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patientrenter
Participantjp,
Enjoy your home!
As others have pointed out, there is an emotional cost to not owning a home for a very long time when all along you really want to own one. Now you won’t have that emotional cost any more. And you get lots of time to do things other than watch property prices. Time is extremely valuable.
I don’t know your purchase price, but let’s suppose that it’s $600,000, and let’s assume a worst case of a further 33% price drop that you end up realizing when you sell 10 years from now. That’s a loss of $200,000 over 10 years, or $20,000 a year. (I am assuming you choose not to walk away then. If you did, your loss might be much less.) Isn’t your time and your emotional wellbeing worth $20,000 a year?
I will miss your informed and objective househunting posts.
Participantjp,
Enjoy your home!
As others have pointed out, there is an emotional cost to not owning a home for a very long time when all along you really want to own one. Now you won’t have that emotional cost any more. And you get lots of time to do things other than watch property prices. Time is extremely valuable.
I don’t know your purchase price, but let’s suppose that it’s $600,000, and let’s assume a worst case of a further 33% price drop that you end up realizing when you sell 10 years from now. That’s a loss of $200,000 over 10 years, or $20,000 a year. (I am assuming you choose not to walk away then. If you did, your loss might be much less.) Isn’t your time and your emotional wellbeing worth $20,000 a year?
I will miss your informed and objective househunting posts.
Participantjp,
Enjoy your home!
As others have pointed out, there is an emotional cost to not owning a home for a very long time when all along you really want to own one. Now you won’t have that emotional cost any more. And you get lots of time to do things other than watch property prices. Time is extremely valuable.
I don’t know your purchase price, but let’s suppose that it’s $600,000, and let’s assume a worst case of a further 33% price drop that you end up realizing when you sell 10 years from now. That’s a loss of $200,000 over 10 years, or $20,000 a year. (I am assuming you choose not to walk away then. If you did, your loss might be much less.) Isn’t your time and your emotional wellbeing worth $20,000 a year?
I will miss your informed and objective househunting posts.
Participant[quote=jdsuowner]If the price of this home was about $250K in 1996-1997 and normal(?) appreciation were to continue to 2011 what do you think the house would be worth today given there was no bubble? Was appreciation normally 4-7%?[/quote]
In the long run, home prices follow incomes or prices in general. Robert Shiller and a few others have done extensive studies of home price changes over long periods, in many locations. His conclusion was that home prices eventually follow general price levels (matching the general inflation measures).
I think it’s arguable that prices might follow household income, which grows more quickly than consumer prices over long periods. Since 1996, the CPI has increased 40%, and household incomes have increased more. My crude estimate was 70%.
Increases of 4-7% a year are unsustainable. That would require average annual increases in real household income of 1-4% annually over long periods, if we assume 3% consumer price inflation. That kind of growth in real income might happen in China, but not in the US.
Participant[quote=jdsuowner]If the price of this home was about $250K in 1996-1997 and normal(?) appreciation were to continue to 2011 what do you think the house would be worth today given there was no bubble? Was appreciation normally 4-7%?[/quote]
In the long run, home prices follow incomes or prices in general. Robert Shiller and a few others have done extensive studies of home price changes over long periods, in many locations. His conclusion was that home prices eventually follow general price levels (matching the general inflation measures).
I think it’s arguable that prices might follow household income, which grows more quickly than consumer prices over long periods. Since 1996, the CPI has increased 40%, and household incomes have increased more. My crude estimate was 70%.
Increases of 4-7% a year are unsustainable. That would require average annual increases in real household income of 1-4% annually over long periods, if we assume 3% consumer price inflation. That kind of growth in real income might happen in China, but not in the US.
Participant[quote=jdsuowner]If the price of this home was about $250K in 1996-1997 and normal(?) appreciation were to continue to 2011 what do you think the house would be worth today given there was no bubble? Was appreciation normally 4-7%?[/quote]
In the long run, home prices follow incomes or prices in general. Robert Shiller and a few others have done extensive studies of home price changes over long periods, in many locations. His conclusion was that home prices eventually follow general price levels (matching the general inflation measures).
I think it’s arguable that prices might follow household income, which grows more quickly than consumer prices over long periods. Since 1996, the CPI has increased 40%, and household incomes have increased more. My crude estimate was 70%.
Increases of 4-7% a year are unsustainable. That would require average annual increases in real household income of 1-4% annually over long periods, if we assume 3% consumer price inflation. That kind of growth in real income might happen in China, but not in the US.
Participant[quote=jdsuowner]If the price of this home was about $250K in 1996-1997 and normal(?) appreciation were to continue to 2011 what do you think the house would be worth today given there was no bubble? Was appreciation normally 4-7%?[/quote]
In the long run, home prices follow incomes or prices in general. Robert Shiller and a few others have done extensive studies of home price changes over long periods, in many locations. His conclusion was that home prices eventually follow general price levels (matching the general inflation measures).
I think it’s arguable that prices might follow household income, which grows more quickly than consumer prices over long periods. Since 1996, the CPI has increased 40%, and household incomes have increased more. My crude estimate was 70%.
Increases of 4-7% a year are unsustainable. That would require average annual increases in real household income of 1-4% annually over long periods, if we assume 3% consumer price inflation. That kind of growth in real income might happen in China, but not in the US.
Participant[quote=jdsuowner]If the price of this home was about $250K in 1996-1997 and normal(?) appreciation were to continue to 2011 what do you think the house would be worth today given there was no bubble? Was appreciation normally 4-7%?[/quote]
In the long run, home prices follow incomes or prices in general. Robert Shiller and a few others have done extensive studies of home price changes over long periods, in many locations. His conclusion was that home prices eventually follow general price levels (matching the general inflation measures).
I think it’s arguable that prices might follow household income, which grows more quickly than consumer prices over long periods. Since 1996, the CPI has increased 40%, and household incomes have increased more. My crude estimate was 70%.
Increases of 4-7% a year are unsustainable. That would require average annual increases in real household income of 1-4% annually over long periods, if we assume 3% consumer price inflation. That kind of growth in real income might happen in China, but not in the US.
ParticipantI am not sure why people so often compare to prices in 2000-2003 when trying to judge what the market bottom might be. Real estate is cyclical, and the last trough was in 1996 or so. Inflation since then has been 40-70%, depending on how you measure it. So prices that are 140-170% of 1996 prices are possible.
The actual peaks and troughs vary from cycle to cycle, so I do not know if we will hit that level in this downcycle, but we should at least entertain that possibility. Without massive government intervention to prop up house prices, it is quite possible that house prices would already be at that level, or even lower. After all, the peak that preceded it was the highest ever, and a large wave tends to have a deep trough following the high crest.
ParticipantI am not sure why people so often compare to prices in 2000-2003 when trying to judge what the market bottom might be. Real estate is cyclical, and the last trough was in 1996 or so. Inflation since then has been 40-70%, depending on how you measure it. So prices that are 140-170% of 1996 prices are possible.
The actual peaks and troughs vary from cycle to cycle, so I do not know if we will hit that level in this downcycle, but we should at least entertain that possibility. Without massive government intervention to prop up house prices, it is quite possible that house prices would already be at that level, or even lower. After all, the peak that preceded it was the highest ever, and a large wave tends to have a deep trough following the high crest.
ParticipantI am not sure why people so often compare to prices in 2000-2003 when trying to judge what the market bottom might be. Real estate is cyclical, and the last trough was in 1996 or so. Inflation since then has been 40-70%, depending on how you measure it. So prices that are 140-170% of 1996 prices are possible.
The actual peaks and troughs vary from cycle to cycle, so I do not know if we will hit that level in this downcycle, but we should at least entertain that possibility. Without massive government intervention to prop up house prices, it is quite possible that house prices would already be at that level, or even lower. After all, the peak that preceded it was the highest ever, and a large wave tends to have a deep trough following the high crest.
ParticipantI am not sure why people so often compare to prices in 2000-2003 when trying to judge what the market bottom might be. Real estate is cyclical, and the last trough was in 1996 or so. Inflation since then has been 40-70%, depending on how you measure it. So prices that are 140-170% of 1996 prices are possible.
The actual peaks and troughs vary from cycle to cycle, so I do not know if we will hit that level in this downcycle, but we should at least entertain that possibility. Without massive government intervention to prop up house prices, it is quite possible that house prices would already be at that level, or even lower. After all, the peak that preceded it was the highest ever, and a large wave tends to have a deep trough following the high crest.
ParticipantI am not sure why people so often compare to prices in 2000-2003 when trying to judge what the market bottom might be. Real estate is cyclical, and the last trough was in 1996 or so. Inflation since then has been 40-70%, depending on how you measure it. So prices that are 140-170% of 1996 prices are possible.
The actual peaks and troughs vary from cycle to cycle, so I do not know if we will hit that level in this downcycle, but we should at least entertain that possibility. Without massive government intervention to prop up house prices, it is quite possible that house prices would already be at that level, or even lower. After all, the peak that preceded it was the highest ever, and a large wave tends to have a deep trough following the high crest.
January 1, 2011 at 4:31 PM in reply to: This news is good for those who haven’t bought, yet. #647771Participant[quote=SD Realtor]Guess all those green shoots that the govt told us about all of last year turned out to be weeds…[/quote]
On fundamentals, that’s right. But Ben is printing up 600 fresh billions, and that will have an impact. We will either see price increases again, or less of a price decrease. It’s pretty much dial-a-market-level now, run from the Fed.
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