Ritholtz has focused on the housing market a lot recently. (if you haven't read it, http://www.ritholtz.com/blog/) Some of the charts got me thinking.
I often complain about housing prices here and especially real estate taxes. Now it seems like most of the places that have weathered the housing crash well have been the same areas that I think are too expensive. Why is that? Is it just the job market (jobs=higher prices and more stability)?
Assuming you're going to buy a place to live, is it worth paying more for housing just to guarantee the investment? I don't mean to buy something bigger, but buy in a more expensive area.
Housing prices/Real Estate Taxes
Same here. Some of the less exclusive areas were harder hit than La Jolla and Coronado.
That said, a 35% decline on a $300,000 house is about the same as a 10% decline on a $1 million house. Higher taxes, maintenance, and the Joneses expectations help make up the difference. That battle wagon you drive would stand out like a sore thumb in La Jolla.
That said, a 35% decline on a $300,000 house is about the same as a 10% decline on a $1 million house. Higher taxes, maintenance, and the Joneses expectations help make up the difference. That battle wagon you drive would stand out like a sore thumb in La Jolla.
Ritholtz has excellent housing market info. I think he has a personal or close to personal beef with NAR, because they are so misleading with their stats.
Yes, places like DC and NYC had lower drops because of better economies. But, places like Pittsburgh had small drops too. Price security on property is more about buying when a place isn't in a bubble and is stable.
Pittsburgh never saw the real estate boom other cities did and it's economy is pretty diverse now, so they didn't have a one industry like Detroit did that could kill it.
While, DC and NYC both have other economic factors (DC - steady government, NYC - big and still world economic center) that made the real estate run-up somewhat more backed by actual fundamentals.
If I ever buy in DC I will definitely buy inside the beltway. I know it will be more expensive, but that real estate is maybe some of the most protected in the world from catastrophic falls.
Yes, places like DC and NYC had lower drops because of better economies. But, places like Pittsburgh had small drops too. Price security on property is more about buying when a place isn't in a bubble and is stable.
Pittsburgh never saw the real estate boom other cities did and it's economy is pretty diverse now, so they didn't have a one industry like Detroit did that could kill it.
While, DC and NYC both have other economic factors (DC - steady government, NYC - big and still world economic center) that made the real estate run-up somewhat more backed by actual fundamentals.
If I ever buy in DC I will definitely buy inside the beltway. I know it will be more expensive, but that real estate is maybe some of the most protected in the world from catastrophic falls.
@Ego
Yes, the difference in dollars is roughly the same, but more often than not the 10% drop in the $1M house will be recovered before the 35% drop in the $300k house. A $100k move on price for a $200k house is a huge move up in a market that was a bubble. A $100k move for a $900k house isn't nearly as outrageous for an area that was only semi-bubbly.
Yes, the difference in dollars is roughly the same, but more often than not the 10% drop in the $1M house will be recovered before the 35% drop in the $300k house. A $100k move on price for a $200k house is a huge move up in a market that was a bubble. A $100k move for a $900k house isn't nearly as outrageous for an area that was only semi-bubbly.
The old "location, location, location" mantra still rings true, whether its because the area has a growing economy, relatively low crime, a sought-after school district or something else.
Separate the land value from the dwelling value if you can. The land value is generally more stable and worth paying for. The dwelling value is where people get ripped off. Any place where people are buying old homes and tearing them down is usually a particularly good bet for future appreciation, especially if you are willing to live in the old house. New developments on cheap land are the most risky.
Real estate is heating up again in some places. On my street (suburban DC), a neighbor just put up their home at the "Zillow" price and sold it in less than a week.
Separate the land value from the dwelling value if you can. The land value is generally more stable and worth paying for. The dwelling value is where people get ripped off. Any place where people are buying old homes and tearing them down is usually a particularly good bet for future appreciation, especially if you are willing to live in the old house. New developments on cheap land are the most risky.
Real estate is heating up again in some places. On my street (suburban DC), a neighbor just put up their home at the "Zillow" price and sold it in less than a week.