Posted by Dan Auito on July 10, 2004 at 02:45:15:
These are excellent questions John, Wish I had all the answers. I’m sort of on a preliminary quest just to see what is on the the minds at this time. Thank you. Dan
Hot topics in Real Estate? - Posted by Dan Auito
Posted by Dan Auito on July 09, 2004 at 16:10:58:
Could I trouble you to come up with in your own mind what you would consider some of the hottest topics in real estate at this time, I think a few to start would be:
Interest rates: how high and when will they go there?
FSBO’s : Will real estate agents lose out to the internet?
Are we in a housing Bubble: and if so when will it pop?
What else do you feel or see people asking about? any additions to the list above would be most appreciated! Thanks Gang. Dan
or maybe? - Posted by Jaber
Posted by Jaber on July 10, 2004 at 15:42:38:
Will the internet get rid of fsbos entirely? I’m seeing more brokers offering services for less than fsbos could get on their own. For $299 I can get on realtor.com and a hundred other sites. I don’t have to pay any commission if I don’t want to.
No other fsbo site can offer this kind of exposure. You can add all the fsbo sites together and wont get a tenth of the traffic to realtor.com.
Just something to think about.
Going fsbo today is penny wise and pound foolish.
Re: Hot topics in Real Estate? - Posted by sptk
Posted by sptk on July 10, 2004 at 11:22:57:
>Are we in a housing Bubble: and if so when will it pop?
Some thoughts to consider. Housing is valued in dollars (as opposed, to say, hours of salary of Teamster workers). My favorite definition of the value of a dollar isn?t the text book one, but the following. How many dollars it takes to buy goods and services. Money is added to the supply in an overall sense. The overall value of a dollar is the total amount of dollars divided by the number of goods and services they can buy. The CPI went up 2.1%. The category value of the dollar is the number of dollars it takes to buy a specific item. A loaf of bread costs $2. So a further complication is that dollars are added to the supply overall, but spent on specific items. You may decide that that titanium driver is too expensive and decide that MP3 player for the trunk of your car is looking better all the time. So the numerator and denominator in the ratio that determines the value of a dollar are variables. A couple of complications prevent this ratio from being a simple analysis. Complication 1: The number of dollars in existence isn?t fixed but changes. The Fed monetary policy and all that gooey M1, M2 stuff. Complication 2: the cost to produce goods and services changes. Many manufactured products, especially high tech products, cost much less to produce over time. I?ve bought a 640K memory card for $400 and a 128Mbyte (more than 100 times as much) memory card for $80. Productivity increases are deflationary. If the cost to produce an item goes down 20%, the cost of the item should go down 20%. If you have 5% productivity increases and a 5% increase in the money supply, the dollar feels like it buys the same amount. The government shamelessly exploits this. We have had massive productivity increases, but prices still go up. They should be going down aggressively. Government products cost much more to produce over time. Government pensions are about to break San Diego city government right now. Let?s not forget health care and workers comp. So you can talk about overall inflation or category inflation. The value of a dollar is a tricky matter.
Real estate only benefits slightly from increases in productivity (cheaper building methods). Mostly Real Estate reflects the value of the overall dollar. So let?s say productivity goes up 10% and the money supply goes up 10%. You loaf of bread costs the same (assuming 10% productivity increases). Your housing prices goes up (nearly) 10%, no productivity increases. More money chasing the same number of houses. People want more of these devalued dollars than before. This is oversimplified, but I am trying to point out that dollars have different inflation rates for different categories of product. That 2.1% CPI lumps housing in with DRAMs.
I bought real estate as a hedge against inflation. Good thinking, but there is a significant problem. When inflation goes up, interest rates go up. Since housing is bought mostly with borrowed money and affordability is critical, housing prices go down, for the short term anyway. Eventually devalued money will cause housing prices to rise. This inefficiency or problem is also the basis for a great investing strategy. Buy real estate with low interest rate highly leveraged money. Sell at top dollar, when interest rates are low and about to go up, and get cash. Buy (cash or leveraged may work either way) after interest rate rises have lowered home values. Hold until inflation (and/or re-lowered interest rates) cause housing prices to go up. I dropped my crystal ball, moisture got into it, and I can only see a murky image. You?ll have to figure out when these things happen on your own 
Cheers,
Speednxs
Re: Hot topics in Real Estate? - Posted by John V, FL
Posted by John V, FL on July 09, 2004 at 21:49:50:
Hi Dan maybe a couple of these I just came up with off the top of my head migh be of interest:
What roll has the internet played in creating a much more efficient market and level playing field both for the retail buyer and the distressed property investor.
Does investor expectations in many markets contribute to high appreciation levels or is it the reverse and investors have high expectations after a prolong period of high appreciation?
Can expectations of continuted appreciation near double digit rates by recent purchasers for the next decade in way overpriced areas be comparable to the tech mania of the late 90’s?
Is there truly an large oversupply of housing in many markets today due to double digit vacancy rates in apartment complexes and a record number of second and third vacation home purchases by the affluent?
Have we ever had such an imbalance between rental rates and housing prices than we have today in many markets with many areas having median priced homes selling for over 30 times annual rent?
One of the most lucrative investents in high appreciating areas the past couple of years has flipping contracts on preconstruction high end condos and single family subdivisions after completion. Will it continue much longer and if not will it end badly in some of these subdivisions for the investors and(or)lenders?