Hi Patron & Thread,
I have two questions the thread may be able to shed some light onto:
My assumption is that when interest rates eventually rise, real estate prices will go down a tad (because people's total loan cost goes up, so RE pricing eases as less people can afford the higher prices.)
So, my question is, in the 70's inflation, did real estate prices drop initially, when interest rates initially rose? And then when inflation kicked into full gear, did RE prices inflect & run up as inflation went into full gear? (I was too small to know.)
I wonder if Bush's spending spree has the potential to create inflation - what are your thoughts on how real estate prices could be impacted? I'm assuming that if inflation were to occur, real estate prices would initially go down (as interest rates rise) until the point of a possible inflation (at which point real estate prices could go up). Questions are: what do you think is the likelihood of inflation? For how long do you think real estate prices could go down initially, in the face of initial rising interest rates? At what point would RE prices inflect back up, in an inflation economy? What indicators/signs do you watch for?
On another note, for those that live in the Bay Area, I saw a property in the city of Woodside for $1.5m (1.3 acres). One friend said, "that's cheap." (Only in California would you hear something like that!!!) Same house probably would have cost around $3m during the boom. High-end property prices seem to have "plunged" by 50%. Tied to the stock market. Do you think high-end properties are equally as impacted by inflation, or not quite as much on a % growth basis (given that 90% of buyers in the over $1m range reportedly do not take out loans and thus those properties may be a tad less sensitive to interest rate fluctuations, though I believe those are too.) Just curious.
On another note, do you have a recommendation to any websites that let you find historical property values (I was using Yahoo Real Estate but stopped using them when they changed to a 3rd party partner supplier that had an onerous registration - credit card and all.)
On yet another note, I have a corporate property lease that expires this Oct and we were paying $3.45/sq foot - (during the boom's peak it was $5.60/sqft for some tenants). Just to keep us after Oct, they offered a $2.00 sqft new lease that would (get this) immediately cancel the higher priced old lease that's not even due to expire until Oct - so they're willing to take a $1.45sqft charge for 9 months just to keep us after Oct - that's how desperate they are to keep anyone. Office property has certainly plunged in price.
Regards,
Amy J |
