Real estate has already experienced double digit gains from 2013! :) (Phoenix: sales, rental)

[HX_Guy]

Originally Posted by Ponderosa

While the return of equity is welcome, my house is nowhere near 10% from what it was at the peak. If it were, I would sell it in a heartbeat and leave. We are maybe at 2004-2005. Good, I guess, but we have lost and have yet to recover 10 years of normal appreciation that would have taken place in the market without the recession and the housing collapse. Without wage gains, we are not going to go much higher any time soon.

That's an interesting point and I think it really depends on how you look at it, not that it really helps the situation either way but look at it this way...

If you remove the bubble which took place and home appreciation would have happened as normal, 3-5% per year, where would your house be today? Would it be higher than now? Or are you at about a level or where it would have been anyway?

[hikernut]

Originally Posted by HX_Guy

If you remove the bubble which took place and home appreciation would have happened as normal, 3-5% per year, where would your house be today? Would it be higher than now? Or are you at about a level or where it would have been anyway?

Looking at a chart of the Case-Shiller index, the bubble started ten years ago. Sure, that index is only an average of the whole metro area, so it is what it is, and nothing more. Obviously there will be differences across the valley, and differences between high-, mid-, and low-end homes.

With those caveats out of the way, the Case-Shiller index was about 14% higher this January than it was in January '04.

hikernut

[Ponderosa]

Originally Posted by HX_Guy

That's an interesting point and I think it really depends on how you look at it, not that it really helps the situation either way but look at it this way...

If you remove the bubble which took place and home appreciation would have happened as normal, 3-5% per year, where would your house be today? Would it be higher than now? Or are you at about a level or where it would have been anyway?

Well, I think it would be higher. I believe we are at about 2005 pricing now. So add another 30% to that. For example, a house that sold in 2005 for $200K would be $260K or so today at 3%. In fact, the house that sold for $200K in 2005 is still pretty close to $200K today (again). It's the same with stocks and other investments. While we are excited about the recovery, it is no higher than it was several years ago and does not reflect what might have happened in better times.

[HX_Guy]

I thought 2005/2006 was the height of the bubble, no? I know it was for our old house which sold at a neighborhood high $350k in late 2005 and then tanked along with the rest of the neighborhood.

So I'm thinking I'd probably have to look back to 2003 and see what the house would have been worth and work the numbers from there to see what it should have been worth today vs what it is worth.

[Ponderosa]

Originally Posted by HX_Guy

I thought 2005/2006 was the height of the bubble, no? I know it was for our old house which sold at a neighborhood high $350k in late 2005 and then tanked along with the rest of the neighborhood.

So I'm thinking I'd probably have to look back to 2003 and see what the house would have been worth and work the numbers from there to see what it should have been worth today vs what it is worth.

Well. The years are taking their toll. My house was over $400K at the peak, whenever that was. It was around $250K the last time I looked which is about the same as it was when the bubble began. Whenever that was. My point is that all we have done is get back to where we were about 10 years ago. We have "lost" everything that did and might have happened since then. We feel good about treading water.

[HX_Guy]

Ok so did a little bit of digging in history on the old house...prior to being purchased for $350k in 2005, it was bought for $162k in 2002, so let's use that as the starting number and add 3% every year until we reach today and we get $230,973.26. The house today is worth probably $260k so it seems pretty much on track with normal (I wouldn't say above as regular appreciation is probably 3-4% per year.)

That's just a single example but I'm thinking it's the same story for a lot of homes if you go back to true pre-bubble days of 2002/2003.

[vince3vince]

Originally Posted by HX_Guy

That's an interesting point and I think it really depends on how you look at it, not that it really helps the situation either way but look at it this way...

If you remove the bubble which took place and home appreciation would have happened as normal, 3-5% per year, where would your house be today? Would it be higher than now? Or are you at about a level or where it would have been anyway?

Thank god for the housing bubble, I profited heavily, along with many others. Even the people that lost their home potentially profited, they got to pull money out of their home and ultimately got out of any judgement to pay that money back. Its been a massive win-win, I can't wait for the next one (which i know can't possibly happen for about 5-7 yrs, there just ain't that many homes that paid precrisis anymore, there needs to be a new healthy supply of people paying new highs for homes that could potentially default again).

[Potential_Landlord]

Originally Posted by vince3vince

Thank god for the housing bubble, I profited heavily, along with many others. Even the people that lost their home potentially profited, they got to pull money out of their home and ultimately got out of any judgement to pay that money back. Its been a massive win-win, I can't wait for the next one (which i know can't possibly happen for about 5-7 yrs, there just ain't that many homes that paid precrisis anymore, there needs to be a new healthy supply of people paying new highs for homes that could potentially default again).

No this is not true. If losses from a bubble are concentrated with rich people as in a stock market bubble the effect is much more benign than in a real estate boom/bust where the losses are shared more equally throughout the population. This kills consumer spending much more which in turn makes the recession much worse. Aside from the example in the link below: the 1987 stock market crash of historic proportions did not cause anything either, but the S&L crisis did.

The Distribution of Bubble Losses Matters | The Reformed Broker


"In 2000, the dot-com bubble burst, destroying $6.2 trillion in household wealth over the next two years.

Five years later, the housing market crashed, and from 2007 to 2009, the value of real estate owned by U.S. households fell by nearly the same amount — $6 trillion.


Despite seeing similar nominal dollar losses, the housing crash led to the Great Recession, while the dot-com crash led to a mild recession. Part of this difference can be seen in consumer spending. The housing crash killed retail spending, which collapsed 8 percent from 2007 to 2009, one of the largest two-year drops in recorded American history. The bursting of the tech bubble, on the other hand, had almost no effect at all; retail spending from 2000 to 2002 actually increased by 5 percent."

[Potential_Landlord]

Originally Posted by HX_Guy

Ok so did a little bit of digging in history on the old house...prior to being purchased for $350k in 2005, it was bought for $162k in 2002, so let's use that as the starting number and add 3% every year until we reach today and we get $230,973.26. The house today is worth probably $260k so it seems pretty much on track with normal (I wouldn't say above as regular appreciation is probably 3-4% per year.)

That's just a single example but I'm thinking it's the same story for a lot of homes if you go back to true pre-bubble days of 2002/2003.

How do you figure in this (I understand hypothetical) calculation that the medium real household income in Arizona declined from a high of $53.4k in 2000 to $47k in 2011 (last year with data I have)? Anyone know what mortgage rates were in 2000? - Thanks.

[Roger427]

Originally Posted by Potential_Landlord

Anyone know what mortgage rates were in 2000? - Thanks.

Mine was originated in Oct 2000 and rate was 7.75% conventional. Doubt I paid any points.