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Is Real Estate Irrelevant? »

Posted by: sexystacked 2 years, 6 months ago
Archived 26 0 drops

When last we looked, a big part of the U.S. economy was related to real estate, therefore it was curious to see the reaction to tough news during the past week.

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sexystacked

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Comments: 5
  • Avg rating: (+0/-0 0)invest07
    invest07
    May 23, 2007, 1:09 p.m.

    The reason for the slowdown in Real Estate is easy to understand:

    The average buyer can't afford the average house. When incomes rise to permit the person with the average income to buy the average house, the market will stabilize. In my area, Central FL, we are about a year away from that point.

    Look at this chart from the local realtor association. It details the average asking prices in January over the past 8 years:

    1999 $145,000

    2000 161,000

    2001 145,000

    2002 155,000

    2003 164,000

    2004 199,000

    2005 257,000

    2006 301,000

    2007 327,000

    The average asking price for 2005 passed the buying ability of the average income buyer. Incomes will need to rise here by about 6% to restore some kind of balance in the market.

    Real estate is still an excellent long term investment. But investing in real estate is a marathon and not a sprint. The house my parents bought in 1969 for $18,000 is now worth around $200K, an increase of 1100%.

    • Avg rating: (+9/-1 8)NelsonR
      NelsonR
      May 23, 2007, 1:34 p.m.

      You forgot to mention, outsourcing and our rich becoming richer while the average Americans wages are stagnant. This is no short term bubble. This will be here for years to come and all those who have morgages with a line of credit added will never catch up with conditions. House prices will fall and it is no time to invest in a losing investment.

      • Avg rating: (+7/-3 4)Deidre
        Deidre
        May 24, 2007, 8:48 a.m.

        I think another situation that is going to change the market long term is the aging of America. As baby boomers hit retirement age we are going to see a lot of housing shifts and reverse mortgages as people need to free up the money they invested in a house for other purposes.

        • Avg rating: (+3/-0 3)Real-Est
          Real-Est
          Sept. 11, 2007, 11:11 a.m.

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