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do home/condo prices ALWAYS go up?

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do home/condo prices ALWAYS go up?

Old 05-27-06, 03:42 PM
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do home/condo prices ALWAYS go up?

in the long run of course. barring a catastrophe.

do they always end up going up in price? im not an econonics expert nor an expert in real estate values or anything like that (i dont know what controls market price with interest rates, etc) but overall do they always end up going up? and what defines "the long run"?

i bought a condo about a year ago and im wondering/hoping that it does end up going up. and NO i didnt buy it to invest, just to live. granted id like to make some money off of it (woudl be nice) but im more interested in not LOSING money on it. which seems inevitable now despite the fact that EVERYONE around me said it was a sure thing ("itll go up 5-10% a year!" yeah, right - id settle for 1% to just minimize my losses). they were all wrong apparently.

does my timing suck or what? i keep checking websites like zillow and it never goes up. and im in SoCal - i thought this area was suppose to be a hot area for real estate.

even if it stays the same price i lose money because of taxes, and then paying agents and escrow when you move and of course the cost of moving itself...

just venting. sometimes its frustrating to think about.
Old 05-27-06, 04:01 PM
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1) No.
2) It's only been a year.

das
Old 05-27-06, 04:04 PM
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You can bank on inflation causing the price of the real estate to increase. I think we've averaged 2-3% for the last decade pretty easily.

After that, it's all about the location. (Haven't you heard that before?) Really depends on local economy, taxes, crime, businesses, and even a bit on interest rates.

Over the course of 30 years, I would be willing to bet that 99% of properties increase in value. However, if you're looking at the short term, there may be volatility -- and it can come from any of the above mentioned inputs.

I live in a pretty developed part of Chicago. I bought my place for about 7% annualized return from the seller. (So if the seller bought for $100 and owned it for 3 years, I bought it for $122). If you figure inflation was 2-3%, then her nominal return was about 4-5%. I am planning on the same number when I sell this place.
Old 05-27-06, 05:18 PM
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Buy land. They stopped making it - Mark Twain.
Old 05-27-06, 05:38 PM
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I'm not a investment expert like some people around here. But this is how I understand it:

Home prices have been going up fast because it's a seller's market. There's more demand than supply.

It's a seller's market because mortgage interest rates are low and more people can afford to get in. I remember 15% mortgages.

Mortgage interest rates are low because the federal rates are low.

Federal rates are low because it's another seller's market. Lots of money is coming in from Asia to US bonds. Since the bonds are popular, there's no need for the Treasury to pay high interest rates.

So, if the Asian money goes someplace else, bad things will happen.

Also, new home construction is a good chunk of the US's economic growth. If interest rates go up, there would be fewer potential buyers, and our slow economic growth could become negative. That would make even fewer potential buyers. More bad things.

I also understand that a lot of the baby boomers, no longer seeing the high returns they got from the stockmarket that they did a few years ago, have piled into speculative real estate. I live a thousand miles from So Cal, and Californians are driving up real estate prices here.

As for home prices ALWAYS going up, read about the Florida bubble of the 20s, the Tokyo bubble of the 90s, or the Rust Belt of the 70s.

Last edited by Nick Danger; 05-27-06 at 05:41 PM.
Old 05-27-06, 06:11 PM
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Originally Posted by Shazam
Buy land. They stopped making it - Mark Twain.
Well........


HERE


-p
Old 05-27-06, 06:13 PM
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Neighborhoods go to shit all the time. To say home values always go up is ignorant.
Old 05-27-06, 06:15 PM
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PMI did a study and something like only 2% of people lost money after owning a home for at least 10 years. For less than 5 years it was higher.

The only way you will lose money is we go from 25 years of falling inflation to 25 years of rising inflation and rates will go back up.
Old 05-27-06, 06:19 PM
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You want to stay in your home for 10 years if it goes redneck or ghetto?

PMI has an interest in the results of that study.
Old 05-27-06, 09:02 PM
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Single family homes in decent neighborhoods will eventually appreciate. Here is upstate, our real estate has been rather stagnant. More people moving out than moving in, loss of jobs. Great when you want to buy, bad when you sell. We paid $137,000 for a 2000SF house 18 years ago. I'd probably get about $165,000 - $170,000 if I sold it today. That's about $1500 per year which at 1% doesn't keep pace with inflation. I have frioends in Florida who saw more than $30,000 growth in 6 mos.
Old 05-28-06, 01:13 PM
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There are 3 things that determine if a home/condo will go up...

Location, location, location......
Old 05-28-06, 04:43 PM
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I bought my home for 89k 4 years ago, it's now worth 120k and homes in the neighborhood have been selling for 110k.

4 years ago my neighborhood and a different dynamic but because of rising cost in the area, it has changed alot and now is alot safer then it was before. The day I was closing on my house the ATF kicked in the people's across the street house and arrested them for drug dealing.

Now, as far as I am aware of it's a safer neighborhood.
Old 05-28-06, 04:58 PM
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Originally Posted by Green Smurf
ATF kicked in the people's across the street house and arrested them for drug dealing.
That would make me think twice about the decision I just made.
Old 05-28-06, 06:11 PM
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Ask the people in New Orleans
Old 05-28-06, 09:20 PM
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Yes they do!

Just like dot com stocks, YOU CAN'T LOSE
Old 05-29-06, 09:05 AM
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do home/condo prices ALWAYS go up?

Simple answer = No

However - if made a wise purchase it will. It really depends on too many variables to make a blanket statement.

The short run (5 years) is usually riskier than the long run (30 years). You also have to take inflation into account to find out if the value really went up.

The worst timing you could have would be to purchase in a boom market and then try to sell in a bust market.

I know people this has happened to, the timing was out of their control due to job relocation and they lost thousands even though they were in the house for 10 years, it just happened to be the wrong 10 years Had they held out 5 years longer before selling they would have made a killing (or had they bought it 5 years ealier).
Old 05-29-06, 09:18 AM
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The biggest problem you are going to have w/ a condo is the fact they always seem to be building new ones. Who wants to buy a used condo when a new one is available? As others have mentioned though it's all going to depend upon the local economy and the actual location/what happens to the neighborhood.
Old 05-29-06, 10:50 AM
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Do home prices always go up over the long term? I'd argue yes - for the most part.

That being said - houses deteriorate and lose money. Over the long term, they will crumble away unless you spend money maintaining them.

Land appreciates (normally), but usually provides no investment income. It's the combination of home and land that generally increases in value over time.

But that's not always guaranteed. Look at Houston in the 80s. If you could wait it out, prices did come back. Good if you could afford to wait. Not everyone can.
Old 05-29-06, 05:36 PM
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Of course there's this thing called "white flight" that will make your home go way down.

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