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So you're another bottom caller? And your statement is not correct for my local market, the Washington D.C. Metro area... we began to see "unreasonable" price gains as early as December of 2000. IMO, I think we're going back to 1999 prices plus an annual appreciation rate of roughly 3-5%. For my local market, that would take us back to 2002 price levels.
No ... I'm not trying to call the bottom but, 1999 price levels is just nonsense. At least 2002 price levels is more within reason.
As far as 3-5 percent appreciation, is that realistic for Fairfax County? Maybe it's realistic for West Virginia, Kansas and Texas but, I seriously doubt normal apprecation in Fairfax would have been that low for in-demand coastal areas.
Even before 2000 California home appreciation averaged 7-9 percent so ... I don't think we're going back to 2002 levels in California unless you're talking a about the inland areas.
Leavingbyron makes a great point about interest rates also. Mortgages cost a lot more back then so ... you have to take that into consideration also.
This is also totally impractical for the vast majority of homeowners. Unless they bought their property years ago, and didn't borrow on it afterwards ... those are the only people who would be able to knock down prices to 1999 levels.
Otherwise ... 1999 prices would never cover what they owe on their houses.
Even if a bank is willing to take a 50 percent hit on the peak value of a home ... it would never come close to 1999 prices. It would be absurd ...
This is just silly ...
If I told you that a luxury house that sold for 700K two years ago is now sellin for 499K...would you have believed me back then ? No. Same goes for what is going to happen...just wait and see.
Too bad the 1999 scenario doesn't work for everything that's risen in price in the past 9 years.
I'd love gasoline prices to get back to 1999 prices. Maybe if none of us buy gas until those "sellers" get realistic and drop their prices back to 1999 levels, our dreams will come true. . . . then we can afford to buy houses again.
Of course, then again, I guess that means our salaries/401k's/investments would all be back at 1999 levels, too.
A house is a good you consume, not a way to build wealth. The government has run out of carrots on sticks (FHA, mortgage interest deduction) and other ways to facilitate the ponzi scheme methodology (securitization, Fannie/Freddie).
If I told you that a luxury house that sold for 700K two years ago is now sellin for 499K...would you have believed me back then ? No. Same goes for what is going to happen...just wait and see.
Yeah I would have believed you. That's why I decided to go to nursing school instead of real estate four years ago. I knew the market would crash.
But I'm not waiting around for '99 prices levels because it's just not gonna happen. During the Great Depression prices fell 30 percent. Maybe this time it will get up to 50 percent.
But, using Mojo's chart there for Fairfax County ... that means prices would fall back to $225,000. Kinda hard to believe that would actually happen with the incomes that area but ...
Expecting prices to drop to the 1999 average of $190K in that area would be totally absurd.
Uh, I just signed a contract to sell my home for 22% more than it was appraised at in 2004. (Unfortunately, I have no idea what it would have brought in 2005 or 2006.) That would be appreciation of about 5%/yr. It has normal wear and tear, no major improvements or replacements in those years (oh, I added a dishwasher and replaced the fridge. big woop.), and the kitchen counters are worn through (laminate) and the floor is hosed (vinyl).
Real Estate is LOCAL. Coastal markets with limited supply. College towns where there is always demand. Rural areas where there was no 'bubble'. Whatever.
It would be appreciated if people commenting on the state of the market, predicting where it's going to go, etc. would at least indicate WHERE they are from, and which market(s) they are referring to.
C.
Last edited by Sweetbeet; 04-28-2008 at 02:58 PM..
Reason: formatting
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