Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Paul Viapiano who wrote (5723)	10/1/2002 1:47:56 AM
From: Lizzie Tudor	Read Replies (3) \| Respond to of 306849

Re: RE returns in CA 1990 was the top of that market...my home was appraised at $235k then, now is worth $270k...so we're higher than that peak right now...however, in the intervening years of 1991-1994, it was worth $150k...the Northridge quake of 1994 didn't help matters either... That sounds exactly right to me. Here in N Ca, I remember being shocked that a Los Altos ranch home (an expensive suburb but not the "hills") went for 700K in 1990- an unbelieveable sum. Then, a crash. Today I can imagine that same house at slightly below one million... or maybe, maybe in the height of the bubble 1.2 million or so. But there was this mighty trough in between where those houses fell to the low 500s. That 89-90 California real estate bubble was really quite frothy. Maybe thats why I am not as concerned with this mkt bubble and burst as some. There were probably trillions of paper profits lost in that decline too, funny money just like stock market money lost. People thought their homes had made them rich. L

To: Paul Viapiano who wrote (5723)	10/1/2002 2:23:36 AM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

Unless you're prepared to trade homes like stocks you need to compare a peak price level to a peak level price. Or a bottom price to a bottom price - but of course most buy at the peak (like now) and perversely sell at the bottom. If you sold your home at the peak and rented for five years - then bought a home and again just sold it six months ago, being prepared to rent for a few years... well then we can be prepared to consider some alternate return on real estate investment. But otherwise we have to consider long term returns - which just happen to exactly match GDP. Rents have fallen dramatically in Los Angeles - ask any apartment building owner, I know many. When comparing rents you need to be less naive and credulous. Buildings which have been recently built or re-built are predicated on excessive peak-cycle land costs. These owners will eventually recognize their losses, as they always do. In the mean time they will ask rents which are far above market. They will find a few suckers but will not fill a building at their current rents. There's a new condo development in West Hollywood in a similar situation, 851 N San Vicente. The developer bought the land at peak-cycle prices. This means the 2 bedroom condos are all priced around $650k (I'd guess about $250k too high now, even more when the market tanks). They've been on the market for 556 days. They're not selling. Oh sure, the real estate agent lies and tells you there's only 3 left - but actually they've only sold 2 units in 556 days. Approximately 45 units that some investor will eventually realize an enormous loss on. They'll be foreclosed on by the bank - and sold at actual market value. That will probably be a $10 million loss by the time the units are finally sold.

To: Paul Viapiano who wrote (5723)	10/1/2002 2:36:30 AM
From: Elroy Jetson	Respond to of 306849

1990 was the top of that market...my home was appraised at $235k then, now is worth $270k - Paul Viapiano You experienced far less appreciation than the 2.14% shown by the Real Estate Research Council's price index. Your Southern California home increased only 1.16% per year compounded over the last 12 years. 270 / 235 = 1.1489 1.1489 ^ (1/12) = 1.0116 or 1.16% Perhaps you could answer Paul Senior's question from your own experience. I'd like to believe that if they really only saw 2% annual appreciation on their real estate, they'd know it and be loud about it. They don't seem to be. Why? Paul Senior Message 18055891