Bull Market in Real Estate is Probably Over
Posted by Frugal on June 29th, 2006
Here is an excellent reading for all the homeowners and potential homeowners. I really hate to see any of you losing big money on purchasing a house. Be independent in your thinking. Don’t get dragged away by the popular thinking. As I have said ealier, according to UCLA professor Didier Sornette, the housing bubble should burst in the middle of 2006 or about right now.
From www.financialsense.com:
http://www.financialsense.com/editorials/sjuggerud/2006/0628d.html
Here are the strategies that I have suggested for every one of you, whether you’re a homeowner or not, related to housing issues:
Unconventional Strategies in this Housing Market
And what possibly may come in terms of price reduction in the housing market:
How Much Will the Housing Market Fall
If you’re not convinced and want an objective analysis, you can run through some actual numbers using my Rent vs Buy Calculator. It’s an excellent and comprehensive calculator.
At last, to anyone who says home ownership is not just about money, but there are other benefits. I fully agree, except that I must say that everything has a price. Are you willing to lose $100K to own a house now? Are you willing to lose $250K? Are you willing to lose $500K? At some point in this questioning process, there is a price at which you will not be willing to get those non-financial homeownership benefits. And you should carefully consider that price for you personally right now, instead of regretting it later.
By the way, stock markets always react faster, and lead the real economy. So if you just look at the stock charts of all the home builders, such as TOL, PHM, KBH, CTX, etc. you can get a taste of what’s coming in the housing market.
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June 29th, 2006 at 9:28 am
In a nice, upper middle class suburb of LA, I saw a house for sale with a reduced asking price of $749k. I then saw a sign for a rental of a very similar house (same size/area), for $2300/month.
This post is right on the money. Do the math! It costs roughly half to rent compared to buying right now.
June 29th, 2006 at 9:52 am
As an added note to the article: it isn’t this way throughout the entire United States. In the CA market yes you probably need to evaluate your sanity if you buy instead of rent right now. This simply isn’t the case in some areas of the country though (especially the midwest) and the case for buying vs. renting will depend on your local market.
For example in my area you can rent a nice 2BR 1BA home in a nice neighborhood for around $700. The same house might cost about $90K to purchase. Doing the math it’s surely going to be better to purchase rather than rent
June 29th, 2006 at 10:08 am
Very good point Jason. I forgot to mention that. Running numbers through Rent vs Buy Calculator is the best for your individual situation. Numbers just don’t lie. They tell you the truth in the most unforgiving way.
June 30th, 2006 at 12:13 am
Cool info Frugal…I wonder what value I put on home ownership…I should search for a calculator to figure that out…