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

To: Michael Sphar who wrote (6272)	10/26/2002 8:32:34 PM
From: Rob Fritz	Read Replies (2) \| Respond to of 306849

But tell me, do you think your current 600k house will nearly triple in value in the next 10 years as it did from 1991 to 2001? One never knows, of course, but the scarey part of CA real estate right now seems to be the assumption so many people have that 'CA real estate never falls in value'. Rob

To: Michael Sphar who wrote (6272)	10/26/2002 11:37:15 PM
From: MulhollandDrive	Read Replies (1) \| Respond to of 306849

so what happens if you had a job transfer or lost your job in 1991? same happy outcome?

To: Michael Sphar who wrote (6272)	10/27/2002 12:31:44 AM
From: Elroy Jetson	Read Replies (2) \| Respond to of 306849

Either you or the local Assessor's Office do not understand the details of California Prop 13. If you purchase a home for $290k which then declines in value to $210k, you can apply for a temporary reduction in assessed value. Your Prop 13 basis is still $290k per year plus annual increases. Once your home increases in value, the assessed value can rise, dollar for dollar, until your assessed value is restored to your Prop 13 basis with adjustments. The only way to maintain a low value is like Governor Gray Davis and his wife did. They purchased their Condo in West Hollywood in 1993, near the bottom of the market, for a very low cost. All annual property tax increases are based on this low valuation. For further savings down the road, they took ownership in the name of his Wife's Trust.

To: Michael Sphar who wrote (6272)	10/27/2002 2:31:46 AM
From: fatty	Read Replies (4) \| Respond to of 306849

>May, 1989, signed a purchase agreement for $289,950. I put down something north of $100K, mortgaged the rest. Back in may 1989, S&P 500 was ~300. Now, it's ~900. So your $100K is worth $300K if you invested in S&P 500. You can net $200k. Let say you had a 30 year mortgage and your're already paid off 1/3 and your house is worth $550k now. If you sell, you net $450K. But you still owe the real estate agent $30k and the bank 2/3 of $180 or $120. So $450k - $120 - $30= $290k, which is $90k better than S&P 500. But investing in S&P 500 is hassle free and you don't have to pay taxes and maintanences. Spread the $90K over the past 12 years, you kind of make $7.5k more per year or $625 per month for all the extras you have done/paid as an owner as opposed to a renter. Well, can you say if that was worth it?

To: Michael Sphar who wrote (6272)	10/27/2002 12:30:38 PM
From: Lizzie Tudor	Read Replies (1) \| Respond to of 306849

May, 1989, signed a purchase agreement for $289,950. for a 3X2 Calif fixer upper in a middle class neighborhood in Santa Clara, CA. This sale defined the peak of the local housing market for the next 5 years at least.<g> I put down something north of $100K, mortgaged the rest. Two years later, in the 1991 doldrums the housing market had cratered and my home's value had declined to about $210K. Sorta wiped out most of my equity, right? This scenario wasn't devastating to you because you got lucky and rode a one-time boom in silicon valley during the 90s that resulted in 1)a contractor workforce with extremely high salaries, 2)astronomical stock option gains, 3)even tighter housing demands as companies hired more as a result of 1 and 2. SV has these things going against it now- - tremendous rental capacity added in the 90s to handle the boom, most of it empty now- why buy an overpriced condo? - current trend is to move IT workers offshore, not bring them in... less people - above trend eliminates many of the contracting salaries and puts a downward bias for the people still here - stock market, who knows but options expensing momentum means far fewer options and opportunities to get rich in SV We all know housing in SV is overpriced. The question is, why was it so expensive and can it continue to hold. A lot of factors are working against high priced RE now. I have friends who have lost 40% on their high priced hillsborough homes even though it declines like that don't show up in the statistics. This is in the 1mm range. THey lost 2/3 of their equity just like you did and its fairly devastating for them since their jobs are being moved to india. What will it take for this house to go from its 2000 peak price of say 1.3mm to 2mm, a similar rise that you experienced with your house in the 90s? Not moving 100K jobs offshore, thats for sure. Lizzie