quite quickly from the market. Fortunately...

It's not over yet boys...

http://biz.yahoo.com/ap/050824/economy.html?.v=15

Housing isn't doing very well in Michigan right now. With all of the jobs leaving, many, many homes are on the market and in our little town of 28,000 people, more than 200 homes are for sale. Our realtor told us the average time to sell is 5 - 7 months and getting longer.

1967....U need to read your news reports....the Median price of a home is DOWN to 203K from 212K a year ago......sales are up prices are DOWN.....

devil is in the details. I still think parts of LA will not crash. There just are too many people and not enough houses, especially in "desirable" areas which have short work commutes.

Ed, you are somewhat in the minority I think. Our *last* house was that situation...we bought in Pasadena in '99 and had a mortgage that could easily be handled on one salary. We moved in '02 because of nightmare commutes. The problem is to get close to her work, we had to jump way up in purchase price, and now have a mortgage that cannot be handled by one salary alone (the mortgage can, but not all the other bills). That is a main complication in the divorce actually. If we still had the "cheap" mortgage, it would be much easier to parse.

I did read it. That level of price drop means nothing....certainly nothing in the north east where prices continue to rise.

The median price of 203k still astonomical AND demand is still very, very strong.

And you know it is all supply and demand. Until that demand goes away, prices will stay high.

And you know it is all supply and demand. Until that demand goes away, prices will stay high.

Nah, its also ability to pay, which I guess forms part of "demand", but theoretically the demand side should be lead by immigration (into the US or from other states) or people moving into cities, etc.

The ability to pay is really high right now - easy, cheap credit and the majority of people already have overvalued equity to transfer from one house to another.

Yes, and the ability to pay in certain parts of Los Angeles, as Todd says, does not correspond with the national average, so what Tabs speaks of doesn't necessarily represent the entire country. "The Industry" as do other industries, pays large fees here, and many people work for those industries. I just don't see a major crash happening around here. Like I said, a house on the corner from mine went in a week about a month ago, and for $200,000 more than asking; and the place was a wreck.

Here, it's supply and demand and money. Almost weekly, we get agents calling us at home, begging us to let them sell our house...

As for immigration, that's interesting. Much of Glendale and now large portions of San Fernando Valley are Armenian and Iranian now. So that segment also has money and its presence is well known.

In a way, it's really a buyer's market in L.A. It just depends on how much money the buyer is willing to spend. All I can say now is come with a lot of dough; the admission price is killer around here.

Dave - I agree with both you and Todd. Some parts of the market operate on completely different bases. When you need to worry is when the "meat and potatoes" of the housing stock get way out of whack.

Apparently the bubble is not bursting.


http://money.cnn.com/2005/09/13/real_estate/buying_selling/real_estate_fall_trends/index.htm?section=money_pf

All articles I've seen indicate inventories are climbing steadily, along with lower Median NEW home prices, and higher exisitng home prices. It looks like many are running for the exits, but this turkey ain't done. However, if you look at homebuilder stocks, and FNM, FRE, you'll notice they've taken quite a hit. You can infer the experts are predicting lean times ahead.

Please post some of these articles. I am curious. That isn't what I am seeing locally....except for the higher existing home prices.

Oh, boy. Where do I start?

Southern Oregon
"For the fifth consecutive month, home sales in the county�s urban, or incorporated, areas have declined from 2004 levels. The inventory of houses on the market in those areas has grown 21 percent over the past year. Still, August�s median sale point rose to $275,000 from $223,250, according to figures compiled by Medford appraiser Roy Wright."

S.D. blazes new trail in housing slowdown
"San Diego County, which set the pace for Southern California's rapid climb in home prices, could be leading the region in a slowing of appreciation that has brought prices to just above last year's levels.... Last month's sales in San Diego County continued a 14-month slowdown, DataQuick's report showed. There were 5,379 transactions last month, down 3.6 percent from August 2004. The highest sales count in this cycle was reached in June 2004 when 6,208 sales were recorded."

Home Sales Statistics August 2005
"Average sales prices continued to climb through August in Northern Virginia, despite significant increases in inventory and fewer sales. Average sales prices rose to $558,880, a 24% increase over August 2004's average of $449,678. Sales were 8% lower this month compared to the same time last year while active listings were up 47%."

Things appear desperate in Detroit:
Reality invades Metro Detroit's housing market
The entire article is nothing but gloom. It's rather shocking.

Median home prices on Long Island rise again
Median prices continue to skyrocket, but inventories climb. Price reductions emerging.

From ziprealty.com, Phoenix listings have grown from 10748 on 7/30/05 to 16816 on 9/14/05. What's that, 50-60% increase in inventory?

CONDO UH-OH: Softening Manhatten prices

I will try to find some info on Florida and the Northwest.

I can confirm a definite slow-down in Phoenix. Open house showings have slowed down to almost nothing, and inventory is rising fast. The Phoenix newspaper is predicting 6% appreciation for 2006.

6% appreciation is still appreciation...I would not call that a bubble popping. At least not until we see a flat line or depreciation.

Patience, young grasshopper. It took some time to appreciate, and it will take some time to deflate. Word is prices will reach the apogee and hang until inventories reach a point at which time reality must be accepted. Keep appendages near torso. It will get ugly.

Foreclosures are exploding in Massachusetts - up 29% this year. Here is a quote from an article published today...

"Through July, foreclosure filings are up 29 percent statewide over last year, according to the report by ForeclosuresMass.com, a Web site for real estate professionals, investors and mortgage brokers.

In July, the most recent month for which data is available, 1,001 foreclosures were filed statewide, up from 611 during the same month in 2004, according to the company.

Increases are taking place in every county, except Dukes.

Foreclosure filings in Bristol County so far this year are up 36.46 percent over 2004 — the third highest percentage increase of any county in the state.

There were 83 foreclosures in Bristol County in July, compared to 50 in July 2004. Bristol County posted a total of 539 foreclosures so far this year, compared with 395 filings for the same period in 2004.

Foreclosure filings are up 33.5 percent with 708 so far this year in Plymouth County, where there were a total of 530 filings for the same period in 2004. In July, there were 100 foreclosure filings in Plymouth County, compared to just 82 in July 2004.

Foreclosure filings are up 36.41 percent in Norfolk County, from 532 so far this year, compared with 390 in the same period in 2004."

I went to Foreclosuresmass.com. They only list a few properties. If you don't have but 4 properties in foreclosure and you add one more...well that's a 25% increase. But still not many foreclosures.

I'm not a real estate agent or anything...In fact I hope the market declines because I am a renter, but I am just not seeing it around here.

from an investing newsletter a few days ago:

Housing Affordability

In 1999, 30 yr fixed rates were 8%. A $2000 payment would service a mortgage of $275k. Today, with 5.5% 30 yr fixed rates, the $2000/month will get you a $350k home. That's a 27% increase. Let's not stop there. Using an interest-only financing, $2000/month gets you into a $440k mortgage. Not to be outdone, lenders offered the interest-only ARM. With rates recently at 4.25%, $2000/month will give you a mortgage of $565k. Would anyone care to work the numbers with a teaser 1% introductory rate advertised in markets like San Diego?

$565k/$275k = 105% increase

;) :p SmileWavy

Turb:
I hear those low teaser rates advertised on the radio all the time in the S.D. area. I live in the south bay area of S.D. - the 6th fastest growing area of the U.S. I see young ladies (20s) driving BIG SUVs (Escalades, etc.) all over the place. One young couple I know (he's an electrical engineer, she's a teacher, probably better off than lots) recently sold a small house (recent development) in the area for 580K and bought one for 950K. Her comment was, "Why not? May as well do it while we can". I hear of so many maxxed out on credit, taking out huge home equity loans, buying like mad. It really scares me. Maybe I don't see something, but if there is a blip in the economy, interest rates, the economy goes down, whatever - I see a lot of people loosing their lifestyles and wondering what happened. Daily I hear advertisements - no credit, bad credit, no problem. Just scarry.

Hehe, Evans. It does not surprise me. Stories like that are pretty common. New bankruptcy laws in October will make it harder to just walk away when things start to get tight. Bankruptcy filings have skyrocketed before the new law goes into effect.

The Economist states the value of residential real estate in developed countries has grown from $40 trillion to $70 trillion in five years. The numbers are staggering.

It is different this time. This is the new economy. :rolleyes: