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Old 07-27-2015, 12:18 AM
57 posts, read 156,787 times
Reputation: 25


Originally Posted by BVG_Steve View Post

I do not know anything about the Jacksonville area so I cannot be much of a help. Just remember with real estate everything is location, location location. So if areas are lagging there is usually a good reason for that.

I also disagree we are near the peak here. I believe we are in a neutral market, meaning prices are high but can go higher but not as the rapid rate of appreciation we have seen. I do not think they are heading lower either, because interest rates are low and going lower. the 10 year bond fell nearly 1/4 point the past 2 weeks and the economy is not doing great, so despite the federal reserve lip service on raising rates, their hands are tied plus the fed does not control long term rates.

Put it this way I personally would be selling some of my properties if I thought we were near a peak. When cash flow ROI gets 4% or below then we will surely be overvalued. Right now we are still in the 5 to 6 % cash flow ROI range when buying desirable property in desirable areas.
I agree with your assessment, which is why we want to get in before it is no longer neutral. Even if it stays neutral for quite a while. I mean, technically, it should stay "neutral" in the long run, as housing prices have tracked inflation for the last 100 years (except for the occasional bubble and bust.) I figured the only way we would gain appreciation above inflation in this market is to pick an area that is going to get more "desirable" over time, but again, have limited knowledge of south florida.

It would be a mistake for the fed to raise its rate target while inflation is still below the target and unemployment is still above the target, but sometimes they do dumb stuff. I sure hope they hold off until after we purchase. I know it won't be a 1:1 effect, but it does have some correlation, historically.
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