I agree. But I don't think prices will "correct". They'll plateau and
stagnate, but not fall significantly.

That depends tremendously on location.

... Demand is increasing
exponentially
with the baby boom population retiring.

Ya think? Seems to me that more people are downsizing as they retire.


A real estate bust is not like a stock market crash. Any corrections will
not happen overnight, but they will occur. A very general scenario,
right now, your market is overheated, they are building like crazy,
everybody is getting fat, and the market will never go down. But watch,
you see a couple of buildings completed, usually a retail unit, with no
occupants. Same with a house, here or there, completed with no one moving
in. Six months later, it's bust. The switch has been thrown, and there
will be no new starts. The well financed builders will complete their
projects and hope for the best, the less well financed will leave theirs
incomplete. Now comes the corrections.

And this also *can* (not necessarily) lead to a steep drop in ask
prices. It will certainly lead to a steep drop in realized prices.




The prices will remain high, because no one is willing to sell for less
than they paid, but those that thought they were going to get rich,
leveraged to the max, can't make the payments, will either walk or declare
bankruptcy.

And those houses go on the block for whatever they will fetch, which
drags down other ask prices.

It's also quite possible for local conditions to change (perception of
schools, for example... or traffic & road conditions) such that an area
becomes much less desirable, and prices drop. Sometimes it's more of a
long term lag, sometimes it's falling off a cliff as the number of homes
for sale in the area increase and buyers aren't coming.

... Those that have to leave the area, for whatever reason, will
have to take the hit. That's the bottom. Then there are those, such as
yourself, who bought a house to live in, they'll ride it out.


NOYB wrote:
Excellent synopsis. So the only thing that will drive prices down will be
those folks who *must* sell because they can't afford the payment on an
investment that they can't rent out.

Excuse me? Was that written between the lines somewhere? In any event,
it's quite wrong.


... That is precisely why DSK's idea of
rental properties makes less sense than dumping all the money into your
primary residence.

What was my idea about rental properties?


... When you live in the house, you can afford to ride it
out.


Not necessarily. And you're overlooking a very key fact- if your
appreciation doesn't dramatically outpace your loan (which could easily
given any of the above scenarios), your home performs extremely poorly
as an investment.

DSK

"DSK" wrote in message
...
I agree. But I don't think prices will "correct". They'll plateau and
stagnate, but not fall significantly.

That depends tremendously on location.

... Demand is increasing exponentially
with the baby boom population retiring.

Ya think? Seems to me that more people are downsizing as they retire.


Houses in Florida don't have basements...and as a general rule are seldom
two stories, and are on tiny lots. Moving to Florida is considered
"downsizing"...everything but the price.



A real estate bust is not like a stock market crash. Any corrections
will
not happen overnight, but they will occur. A very general scenario,
right now, your market is overheated, they are building like crazy,
everybody is getting fat, and the market will never go down. But watch,
you see a couple of buildings completed, usually a retail unit, with no
occupants. Same with a house, here or there, completed with no one
moving
in. Six months later, it's bust. The switch has been thrown, and there
will be no new starts. The well financed builders will complete their
projects and hope for the best, the less well financed will leave theirs
incomplete. Now comes the corrections.

And this also *can* (not necessarily) lead to a steep drop in ask prices.
It will certainly lead to a steep drop in realized prices.




The prices will remain high, because no one is willing to sell for less
than they paid, but those that thought they were going to get rich,
leveraged to the max, can't make the payments, will either walk or
declare
bankruptcy.

And those houses go on the block for whatever they will fetch, which drags
down other ask prices.

It's also quite possible for local conditions to change (perception of
schools, for example... or traffic & road conditions) such that an area
becomes much less desirable, and prices drop. Sometimes it's more of a
long term lag, sometimes it's falling off a cliff as the number of homes
for sale in the area increase and buyers aren't coming.

... Those that have to leave the area, for whatever reason, will
have to take the hit. That's the bottom. Then there are those, such as
yourself, who bought a house to live in, they'll ride it out.


NOYB wrote:
Excellent synopsis. So the only thing that will drive prices down will
be those folks who *must* sell because they can't afford the payment on
an investment that they can't rent out.

Excuse me? Was that written between the lines somewhere? In any event,
it's quite wrong.


... That is precisely why DSK's idea of rental properties makes less
sense than dumping all the money into your primary residence.

What was my idea about rental properties?

Sorry. I meant Gould's idea. It was to buy a cheaper primary residence and
put the savings into rental properties.


... When you live in the house, you can afford to ride it out.


Not necessarily. And you're overlooking a very key fact- if your
appreciation doesn't dramatically outpace your loan (which could easily
given any of the above scenarios), your home performs extremely poorly as
an investment.

I only look at my home as an added bonus investment. It's not my primary
means of investment. And what price can you put on the enjoyment of living
on the water with a boat in my backyard and only 2 miles from my office?

... Demand is increasing exponentially
with the baby boom population retiring.

Ya think? Seems to me that more people are downsizing as they retire.



NOYB wrote:
Houses in Florida don't have basements...and as a general rule are seldom
two stories, and are on tiny lots. Moving to Florida is considered
"downsizing"...everything but the price.


???

You think retirees with less income than they had when working, who are
looking for less expense, less driving, and closer care, are going to
buy increasingly expensive & expansive homes?



What was my idea about rental properties?


Sorry. I meant Gould's idea. It was to buy a cheaper primary residence and
put the savings into rental properties.


Well, that can be made to work out, depending on your community and how
savvy a buyer you are. Probably less risk than your method.

Personally, I wouldn't even invest in REITs and the spreads the risk
maximally. But then, I don't know a lot about real estate and would
rather invest in things I *do* know about.



... When you live in the house, you can afford to ride it out.


Not necessarily. And you're overlooking a very key fact- if your
appreciation doesn't dramatically outpace your loan (which could easily
given any of the above scenarios), your home performs extremely poorly as
an investment.


I only look at my home as an added bonus investment. It's not my primary
means of investment.

Ah so. That reduces the risk considerably. But it also contradicts what
you said earlier, that you are planning to pay off your business loan
and reap an increased income in the future; not putting money into other
investments.


... And what price can you put on the enjoyment of living
on the water with a boat in my backyard and only 2 miles from my office?


Personally, I put a higher value on living more frugally, having a large
& exponentially growing net worth along with investment income that will
see my wife & I comfortably thru retirement, and independence from the
whims of local gov't & the fickle real estate market.

OTOH I bought a pretty expensive boat which isn't going to (fiscally)
appreciate at all. So obviously I place a high value on *that*.

DSK

"DSK" wrote in message
.. .
... Demand is increasing exponentially
with the baby boom population retiring.

Ya think? Seems to me that more people are downsizing as they retire.



NOYB wrote:
Houses in Florida don't have basements...and as a general rule are seldom
two stories, and are on tiny lots. Moving to Florida is considered
"downsizing"...everything but the price.


???

You think retirees with less income than they had when working, who are
looking for less expense, less driving, and closer care, are going to buy
increasingly expensive & expansive homes?


I think you don't have a clear understanding of the average Naples retiree's
financial situation. Less expense isn't exactly a top priority to someone
worth $10, 50 or 100 million.

1,400 properties sold in Collier County for more than $1 million from
January through August of this year.

Presently, there are more than 450 homes listed at $2 million or more...and
100 of them are priced at $5 million and more.

It isn't your average shuffleboard-playing retiree settling down here.


But then, I don't know a lot about real estate

No kidding.




... When you live in the house, you can afford to ride it out.


Not necessarily. And you're overlooking a very key fact- if your
appreciation doesn't dramatically outpace your loan (which could easily
given any of the above scenarios), your home performs extremely poorly as
an investment.


I only look at my home as an added bonus investment. It's not my primary
means of investment.

Ah so. That reduces the risk considerably. But it also contradicts what
you said earlier, that you are planning to pay off your business loan and
reap an increased income in the future; not putting money into other
investments.

I currently put away $25,000+ per year in qualified pension plans...and have
done so since 1999. When my business loan is paid off in 4 years, I plan
on using some of the newfound income to pay down the principal on my house.
The rest I'll probably put away for my kids' college.



... And what price can you put on the enjoyment of living on the water
with a boat in my backyard and only 2 miles from my office?

Personally, I put a higher value on living more frugally, having a large &
exponentially growing net worth along with investment income that will see
my wife & I comfortably thru retirement, and independence from the whims
of local gov't & the fickle real estate market.

OTOH I bought a pretty expensive boat which isn't going to (fiscally)
appreciate at all. So obviously I place a high value on *that*.

I put a high value on my boats too...which is precisely why I bought a more
modest-sized home than I had before, but on the water with a boat dock.

Water access is very difficult down here. If we had adequate ramps and
marinas, I'd be living in a less expensive house inland.

You think retirees with less income than they had when working, who are
looking for less expense, less driving, and closer care, are going to buy
increasingly expensive & expansive homes?


NOYB wrote:
I think you don't have a clear understanding of the average Naples retiree's
financial situation. Less expense isn't exactly a top priority to someone
worth $10, 50 or 100 million.

1,400 properties sold in Collier County for more than $1 million from
January through August of this year.

What that tells me is that the people who are going to make money are
the people who 1- sell those homes and collect commission (and the
appraisers, insurers, etc etc)
2- bought into the market several years ago.

Buying into a hot market because it's going up like a rocket is not
generally how one makes a large profit. Not in the stock market, not in
a crap game, and not in real estate.

The fact that real estate has run up far faster than inflation over the
past few years is a good indication that 1- inflation is going to pick
up (after all housing costs are a big part of the consumer spending
"basket")
2- it is *less* likely to outpace inflation over the coming years
(nothing goes up & up & up forever & ever..



I currently put away $25,000+ per year in qualified pension plans...and have
done so since 1999.

That's a good move. Of course, it really depends on having a gov't that
doesn't simply confiscate wealth from people who were wise enough to
save up (ie a very different gov't from the one we have now).



Water access is very difficult down here. If we had adequate ramps and
marinas, I'd be living in a less expensive house inland.


So, if boating is important to you, move to place where marinas are cheaper.

The most important vote is cast with one's feet.

DSK

"DSK" wrote in message
...
You think retirees with less income than they had when working, who are
looking for less expense, less driving, and closer care, are going to buy
increasingly expensive & expansive homes?


NOYB wrote:
I think you don't have a clear understanding of the average Naples
retiree's financial situation. Less expense isn't exactly a top priority
to someone worth $10, 50 or 100 million.

1,400 properties sold in Collier County for more than $1 million from
January through August of this year.

What that tells me is that the people who are going to make money are the
people who 1- sell those homes and collect commission (and the appraisers,
insurers, etc etc)
2- bought into the market several years ago.

Buying into a hot market because it's going up like a rocket is not
generally how one makes a large profit. Not in the stock market, not in a
crap game, and not in real estate.

The fact that real estate has run up far faster than inflation over the
past few years is a good indication that 1- inflation is going to pick up
(after all housing costs are a big part of the consumer spending "basket")
2- it is *less* likely to outpace inflation over the coming years (nothing
goes up & up & up forever & ever..



I currently put away $25,000+ per year in qualified pension plans...and
have done so since 1999.

That's a good move. Of course, it really depends on having a gov't that
doesn't simply confiscate wealth from people who were wise enough to save
up (ie a very different gov't from the one we have now).



Water access is very difficult down here. If we had adequate ramps and
marinas, I'd be living in a less expensive house inland.


So, if boating is important to you, move to place where marinas are
cheaper.

The most important vote is cast with one's feet.

Affordable areas in Florida don't exist anymore. But if by some miracle you
happen to find one, the people living there have no money for
dentistry...nor do most of them have teeth.

So, if boating is important to you, move to place where marinas are cheaper.

The cheapest marina of all is a dock in front of your house. You
control the cost, and also get to enjoy an appreciating asset.

So, if boating is important to you, move to place where marinas are cheaper.


wrote:
The cheapest marina of all is a dock in front of your house. You
control the cost, and also get to enjoy an appreciating asset.


Not really. I bet it feels good though.

Nobby said he's paying $5K a month on an interest-only mortgage.... my
slip doesn't cost that much in two years. My slip plus my mortgage
aren't half what his cost.

My wife and I sporadically look at waterfront property, but the premium
is too high most places that are actually desirable. When the bubble
bursts, maybe we'll buy in... but not in Florida, for sure. Been there,
done that.

DSK