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I've always mentioned to those who were buying that a house is not a virtual ATM but a consumer product like a car. You need a car to get to places (in most cases), and you need a house to live in. House prices, on a normal basis, appreciate very slowly only because of inflation and a slightly decreased amount of land. This housing fad since 9/11 was mostly attributed to shifting monies out of a stock crash into something that was thought of as safer. As a result of the "good times" in housing, the fantasy that you can retire off of virtual dollars in the form of home equity has ended. What this means for the triangle specifically? Dunno. As transplant money dries up, if sellers choose not to leave the triangle and keep their primary residences, the downfall should be short lived and relatively painless. On the other hand...
Very true, I would say that as you and others have said the appreciation over the last five years has been very unsustainable. However remember many of the home owners in the North East purchased their homes 25-35 years ago and have land that has escalated along with property. 3 acres in suburban areas can bring you 500K-1 mill with out the house. They have such appreciation that a 10%-20% drop still leaves them wealthy. Like with the market who crys about a 10% correction when they have been in for years and have seen a year over year compounded average of 11% in their portfolio. Most long term investors took the recent 10% correction with a ho hum.
Very true, I would say that as you and others have said the appreciation over the last five years has been very unsustainable. However remember many of the home owners in the North East purchased their homes 25-35 years ago and have land that has escalated along with property. 3 acres in suburban areas can bring you 500K-1 mill with out the house. They have such appreciation that a 10%-20% drop still leaves them wealthy. Like with the market who crys about a 10% correction when they have been in for years and have seen a year over year compounded average of 11% in their portfolio. Most long term investors took the recent 10% correction with a ho hum.
When gauging how much the property has really gone up, consider the 25-35 years ago up until 1999-2000. Anything afterwards is arguably bogus, except for the person who gets out now. You are compounding the last 5-6 year sheeple mentality (by sheeple I'm referring to the speculator and spec-wannabe sheeple) along with the previous 20-30 years. You'll find that in real terms, after maintenance, taxes, etc that the growth was minimal compared to stocks/bonds.
I'm highly confident that prices will return to 2001-2002 levels before escalating again. Considering my argument on macroeconomic pressures, I stand by it regardless of the houses condition, location, or any other factor.
When gauging how much the property has really gone up, consider the 25-35 years ago up until 1999-2000. Anything afterwards is arguably bogus, except for the person who gets out now. You are compounding the last 5-6 year sheeple mentality (by sheeple I'm referring to the speculator and spec-wannabe sheeple) along with the previous 20-30 years. You'll find that in real terms, after maintenance, taxes, etc that the growth was minimal compared to stocks/bonds.
I'm highly confident that prices will return to 2001-2002 levels before escalating again. Considering my argument on macroeconomic pressures, I stand by it regardless of the houses condition, location, or any other factor.
First of all the appreciation numbers I was using were for stock not housing. The historical range for the stock market is 9-11% and with compounding my 11% is within reason. You know the laws of doubling. With regards to housing a home that at the peak was 700K that falls by 50% to 2001 prices is still 350K. Now if that house was purchased 35 years ago and is paid off that leaves 350K equity for retirement. Can I get a house in the Triangle for 350K. If the answer is no then I concur or are you articulating that houses will go back to 1972 levels? Wait and how much were houses in 1972? Even at 1972 levels I should be able to buy a house here that is now priced at 1972 levels. A paid off house is a paid off house. Now bring on those wealthy retirees from up north.
First of all the appreciation numbers I was using were for stock not housing. The historical range for the stock market is 9-11% and with compounding my 11% is within reason. You know the laws of doubling. With regards to housing a home that at the peak was 700K that falls by 50% to 2001 prices is still 350K. Now if that house was purchased 35 years ago and is paid off that leaves 350K equity for retirement. Can I get a house in the Triangle for 350K. If the answer is no then I concur or are you articulating that houses will go back to 1972 levels? Wait and how much were houses in 1972? Even at 1972 levels I should be able to buy a house here that is now priced at 1972 levels. A paid off house is a paid off house. Now bring on those wealthy retirees from up north.
Agreed.
That's why I don't understand people getting all bent out of shape with falling house prices since the fall will likely be universal and allow first time homebuyers into the market as well as neutralize any losses in equity, since the new home is less costly. Only those who were leveraged on real estate will be (severely) affected.
That's why I don't understand people getting all bent out of shape with falling house prices since the fall will likely be universal and allow first time homebuyers into the market as well as neutralize any losses in equity, since the new home is less costly. Only those who were leveraged on real estate will be (severely) affected.
I think part of it is the drama of Brian Williams and others in the media. I find it incredible that if the Dow falls 300 points they talk about the wealth that was loss. However when it goes up they don't quantify the amount that was made. It is called being a prophet of doom and gloom. Hard as it is to believe there are actually people in City-Data who often have good points to be made but they couch it in such a negative pious way that their good points get missed.
Well I like the fact that I have no mortgage living here in a nice new house at 335K. I find it crazy how so many even in my new development are still thinking they can get top dollar on their homes. Two homes built less than two years ago have gone on the market and are now priced higher than 20 new builds in the same neighborhood here in the triangle. Only one showing so far in 3 weeks for the newest listing. People are still wanting to move with unrealistic prices. Maybe they don't have to move and think MAYBE I will get a buyer at a higher price. Good Luck with that . I mean my new place is only 18 months old and I just got the new tax assessment and I have already sent in a letter saying no way is it worth 350. More like 320. All of the new construction 20+ homes in my neighborhood are all listed from 265 to 332 as of today. Yes when we bought in July of 06 we well paid 30 grand more than I thought we should have, but made so much from our move from LALA land up north before the bottom fell out well I said go for it. We will keep our cars 3 extra years to make up the 30!
But everytime I look at my new house and think nice I own the darn baby I have to pinch myself. The triangle is a place where dreams still can come true. LOL.
A suburban trap, I am disappointed with the lack of mass transit in the area. It would seem that bus lines could work here but then again some of the roads are at maximum in the mornings. Especially those two lane babies in the Holly Springs, Cary areas. Same goes for the wake forest area.
It is however a really nice area the triangle. Not the greatest since white bread though and definatly not our final living place, a great place to use as a base of travel. We will travel extensivly over the next 5 to 7 years and then decide where to really retire to. This is just a way station.I do love the far west, but even that area has other issues. So as we settle into the Raleigh area and the wife enjoys here hometown I will enjoy the weather and nice people and say hey where is the snow, ? Heck how bout some rain!
Last edited by Happy2222; 12-01-2007 at 06:26 AM..
I think part of it is the drama of Brian Williams and others in the media. I find it incredible that if the Dow falls 300 points they talk about the wealth that was loss. However when it goes up they don't quantify the amount that was made. It is called being a prophet of doom and gloom. Hard as it is to believe there are actually people in City-Data who often have good points to be made but they couch it in such a negative pious way that their good points get missed.
Let's not forget the media talked the bubble all the way up.
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That is still a lot of appreciation.
