Real estate

[KaiineTN]

What do you guys think will happen with real estate market in 2006? Up? Down? Same?

[The Kizzy]

CRASH GO BOOM

[KaiineTN]

I agree. I think it's going to be quite ugly, and it will have massive repercussions on our economy.

[Phlegm]

I dont think it will crash but the rate home appreciation will not be as high as before.

[Gypsiyee]

Depends on the area - around here, I don't see anything too drastic happening. It'll slow a bit, but I doubt it's going to be a huge deal.

There's still a pretty high demand for new construction out here, and even with that demand there's the opposing side that is anti-subdivision that want to snag up the existing homes with some acreage... I don't see that changing anytime soon other than to slow pace a smidge.

Those who feel it's the end of the world as we know it.. it just kinda reminds me of Y2K - all that worrying for nothing.

[KaiineTN]

Well, the real estate market has already started to implode. Some areas have already seen 20% drops, or more. This has happened very quickly.

If the real estate market crashes, what can we expect to happen?

Obviously, we will be flooded with sellers and no one will be buying. Prices will drop quickly and considerably. All of those people out there with interest only loans that expected to sell their houses in a few years and turn a profit are going to get screwed. They will end up paying twice what it is worth. They wont be able to, and they'll default. Banks will not be able to make their money back, and will start to go under. As banks fail, people will lose their money in them. The insurance system will go bankrupt, and more banks will follow. Everyone will be panicing and trying desperately to save their cash and assets, and we will experience deflation.

Many of you probably know about debt expansion. If I put $100 dollars in a bank, and you borrow that $100, we both think we have $100. There's $200 for the economy. This causes inflation, which we have been experiencing for many years. However, credit has expanded so much that the ratio of dollars (credit) to real dollars in circulation is now around 600 to 1.

So what does this all mean to you? It means you should be aware. For many years, people have been getting rich off of the 600 dollars out of 601 that don't exist. When the collapse happens, that will no longer be possible.

Look at it this way, if 9 out of 10 dice throws get you 1% gains, and that 10th throw gets you a 50% loss, you're better off betting on the loss. If you apply that idea to real estate, what does it mean to bet on the loss? It means we've been pushing those lucky rolls for too long, and in my opinion, you should quit while you're ahead. Cash will be the best investment you can have when real estate crashes and deflation sets in. Debt will ruin you. The value of the dollar could go up as much as ten times. There is much more potential upside in cash right now than stocks or real estate. Don't follow the herds.

Prepare yourselves for deflation. Even if you don't believe it will happen, have an idea of how you will handle it if it does happen. It will be a time of incredible opportunity, if you are ready for it.

But what do I know? I'm just some supposedly lipstick-wearing internet nerd that likes to cuddle.

[Gypsiyee]

Like I said though, it really depends on the area.

Yes, there have been some slows as much as 20% in some areas.. economy is certainly not the same everywhere.

It isn't going to be like the great depression, people aren't going to be sticking their heads in ovens with this horrible debt on their hands. The market will slow, yes, partially due to interest rates going up.. but what people need to recognize is even if it slows, all it's going to do is revert back to where we were a few years ago.. that's what the real estate market does. 20 years ago, people were looking at like 18-19% interest rates, they would kill for the standard 6ish we have now.. the market has just been PHENOMENOL, amazing, abnormally terrific.. if it slows, even drastically, I look at it more like we'll be back to normal.

There will be less salespeople for sure.. no question about that. For the past few years EVERYONE has been getting into the real estate business. Everyone thinks they know everything, and everyone's a pro. It's oversaturated.. companies will have to downsize, including mine, and if that happens so be it.. shit happens, but I really don't think it's going to be as huge as people predict.

I remember this headline last month on a newspaper - "Interest rates SOAR over 6%!!!" in order to cause alarm.. it was this whole article about how the market is going kersplat and people need to worry.. soar over 6%? standard around here was 5.8-5.9.. yeah. that .1% is really "soaring".. a month later, our rates are back to that 5.8-5.9.. that article just kinda made me laugh.

We'll see what happens, but I won't get my panties in a bunch about it.

[KaiineTN]

I don't want to sound like a pessimist, but it seems like most people seem to think deflation isn't real, or will never happen. Deflation is essential to any economy. If real estate, combined with medicare/social security and the baby boomer generation retiring doesn't trigger it, what will?

Think about it, everyone knows that social security simply doesn't have enough money. The best way to deal with it isn't to pour more money into it, but rather to make every dollar that is in it go further. I wouldn't be surprised if the powers at be are pushing for deflation, although they wouldn't be caught dead admitting that.

Anyways! I'm getting a bit off topic for the thread now, so I'll stop there.

[Zanchief]

Call me an economics noob but if the real estate market really takes a dive wont people just buy property when it's really low, thus rejuvenating the market?

[Gypsiyee]

That's how it's happened in the past, yes

[KaiineTN]

If they can afford it. Interest rates will be huge and credit will be hard to get.

[Zanchief]

Hmm is this impending doom going to effect Canada aswell? I'm planning on buying a house this year~

[KaiineTN]

I don't know shit about Canada's economy or housing market.

[Vincenti]

You want to talk about incredibly odd fluctuations in the real estate market, you should come to New Orleans. The Metropolitan area has shrunk in population to about 20% of its former grandeur (such as that was), and everyone who has a house that DID flood but wants to continue to live here but has no house is buying, and everyone who DIDNT flood is hiking prices by as much as 300% of pre-katrina. Then there are entire swaths of the city that are not habitable. People are trying to crowd into the little area around the crescent of the river that is high-ground now, which I might add were previously either extremely high rent before (right around the quarter and CBD) or extremely low rent (ie Da Projects and the warehouse district). In the outlying burbs, prices are either plummeting (where people think they are likely to flood again and are GTFO) or skyrocketing (where people are staying and/or think they can make a quick buck or five). Most of what is left here are either people desperate to get out of these FEMA trailers (5 people in a small travel trailer sucks k?) or they arre currently commuting 100 miles a day or more to get to stable housing. Now lets get even more unstable because the Army Corps of Engineers is now using Imminant Domain laws to buyout land near the river to rebuild the levee systems (not that this is a bad thing, but it makes the market all that much more unstable).

And to make it all jump and hop around there is the complete uncertainty of knowing whether the Feds are going to actually repair the levee systems like they have been promising for 30 years and now are forced to do, or if they are going to hold it all up in committees and contractors (like they have for the last 30 years ) and if they do decide to actually repair the levee systems, will it happen before next hurricane season.

Very stressful to be a real estate agent in NOLA right now I imagine.

[Kramer]

the real estate market throughout the country has been declining for around 6 months, in Houston it has been crazy booming for the past 8 years, and it has slowed to a screeching halt....

if you are buying find the place you want and do the price drop/interest rate dance, the longer you wait the higher interest rates will go.....

if you are selling..... ummmmm...

[Arlos]

CNN today has a post on the most over-valued and under-valued real estate markets in the country.

http://money.cnn.com/2005/12/29/real_es ... tm?cnn=yes

-Arlos

[Phlegm]

If they can afford it. Interest rates will be huge and credit will be hard to get.

But according to you, if the housing market crashed, deflation will happen. If deflation happens then the fed will drop the prime rate to counteract that. Interest rates will drop in a deflating economy.

[KaiineTN]

We'll see, I suppose. That was more of a reference to what's happened in the past, since history tends to repeat itself.

[Gypsiyee]

That's an interesting article Arlos, thanks.

[Goose_Man]

I'm a full time real estate investor, I own a real estate investment company, I am also a Realtor (but I just have my license to help my investment business)

If you know how to look at deals and analyze the market then real estate is still your number one safest investment period. In my humble opinion that is.

All this doom saying about the real estate "bubble" and the markets "down trend" fucking crap, complete and utter crap. However, if you’re the type of person who turns to their realtor or neighbor for investment advice then please do not go buy anything, but for the savvy folks out there it’s not a big deal. As a matter of fact I hope California and Florida real estate prices crash into the ocean.... Ill make a fucking killing.

I’m willing to bet that all of you who have posted here about this own ZERO investment property. That’s good, don’t go buy any and leave the deals for me!!!

I guess what I’m trying to say is that the sky isn’t falling. Real estate is still a fantastic medium to hold and make money no matter what the market is doing. Just please go educate your self before you buy anything though and don’t put a lot of stock into what the Realtors tell you. Most of them couldn’t find their ass with two hands and a mirror let alone give you investment advice.

Here is a tip: Do not take any financial advice from someone who isn’t making at least 5 times the amount your making.

[KaiineTN]

Well I just hope that if shit does hit the fan, you maintain enough equity to cover your debts. No one knows when it will happen, but deflation, a recession, even a depression, will eventually happen in this country, again and again. All economies experience them, just as they all experience inflation and growth.

When it does happen, people who have debt will be in serious trouble. Whatever equity they have will shrink very quickly.

[Lyion]

Real Estate is good as a long term investment. For short term investing, I believe things will equalize and areas will even out.

There are a lot of places with vastly overvalued pieces of real estate.

Your big negative is the huge property tax most areas of Texas has Goose.

I own four pieces of property, and have no desire to sell any of them as thats not how I make a living. I believe the foreclosure and probate groups of 'investors' are going to start losing money once the housing market starts to decline and shift in valuation, but as I'm neither I don't worry about that.

[Goose_Man]

There are ways to buy real estate without being responsible for the debt...........

[Captain Insano]

I can't wait to buy foreclosures when the market tanks in certain areas. I don't know as much as goosse per se, but I don't see any huge real estate crash coming either...At least not one that is going to drastically affect the economy.

Real estate will depreciate in some places where it significantly overvalued, like San Diego and will probably flat line in most other places until wages catch up. Some areas will appreciate based on other factors.

This nation was founded on the idea of land ownership and nothing has changed. In the long run real estate is a fantastic investment. The long run not being some tard who bought a bunch of properties in coastal california on short term interest only loans and can barely afford payments...People like this are going to get their shit wrecked here soon and I'll be there with a smile to buy out their house in pre-foreclosure if all goes well.

[dammuzis]

with the price of gold currently im surprised this hasnt already happened

i exited the real estate market last year and went into gold/silver in anticipation of the collapse

best book on this subject is "cycles of war cycles of peace" the next 7 years are going to be interesting