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Face it, if someone moved here at the height of the market, say 2005-2006, I bet over 50% of those folks are underwater with their mortgage. Can you say short sale????
We moved into a neighborhood that started near $300k several years ago. We bought brand new last year for $30k less. And, I am guessing that many of those who bought several years ago did not put much down. These are young kids buying a big house for their first home. Now, at block parties you hear these people complaining that they owe so much more than houses are selling for. What ever happen to starting small and working your way up?
Even though our house was listed for far more than we bought it for, the appraisal (from the builder's finance company) still came in at our purchase price. We just received the tax appraisal and it came in at the $300 mark because they were required to use 2007 prices.
I have very little faith in all the numbers being thrown around today.
Obviously, you guys don't know pink very well. He buys/sells low-end properties for a living. Real estate is still the best investment out there, as long as you are smart about it. Certainly better than the volatility of the stock market!!
Mikey, you are right, it is the higher-priced properties that are now in serious trouble as far as values go. However, the lower-end properties are in somewhat of a shorter supply, thus, their prices have probably bottomed and are correcting to become stable. (again, depending upon your certain neighbourhood).
Prices will never be again what they were in the boom times, but, they will still appreciate (at a lower rate, granted) and not depreciate once they have become stable.
Yeah, that's why I tried to quantify it with a number since we can't speak of "the market" overall. Properties <200k are more stable (whatever that means heh) and will actually see competition when priced right. Based on history I believe that pink is buying <100k properties and flipping them for profit - which could be very lucrative if you know the area well.
The sprawl areas are continuing to get hammered and show no signs of stabilization. It almost becomes that you can't get a good enough deal, especially when you consider the mcMansion type communities. Factor in what the tract builders are offering to TRY and finish off many of the subdivisions and things have nowhere to go but down.
Real estate is still the best investment out there, as long as you are smart about it. Certainly better than the volatility of the stock market!!
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cc, you need to clarify this statement because people can misunderstand what I THINK you are saying.
You (I assume) mean when you say "real estate is the best investment", you mean people who "flip" homes or rent out as landlords, correct?
You don't mean buying a home and hoping your house appreciates double digits, correct?
The stock market can be a great tool over the long term to achieve your financial goals if you are diversified and ignore the noise of the market and in it for the long term. It certainly has helped our family get on track to meet them....Too many people took on too much risk over the past 2 years and lost a ton on paper when they should've been way more conservative (I'm talking about those closer to retirement)...it was a good (or bad) wake up call for many.
.... Real estate is still the best investment out there, as long as you are smart about it. Certainly better than the volatility of the stock market!!....
The smart money has long since left this market. You made two errors that end up burning a lot of investors no matter what they invest in.
The first is assuming future returns based on past results. The problem with this is it does not consider changes to the market. The housing market has changed dramatically and there is no modern historical precedent for where we are now.
The second i.e. investing in real estate is safer than the stock market, is a logical fallacy. An investment doesn't automatically become good because another one is bad. If anything, one should figure out why A is bad and make damn sure that it doesn't also apply to B.
People continue to make the mistake of assuming that because housing prices have dropped then housing must be a good buy. The mistake is the irrational thinking that their good buy somehow will mysteriously stop dropping in price once they sign the contract. I'm sure that pink knows this based on posts here, but it appears that many don't.
The stock market can be a great tool over the long term to achieve your financial goals if you are diversified and ignore the noise of the market and in it for the long term. It certainly has helped our family get on track to meet them........
Money is leaving the stock market by the billions now, and I mean by institutional investors because it is no longer what it once was. Until about 15 years or so ago, it was a place where individuals could invest capital that would use to increase production in the USA. In the last 10 - 15 years, it has become a gambling casino for high frequency traders who have the advantage of gaming the market. In other words, it's speculative now.
The common wisdom has been to buy and hold. Buy and hold investors have not made any money in the stock market in more than 10 years now. (by going by the indexes) Even young investors should consider this because this represents a significant portion of a working career. This comment is only being made for anyone in stocks to go and look into what is really going on now.
Last June, on our 7.5 hr return drive to western Pa, we decided to put our home on the market. The realtor we contacted priced our home at about $35,000 less than I, in my "vast experience", thought it should sell for. The home sold in 2 days at the asking price and we have not carried 2 mortgages for 10 months. Several that were on the market at the same time as ours are still not sold. Now when we make the permanent move we don't have to worry about selling a house. It was worth it to get out when we thought the getting was good. The hardest part of our move was finding temporary housing to rent because we have a large dog. Pet friendly rental property in our area of Pa is very very rare.
Buy and hold investors have not made any money in the stock market in more than 10 years now. (by going by the indexes) Even young investors should consider this because this represents a significant portion of a working career. This comment is only being made for anyone in stocks to go and look into what is really going on now.
I've made money over the past 10 years because I just don't have 100% of my money in the s&P500 and for those to advocate that (only investing in the s&p) really don't know diversified investing.
So to make a blanket statement and ignore what I said about diversifying is incorrect.
Well, actually, I switched my money into bonds b/f things fell apart and so managed to hold onto that portion of my portfolio . . . and have subsequently made some modest gains.
Had hubby listened to my advice on this we would have done much better when the bottom fell out. On the other hand, stuff that was in mutual funds and over which we had no administrative control didn't fare well b/c there just wasn't much we could do about fund holdings that we couldn't re-sector.
In addition, we have done well with a few carefully selected restaurant/food sector stocks, believe it or not. Of course, we purchased them in the 90s, but even when folks were bailing out, I insisted we hold on and we have done well w/ them in the last decade.
I've made money over the past 10 years because I just don't have 100% of my money in the s&P500 and for those to advocate that (only investing in the s&p) really don't know diversified investing.....
My statement didn't have anything to do with this. I recommend reading it again. I was commenting on the fact that you said that the best bet is to go long in stocks. Now you are saying that you need to pick and choose stocks for this to work. Sure you can make money this way but it is nothing but a crap shoot. Stock holders of General Motors, Enron, US Airways, and the 700 banks that have been shutdown over the last couple of years, to name a few, will all tell you so.
My commentary is that to "assume" that because stocks have been historically a good place to put money, that they will continue to be that way. Furthermore, the stock market has been turned into a giant casino that is dominated by low volume (real investors have left) and high frequency trading. This is not your dad's stockmarket and if you decide to play here, you better have some cajones of steel. When it can drop 1000 points in a few hours, and some stocks can go to 1 cent during this time, and nobody will say why, this isn't a place where sensible people should have their investments. Not until this snake pit has been cleaned up.
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