Do you see an end to the rise in the real estate market?

ray · 12-16-2003, 12:39 PM

http://story.news.yahoo.com/news?tmp..._ec_fi/economy

After reading that story, my hopes of finding a reasonably priced home here in Los Angeles grew much much slimmer

Cubsfan · 12-16-2003, 11:07 PM

I really don't understand what's fueling the market. Here in Colorado, we've lost a ton of high-paying tech jobs to both layoffs and outsourcing to India. Bankrupcy was the highest it has ever been. But still, housing prices are going up. I don't know who's getting jobs and is able to afford some of these prices. Is it possible that the market is artificially being kept high somehow?

VTGreg · 12-17-2003, 05:05 AM

Not sure if it is the case up there in Colorado, but many people took their money out of the stock market when things got bad and invested it in real estate. As a result, you were having alot more money dumped into real estate than usual. Couple that with the historically low interest rates and people are able to afford more when purchasing houses. With the market continuing to improve, I would imagine we will see a correction in the real estate market in the next 2-3 years.

cheapchinese · 12-17-2003, 07:01 AM

real estates not going to keep rising...

interest rate won't have a dip like that for a long time, and the market seems to be healthy again, so i kinda see the money going back to the market

VTGreg · 12-17-2003, 07:30 AM

http://www.investors.com/editorial/feature.asp?v=12/17

Just one source, but it appears things may be topping out now.

From IBD:

"Building permits fell 5.4% to a still-robust 1.874 million pace.

Naroff noted the number of homes that had building permits but had not been started also declined sharply.

"If those waiting-to-be built numbers and the small decline in permits are any indication, I think we may have hit the peak," Naroff said. "

zippyjuan · 12-17-2003, 01:25 PM

HOusing does vary considerably by region. Here in San Diego it was announced this week that only 16% of people can afford the median priced home on a single income. Even on two incomes that is becoming more impossible. Where are people getting the money? Lower intest rates are helping people afford a higher priced home relative to their income and lending practices are also encouraging people to borrow more. The problem will come when these people have some sort of financial problem- they won't have anything to fall back on since all their money is going into their homes. Then default rates will soar.

Right now it is supply and demand with the number of houses being built not rising as fast as the population in many areas. People see the prices skyrocketing so they will buy just about anything they can afford now so that they are not priced out in the future. Low interest rates are helping fuel it as well. All this has led to speculative pricing levels. If interest rates jump above say 7% then we will see a cooling off (although there is presently no reason for rates to rise). Generally home prices do not drop if demand is reduced- houses are merely taken off the market or remain listed for longer periods of time. Condo prics are more related to the rental market for their prices and may not respond in the same way as houses. If rental vacancies rise, then condo proces will tend to fall as well. People tend to buy condos to stop paying rent or to rent out the unit themselves. ALthough with housing prices getting so high, more are looking to condos as a more affordable alternative.

VTGreg · 12-18-2003, 05:22 AM

Quote:

Originally posted by zippyjuan
Generally home prices do not drop if demand is reduced- houses are merely taken off the market or remain listed for longer periods of time.

Many good points, but I disagree with this comment. If people are having difficulty selling their house and need to sell it typically they lower the asking price. If it is an isolated event it is insignificant. However, if there are others that are in the same situation then it has a chain reaction. At the current time many people have money tied up in real estate that was invested in the stock market before (and during in many cases) the bear market. If in the near future many of those people attempt to free up capital to invest in the bull market then demand will go down and housing prices will correct. If nothing else people will not be as willing to pay exorbitant prices for housing driving costs down.

In my area (DC metro area), you can't touch a house right now unless you are willing to offer 10-20% over the asking price. It is ridiculous.

12-16-2003, 12:39 PM	#1
ray lilbigblue Join Date: Jan 2003 Posts: 6,613	Do you see an end to the rise in the real estate market? http://story.news.yahoo.com/news?tmp..._ec_fi/economy After reading that story, my hopes of finding a reasonably priced home here in Los Angeles grew much much slimmer __________________ new uploader My World

12-17-2003, 05:05 AM	#3
VTGreg Captain Join Date: Jun 2002 Location: Charlotte, NC Posts: 1,674	Not sure if it is the case up there in Colorado, but many people took their money out of the stock market when things got bad and invested it in real estate. As a result, you were having alot more money dumped into real estate than usual. Couple that with the historically low interest rates and people are able to afford more when purchasing houses. With the market continuing to improve, I would imagine we will see a correction in the real estate market in the next 2-3 years. __________________ Courage is not the absence of fear but rather the judgment that something else is more important than fear. http://www.hammockbag.com

12-17-2003, 01:25 PM	#6
zippyjuan Picture of the Day Guru Join Date: Oct 2002 Location: Sunny San Diego Posts: 8,070	HOusing does vary considerably by region. Here in San Diego it was announced this week that only 16% of people can afford the median priced home on a single income. Even on two incomes that is becoming more impossible. Where are people getting the money? Lower intest rates are helping people afford a higher priced home relative to their income and lending practices are also encouraging people to borrow more. The problem will come when these people have some sort of financial problem- they won't have anything to fall back on since all their money is going into their homes. Then default rates will soar. Right now it is supply and demand with the number of houses being built not rising as fast as the population in many areas. People see the prices skyrocketing so they will buy just about anything they can afford now so that they are not priced out in the future. Low interest rates are helping fuel it as well. All this has led to speculative pricing levels. If interest rates jump above say 7% then we will see a cooling off (although there is presently no reason for rates to rise). Generally home prices do not drop if demand is reduced- houses are merely taken off the market or remain listed for longer periods of time. Condo prics are more related to the rental market for their prices and may not respond in the same way as houses. If rental vacancies rise, then condo proces will tend to fall as well. People tend to buy condos to stop paying rent or to rent out the unit themselves. ALthough with housing prices getting so high, more are looking to condos as a more affordable alternative. __________________ I add new pictures to my photo gallery pretty regularly. You can see them here if you are interested: http://www.pbase.com/jeffryz

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12-16-2003, 11:07 PM	#2
Cubsfan Rear Admiral Lower Half Join Date: Jul 2001 Location: Colorado Posts: 2,584	I really don't understand what's fueling the market. Here in Colorado, we've lost a ton of high-paying tech jobs to both layoffs and outsourcing to India. Bankrupcy was the highest it has ever been. But still, housing prices are going up. I don't know who's getting jobs and is able to afford some of these prices. Is it possible that the market is artificially being kept high somehow?

12-17-2003, 07:01 AM	#4
cheapchinese I love free! Join Date: Apr 2003 Location: LA, California Posts: 2,976	real estates not going to keep rising... interest rate won't have a dip like that for a long time, and the market seems to be healthy again, so i kinda see the money going back to the market

12-17-2003, 07:30 AM	#5
VTGreg Captain Join Date: Jun 2002 Location: Charlotte, NC Posts: 1,674	http://www.investors.com/editorial/feature.asp?v=12/17 Just one source, but it appears things may be topping out now. From IBD: "Building permits fell 5.4% to a still-robust 1.874 million pace. Naroff noted the number of homes that had building permits but had not been started also declined sharply. "If those waiting-to-be built numbers and the small decline in permits are any indication, I think we may have hit the peak," Naroff said. "

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