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Old 03-13-2007, 02:31 PM
 
Location: WPB, FL. Dreaming of Oil city, PA
2,909 posts, read 12,991,105 times
Reputation: 991

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Location=West Palm Beach, FL

Our parent's house used to be "worth" $737k between late 2005 and early 2006. Today its worth $584k, this is a drop of $153k in one year! 21% drop, 79% value remaining. The bottom of the market isnt due till 2009 and if we assume 20% drop a year, itll be $467 in 2008 and $374k in 2009.

Parents paid $225k for it in 1995 and if its worth $374k in 2009, thats a 3.7% increase a year(when averaged out) Id say $425k in 2009 because Zillow didnt account for the renovations/remodeling my parents did to their house.

This makes sense that prices are dropping or "correcting" themselves to get back in line with fundamentals and inflation. The bubble caused prices to double or even triple in a short period and now prices are dropping by 30-50% to "cancel" the bubble insanity.

Lets say prices didnt drop from the peak of $737k, this would correspond to a 8.9% increase on average from 1995 to 2009 and we all know this is an unsustainable rate and that a 3.7% increase is actually reasonable and goes with fundamentals. This means people who bought between the year 2000 and 2007 overpaid for their house. Our parents bought it before the big price hike so they paid a correct and fair price. The "equity" they will lose is not real equity but bubble fueled crazed out of fundamental false equity.

That bubble should have never existed and price increases about 4% a year is normal. The chart below shows a $225k house and the paranthesis denotes a normal increase if no bubble.

1995=$225k($225k)
1996=$233k($233k)
1997=$242k($242k)
1998=$251k($251k)
1999=$265k($260k) <------starting to bubble
2000=$290k($270k)
2001=$350k($280k)
2002=$425k($290k)<-------bubble going on big time
2003=$550k($301k)
2004=$650k($312k)<-------bubble in full force
2005=$737k($324k)
2006=$700k($336k)<-------bubble starting to deflate
2007=$584k($348k)
2008=$467k($361k)
2009=$374k($374k)<------bubble fully deflated
2010=$388k($388k)
2011=$402k($402k)<-----normal 3.7% appreciation

You can graph this if you want and post the graph you drew. I am too lazy to do the graph part.

How much is your house dropping and is it following the above chart? Not all areas will see the same drop because some areas did not experience a big bubble such as Texas for example.
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Old 03-13-2007, 02:53 PM
 
Location: Burlington VT
1,405 posts, read 4,381,198 times
Reputation: 544
Need affordable home -

You might want to join the thread called Housing Bubble Smackdown...
It's pretty closely related to this.

And I'm curious - you know exactly what's going to happen to the housing market, right? How do you come by this knowledge? And what money do you have riding on this knowledge of the future? If I knew exactly what was going to happen to the national housing market, I'd be able to make enormous returns in equities and in the bond market... in pretty short order too. Not to mention in various forms of Real Estate investment per se. But I don't know nearly as much about the future as you seem to.

I'm not trying to be unhelpful here. And I'm not challenging your predictions, as much being just a wee bit wary of anybody who's so certain about the future, outside of a few very limited and prudent assumptions our grandparents and parents relied upon.

How did your crystal ball get so clear?

Your friend,
David
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Old 03-13-2007, 03:14 PM
 
3,161 posts, read 8,096,607 times
Reputation: 2385
I am in Connecticut and my house appears to have the same value as it did two years ago. You have to love areas that didn't see rapid appreciation aka the dreaded bubble!

The real estate market will go up and down. Unless you bought recently and want to sell, it shouldn't affect your life that much. People should stop looking at their home as an investment (unless you flip for a living) and take it for what it is - just a place to live, not some sort of equity machine or get rich quick scheme.
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Old 03-13-2007, 06:29 PM
 
Location: NE Florida
9,362 posts, read 22,804,727 times
Reputation: 9286
Quote:
Originally Posted by Need_affordable_home View Post
Location=West Palm Beach, FL

Our parent's house used to be "worth" $737k between late 2005 and early 2006. Today its worth $584k, this is a drop of $153k in one year! 21% drop, 79% value remaining. The bottom of the market isnt due till 2009 and if we assume 20% drop a year, itll be $467 in 2008 and $374k in 2009.

Parents paid $225k for it in 1995 and if its worth $374k in 2009, thats a 3.7% increase a year(when averaged out) Id say $425k in 2009 because Zillow didnt account for the renovations/remodeling my parents did to their house.

This makes sense that prices are dropping or "correcting" themselves to get back in line with fundamentals and inflation. The bubble caused prices to double or even triple in a short period and now prices are dropping by 30-50% to "cancel" the bubble insanity.

Lets say prices didnt drop from the peak of $737k, this would correspond to a 8.9% increase on average from 1995 to 2009 and we all know this is an unsustainable rate and that a 3.7% increase is actually reasonable and goes with fundamentals. This means people who bought between the year 2000 and 2007 overpaid for their house. Our parents bought it before the big price hike so they paid a correct and fair price. The "equity" they will lose is not real equity but bubble fueled crazed out of fundamental false equity.

That bubble should have never existed and price increases about 4% a year is normal. The chart below shows a $225k house and the paranthesis denotes a normal increase if no bubble.

1995=$225k($225k)
1996=$233k($233k)
1997=$242k($242k)
1998=$251k($251k)
1999=$265k($260k) <------starting to bubble
2000=$290k($270k)
2001=$350k($280k)
2002=$425k($290k)<-------bubble going on big time
2003=$550k($301k)
2004=$650k($312k)<-------bubble in full force
2005=$737k($324k)
2006=$700k($336k)<-------bubble starting to deflate
2007=$584k($348k)
2008=$467k($361k)
2009=$374k($374k)<------bubble fully deflated
2010=$388k($388k)
2011=$402k($402k)<-----normal 3.7% appreciation

You can graph this if you want and post the graph you drew. I am too lazy to do the graph part.

How much is your house dropping and is it following the above chart? Not all areas will see the same drop because some areas did not experience a big bubble such as Texas for example.
Where are you getting these values? And what is the property appraised at by the property appraiser?

The 2005 price wasn't a true value, but a temporary amount pushed unrealistically high. It's now coming back into line and will not continue to have such dramatic drops.
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Old 03-13-2007, 06:39 PM
 
Location: Central Florida
1,406 posts, read 4,673,569 times
Reputation: 842
Quote:
Originally Posted by hereinfla View Post
Where are you getting these values? And what is the property appraised at by the property appraiser?

The 2005 price wasn't a true value, but a temporary amount pushed unrealistically high. It's now coming back into line and will not continue to have such dramatic drops.
He may be using zillow.com -- but I wouldn't put a lot of faith in that. I've not seen one house in our area in which that "estimate" is accurate.
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Old 03-13-2007, 06:42 PM
 
Location: WPB, FL. Dreaming of Oil city, PA
2,909 posts, read 12,991,105 times
Reputation: 991
Quote:
Originally Posted by chaz longue View Post
And I'm curious - you know exactly what's going to happen to the housing market, right? How do you come by this knowledge? And what money do you have riding on this knowledge of the future? If I knew exactly what was going to happen to the national housing market, I'd be able to make enormous returns in equities and in the bond market... in pretty short order too. Not to mention in various forms of Real Estate investment per se. But I don't know nearly as much about the future as you seem to.

I'm not trying to be unhelpful here. And I'm not challenging your predictions, as much being just a wee bit wary of anybody who's so certain about the future, outside of a few very limited and prudent assumptions our grandparents and parents relied upon.

How did your crystal ball get so clear?

Your friend,
David

The experts I know make those predictions. I also use Zillow and some good old math to arrive at those figures and they make sense. $225k in 1995 should be $374k in 2009 at 3.7% average annual appreciation. I am not gonna tell you what to buy, this is not what my topic is about. Its about how much your house is dropping.


Quote:
Originally Posted by mels View Post
I am in Connecticut and my house appears to have the same value as it did two years ago. You have to love areas that didn't see rapid appreciation aka the dreaded bubble!

The real estate market will go up and down. Unless you bought recently and want to sell, it shouldn't affect your life that much. People should stop looking at their home as an investment (unless you flip for a living) and take it for what it is - just a place to live, not some sort of equity machine or get rich quick scheme.
Maybe your area will stay flat but inflation will make houses "cheaper" The market is on its "down" trend and will go back uo once prices return to sanity.


Quote:
Originally Posted by hereinfla View Post
Where are you getting these values? And what is the property appraised at by the property appraiser?

The 2005 price wasn't a true value, but a temporary amount pushed unrealistically high. It's now coming back into line and will not continue to have such dramatic drops.

My parents house was appraised at a few thousand more than Zillow's zestimate. If we were to appraise it again, im gonna guess around $600k today and around $500k next year. The true value is the 2009 price. How much is your house dropping? Keep up the post guys, we are curious what the house market in your city is
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Old 03-13-2007, 07:01 PM
 
Location: NE Florida
9,362 posts, read 22,804,727 times
Reputation: 9286
Quote:
Originally Posted by Need_affordable_home View Post
The experts I know make those predictions. I also use Zillow and some good old math to arrive at those figures and they make sense. $225k in 1995 should be $374k in 2009 at 3.7% average annual appreciation.

My parents house was appraised at a few thousand more than Zillow's zestimate. If we were to appraise it again, im gonna guess around $600k today and around $500k next year. The true value is the 2009 price.
So you used Zillow and the "experts" that you know (the names of which you can't reveal to us, just as you can't reveal what funds are paying 10% interest) to chart the rise and fall of the value of your parents' home. Then you say that your parents house appraised at more than Zillow...

On one hand, you rely on Zillow's data, but on another, if it doesn't suit your purpose, you don't. Whatever it takes to boulster your wild opinions, I guess.

I don't think you have any idea of the drop in your parents' home value, as you contradict yourself repeatedly. You just have all these figures swirling around in your head and when one pops out, if it makes your case, you post it.
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Old 03-13-2007, 07:41 PM
 
Location: Burlington VT
1,405 posts, read 4,381,198 times
Reputation: 544
The experts I know make those predictions. I also use Zillow and some good old math to arrive at those figures and they make sense. $225k in 1995 should be $374k in 2009 at 3.7% average annual appreciation. I am not gonna tell you what to buy, this is not what my topic is about. Its about how much your house is dropping.

Umm - What experts you know? Local Bank appraisers? Your State property tax returns? The sale documents from your MLS?

Zillow's fun. I'd buy my house at Zillow's price. Twice. Zillow thinks it's 1985 in my neighborhood. To be fair, I'm sure it's more accurate in yours.

My house isn't dropping in value actually. Nor are a lot of folks. And as pointed out in a terrific post above - if you're not looking to sell and make a quick profit, it may well not matter that your primary home's value fluctuates. Over the time it takes to raise a family, or spend your retirement, it's still a darned good place to park your housing payments. Vastly better than an apartment in which to wait for a crash to benefit from. People who suggest others sell and rent while speculating that thier local market is going to drop like a stone are really going out on a limb and asking others to follow.

BTW - What rate of inflation are your experts observing right about now?

And if you're inclined I'd still welcome answers to the questions I posed up top...

David
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Old 03-13-2007, 07:47 PM
 
Location: Polish Hill, Pittsburgh, PA
30,205 posts, read 67,351,355 times
Reputation: 15855
Our home appreciated $100,000 between 1996 and present. Yup, there's no "bubble" here in NEPA, and we're lovin' it!
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Old 03-13-2007, 08:15 PM
 
Location: NE Florida
17,835 posts, read 29,969,929 times
Reputation: 43273
lets see built house nov 2001 $192k one of the first 20 houses built in a 108 house subdivision
apprasial Jan 2004 $260k
apprasial Apr 2006 $360k
when we were looking to put it on the market late 2006 early 2007 comps put the house between $350 & $360
so lets see hmmm thats a $168k increase in not quite 6 years.
Due to our location(being right next door to 2 "grade A" schools being one of them) and the fact that we are still "catching up" with the other developments in the area we(including quite a few Realtors) don't see the houses going down.
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