Sac - No. 8th In Riskiest Housing Markets
#1
Posted 19 July 2005 - 08:13 AM
Affordability is a key issue in the hottest market in northern California, where prices have climbed 27% in the past year and an annualized 19% over the past five. A state-budget crisis puts jobs at risk in the Golden State's capital. Odds of a price decline: 40%.
http://biz.yahoo.com...article1_3.html
#2
Posted 19 July 2005 - 08:23 AM
40%? Those aren't bad odds. That pretty much says, it might or might not happen. In other words, no clue.
Even the weather man can say there is a 50% chance of rain.
#3
Posted 19 July 2005 - 08:29 AM
#4
Posted 19 July 2005 - 08:47 AM
The valley, from Redding to Bakersfield, is where most are expected to settle.
What happens to housing prices when there is increased demand?
Steve Heard
Folsom Real Estate Specialist
EXP Realty
BRE#01368503
Owner - MyFolsom.com
916 718 9577
#5
Posted 19 July 2005 - 09:00 AM
If you prepare yourself and diversify, you will be fine. If you are using an interest only loan, God help you.
If you can dodge a wrench, you can dodge a ball.
#6
Posted 19 July 2005 - 09:05 AM
#7
Posted 19 July 2005 - 09:08 AM
I respect your opinion, but the real estate market smells as bad as the Nasdaq in 2000. The bubble may not pop soon (as the bubble in the stock market kept building up more excess), but it will pop.
Don't let the blind lead the blind. Maybe that's what that "Wake Up" sign is for.
If you can dodge a wrench, you can dodge a ball.
#8
Posted 19 July 2005 - 09:10 AM
#9
Posted 19 July 2005 - 09:12 AM
Agreed on that point. However, they have run up way too far, way too fast. Did anyone study economics or history here?
If you can dodge a wrench, you can dodge a ball.
#10
Posted 19 July 2005 - 09:12 AM
There are lots of ways to get into trouble with real estate and it would seem the biggest way would be to assume that since we'll have growth, our homes will continue to appreciate over the short term.
#11
Posted 19 July 2005 - 09:14 AM
If you can dodge a wrench, you can dodge a ball.
#13
Posted 19 July 2005 - 09:19 AM
And real estate has traditionally appreciated at 4-5% a year. For the last five, it has appreciated at greater than 20% per annum. It has progressed WAY beyond the mean. When that happens, what ALWAYS follows? That's right, a price correction.
Banks are already adjusting for potentially bad loans in their earnings forecasts.
If you can dodge a wrench, you can dodge a ball.
#14
Posted 19 July 2005 - 09:22 AM
#15
Posted 19 July 2005 - 09:33 AM
There are so many people for whom a nice house is out of reach, and if prices should come down, they will be right there to bid them up. All of those folks planning on moving to California are hoping for a price crash, too. The most desireable state in the union will become even more attractive.
Investors are getting ready. They are hoping for a price drop so that they can snap up some properties at 'bargain' prices. Why? Because they know that prices will rise again.
As for the 'interest only' loans, what most people don't realize is that for these loans, 'interest only' is an option, not mandatory. You can pay as much on principal reduction as you want to. I don't have any figures on how many of these folks actually do pay down principal, but regardless of whether prices go up or down, their loans won't change.
We need to stop looking at housing, at least our own homes, as a cash cow, or even an investment.
Buy a house if you need a place to live. If you rent, you are paying someone else's mortgage, someone else gets the tax deduction on interest, they can raise your rent any time, or evict you. And while you may be unsure if the value of your home will increase, you know for sure the value of your apartment won't, at least, not for you.
Who knows what the future will bring? I don't. I am glad I own my own home, and that it is worth today, a lot more than I bought it for. If the market crashes, I'll still live there.
Steve Heard
Folsom Real Estate Specialist
EXP Realty
BRE#01368503
Owner - MyFolsom.com
916 718 9577
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