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Strategies & Market Trends : US Economic Trend Analysis
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To: gpowell who wrote (91)8/24/2010 5:52:05 PM
From: gpowellRead Replies (1) of 97
 
It really is a tragic comedy when viewed from afar. Not so much if you part of the wrong side of the bubble.

For my self, I sold real estate into the bubble from 2003 to mid 2006. I made out pretty well, overall. And because I think real estate is dead for a while, I have no desire to buy back into those homes even though they're 30% to 50% below their sale price now. In the Bay Area, you cannot buy real estate even at today's market prices and make much rental income. All economic profit must come from price appreciation.

On the flip side I have one friend who lost their home, and another who is way upside down on several rentals. Neither were really cognizant of the historically low rates that were prevalent in the decade. And even though we had conversations about the dangers of adjustable rates resetting upwards, they just didn't seem to understand what that really meant. It came as quite a shock to them to learn they couldn't re-fi when the market price of their homes caved.

Then there is the case of another online "friend" who I had many many discussions with about the past direction of real estate in the Bay Area. They thought housing had peaked around 1998 and had declined all the way through 2004 or so. Consequently they viewed the very tip of the bubble as the "firming up" of a depressed market. From what I gather, they finally took the plunge and purchased a couple of homes right at peak of market, and at ground zero of the bust.
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