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: Tradelite who wrote (18610)	3/15/2004 3:21:07 PM
From: Elroy Jetson	Read Replies (3) \| Respond to of 306849

This is why the top in the California real estate market is marked by extremely few homes for sale, not a large inventory as you suggested. Let's examine one home owner. They sell their home and purchase one which costs 20% more. Their annual costs increase by 90%! $500k home (bought for $200k) ($200k mortgage and $300k equity) Annual mortgage payments $11k Annual Prop 13 real estate taxes $4k Total annual cost $15,000 Sell the $500k home and buy a better $600k home (mortgage increases from $200k to $300k, + $300k equity) Annual mortgage payments $16.5k Annual Prop 13 real estate taxes $12k Total annual cost $28,500 $28.5k is 90% larger than $15k just to buy a home 20% more expensive. As home prices rise, home owners cannot afford to sell, unless they move out of the area. The number of homes for sale decline as prices rise. When prices start to decline, more and more homes are put up for sale as home owners fear losing their equity and being stuck with a home worth less than their loans.