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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Amy J who wrote (27440)2/24/2005 8:33:05 PM
From: David JonesRead Replies (1) of 306849
 
snip>>>>The explosion in move-up housing demand will end in 2004.
After nine years of declining demand, demand for traditional entry-level housing will increase in 2003 and 2004, only to decline steadily thereafter.
The greatest traditional home building opportunities will exist in the luxury and second-home markets."<<<<<end

Realize that article was wrote May of 02 directed at builders and during a time when talk of deflation was prevalent. So I see him as a bull in calling for real estate to trend off after 04.
His "greatest traditional home building opportunities will exist in the luxury and second-home markets" statement may be seen as reflected in Toll Bros mad bursts of profits.
For example with land at a premium in the Livermore/Amador valley and selling for 1 million per acre. Most goes to high end homes of 1 mil and up. On such lands your entry level homes tend to be condo's. One can see just such building in Dublin at the 580/680 junction. From the freeway homes on the ridges 1 mil and up. With huge condo villages in the foreground with prices which I'm not sure of but safe to say close to 1/2 mil.

>>>>"entry level is more overpriced than luxury homes on a per sq ft basis."<<<<<

Always has been look at what it costs to rent storage space, the smaller units have the highest costs per foot. Same with homes or their equivalent as rentals units.

>>>>>I think he's going to be in for a surprise - since when do people buy "up" when they retire?<<<<<

The writers move up buyer is 43 which he calls traditional.
I agree with you, retirement aged move down. Example, my recently retired brother '60yrs' left his ten acres and moved to retirement village home of one third value.

>>>>From your other post, you said the mortgage payments are the same over the past ten years because interest rates are much lower - that's the real reason for the boom.<<<<

I don't believe that was me, Amy. I believe it's interest rates, boomer peak earning years, lack of other investment vehicles and low returns on savings. The perfect storm so to speak.

>>>>>If Greenspan calls certain RE localities a bubble, then you know it's got to be since he's the RE bubble magician maker.<<<<<<

Yes there are bubbles most published writers say there's no 'nationwide housing bubble' then go on to point out shy high markets on the coasts. I'm one that believes real estate should earn a buck and not form appreciation. In time when other vehicles for investment start to shine those holding low CAP properties will rotate out. That's my thinking.
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