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sdduuuude
ParticipantI think waiting for a single number is not wise.
You really want to wait until the conditions are such that the indicators of the future of the housing market show potential growth.
In an earlier post, I made a distinction between one who can tell you the state of the market (a reporter) and one who can tell you the future performance of the market (an analyst). Don’t make the mistake of the reporter and base your decision on simple numbers that only show the current state of the market. Don’t just look at median price and guess the trend while sipping a beer. Look deeper into the numbers, the financial markets, the lending markets, inventory levels, where are the buyers coming from, yada yada.
In other words, evaluate your decision month by month, or every 6 months. You may think 20% now, but if it hits 20% with no hope of an uptick …. well, you know.
Buying at the bottom is difficult and isn’t necessarily optimal. I would prefer to buy after the bottom has passed. The appreciation rate at the bottom is 0, and takes some time to pick up speed. If you miss the bottom by a year, you really aren’t missing that much in terms of appreciation. Plus, waiting until after the bottom helps you really see that the market has turned so you don’t jump the gun. Patience, patience, patience. So hard. So important.
Keep in mind, some on this forum expect a “Dead Cat Bounce” where the market kicks up after a short down cycle, tricking many into thinking the market has passed.
The RE market moves sooooooooooooooooo slowly. It could be 7 years until buying a home in SD gives you appreciation opportunities.
Participant“Rents are rising because rents and housing prices move inversely.”
!?!?!?!
ParticipantThis is a supply/demand issue, not a cost issue. Things are worth what they are worth. They are not worth what they cost to produce. Two very different things.
If I did own the land, I would never pay more for gold that the cost to extract it.
Because I don’t own the land on which the gold is found, the cost to me of extracting the gold is very, very high.
ParticipantTwo thougths for you – a stalled real estate market is not like a stalled car, which just sits there. It is more like a stalled airplane, which … well … you know.
Also, old business people like to say “You make as much money when you buy as when you sell.” This means – even though you really, really want to go house shopping (It is sooooo much fun, isn’t it?), don’t do it. Now is the time to build that down payment for a later purchase. This is a bad, bad, time to buy.
Don’t worry about rates rising. For the same monthly payment, it is better to buy a cheaper house with a higher rate.
ParticipantAlso, keep in mind is that if you sell and buy later, you lose that transaction cost. Then there is the new taxable value at a higher rate. And you have a great loan. And you have to move – into a rental, maybe into another rental, then maybe another, then into a newly purchased house, which may be 6 years away.
I’m not seeing “sell” here.
ParticipantFor the most part, this is the article that convinced me to sell last year.
Japan has been flat for years and years. I’d be surprised if we missed the bottom, as it hasn’t really come up yet.
Even so, the high-growth period in the cyle comes after the bottom, anyway so missing it isn’t so bad.
I wish we could find the Piggington-son site that does brilliant, in-depth analysis on Japanese real estate, with lots of data.
ParticipantConsider this article – from early 2005.
Prof Piggington linked to it long ago.
I keep it around because it shows distinctions between the cyclicality of different cities. At this point in the cycle, it would be better to look at markets that are less cyclical to avoid plummeting prices.Also, consider Japanese real estate. I don’t know anything about it, but after 15 years of flatness, it may be ready for growth, and it would get you out of dollars.
ParticipantSteve,
I think you have done a good job describing today’s market in SD. Things really aren’t all that bad.
I think what you are missing is an analysis of the FUTURE of the market. Median price is a good things to look at when understanding the market today. Sales and inventory are decent future indicators – and you did touch on that.
But to better understand the future one must look at indicators such as interest rates, Loan-to-Value ratios, the number of variable rate loans, asian currency policy, price-to-income ratios, housing developer activity, – anything that gives one a deeper understanding of what major long-term factors are at play behind the basics of median price, sales and inventory.
Without looking to the future indicators, you could certainly see this as a soft landing which could go in any direction.
For me, this is what distinguishes a reporter from and analyst: A reporter tells you how things are. An analyst tells you how things are going to be. Your post shows you are a fair and honest reporter. However, I’ll stick with Rich when it comes to analysis.
ParticipantI think what your spouse does not realize is how bad a 10 to 15% reduction is, or how long it takes.
The last housing crash was about 10 to 15% down and it was awful. Many people think housing prices in the 90s really crashed, like the stock market, which wasn’t the case. Median price was only down 10 or 15% and people just got killed.
10% of a $500,000 home is $50,000.
Does he make $50,000 in a year?
He is trying to tell you that you stand to lose $50,000 and that is OK? A year’s salary down the drain, but renting is a waste of money?Amazing to me that anyone could think “it will go down 15% so I’m gonna buy.” Amazing. Tell him to listen to himself.
Also, consider the amount of time it takes for the market to cycle down 15%, then back up. It could take several years for the market to go down and several more for it to come up – call it 7 to 12 years. That is a long time to not make any appreciation.
Plus, you have to be certain that life will not deal you cards which force you to sell when the market is at its worst.
Also, keep in mind if it goes down 15%, it has to come up 17.6% to be even.
Finally – very compelling is the annual pattern of sales from year to year. Always, there are significant sales in the spring and summer, then buyers dry up until next spring. Better to buy later in the year or in January, when the market is really hurting.
Participant“Doesn’t lowering prices mean the home price went down????”
Not necessarily. If sellers list the price well above the market value, they could lower their prices without market prices falling.
ParticipantOverbuilt isn’t the only question.
Will people be able to afford all the remodels?Participant“Luck is the residue of good planning”
-Branch Rickey
Being rich is not about having things.
It is about not needing things.
Some think rich people have money.
I think rich people have time.– sdduuuude
ParticipantThe best deals are in the rental market.
ParticipantAfter thinking about this, I have this question:
Why can’t a private entity create a gold-backed currency?
Simply build a vault, start taking in gold and pass out pieces of paper which give title to the gold deposited, taking a percentage of the gold as payment for the security services.
I mean, if a gold-backed currency is so desireable, why hasn’t the market provided such a thing, independent of government?
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