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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Riskmgmt who wrote (38210)8/16/2005 11:08:35 PM
From: John VosillaRead Replies (4) of 306849
 
"..since this board started, is R.E. 90% of the people posting on this thread believe that we are in a RE bubble and it is about to pop any day. Most of us believed that 3 years ago too."

I've been in that camp for about 12-18 months in my market. It is funny but I went to LA for the first time in May 2002 and was amazed to see these small older ranch homes on tiny lots going for $400k back then and thinking this is crazy but hey LA is a special place and deserves some premium. Meanwhile in that same time my own area has doubled in price and is close to where LA was three years ago<g>

As for undervalued property in flyover country there is nothing wrong with buying say a townhouse in a built out area of Houston, close to jobs, uptown/Galleria and downtown, great demographics for $60k that rents for $825/month. Works out to under $40 psf. In south Florida the same property would be $300K+ and rent maybe $1200. Honestly the opportunities are everywhere from Kansas City to Austin to Cincinnati or Oklahoma City. All you need is one niche with high cap rate, purchase way below replacement cost,some local job growth,tight rental market and thus avoid expensive new urban condos and those new subs with those California investors<g>

Will the economy first go into a deep recession? Perhaps but folks still will need an affordable place to live. Those caught up in the bubble will be hurt bad. Those beautiful new $500-700k condos near the beach here in South Florida or houses by the beach in Coast Rica might look great and target the right demographic in a fantastic area but make no sense to me from a true long term investors perspective.
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