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We bought in five points back in 2000. Our home continues to appreciate. Just like the north raleigh home that I grew up in. My folks paid 28k in 1970 and sold for 125k in 1987. That same split level would sell for 300k today. Location location location. Our home has more than doubled since we bought it 7 years ago. We are not moving until we retire in 20 years to bogue banks. Equity is easily removed by realtors, movers and new furniture purchases.
I'm right there with ya! Right now I reside in Washington St. and own my home in Cary, free and clear and have it leased out. My home was purchased in January a year ago tomorrow. I paid $248,000 for it. I plan to relocate and live in the home in 7-10 years from now once I retire.
Right now today, it is probably worth the exact same I paid for it. My tax assesment I just recieved states it is worth $260,000. If it drops in value, whopie do, I'm ridiin it out. In the mean time, after all my expenses and care for the home, I'll net between $8000-$12,000 yearly in rental income. Sure, this is a little less of a return then if I had placed that $248,000 in a high yield savings, BUT If things turn back around in a few years, (and I expect they will) and we start appreciating even at 3%, then I'm sitting pretty.
Remember it is only a loss if you sell. Why would you sell into this market? I'm not even thinking about selling and anyone who does now is in a panic and not thinking clearly. Historically, as I said in my last post, a mild downturn in housing is healthy. I assure you, even with this bump in the road, that graph still points upward for the long term, from where we are now. 3-5 years out.
Everyone needs to just calm down, enjoy their homes and live life. The sky is not falling.
What about those who have to relocate because of jobs? I know of 2 families who are desperate...have to sell homes here because they are moving.
I'm in a simliar situation. I've reluctantly gone with refinancing my SFH. While it's "worth" $175K now, I hold no reservation on it's ultimate value after the crash. I fully expect to take at least a $30-50K bath on it, even with it being near 540 and 64. The HOA is already experiencing a severe deficit in homeowner dues and the HOA head asserts that it will only get worse, driving up costs for the rest of us. I blame the cheap townhomes in the back . I could kick myself for not selling last summer and sitting on the sidelines. Water under bridge I suppose...
If I really loved the house and planned on staying there for the next 15-20 years, I wouldn't have these worries at all. The real reason I'm so eager to sell is the possibility of leaving the area (again, sort of reluctantly).
Again, this is just my situation and everyone's is different.
Our home has more than doubled since we bought it 7 years ago.
This is a good data point for people claiming there wasn't rapid appreciation here in the triangle. Doubling in 7 years is 10%+ annual appreciation for those 7 years. Anyone want to claim that 10% annual appreciation is sustainable compared to wage growth?
By comparison, 125K in 1987 to 300K today is 4% a year or so (about 1% real return after inflation). 28K to 125K is more like 9% a year, but considering the sky-high inflation in the late 70s and early 80s, it's only 2.5% a year real return. Compare that with 8%+ real return in the last 7 years and you'll see that the recent increases are out of the ordinary.
Not that one property proves anything, but it's part of the trend I've posted before that show home prices here climbing way faster than incomes since the start of 2005. It's not as bad as some areas, but prices here have gone up faster than people's ability to pay for them. The next 3-5 years should work that out with a combination of price decreases and inflation. I'd much rather have home price deflation than out of control inflation everywhere else.
This is a good data point for people claiming there wasn't rapid appreciation here in the triangle.
I would consider the appreciation experienced by historic neighborhoods (Like Five Points) a bit of an outlier as far as the data analysis goes. It is difficult to draw a comparison between these unique historic neighborhoods and what is going on in the Triangle as a whole.
This is a good data point for people claiming there wasn't rapid appreciation here in the triangle. Doubling in 7 years is 10%+ annual appreciation for those 7 years. Anyone want to claim that 10% annual appreciation is sustainable compared to wage growth?
By comparison, 125K in 1987 to 300K today is 4% a year or so (about 1% real return after inflation). 28K to 125K is more like 9% a year, but considering the sky-high inflation in the late 70s and early 80s, it's only 2.5% a year real return. Compare that with 8%+ real return in the last 7 years and you'll see that the recent increases are out of the ordinary.
Not that one property proves anything, but it's part of the trend I've posted before that show home prices here climbing way faster than incomes since the start of 2005. It's not as bad as some areas, but prices here have gone up faster than people's ability to pay for them. The next 3-5 years should work that out with a combination of price decreases and inflation. I'd much rather have home price deflation than out of control inflation everywhere else.
Unfortunately for those who don't own but are otherwise fiscally responsible, they're not the majority of the voting public. Also, much of the voting public don't understand the concept of escalating inflation to socialize losses away from overstretched homeowners.
I can only hope that responsible homeowners will realize the printing of money will hurt their nest egg and pensions as well.
I would consider the appreciation experienced by historic neighborhoods (Like Five Points) a bit of an outlier as far as the data analysis goes. It is difficult to draw a comparison between these unique historic neighborhoods and what is going on in the Triangle as a whole.
In a recession, there will be very very few high end wage earners who's incomes will keep track with these particular properties' appreciation, and less credit available for even the most prime borrowers. The case can be made for one or two particular properties ITB, but not an entire segment or neighborhood.
The sub-$150,000 home segment is about the hardest hit. That market has been highly dependent on high LTV financing, and the elimination of sub-prime funding has made those sales much more difficult.
I think it was about 29% decrease in sales. Now that figure helps skew local statistics for decreased sales and increased inventory.
With FHA the new sub-prime, the paradigm shift is away from "You can buy, if you can fog a mirror," to a little more caution. And still people are stretching FHA to the limits.
Yes, it looks like $80K-$120K sales were down nearly 30% vs this time last year. But $250K and over sales numbers were down 17%. Overall sales were down 19%, pretty close to the $250K figure. So the lower priced houses were hit a bit harder, but the higher end isn't exactly holding up either. Portraying this as a subprime problem is a popular myth, but incorrect in many ways.
In a recession, there will be very very few high end wage earners who's incomes will keep track with these particular properties' appreciation, and less credit available for even the most prime borrowers. The case can be made for one or two particular properties ITB, but not an entire segment or neighborhood.
That's fine because at the same time there are very very few homes for sale in these neighborhoods at any given time when compared to the overall number of homes for sale in the area. These neighborhoods are quite small and cater to a unique buyer. I think even in a recession the number of people who can afford homes in these more expensive historic neighborhoods will still outnumber the volume of homes for sale there be several orders of magnitude.
I would consider the appreciation experienced by historic neighborhoods (Like Five Points) a bit of an outlier as far as the data analysis goes. It is difficult to draw a comparison between these unique historic neighborhoods and what is going on in the Triangle as a whole.
Maybe, but the numbers for the whole region show that home prices have jumped way above the historical average when compared to incomes - HousingTracker.net: Home Affordability Measures for Raleigh, North Carolina, specifically the bottom two charts. Either there's been a fundamental shift in people's ability to pay (which has been pretty steady through the tech boom, the dot com bust, 9-11 & aftermath, and the following recovery - meaning that it doesn't change just because the economy is good or bad), or the loose lending standards have driven up prices here just like they have everywhere else in the world. Without hard evidence to the contrary, I'm not going to bet that we're significantly different from other places, and like them, we'll return to our long term price to income ratio here just like everywhere else.
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. I could kick myself for not selling last summer and sitting on the sidelines. Water under bridge I suppose...
