| We Could be in a Real Estate Bubble |
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yoander
Member
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Joined: 23 Jan 2005
Location: phoenix
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| agree |
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Well said forex,
The pattern is always and will always be the same. How is this the same, how is this different  Recognition of the pattern through thinking  is what gets investors ahead. 
Convert your gov't debt into real Money.
http://www.libertydollar.org/default.asp?REFERER=NRC20245
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Mon Jul 18, 2005 9:41 am |
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jamezd
New Member
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Joined: 18 Jul 2005
Location: Orlando, FL
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| Condo prices in Orlando |
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As a mid-Forties software engineer, was recently transferred to Orlando, FL. Was astounded at the rate properties are increasing here, ~30% since July 2004. Since I plan to be here 6 yrs plus, am considering purchasing a condo for 200-225K. Have looked for a couple weeks and demand is strong while supply is weak (a lot of building going on).
Not sure if I should rent and wait for the bubble to burst and condo prices fall or bite the bullet and get in the game now??
Can anybody remember when the times were not hard and money not scarce?
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Mon Jul 18, 2005 12:55 pm |
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forexdaytrading
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Location: Miami, Florida, USA
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| Still want to buy? |
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Jamezd,
Since the price to rent level in the housing market is at a historic high in many countries (including the US), it is much cheaper for you to rent at this point. I know that it is tempting to jump right into real estate since everyone around you is doing the same, but this is always the case when a pricing bubble is present. Fear and greed always control investors (or should I say, "speculators") at market extremes. Right now, greed is the predominant market driver.
Check out the May 2005 article from The Economist magazine titled, "Still want to buy?" Here is the link:
http://www.economist.com/finance/displayStory.cfm?story_id=3722894
I pray that you make the wisest choice.
Dan
Managed Alternative Investment Accounts uncorrelated to stocks, real estate and other economically sensitive investments.
http://www.forex-day-trading.com
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Mon Jul 18, 2005 1:35 pm |
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bamboo
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| Condo Purchase and Interest Only discussion |
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Hi all,
Just read through this thread and thought I would reply to somethings that caught my eye:
1. Housing Bubble - This maybe an issue in some areas but I believe it is very dependant on the local markets and less dependant upon interest rates. In addition, I believe rental property investments well benefit as interest rates climb. Some people will to take their money off the table (Cash Out), others simply want be able to afford the mortgages and will resort to renting.
2. Interest Only Loans - This is possible a new loan or simply a regional loan, but I'm considering a 30 year fixed 5.875% loan. The first 15 years is interest only and the last 15 years is interest and principle. Obviously it will be to my advantage to sell the condo that I'm buying withing that 1st 15 years.
3. Buying investment property (i.e., Condo's) - Similar to JAMEZD post above, I'm in the process of buying a condo (Norfolk, VA). I'm doing a 1031 exchange (I will explain if anyone is interested) selling land in NC and investing the gains into this Condo. I will be avoiding about $10,000 in taxes. Condo price is $216,000, as in Orlando the prices here have sky rocketed over the last 2 years. This same Condo was $110K in 1998.
Let me say that I'm a little concerned about the housing market as we all should be and I can't see how the housing market in my area can continue on this pace. However, I do not expect the market to crash. I'm investing believing the market will level out to more historic gains. I choose the interest only approach for 3 reasons:
1. The rate is fixed.
2. With the 1031 exchange I will be putting approx 70K down so I have immediate equity.
3. I plan to hold the Condo for 3-5 years..... no more.
Great reading, thanks for all the quality advice. Keep it coming!
Buckle up...this baby is going to the Moon!
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Tue Jul 19, 2005 3:24 pm |
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jamezd
New Member
Cash: $ 1.25
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Joined: 18 Jul 2005
Location: Orlando, FL
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| More condo purchase comments |
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Given the current state of the national real estate market, tend to agree with those who believe values will be driven more by location than interest rates. With CA, TX, and FL leading the population boom over the next 10 years, property values there will continue to appreciate. As the boomers ('46 - '64) retire and head south, people who own attractive property in those areas stand to profit.
One last point, IMHO even though the break-point between renting and owning is pretty close, the tax benefit of owning coupled with the transient nature of renting tilts the balance toward owning.
Interested in hearing other points of view....
Can anybody remember when the times were not hard and money not scarce?
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Wed Jul 20, 2005 3:58 am |
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forexdaytrading
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Location: Miami, Florida, USA
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Jamezd, in a normal housing market, the balance is indeed tilted toward owning - but how can the same be true if we are at historical price to rent levels? In other words, at this point you will be paying top dollar for a property that you won't be able to rent out for much. The income from the rent won't be enough to give you an attractive enough return considering your mortgage payment. If prices drop going forward, and most evidence confirms that this will obviously happen sooner rather than later, this will make your investment even worse.
Managed Alternative Investment Accounts uncorrelated to stocks, real estate and other economically sensitive investments.
http://www.forex-day-trading.com
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Wed Jul 20, 2005 9:53 pm |
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bong12187
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quote:
Originally posted by Realtor1
As a REALTOR for almost 10 years I agree. I personally think it will happen sooner than later.
Interest rates WILL go back up to 8-9 and possibly 10% range. Once that happens the people who can qualify for 300,000 house will now qualify for 200,000, same thing with middle america, the people buying 150,000 homes will only be able to buy 100,00 to 110,000 and the problem is going to be there wont be any inventory in that price range. Seller will be forced to sell for under what they paid in some cases.
Its going to be a crappy few years when this happens.
I'm sorry but I am one of the few people who can't wait for the crash to happen. I would like to see a repeat of 2000-2003. The best time to buy real estate is during the crash. I will be better prepared this time to buy more and better real estate when that actually happens. Those who profited big in real estate are those who were financially ready during the crash...
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Mon Aug 01, 2005 6:34 pm |
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TmDrak
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Joined: 06 Aug 2005
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Historic West Tampa is starting to rise up, they are cleaning it up and making it a landmark...we have a property which we bought for 20k about to sell for 250k. Though sooner or later they are gonna drop down again...I can feel it 
I always sell custom computers and computers parts..talk to me on aim if interested.
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Sat Aug 06, 2005 2:48 am |
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jamezd
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Location: Orlando, FL
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| Like the Shuttle, still going higher |
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The Orlando condo I contracted for in late June '05 (6 weeks ago) nows sells for 3.5% more. The unit is still being built, will be ready in late Sept. By move-in date, I figure it will be up another 3.5%. Getting into the Orlando condo market now is a money-maker. That is, brand new units in the 200-225K range in brand-new areas (SE Orlando) will sell for 250-275K within 2-3 years. Then, its time to sell out and move back to Syracuse, NY where real estate dropped 6% in 2004.
SSI1111's link above lends more credence to my contention that a national real estate correction may slow-down but will not stop the Orlando boom.
Can anybody remember when the times were not hard and money not scarce?
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Sun Aug 07, 2005 1:09 pm |
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bong12187
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Cash: $ 24.50
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| Re: Like the Shuttle, still going higher |
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quote:
Originally posted by jamezd
The Orlando condo I contracted for in late June '05 (6 weeks ago) nows sells for 3.5% more. The unit is still being built, will be ready in late Sept. By move-in date, I figure it will be up another 3.5%. Getting into the Orlando condo market now is a money-maker. That is, brand new units in the 200-225K range in brand-new areas (SE Orlando) will sell for 250-275K within 2-3 years. Then, its time to sell out and move back to Syracuse, NY where real estate dropped 6% in 2004.
SSI1111's link above lends more credence to my contention that a national real estate correction may slow-down but will not stop the Orlando boom.
Barring any major disasters, I believe that your assessment is right. Are you planning on leaving in it for 2-3 years or you'll have it rented? There are tax differences between the two when you decide to sell later.
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Sun Aug 07, 2005 4:31 pm |
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jamezd
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Joined: 18 Jul 2005
Location: Orlando, FL
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Bong, I am going to live in the condo for 3+ years. Depending on how congested it has gotten here, and we're pretty crunchy now, I may opt to transfer to corporate in Syracuse NY. The trick seems to be sell high and move to a lower cost area.
Can anybody remember when the times were not hard and money not scarce?
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Sun Aug 07, 2005 6:03 pm |
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bong12187
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Cash: $ 24.50
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quote:
Originally posted by jamezd
Bong, I am going to live in the condo for 3+ years. Depending on how congested it has gotten here, and we're pretty crunchy now, I may opt to transfer to corporate in Syracuse NY. The trick seems to be sell high and move to a lower cost area.
Then you should get your money's worth with your plan. Good thing about it you will not have to pay capital gains tax when you sell. Good thinking... 
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Sun Aug 07, 2005 6:57 pm |
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