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

To: Valuepro who wrote (31302)	5/16/2005 12:14:57 AM
From: Drygulch Dan	Read Replies (1) \| Respond to of 306849

Not sure what you mean by "the problem in comparing long ago real estate prices/values to present ones is the difference in financing options". My intent was to show that the long term trend in RE pricing unadjusted for inflation was approx between 6% and 9%, depending on variables I did not delve into, in the SF bay area. In the old days people did borrow money and some made profits while others lost. Things are a lot more complex now, but the participating public are a lot more savvy by comparison. Mortgages were difficult to maintain in the old days just as they are today and will be for the foreseeable future. After you brush aside all the sophistication, people still need to pony up to meet that monthly challenge. If the banking industry has become lax in its standards lately, this will come back to bite either those lenders, Fanny or Freddie or ultimately the US taxpayers as bailers of the last resort. For the deleveraged real property owner, riding out this coming adjustment period will not be perilous unless they are in need of liquifying through property sales at any given time. If you can hang on for 25 to 50 years the long term trend will be in your favor. Regarding China, $48.5 million per day may sound like a lot of money, but if you view it in terms of houses its not really. Say an average house costs $250K. Then China is contributing only and I stress only about 200 houses a day or 70K houses a year. This in a country of 280 million people! One tenth of one percent of all living units approximately. No big deal.

To: Valuepro who wrote (31302)	5/16/2005 1:56:16 AM
From: Proud Deplorable	Respond to of 306849

"I moved from Los Altos in the Bay Area to Arizona nearly 3 years ago." I thought you lived in Carmel? Who am I thinking of?

To: Valuepro who wrote (31302)	5/16/2005 2:51:03 AM
From: John Vosilla	Read Replies (1) \| Respond to of 306849

Logically, would it make sense to compare how home values stack up in a neighborhood to historic multiples of home values to median incomes and rents over time in that neighborhood? Even in the most overpriced of metro areas today going back to 1960 multiples of 2.5 to 3 times income and GRM's in 7-10 range were common. The latest bottom in the mid 1990's actually came close to these figures while today I find that we could be easily more than twice over the 1989 top. It seems by looking at real estate in this way you can always take out the financing and manipulation of CPI by the BLS. To me it is totally ridiculous for someone to tell me everything will be fine in a market just because he bought a house in NY for $40k in 1980 and it is worth a million today (so it will automatically trend at the same rate going forward)like that realtor you always hear on the Fox show Bulls and Bears. My guess is that 14% annual rate might be zero at best the next 25 years since prices are so overvalued compared with real fundamentals.