No housing bubble? Riiiggghhhhtttt

Economists have been saying yes, realtors of course say no. Look at three 'gems' I found totally worth the money don't you think?







Jump in now while you still can and use one of those nice 100% financed interest only loans! I mean it can only go up right?? :party:

265K??? ONLY 265K?

MLS REMARKS:
PLEASE-if ypur client is unable or unwilling to rebuild a major fixerdon't call. no one has lived in this vacation cabin for over 30 yearsit needs everything roof,walls,foundation etc

so your basicly getting the land for 265K

Where do I sign up?

That's about all it has.

:eyes:

I wouldn't take that if someone GAVE it to me!

I live right next to West Hills and can tell you that that neighborhood is NICE. It is one of the few remaining areas of the SF Valley that is nice (besides Encino, Tarzana, and Woodland Hills). The 30,000 sf lot is huge for valley standards, but it looks like it hasn't been leveled, which is a major problem. A good 2500 sf home on a 30k sf lot would probably sell for 1 million in west hills easy.


taught.

$250k for the lot, another $200-$300k to build a reasonable home on it, and the resulting property would be worth $750k easy.

Easy money.

and it's a leftover from the tech bubble of the nineties. I expect it to burst in a big way.

The East Coast also has a real estate bubble. There are other regional bubbles across the nation that are pretty big, too. Some examples would be Las Vegas, Atlanta, and Denver.

All in all, when the credit bubble bursts and interest rates go way up, the real estate bubble will burst very shortly thereafter. some areas will be devestated like California and the East coast. Other areas will be hit, but not as badly, like the Midwest.

and now could NEVER move back even if we wanted to. There's just no way we could afford it.

The wall to wall....um....trash is a nice touch:



and you just CAN'T BEAT THIS VIEW!!!

:P

I bought a pretty modest little house for 63K seven years ago; similar houses in the neighborhood are going for over 200K now.

I'm grateful I'm not buying now...

I actually feel good about my place now.

how do you think developers can get rich buying houses and LEVELING them? because the vast majority of the value is in the location, not in the building itself.

i'm perfectly willing to believe that there's a real estate bubble, but, sorry, these examples don't prove anything. if i found a vacant lot going for $256K, would that be any different?

if the vacant lot, or condemnable house, was right next to central park manhattan, would you think it a bubble if it was going for $256K?

a LARGE component of the housing "bubble" is that the market has accurately responded to artificially and generationally low interest rates. as rates are being returned to more historically reasonable levels, so will real estate prices. if real estate prices remain exorbitant, THAT would be much better evidence of a bubble.

When the housing bubble bursts, that $256K vacant lot will be worth less than 1/10th the asking price.

which is HUGE a huge decline in the real estate market, especially given how leveraged most participants are.

but in any event, though, your comment assumes the bubble is fact, i maintain that a bubble is in dispute.

Count on it. Way more than 30%.

When the housing bubble bursts, that $256K vacant lot will be worth less than 1/10th the asking price.

In Ventura County? In the nice part near LA? You're smoking something. That land will always be in demand. It will always be expensive.

Every inch of real estate in California is currently priced about three times more than it's worth due to the tech bubble and the credit bubble. It never went down after the tech bubble burst, butit will plummet once the credit bubble bursts.

It'll be worth MAYBE 40% of current valuation.

An economist goes through explaining where there will be problems and how a housing bubble burst will affect various regions.

Go back to the lot listing, and click on neighborhood info.

Evidently you have folks buying these lots @ 256K when their "household" income is 66K. I would suggest that yes, this could indicate a housing bubble.

Besides, I thought the nice part of LA had a much higher median household income.

The reason the neighborhood income isn't higher is because this area is only now being developed or redeveloped as the case may be (hence this house being little more than an outhouse.)

The median income will be lower than the mean, because the high-end earners earn so much more than the rank-and-file.

With the advent of "Interest Only" mortgages housing prices will
continue to go up. Because people will use the additional "debiting
power" (for lack of a better term) to make larger purchases.

This, in turn, will drive housing prices even higher.

I've heard this is already happening in areas where IO mortgages
are available.

Too bad for those of us with fixed interest traditional loans
having to pay taxes on all this bubble.

at first glance, this is a rational response to an increased availability of investible funds. if io's remain a permantent, or even normal, way to finance housing, then this is completely rational. if io's might be withdrawn from the market, especially during a crash, that's where the problem lies.

at worst, io's increase leverage, which does increase the risk involved. it's not evidence of a bubble, though it does mean that a market correction, if/when one comes, would likely be more severe, as there will be more leveraged participants eager to get out and further depress prices.

It's only missing one letter... "U".

This type of thing is what led to the S&L crisis of the
'80s. S&Ls paying premium prices for junk.

If I not mistaken we're still paying for that one.

These record low interest rates are unsustainable, so IO loans will end up going the way of the dodo. All these IO loans are doing is extending the credit bubble which in turn is extending the housing bubble, which means it will be that much worse when it all comes crashing down.

DC added something like 35,000 new residents last year, most of them affluent. And they are going to need to live somewhere.

I've owned my current condo for less than a year and could probably sell it for a 30 percent profit tomorrow. Unfortunately, that would probably not be enough to allow me to buy anything new. Which in turn decreases the supply.

An increase in interest rates will likely limit deamn and drive more people in the rental market (which is in limited supply as well). But even a drop of 40 percent in this super-heated market will only put my home in line with the amount I owe on the mortgage.

Some housing markets are off the charts simply because they are desirable to live. And I think the worry of a bubble would be greater if any of the cities you listed were overbuilt. Of them, only Vegas and maybe parts of California fall into that category. If anything, the DC and NYC markets are underbuilt at this point.

You'd think that in the cradle of the tech bubble you would find some sort of correlation between that bubble and this supposed bubble, but it simply doesn't exist. The housing stock in the desirable parts of the bay area is restricted by geography - there's simply no more land upon which they can build, and they're already running up against 3-hour commutes for some far-flung parts of the sprawl. And people still want to live there, and are willing to sell their children into slavery in order to do it.

The Baby Boomers are preparing to die off. They are becoming the "check-out" generation as they enter their 60's. Demand for housing will drop off and will do so dramatically over the next few years as Baby boomers stop buying up and creating so many new housing starts. The Gen Xers and Yers are nowhere near as big as the Baby Boomers and population is set to DECREASE.

You cannot have a housing demand increase if the population decreases.

... I maintain extending credit via IOs and ARMs (AKA Balloons)
is a huge crap shoot.

The RWers are saying that the appreciation of that teenie-tiny lot
somewhere in CA is going to exceed the rise of interest rates and
that the Buyer's income is going to keep pace with the inflation
rate. To this I say Hoo-ie!

Anybody who has been paying attention to the CPI (With energy,
food, med. care included) and the rise in interest rates *knows*
it isn't going to happen. As an investor you're living in
dream land.

This is a wreck flying around looking for a place to land... IMHO.

housing prices. As you saw with the tech bubble, an enormous amount of wealth dissappeared from households after the bubble burst.

Many of the currently "affluent" are that way because they have good, high paying jobs. If those jobs start to disappear or wages stagnate, they are not going to be able to afford to buy at current prices. Also, many of those people are "keeping up with the Joneses" debtors. A few financial misfortunes and they will no longer be able to afford their McMansions.

Areas with the alleged bubbles (Vegas, San Fran, DC, New York) are growing thanks to young professionals and immigrants. The young professionals are affluent and the immigrants are buying at surprisingly high rates - particularly in areas like Arlington, County, VA. Like I mentioned, DC's population is growing each year and is causing gentrification in myriad neighborhoods.

I don't think what we have is so much of a bubble as it is a migration. The Rust Belt cities are on their last legs. When their Baby Boom populations start to die off, the housing markets in places like Cleveland, Pittsburgh, Buffalo, etc. might crater. But we have 30 million more people in the country than we did 15 years ago. And they are all chosing to live on the coasts or in the Sun Belt.

What I would really like to see is your explanation as to how the Baby Boomers are affecting the boom in places like DC and Vegas.

afford it (after all, the very rich can't snap up everything and many of those who are currently paying these prices are a few paychecks away from NOT being able to afford them.) It will be a case of being PRICED OUT of the market for many people and eventually prices will have to come down if these properties are to sell.

We could be looking at a very long term economic depression, and many who are buying investment properties at inflated prices will no longer do so because there will be no return on their investment in the forseeable future.

Actually, the real risk is that people are taking out loans that they cannot pay back. I mean, one of the trendy moves in DC is to take out a personal loan to buy a home since they can't get home loans approved. But that would probably require severe economic downturn in the areas with a bubble. And at that point, all bets are off.

But DC has survived 9/11, the sluggish national economy, and the collapse of AOL with nary a tick in the housing market...so who knows?

"high rent" area and who have taken out home equity loans to add on to their older house as their family is expanding. They pull in about 1/2 million per year, but they are also deeply in debt.

They are a young couple who are optimistic about their future, but if they were to lose their jobs (he's a doctor, she's in pharmaceutical sales and they have a 2 year old and another on the way) they would be in a tough spot if they were unemployed for a long period of time.

I think there are a lot of people like this -they make good money, but they are highly leveraged - and those are the people that I think will suffer the most.

gives new meaning to the term "lean to".

I do... :)

"no one has lived in this vacation cabin for over 30 years it needs everything roof,walls,foundation etc."


What the f*ck?!?!?!?!?!?!?!?!

???

:shrug:

You're buying the land, not the house. With homes in that area selling in the 500k+ range, paying 200k+ for an empty lot isn't unreasonable.

I live in a 1700 square foot house with no yard that is worth $500,000.

And as with tech stocks in 2001, it will be very ugly when this bubble bursts.

MLS notes:

"PLEASE-if ypur client is unable or unwilling to rebuild a major fixerdon't call. no one has lived in this vacation cabin for over 30 yearsit needs everything roof,walls,foundation etc. NOW Incl:6490 272 030/140/200/220/060/070 total sqft is 30,051"

So, basically, it's a great price for just over a tenth of an acre ready for 'real estate' (improvement to the land)

In fact, prices, appreciation rates, and values vary neighborhood to neighborhood.

IO mortgages are not new.

There will be a slow down in sales and prices as interest rates eek up but only a few specific locales will actually burst. This is not a nationwide crisis. Real estate in certain areas will continue to increase in value, particularly high demand areas such as San Francisco and areas of NYC.

Developers, real estate brokers and homeowners or investors who bought at inflated prices will be the ones adversely affected.

... are paying taxes based on inflated property values.

Hurts us too.

But not for all. Values in our area are not inflated although prop taxes have increased. Tax values are lower than market values in our area. This is not the case everywhere though.

My home appraised for something like $30,000 more last year. And it will probably go up as much if not more next year. Which means that people are freaking on their property tax rates. The County pushed through a quick tax cut which should alleviate the problem a little bit (and shouldn't hurt revenues at all).

But that is the biggest problem with the growth.

This is what around half a mil will get you in my area.

http://www.realtor.com/FindHome/HomeListing.asp?snum=1&locallnk=yes&frm=byzip&mnbed=0&mnbath=0&mnprice=450000&mxprice=99999999&js=off&pgnum=1&fid=so&mnsqft=&mls=xmls&areaid=38016&typ=1%2C+2%2C+3%2C+4%2C+5%2C+6%2C+7&poe=realtor&zp=38016&sbint=&vtsort=&sid=04947878E1DBC&snumxlid=1044364808&lnksrc=00002

I noticed no sidewalks.... :scared:

(4,400 Square feet)
Heavily treed lot on quiet street with great view of golf course; SWEETWATER GOLF MEMBERSHIP INCLUDED; many recent upgrades including recent roof and A/C and furnaces, interior painting and carpeting throughout. NEWLY UPDATED KITCHEN! 20' CERAMIC TILE; HOME IS PROFESSIONALLY DECORATED WITH BEAUTIFUL INTERIOR FOUNTAIN. NEWLY LANDSCAPED BACK YARD LARGE ENOUGH FOR POOL; UPDATED C



This listing is brokered by: RE/MAX Fine Properties
Office: (281) 265-5533


Property Features

--------------------------------------------------------------------------------


Single Family Property
Area: 29 - Ft. Bend Central
Subdivision: SWEETWATER SEC 1
County: Fortbend
English style
Freestanding style
Two story
Year built: 1984
Year built source: Appraisal District
5 total bedroom(s)
4.5 total bath(s)
4 total full bath(s)
2 total half bath(s)
Breakfast area/room
Dining room
Formal dining room
Formal living room
Game room
Library
Living room
Approximate interior sq. ft.: 4463
Square footage source: Appraisal
1st bedroom is 20x17
2nd bedroom is 12x12
3rd bedroom is 13x12
4th bedroom is 14x12
5th bedroom is 10x09
Breakfast area/room is 16x09
Dining room is 15x14
Game room is 20x17
Kitchen is 15x09
Library is 12x11
Living room is 24x17
Two bedrooms downstairs
Master bedroom is downstairs
Electric laundry hookups
Gas laundry hookups
Dryer hookups
Washer hookups
Inside utility room
2 fireplace(s)
Gas fireplace logs
Marble floors
Tile flooring
Attic ventilator
Central air conditioning
Zoned temperature control
Central heat
Gas heating
Dishwasher
Disposal
Ice maker
Trash compactor
Double oven
Electric oven
Microwave oven
Electric range
Indoor grill
Breakfast bar
High ceiling(s)
Central vacuum system
Intercom system
Kitchen island
Staircase(s)
Insulated window(s)
Window treatments
2 car garage
Attached garage
Automatic garage door
Slab foundation
Brick/veneer exterior
Patio/deck
Curbs
Sprinkler system
Wooded
Composition roof
Fenced
Security features
Community swimming pool(s)
Lot is 11718 sq. ft.
Lot size is between 1/4 and 1/2 acre
Subdivision lot
Eastern exposure
Southern exposure
School District: 19 - Fort Bend
Elementary School: Colony Bend
Middle School: First Colony
High School: Clements

What does that mean?

The monthly mortgage payment is only the interest portion of
the loan. It doesn't include repayment of any of the loan
principal.

Ergo... A lower monthly payment...

or you refinance.

The idea is that you sell before the ten years and take the profit or you refinance.

I don't think it's that big a risk since you have to put down a downpayment. That means the loan is less than the value at purchase and unless the market collapses, you will at least break even at the end. If the market is like it is in VA, it's like having an investment increasing at 25 percent a year.

If not, there won't be anyone who can afford to
buy the house after a few years.

That's the definition of a "bubble".

Here is the property tax assessment on my condo for the last five years:

Year Land Building Total
2005 $39,000 $154,230 $193,230
2004 $18,500 $122,390 $140,890
2003 $18,500 $96,720 $115,220
2002 $18,500 $73,060 $91,560
2001 $18,500 $45,980 $64,480
2000 $18,500 $43,500 $62,000

For the record, I could put it on the market and sell it for $245,000 in less than 48 hours.

They have forbid building and outsiders from expanding the living zone they occupy.
Hence, housing costs skyrocket due to high demand and almost zero availability.
Good. Let them suffer. They want to live in an elite and secluded California 'It's mine and you can't touch it' world, - suffer.

There are places around DC that have maximum density laws (one house per acre, etc.) that exclude anyone unable to afford that.

The biggest problem is the "I GOT MINE" attitude, and liberals have it too (but generally not as bad)

There's only so much valuable land to go around. Folks sit on unbuilt and underbuilt properties waiting for the price to be right. Look downtown at any run-down building next to a starbucks. Look at a surface parking lot next to a 10 storey office building.

The answer to these rediculous housing prices is to BUILD. Build townhouses where there were single family. Build walk-ups where there were townhouses. Build mid-rise condos where there were walk-ups. You get the picture. Build intra-city transit so you don't have to use 50% of your land area for roads, streets, and parking (as Washington DC and most cities do). Make people pay to have a car in the city.

To get people to build, you have to take the taxes off of buildings (and the labor to build them, if you can). Put the tax on the land value, and you'll see smaller mortgages, intensive vs. extensive development, and more affordable housing.

levelling it and selling the land as a lot is a complete idiot. That said, there is a big bubble in California.

I live in a neighborhood of 30 - 35 year-old modest tract homes. Many are still occupied by now-elderly original owners who've done little to them over the years. Starting price in this neighborhood is now $600K and that's the price for an investor to come in, make all sorts of cosmetic changes, and then stick the place back on the market for another couple hundred thousand more.

However, there are limits. One poor guy is trying to unload his 3 and 2 and has the misfortune of living next to a complete yokel who has a big RV parked on his front lawn. Who the hell is going to pay six hundred thousand dollars to look at that?

Eventually the pin has to meet the bubble. The situation is out of control.

In my part of the country, you can buy a new, luxed out, 4500+ square foot house on the golf course for that.

Here's a listing - the one next to the RV on the lawn.

http://www.realtor.com/FindHome/HomeListing.asp?snum=25&locallnk=yes&frm=byzip&mnbed=0&mnbath=0&mnprice=0&mxprice=99999999&js=off&pgnum=3&fid=so&mnsqft=&mls=xmls&areaid=91377&typ=1%2C+2%2C+3%2C+4%2C+5%2C+6%2C+7&poe=realtor&zp=91377&sbint=&vtsort=&sid=04948E501A59C&snumxlid=1042784678&lnksrc=00002

A house comparable to that one, in my area would go for about 150k!!! The backyard w/pool looks nice but 1400 sq ft, low ceilings & a small outdated kitch for 650K? sheeesh!

I live in Mid Mo, and bought a 2400 sq ft house with twenty acres in the country a year and a half ago for $140,000. And I thought that the prices were steep at that. I had sold my old 900 sq ft starter house for $50,000 in the city, and thought that damn, property sure is going up. But $449,000 for a thousand square feet! How can anybody afford those thing:crazy: I know, I know, they can't. That's another thing that amazes me is that those houses are actually selling.

It makes no sense:shrug:

I really don't know much about California's economy. But I don't think it is strong enough to support a housing market that over-valued. That could lead to disaster.

DC is listed at 10 percent overvalued. I don't think I agree with that (maybe 5 to 7 percent). But considering we've had something like 25 percent increases for the last two years, this is hardly a problem except for those getting in too late.

I would have serious doubts about buying overvalued property sitting on a fault line.

now why would you try to sell that as a fixer-upper?

that's a knocker-downer and build a new shack on the land you just bought.