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It's educational to refer back to post #6. Nearly everything written there - in 2006 - could be re-written today, in 2022... and it would be just as accurate.
It boggles the mind, why it would NOT be the case, that just as the horror of 2008 followed 2006, 2024 would follow 2022.
I was a CD member in 2006 when Need Affordable Home (the OP) was in the midst of his dream to buy a cheap house in Oil City, PA and move away from Florida. His numerous threads on the topic were sometimes bizarre, sometimes entertaining, and stirred up a lot of discussion.
Ironically, I was toying with the idea of buying a house here in Tucson a few months ago, but the whole experience soured on me. Homes were (and still are) being bought at double the price they sold for 1-2 years ago, and sold in a matter of days after appearing on the market. The selection of homes for sale that are under 1500 square feet, and not located on or near a noisy main street are few and far between.
Everyone has that pipe dream: The bubble will burst soon, and we'll buy a nice house much cheaper. Keep dreaming. Barring the deep dive of 2008 and another in 1990s, the RE prices tend to stabilize after a steel runup rather than decline.
It's the same thing as imagining that you will buy stocks at the bottom -- good luck with that, too.
Everyone has that pipe dream: The bubble will burst soon, and we'll buy a nice house much cheaper. Keep dreaming. Barring the deep dive of 2008 and another in 1990s, the RE prices tend to stabilize after a steel runup rather than decline.
It's the same thing as imagining that you will buy stocks at the bottom -- good luck with that, too.
On the contrary, the stock market is entirely different. Why? Because historically the stock market has outpaced inflation by something like 6%/year. The real estate market has only outpaced inflation by about 0.5%/year. We have reliable date on both the stock market and the real estate market going back to around the late 19th century... so, about 150 years. Those 150 years reveal signficant gyrations in both markets, sometimes together, sometimes not. But those 150 years, or even shorter (but still long!) windows like 30 years, we find repeatedly that the stock market always keep outperforming inflation handsomely, whereas the housing market does not.
So if the stock market surges over some number of years, going well above the trendline, OK, it might revert to the mean, but that mean would still solidly be up. But if the housing market makes similarly sprightly progress, it nowise follows, that it should continue doing as well.
This market will end badly. Perhaps the "bad" will be confined to the real estate sector. That is the rosy scenario. The cloudy scenario (to put it mildly) is another housing-led severe recession.
Everyone has that pipe dream: The bubble will burst soon, and we'll buy a nice house much cheaper. Keep dreaming. Barring the deep dive of 2008 and another in 1990s, the RE prices tend to stabilize after a steel runup rather than decline.
It's the same thing as imagining that you will buy stocks at the bottom -- good luck with that, too.
I think it will be a bifurcated market. The desirable places in the high cost of living regions won’t correct. Middle class housing elsewhere will track interest rates and the local economy because the buyers are mortgages and W2 money. Blue chip suburb in a high cost of living region? Too much competition among buyers for prices to correct. The same for the most desirable urban areas. The same for oceanfront or at the ski resorts. Aspen isn’t going to get cheaper. Nantucket isn’t going to get cheaper. The Millenials will be the wealthiest generation ever and the most numerous. The top-5% of those are going to continue to drive up prices in the most desirable areas. If you’re not in that top-5%, you have to move.
Location: Sarasota/ Bradenton - University Pkwy area
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Can't speak for the rest of the country, but here in SW Florida I would not be counting on seeing prices crash anytime soon.
This "bubble" in real estate prices is very different, in my opinion, than the one back in the mid 2000's in that a lot of that bubble here in FL then was fed by insane, no money down loans (even to investors), no document loans & subprime lender loans at ridiculous interest rates. They created the "Ninja" mortgages -- no income, no job, no assets -- at very high interest rates, which added even more fuel to the fire. The number of loans increased substantially between 2003 and 2006. And it wasn't just new loans. Home owners also got into the loan crap shoot by pulling money from their residences via equity home loans. Eventually in 2008 the feeding frenzy hit a peak and lending dried up, the real estate market collapsed, and foreclosures became the norm for several years.
Most buyers today are doing conventional financing or paying cash (up to almost 50% of all sales in my particular area are cash) rather than dubious 100% financing loans. Tighter lending standards compared to the 2000's will help minimize the risk of a real estate market crash as in 2008. The loans that have been made over the past decade are more solid, from borrowers with higher credit scores/ savings and lower debt.
This market is also different because the number of people looking to relocate to Florida continues to grow, creating more demand for owner occupied housing. Between now and April 1, 2024, the population of Florida is expected to grow by an average of 906 new residents per day, according to a news release from WFLA Channel 8 in Tampa. Florida’s population is expected to grow by more than 700,000 residents the next 2 years alone. More people require more housing.
One of the reasons for the growth can be contributed to Florida's business friendly governments, at the local and state levels. Businesses are finding they no longer have to be tied to metro areas like New York, and are therefore taking advantage of what FL has to offer.
Another has to do with people that became tired of the Covid lockdowns, vaccination cards, mandatory masks for school students, etc that were still going on in a number of states up north for many months after FL dropped all mandatory requirements. As more and more employers allow people to work remotely, it makes it easier for those in the work force to relocate and they are, in larger and larger numbers.
Then there is the entry of huge, national investment companies buying up homes to place within REITs (real estate investment trust). Just 3 of those big firms have bought up a huge chunk of single family homes, condos & townhomes in my area over the past 5 years. They make it very difficult for the average buyer to compete as they pay cash, have few if any contract contingencies and generally pay above list price.
I will leave the market predictions to the "experts." Most of those are not predicting a housing market crash in FL anytime soon, especially not in the next 5 years. Some are predicting demand will start to level off as prices increase, mortgage rates start to rise. Others disagree, saying the demand and lack of supply will continue to fuel the price increases for at least the next few years. Either way, I would not look for real estate prices in most of FL (especially the Tampa Bay area south to Venice) to go down any time in the near future.
Unfortunately $100,000 homes in FL have mostly gone the way of 8-track tapes, go-go boots & Tang.
.... But I refuse to buy those way inflated houses(cant afford them and wont even if I could) and will relocate to where speculation has been largely absent and nice houses can be had for $50k. If others refuse to play the game, there will be affordable houses for everyone(except in the most desirable upscale neighboorhoods and locations of course)
This was an old post from 2006. But even back then we couldn't find houses less than $400K. Not sure where OP was looking.
We bought a house in 2008 and it was a bit above $500K. During next 4 years the home prices declined but was never below 20% of purchase price. It recovered in 2012 and has enjoyed a steady appreciation since then.
Everyone's trying to read the tea leaves on where the housing prices is heading this year and next. Going back to my 2008 reasons for buying a house, I don't regret the decision as we plan on holding onto the house no matter what the market leads in the next few years. The decision has paid off for us. Whether if it's a right decision for you, only you can decide.
I was a CD member in 2006 when Need Affordable Home (the OP) was in the midst of his dream to buy a cheap house in Oil City, PA and move away from Florida. His numerous threads on the topic were sometimes bizarre, sometimes entertaining, and stirred up a lot of discussion.
Ironically, I was toying with the idea of buying a house here in Tucson a few months ago, but the whole experience soured on me. Homes were (and still are) being bought at double the price they sold for 1-2 years ago, and sold in a matter of days after appearing on the market. The selection of homes for sale that are under 1500 square feet, and not located on or near a noisy main street are few and far between.
I remember that poster too. What happened to him I wonder.
So, how does the OP feel in 2022 about not buying that house in 2006? Still glad he was clever enough to not be tricked into buying it?
People forget todays high is tomorrows lows when it comes to assets that appreciate over time ….
It is like when the market falls 2000 points and you have the misinformed calling it a sale ….
Since we are always somewhere between the last low and last high 80% of all our time ,one is still buying high compared to the last low…
There is little point in waiting unless you are a good timer
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