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The media have been talking about a RE bubble bursting for several years. About two years ago a friend decided to sell and buy a bigger house. When he sold his neighbor was convinced that the bubble was about to burst so he sold his house and decided to rent and wait. The house sold for just around $400k and my friend bought a bigger house for $550k. Now my friend’s house is worth about $950k and his old house is around $650k. His brilliant neighbor who is still waiting for the bubble to burst has lost about $250k in appreciation and he is still renting.
The last real estate “bubble” where houses lost value was in the early to mid 90’s. In Orange County, CA it was about a 21% loss. This was due to a recession and the loss of several hundred thousand high paying aerospace jobs. It’s not likely that another recession like that is going to happen anytime soon. If it did and houses lost 21% then if you had purchased two years ago you would still be ahead. Of course if you bought now and prices dropped then you would be upside down until the house appreciated again.
If you are banking on adjustable loans being the killer of the RE market I wouldn’t bank on it. There have always been adjustable loans, but I can’t remember them ever being the reason for a housing crash. The fed raised rates all through out the late 90’s, but that didn’t kill the RE market in fact it enjoyed record appreciation. Even through out the 2000 recession RE appreciated.
I do think we are in for an adjustment, but I doubt it will be anything more than no appreciation for this year and modest 2-3% a year for a couple of years.
If you are waiting for homeowners to give their houses away because of a slow market you are in for a long wait.
I will build my house down wind from you, since you will be there first.
Yeah I bet. Don't pick one of those houses on the hills. I don't know how people buy those lots. Mine is completely level. I want to be able to use the lot and not sit on a cliff.
What I don't understand is people who keep "waiting to buy" biting their nails in expectation for the bubble to burst. Sure, there have been market adjustments in a few markets, but I've been hearing about a bubble burst for 10 years. So if you're (very) patient, go ahead and wait. But it might be a while...
My parents say that people told them to wait for the "bubble to burst" when they built a home for $65,000 in 1986 in the Minneapolis suburbs. The price of that house never went down in the past 20 years. They would still be waiting for the "burst" now 20 years later if they had not built at that time.
The media have been talking about a RE bubble bursting for several years. About two years ago a friend decided to sell and buy a bigger house. When he sold his neighbor was convinced that the bubble was about to burst so he sold his house and decided to rent and wait. The house sold for just around $400k and my friend bought a bigger house for $550k. Now my friend’s house is worth about $950k and his old house is around $650k. His brilliant neighbor who is still waiting for the bubble to burst has lost about $250k in appreciation and he is still renting.
The last real estate “bubble” where houses lost value was in the early to mid 90’s. In Orange County, CA it was about a 21% loss. This was due to a recession and the loss of several hundred thousand high paying aerospace jobs. It’s not likely that another recession like that is going to happen anytime soon. If it did and houses lost 21% then if you had purchased two years ago you would still be ahead. Of course if you bought now and prices dropped then you would be upside down until the house appreciated again.
If you are banking on adjustable loans being the killer of the RE market I wouldn’t bank on it. There have always been adjustable loans, but I can’t remember them ever being the reason for a housing crash. The fed raised rates all through out the late 90’s, but that didn’t kill the RE market in fact it enjoyed record appreciation. Even through out the 2000 recession RE appreciated.
I do think we are in for an adjustment, but I doubt it will be anything more than no appreciation for this year and modest 2-3% a year for a couple of years.
If you are waiting for homeowners to give their houses away because of a slow market you are in for a long wait.
I agree with everything but the last part. 100% actually. While you may hold out, there are others that have houses in escrow and want to sell and will deal to close escrow. Lady bought a house recently, appriasal came back $35k less. Thought deal was lost and seller sold it for $35k less! You just never know.
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