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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: J. P. who wrote (11763)7/25/2003 10:40:12 AM
From: TradeliteRead Replies (3) of 306849
 
<<The principle on houses is sky high! And even the "low" interest rates eat you up at these principle asking prices. This market is punishing people who are starting out>

Those people (buyers) ARE the market. The market isn't something which exists without them and "punishes" them. The market is doing what it's doing because the buyers are buying. Discussion can get pretty mixed up if this concept isn't well understood.

I know this, because I used to spend hours trying to explain the "market" to sellers who mistakenly thought THEY were in control of prices. Even the smartest ones sometimes never quite "got it".

One thing that seems to be overlooked continuously on this thread is the market impact of many many more Americans buying homes because they NEED them. I got laughed out of here many months ago when I suggested demographics were responsible for the housing boom, which started long before Greenie ever did a thing to sharply reduce interest rates.

This trend will continue in heavily populated areas, almost without regard to interest rates.

And for those people who intend to flip a house within a few years of buying, the market will treat them no differently than it ever has. They stand to lose money. You're not supposed to make a six- or seven-figure investment in ANYTHING without having an exit plan--certainly not something as hard to liquidate as real estate.

As for the comments about $150K houses somehow being different for borrowers to manage than homes which are more expensive....well, for one thing, a $150K house is practically a mansion in some parts of the country even today.

House prices are always a reflection of the income levels of the area in which they're located. So the $150K buyer is no less concerned about interest rates than the fellow who can afford a million or more. They just live in different places. Everything is relative.

<<But 150K is pretty low. With 70K you can almost pay off half immediately.>> Believe me, many folks who buy $150K homes will never see 70K in their bank account at one time if they live to be 200 years old. Therefore, to dismiss the impact of interest rates on them makes no sense.
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