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

To: John Vosilla who wrote (51319)	4/3/2006 10:39:05 PM
From: ChanceIs	Respond to of 306849

>>>We've never had a residential RE boom like this one before<<< That is probably true. There was a little boomlet in Washington, DC in 1989, followed by a microbust bottoming in 1992. The signs were the same - lots of properties being flipped. I bought a 26 X 22 (1,500 sf including basement) colonial for $220K in May '89. The sales agent kept foaming all over me saying, it will be worth $280K by August. It might have gotten to $280K by August 1998. So the mania seems very much the same, but the prices - most notably the ratios (eg price/rent, price/salary) are absolutely in uncharted, nose bleed territory. What was so amazing was that in '92 when interest rates fell, lots of people had to bring cash to the table to refinance. Also the local governments were in a heap of hurt. Fairfax had built a new town hall and a couple police helicopters, which were of course going to be financed by future increased tax revenues available from the straight line extrapolation of the price increases in '86-'89. Yeah just hold a ruler against tht chart. We'll have oh 30% more tax revenue in '92 than '89. Ooooooooooops. How are we going to pay for the new helios???? It is bad to raise taxes in the middle of a recession.