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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Earlie who wrote (51765)	5/26/2006 9:42:51 AM
From: valueminded	Read Replies (2) \| Respond to of 116555

Guys: This neck of the woods, I don't see an implosion. Prices still rising, sales still strong. Real estate is no different then anything else. Buy low and sell high. If you buy with a margin of safety, then while there is risk, it is minimized. I fly often from Nashville to California. It is a world of difference. From a cost perspective, it is far less expensive in Nashville. Housing is at least 3x cheaper (apples to apples), real estate taxes are 2,5x cheaper, no state income tax in tennessee etc. Bottom line, is that I see an implosion in the grossly overpriced areas and possibly a carryover decline in other areas. Real estate tends to be regional, it is not like the stock market. (ie Rising tide raises all ships) My method is evaluate if overvalued by comparing rental cost to ownership cost. For example, in California, you can rent a brand new house 3200 sq ft for 2700-2900 per month. House sale price in that area is ~1 million. Here in Nashville, you can rent a similar size house in nice area also for about 2500/month. But this house is priced in the 400k range. Many areas did not participate in the upward explosion in house prices so I dont forsee many area imploding. (maybe 10% drops but thats it)