There's been a lot of talk lately about the 'real estate bubble' comparing in to the dot com nineties. So if it were to 'burst' would you be screwed? Nobody is going to buy your house at a profit for you if they have to pay 14% interest on MORE than what you payed.
::Poll:: How fvcked are you going to be when the real estate bubble bursts?
- Thread starter djheater
- Start date
I rent.
I guess it the real estate bubble bursts I'd be able to afford a nicer apartment, but beyond that, it wouldn't affect me at all.
I guess it the real estate bubble bursts I'd be able to afford a nicer apartment, but beyond that, it wouldn't affect me at all.
RandomFool
Diamond Member
Originally posted by: aphex
The townhouse i bought for $140k in September is now worth approx $235k, i sure as hell hope not in the next 2 years
I'm never gonna be able to buy a house
Originally posted by: aphex
The townhouse i bought for $140k in September is now worth approx $235k, i sure as hell hope not in the next 2 years
SELL SELL SELL
(hoping to encourage rash, irrational behavior)
- Jul 19, 2001
- 38,572
- 2
- 91
Originally posted by: djheater
Originally posted by: aphex
The townhouse i bought for $140k in September is now worth approx $235k, i sure as hell hope not in the next 2 years
SELL SELL SELL
(hoping to encourage rash, irrational behavior)
Actually, just checked again (last time i checked was a month ago), roughly worth $240-245k now
EDIT: We would except for a few reasons, #1, we cant afford anything around us, most of the home prices start in the 350-400k's.... #2, i have 2 more years left in law school
Originally posted by: aphex
Originally posted by: djheater
Originally posted by: aphex
The townhouse i bought for $140k in September is now worth approx $235k, i sure as hell hope not in the next 2 years
SELL SELL SELL
(hoping to encourage rash, irrational behavior)
Actually, just checked again (last time i checked was a month ago), roughly worth $240-245k now
How are you 'checking'?
- Jul 19, 2001
- 38,572
- 2
- 91
Originally posted by: djheater
Originally posted by: aphex
Originally posted by: djheater
Originally posted by: aphex
The townhouse i bought for $140k in September is now worth approx $235k, i sure as hell hope not in the next 2 years
SELL SELL SELL
(hoping to encourage rash, irrational behavior)
Actually, just checked again (last time i checked was a month ago), roughly worth $240-245k now
How are you 'checking'?
MLS, checking the same units for sale around the complex.
This bubble everyone speaks of only exists in very specific areas where people have driven up the costs astronomically high. 98% of the country won't be heavily affected when rates go up. The vast majority of areas the appreciation rates are very consistant and perfectly inline with the market trends.
When rates go up, you definatly see less refinancing of real property. You also see less sales transactions, but they just drop down to standard levels. The amount of sales transactions are not dramatically different from the historical trends. People always have to move, real estate always changes hands. There may be a slight spike in foreclosures, but that is more indicative of the job market and people borrowing far beyond their realistic means.
The people who buy houses in order to make a profit in a short amount of time are always going to lose in the long run. Flipping properties is a standard practice, but it is typically not performed by the typical one home owning family.
When rates go up, you definatly see less refinancing of real property. You also see less sales transactions, but they just drop down to standard levels. The amount of sales transactions are not dramatically different from the historical trends. People always have to move, real estate always changes hands. There may be a slight spike in foreclosures, but that is more indicative of the job market and people borrowing far beyond their realistic means.
The people who buy houses in order to make a profit in a short amount of time are always going to lose in the long run. Flipping properties is a standard practice, but it is typically not performed by the typical one home owning family.
Siddhartha
Lifer
- Oct 17, 1999
- 12,505
- 3
- 81
IIRC, this happened in Tokyo and drove Japan into a serious recession that took years for its economy to recover.
But aren't low interest rates driving the current boom?
Triumph
Lifer
- Oct 9, 1999
- 15,031
- 14
- 81
It's happened before, and it'll happen again. I've talked to coworkers who bought in the late 80's/early 90's when the market was doing this same thing. Crazy growth with no end in site. After it burst, alot of them were upside down on their townhouses/condos. Being upside down on a mortgage is not a good position to be in! It wasn't until the last couple of years that they recovered. And these guys are in the northern Virginia/DC metro and northern New Jersey/NY metro areas. Not exactly what you'd call economically depressed areas.
Right now it will go on, at least in this area, because there are jobs and there is a demand for housing. But it will reach a point where starting salaries will have to be way higher than what they are now to attract people to the area. As it is, young professionals making good money are stretching their budgets to the absolute maximum (50% of gross income spent on the house), just to get into the smallest houses available. Unless salaries increase by 20% a year, something has got to give.
Right now it will go on, at least in this area, because there are jobs and there is a demand for housing. But it will reach a point where starting salaries will have to be way higher than what they are now to attract people to the area. As it is, young professionals making good money are stretching their budgets to the absolute maximum (50% of gross income spent on the house), just to get into the smallest houses available. Unless salaries increase by 20% a year, something has got to give.
The savings and loan scandals and price fixing practices of lenders/appraisers made that happen.
It won't be that bad again.
Nope, never studied the history of real estate when I was in school for my state appraiser and realtors license.
Sure the bubble will pop in the same areas it has in the past. The same thing will happen with thoes areas in the future too. Thoes areas represent a small minority of the country. Focusing on them has no point.
But, feel free to endow me with all your illustrious real estate experience. I'm sure you're an oasis in a desert of ignorance.
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