quote:

ORIGINAL: tj444

quote:

ORIGINAL: Hillwilliam
Which part of "we never boomed so we never depreciated" did ya miss?

Our area has always had very low turnover. People buy a house and stay in it. My house. built in '39. I'm the second owner.

Neighbor on one side. built in 45. Neighbor is the second owner.

Other side. Built in '42. 3rd owner lives there now.. I have a listing that the most recent deed is from 1906. Just uber stable.

even places where they say they never boomed, there usually has been some appreciation over the years, certainly not as much, and then some depreciation, perhaps not much. It doesnt take much for someone with a 3% down mortgage to get underwater even with a small amount of depreciation..

But if thats the case then why is the real estate market so slow there?

quote:

ORIGINAL: Kana

quote:

ORIGINAL: MrRodgers

Funny you should say that...'what my house should be worth.' Just what should any house be worth ? Worth about as much say for example, for me alone to pay off my mortgage typically in 6 years as the market was in the eastern 'suburbs' of the 1870's or worth about as much as to mortgage one now that takes over 1/3 of our two incomes...30 years to pay off even though it could be pretty damn near...the same house ?

Funny you should say that, cuz this was the one phrase I lingered over...and knew someone was gonna pick up on.
Technically, the flippant answer is that any commodity is worth what the market will bear.
But we all know the market can be wrong (Points at his overvalued house estimates in 2007).
At one point my house was appraised at 250. Now that was just wildly out of line-pretty much everyone was aware that we were operating in a speculator driven boom. Now I would be shocked if someone offered 145.
Realistically, the house is worth about 170-180-that's a reasonable price, what the finance guys call true market value.
Course an accountant would judge it's worth at book cost, but we all know they just juggle numbers anyhow :-)

quote:

ORIGINAL: tj444

Is water a big problem? are there small lakes there or is it all dry? could you dig dugouts for a water source?

quote:

ORIGINAL: Hillwilliam

In the mid 90's, pasture was about $4000/acre in large tracts in a rural area (not development land)
Now, It's around $6000/acre. It varies tremendously depending on how much water is available for livestock/crops and the topography. (It's hilly to mountainous around here).

That's about a 6% annualized appreciation which is sustainable.

Markets in FL that were showing 20-25%+ were unsustainable. It HAD to crash.
A new house is worth Land + Labor + Materials + fees + markup.

Around here, a brand new 3/2 has 100,000 worth of materials and labor in it and the lot is worth about 15,000. The builders are asking 129,900.
The problem in overheated markets is that a home would sell 3-4 times in a year and noone ever moved in. They just flipped them. I feel sorry in a way for the poor SOB that realized he had just spent a half Mil for something that had $200,000 in labor and materials in it and was sitting on a 50,000 lot. (do the math)
Bottom line is that he did it to himself.

Large numbers of ignorant greedy investors (Fast Buck Freddies) crash markets.
Everyone seems to forget day traders and the DotCom boom and bust.

Savvy investors pick up what's left after the amateurs go broke.

quote:

ORIGINAL: SoftBonds


I found myself in Dubai around the time of the US crash. Local regulators were trying to impose a requirement that folks who bought condo's had to live in them for a month before selling.
Condo's were selling 4-5 times between when the builders put the condo up for sale, and when they actually finished the building!!!
(yes, builders were selling condo's that were not yet built).
"Investors," were buying the condo's with 10% down, and selling a few weeks later with enough profit to triple or more their money. Of course, you can guess what happens when the market crashes...

quote:

They know what they can afford and stick to it. They and/or some family member has always been poor and they know to squirrel some away for 'bad times'.

quote:

ORIGINAL: Owner59

http://www.bloomberg.com/news/2012-02-24/purchases-of-new-houses-in-u-s-exceeded-forecasts-in-january.html

"Sales, tabulated when contracts are signed, fell 0.9 percent to a 321,000 annual pace from a 324,000 rate in December that was stronger than previously reported, figures from the Commerce Department showed today in Washington. The median estimate of 77 economists surveyed by Bloomberg News called for a rise to 315,000. The number of homes for sale dropped to a record low."


And now for the requisite con`s denial,spin and sour-grapes whining.....the icing on thw cake......

quote:

ORIGINAL: Kana

quote:

Purchases of new homes in the U.S. exceeded forecasts

So someone sold their house?

Grins
Seriously though, I used to do real estate financial analysis for this iron fisted, steel brassiered wombat who was one of the nations experts in the field and it was her informed opinion that right now in the US we have enough houses left over from the real estate boom/building glut sitting empty to satisfy US need for the next decade if not one new house is built during that time frame.
If I was a builder or realtor, I would be worried.

quote:

ORIGINAL: tj444

quote:

ORIGINAL: Kana

quote:

ORIGINAL: MrRodgers

Funny you should say that...'what my house should be worth.' Just what should any house be worth ? Worth about as much say for example, for me alone to pay off my mortgage typically in 6 years as the market was in the eastern 'suburbs' of the 1870's or worth about as much as to mortgage one now that takes over 1/3 of our two incomes...30 years to pay off even though it could be pretty damn near...the same house ?

Funny you should say that, cuz this was the one phrase I lingered over...and knew someone was gonna pick up on.
Technically, the flippant answer is that any commodity is worth what the market will bear.
But we all know the market can be wrong (Points at his overvalued house estimates in 2007).
At one point my house was appraised at 250. Now that was just wildly out of line-pretty much everyone was aware that we were operating in a speculator driven boom. Now I would be shocked if someone offered 145.
Realistically, the house is worth about 170-180-that's a reasonable price, what the finance guys call true market value.
Course an accountant would judge it's worth at book cost, but we all know they just juggle numbers anyhow :-)

It is worth what the market will bear,.. just once prices hit the high point, the number of people willing to pay that have bought and the ones left have decided they wont pay that price so it goes down...

I tend to look at what a property would rent for, to determine what it would be worth (to me).. Part is also, the cost to replace it.. in CA, it will cost $45-50,000 in many cities/counties just to pay the development/impact fees to get a building permit,.. so a small older house with a price of $50,000 would be the same cost as those fees, you are getting the small house and land for free.. you can then add 500sqft at a time and end up with the house you want for minimal building permit costs.. and as i understand it, because you buy it cheap, your property taxes will be very low forever thanks to Prop 13...

quote:

ORIGINAL: Hillwilliam

In the mid 90's, pasture was about $4000/acre in large tracts in a rural area (not development land)
Now, It's around $6000/acre. It varies tremendously depending on how much water is available for livestock/crops and the topography. (It's hilly to mountainous around here).

That's about a 6% annualized appreciation which is sustainable.

Markets in FL that were showing 20-25%+ were unsustainable. It HAD to crash.
A new house is worth Land + Labor + Materials + fees + markup.

Around here, a brand new 3/2 has 100,000 worth of materials and labor in it and the lot is worth about 15,000. The builders are asking 129,900.
The problem in overheated markets is that a home would sell 3-4 times in a year and noone ever moved in. They just flipped them. I feel sorry in a way for the poor SOB that realized he had just spent a half Mil for something that had $200,000 in labor and materials in it and was sitting on a 50,000 lot. (do the math)
Bottom line is that he did it to himself.

Large numbers of ignorant greedy investors (Fast Buck Freddies) crash markets.
Everyone seems to forget day traders and the DotCom boom and bust.

Savvy investors pick up what's left after the amateurs go broke.

quote:

ORIGINAL: Kana


I live in Baltimore (in a hot, artsy, yuppie, highly educated neighborhood nonetheless) which is one of the areas kinda sheltered from the crisis due to proximity to DC/availability of federal jobs and my house has lost 1/3 of it's value over five years.
Don't know bout elsewhere but that's how it looks at the ground level here.
Were houses over-valued then?
Sure.
But now things have flipped and my house is valued at less than what it should be worth.

quote:

All true but residential real estate is not in a free market. The govt. has been buying up mortgages with ever increasing prices and since Fannie so inflation has been part & parcel. The only way houses could reach the speculative frenzy as we recently experienced is that over 80% of the mortgages were bought up by FHA or Fannie/Freddie. FHAVA has no business whatsoever in covering $700,000 homes.