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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: J. P. who wrote (2536)5/7/2002 12:51:21 PM
From: TradeliteRead Replies (1) of 306849
 
<<What set of conditions would it take for real estate to actually drop? >>

In my humble opinion, it would take a major cataclysm to make real estate values drop severely in those areas where they have risen substantially. The reason the values went up are twofold: desirable places to live (near jobs, good schools, beautiful areas in general) and no lack of people with money and savvy to make real estate work toward whatever their personal goals happen to be.

Real estate is a very flexible type of investment--it can be rented, mortgaged, financed in literally hundreds of ways, if the owner knows what he's doing. Our country is populated by many smart people, and their offspring are about to get out of the overcrowded colleges and start looking for places to live, too.

I can't buy into the theory that suddenly the economy will force a huge supply of homes to come on the market in those areas where homes are currently scarce. The owners of those homes may want to sell, but then they have to buy or rent somewhere else. As Greenie himself pointed out, the cost of moving is kinda high. It's not really a winning choice. Staying put or playing some financing tricks or at least keeping the property but installing a high-rent-paying tenant is probably the best option.
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