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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Tradelite who wrote (145257)1/22/2002 6:03:41 PM
From: reaper  Read Replies (4) of 436258
 
<<I'm a licensed real estate broker (in the biz for about 14 years) >>

Well, that explains a lot then.

Look, paying too much for anything is a stupid idea. The dude who bought the place down the street from me for a million bucks (thus establishing the comp for my appraisal <g>) is going to lose ALL his equity if house prices merely fall 10% from where they are now. And given that prices are about 65% higher than they were 30 months ago in my neighborhood, a 10% drop is far from out of the question.

Yeah, I know, house prices ALWAYS go up. They go up when inflation is high (real estate is an inflation hedge, right) and they go up when inflation is low (with low rates people can afford to pay more). Heads I win; tails I win, my home is a perpetual motion (err...cash) machine.

I'm going to try this one more time. Financial advisors say I should buy real estate because it is a leveraged (usually 9:1) bet on more people buying real estate (do you see the circular reasoning here?). The value of residential real estate has separated from any sense of "inherent" value based on cash flows and is now just a gigantic ponzi scheme where you just need to pray you're not the last guy in.

And for what its worth, I DID sell my house. I sold it to the bank. I "own" 10% of my house. I pay rent to them (my mortgage payment) and in return I get to live in my house and I get the use of $400k of their money, which right now is invested in Treasury strips but in 4-5 years will very likely be re-invested in more South End real estate at prices 50-60% lower than those prevailing in the market today.

As usual, JMHO.

Cheers
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