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

To: Les H who wrote (27817)	3/5/2005 6:26:16 PM
From: Amy J	Read Replies (2) \| Respond to of 306849

"house prices would need to remain flat for over ten years to bring America's ratio of house prices to rents back to its long-term norm." --------------- "The figures look even more striking in the San Francisco Bay Area, where it is possible to rent an $800,000 house for $2,000 a month. Making the same assumptions about rents and house prices, but also deducting tax relief on a fixed-rate mortgage and adding property taxes, a buyer would pay $120,000 more over seven years than if he had rented. House prices in San Francisco would need to rise by at least 4% a year (2% in real terms) for it to prove cheaper to buy a house. Since 1950 American house prices in real terms have risen by an annual average of just over 1%. To expect them to rise faster from their current dizzy heights smacks of irrational exuberance, to say the least." economist.com

To: Les H who wrote (27817)	3/7/2005 2:08:13 AM
From: fatty	Respond to of 306849

Couple weeks ago, I had tried a few buy vs buy analysis tool online. Most of them were hosted by realtors, mortgage companies or banks. All of them were totally useless. They conveniently ignored things like you could invest your downpayment or made ridiculous assumptions like housing price would rise double digit every year. Naturally, most tools recommended me to buy instead of rent. Then I launched an excel spreadsheet and did the calculations myself. Sure enough, it made no sense to buy, especially if you consider the condo scenario when a comparable rental unit is so easy to find. A single house scenario is more complicated to calculate because it is hard to find rental listings for single house and there are intangible factors like the value of a nice backyard. Anyways, in Massachusetts, housing price has been quietly sliding in the past 6 months. The median price for single family had dropped from 360k to 340k over the same period. In 5 out of the 6 months, the median price was lowered than the previous month. If this trend continues in the next couple months, I think it's safe to say the housing market is entering a new cycle.