Upcoming Events
Saturday, October 14, 2006:
Michael Stitt of Valley Sierra Mortgage Planners, a division of SAC 1st Mortgage, will present a free workshop, "Why It Still Makes Sense to Buy versus Rent," from 10 a.m. to noon at Roseville Maidu Public Library, Rocky Ridge Drive in Roseville. Information on the local and national real estate market and the history of property appreciation and interest rates will be provided. For more information, call (916) 367-7100.
Any roving citizen-reporters in Roseville?Wednesday, November 1, 2006:
Sacramento Regional Housing Forecast, North State Building Industry Association
When: Wednesday November 1, 2006
Time: Program begins at 3:00 p.m.
Where: Sacramento Convention Center 1401 J Street, Sacramento
Speakers:
- Elliot F. Eisenberg, Ph.D, Housing Policy Economist NAHB
- Harry C. Elliott III, President, Elliott Homes
- Michael P. Lyon, Chief Executive Officer, Lyon Real Estate
- Greg Paquin, Founder & Chief Executive Officer, The Gregory Group
7 comments:
I got something in the mail a few days ago doing a rent vs buy analysis. It compared $1400 rent vs a home for $270000 and I think it said I would come out ahead by a few hundred if I bought. Now which house in Placer County costs $270000? The ones renting for $1400 are way more expensive.
I am very curious about what will be said at that second meeting, at the convention center.
I posted this on Ben Jones Blog today, when I happened to run across this data, prompted by a discussion of the typical length of a housing downturn. Below is an example of what happened after the run up in the late 1980's which peaked in June 1990. (Keep in mind that market was not nearly as imbalanced as this one, though we had out migrations and negative job growth.)
So here is the example: MLS # 60077228, Fairway Drive, Rocklin, CA. It is for sale at $415,000, after multiple price reductions of approximately 15% during the last 9 months. Seeing it continually dropping in price, I looked up the sales history.
It sold in February, 1992 for $200,000. I sold again in March, 2000 for $195,000. So after the 1990 correction, this home DEPRECIATIATED 2.5% OVER 8 YEARS. Some one should look up the CPI statistics, because they ran in the 5% range during those years. This means the house lost 40% in MORE value during those 8 years. Yet is was a loss no one really clearly saw, except the seller in 2000, who lost $5,000 and a lot of money thrown away on housing costs above the rental value.
Wake up folks. Appreciation is history for years and years now. Houses are dropping in value in nomimal terms, and will stagnate for years, while inflation eats away your equity. Until such time that owning and renting approach equality, there in NO SENSE IN BUYING ANYTHING.
So the big real estate professionals are resorting to gimmick seminars with their flashy sales pitch. Please people do not fall for their tricks. They are all smoke and mirrors, believe me. They will leave out plenty of numbers. REMEMBER A HOUSE YOU BUY IS FOR LIVING NOT AN INVESTMENT. Last time I looked I did not pay interest on the stocks I purchased. Also, Mike Lyon was on the real estate show a few weeks ago and he said that only one out of seven homes was priced correctly in the Sacramento area, MAYBE HE SHOULD DO A SEMINAR ON THAT, BEFORE HE SPOUTS OUT LIES TO GET PEOPLE TO RUIN THEIR LIFE's WITH A TOXIC MORTGAGE. Please beware of the tricks. Wait until buying a home feels right not because somebody who needs a commission tells you to, YOU WORK TO HARD FOR YOUR MONEY.
#1: I don't understand why Lander is advertising sales pitches from the real estate industry on his blog.
#2: Re: JR, 9:07: The CPI ranged between 1.6 and 3.4% between 1992 and 2000, but I get his point, that real estate bubbles can be followed by long periods of flat appreciation (or negative appreciation in real terms). And that is exactly what the most optimistic forecasters are calling for in this market. But this bubble is unprecedented (http://sacramentolanding.blogspot.com/2006/08/soft-landing-after-this.html), and many experts think it was caused by an unprecedented event, namely the attack on the US, on US soil, of 9/11/2001 and the response by the Fed Reserve and banks to flood the economy with cheap money to prevent a collapse of the strongest economy in the world. So I think this bubble with pop with more than an 8-10 y period of flat prices, especially since wage growth is likely to remain low for the foreseeable future. I think the picture will become clearer from Dec 2006 through March 2007. I think we'll be in a recession by the middle of next year. I suspect mortgage rates will remain low, but the bubble will pop anyway.
Thanks JR, and happy renter.
I don't understand why Lander is advertising sales pitches from the real estate industry on his blog.
It's all that money they give me ;>
JR -- Bingo! Some of the specuvestors are going to have to wait a decade or more to "break even" on their purchases in 2004/5, and between inflation and all the extra interest paid and losses taken in the intervening years, they'll really have lost substantial amounts of money.
We considered buying when we moved to Arizona, but buying our identical condo would cost at least $700 a month more than we pay in rent, and even the happy thinkers expect prices here to drop through 2009. Why pay 45% more to *lose* money?
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