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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: CalculatedRisk who wrote (31494)5/18/2005 7:05:12 PM
From: GraceZRead Replies (2) of 306849
 
I rode the bubble until Dec '99 / Jan '00 ... and even then I was a little early.

In 1999 and early 2000 stuff was still crazy but it was always stuff you didn't seem to own or stuff you sold much earlier. At least that was my experience. I think it's easier to get out on the way up than to hang around after a peak. When you hang in after a peak you get married to that ATH and wind up riding things down when you should be running for the hills.

I'm seeing price reduced signs and the two spec houses in front and in back of me aren't moving. I think it's hit the inevitable wall where there are no more real buyers, just specs. I lived in my area for ten years with maybe ten houses going up in that time frame because the zoning restrictions were too onerous for the big homies to want to build here. Price changed all that and in the last three years there are a 100 new houses within 3 miles of my property. Supply is no longer restricted at these prices. You can't go for a walk around the block without getting run off the road by some boom truck or pickup from the various tradesmen swarming around here. I don't think we need rising rates to bust it, just a slight shift in psychology at these heights.

In '90-'91 it was more than just rising rates that busted the boom, if you remember there were also some serious changes in the tax treatment for investment properties put through with the tax reforms of 1987. The changes in the tax treatment had a devastating effect on rental property in my city and in New England where there was a lot of investment in multifamily housing on the part of small investors trying to get in on the action.
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