Nbadan
12-31-2006, 04:18 AM
Windfall profits are beginning to pile up for those of you who took my advice and resisted the temptation and hype of jumping into the over-valued home investment market and have waited out the SA real estate bubble. Over-building in the area is leaving many investors in the unfortunate position of renting new homes for hundreds less than just a year ago, just to get people into houses, bringing down the monthly rent payments on avg. price per foot.
The housing slump has been painful for millions of people who work in real estate or recently bought a house.
For Patrick Killelea, however, this year has been one long victory lap. Mr. Killelea, a 41-year-old software engineer, has long preached that it makes more economic sense to rent than buy homes. He recalls shouting "Wow!" when he heard about September's 9.7% drop in prices of new homes.
"I didn't want to gloat," he says. "But then again, maybe I did."
For years, Americans who refused to buy real estate at what they considered excessive prices were ribbed for failing to profit from one of the greatest booms in history. "Are You Missing the Real Estate Boom?" needled the title of a 2005 book by David Lereah, chief economist of the National Association of Realtors.
Now, with the housing market in a slump, renters who sat out the boom are finally getting some satisfaction.
Dean Baker, an economist, believes that the slump validates his decision to sell a two-bedroom condo in Washington's Adams Morgan neighborhood two years ago. Mr. Baker says he received $450,000 for the unit, which he had bought for just $160,000 in 1997. Since unloading the condo, he and his wife, Helene Jorgensen, also an economist, have been renting an apartment nearby for about $2,300 a month.
Yahoo (http://biz.yahoo.com/weekend/rentgloat_1.html)
Prediction #1 for 2007:
Where rents go, mortages follow. Intrest rates aren't coming down, so expect deep discounts in new home prices to get people into homes. If your in the market, or will be soon, keep an eye on how long houses in your area stay on the market. The longer you wait now, the better price you'll get later as more and more investors are forced to turn their investment homes into a market already burgeoning with the glut of new houses still coming on the market. Wait long enough and you could save up to 20% or more.
If you bought a new home recently, expect your home to lose value this year even though the county will say your home appreciated at a 3% rate (for tax purposes). So, maybe holding off on that second mortagage for that home improvement loan, or credit card consolidation or new car wouldn't be such a good idea.
The housing slump has been painful for millions of people who work in real estate or recently bought a house.
For Patrick Killelea, however, this year has been one long victory lap. Mr. Killelea, a 41-year-old software engineer, has long preached that it makes more economic sense to rent than buy homes. He recalls shouting "Wow!" when he heard about September's 9.7% drop in prices of new homes.
"I didn't want to gloat," he says. "But then again, maybe I did."
For years, Americans who refused to buy real estate at what they considered excessive prices were ribbed for failing to profit from one of the greatest booms in history. "Are You Missing the Real Estate Boom?" needled the title of a 2005 book by David Lereah, chief economist of the National Association of Realtors.
Now, with the housing market in a slump, renters who sat out the boom are finally getting some satisfaction.
Dean Baker, an economist, believes that the slump validates his decision to sell a two-bedroom condo in Washington's Adams Morgan neighborhood two years ago. Mr. Baker says he received $450,000 for the unit, which he had bought for just $160,000 in 1997. Since unloading the condo, he and his wife, Helene Jorgensen, also an economist, have been renting an apartment nearby for about $2,300 a month.
Yahoo (http://biz.yahoo.com/weekend/rentgloat_1.html)
Prediction #1 for 2007:
Where rents go, mortages follow. Intrest rates aren't coming down, so expect deep discounts in new home prices to get people into homes. If your in the market, or will be soon, keep an eye on how long houses in your area stay on the market. The longer you wait now, the better price you'll get later as more and more investors are forced to turn their investment homes into a market already burgeoning with the glut of new houses still coming on the market. Wait long enough and you could save up to 20% or more.
If you bought a new home recently, expect your home to lose value this year even though the county will say your home appreciated at a 3% rate (for tax purposes). So, maybe holding off on that second mortagage for that home improvement loan, or credit card consolidation or new car wouldn't be such a good idea.