is it possible for real estate to go down, or flat forever?

9 Comments

1. me8md says:

   July 7, 2009 at 11:35 am

   It is going down in Michigan.
2. Loretteme says:

   July 10, 2009 at 2:04 am

   Homes are a good investment. Rarely will real estate go down in value if they are kept maintained.
3. oldhombre says:

   July 11, 2009 at 12:46 pm

   Real estate only has the value someone else will actually pay for it. Market value can go up and down but it has to be affordable by potential buyers. I saw 2 price crashes in the UK. First in Aberdeen, Scotland when there was a crisis with the oil industry and house prices fell by about 25% then a bit later in England when house prices fell by over 35%. In my case the house I was wanting was just about unaffordable having suffered in the Scottish crash but then overnight the builders dropped their asking price in England by 30%, yes overnight in one step. They had to sell houses somehow to get income for the business. In the end, the prices then slipped another 5% down over the next year and didnt recover for 5 years or so. In many places houses are just not selling at the moment because of stupid high asking prices and the increasing interest rates for mortgages.
4. endgame1915 says:

   July 11, 2009 at 10:01 pm

   In the long term, the investor who usually secures upper-income properties are the experience, wealthy investors who do so because they need to hold the property as a tax shelter. they understand they are likely not going to make money off their investment in the short term or even the long term and it is the tax shelter advantages that are their motivating factor.Also, be aware that when leasing an upper income property, there is the possibility of only breaking even or, worse, experiencing negative cash flow.
5. iceman says:

   July 13, 2009 at 11:47 am

   Simple answer…

   In some isolated areas.. yes. But in the vast majority of the country.. no.
6. CMass Stan says:

   July 15, 2009 at 10:29 pm

   Certainly in the long term, RE values tend to rise. In the short term, however, it fluctuates. And it’s that short term fluctuation that is getting a lot of recent homebuyers, the ones who thought that their home values would always rise year over year to cover any loss incurred by the interest rate reset of their ARMs.

   You can’t tell those homeowners to count on the long term appreciation of RE when the short term fluctuation is affecting them now. Their home’s value is now about the same or less than what they bought at. The rate reset is could be twice their current rate, making the monthly mortgage payment more difficult to pay off. They can’t refinance because, very likely, the conditions under which they could finance the first time (subprime for high credit risks, lax underwriting rules) are gone. Thus: foreclosure.

   I agree with you in general: RE values tend to rise over time. But right now we’re in a trough where, if I did try to sell, I’d lose a decent portion of what I’d paid into it. Just one of those things, and it’s cyclical. And time and circumstance doesn’t always allow you to take advantage of the ups. Sometimes you get caught in the downs.
7. Jeffrey F says:

   July 18, 2009 at 8:35 am

   Real estate bubble busts are tied to salaries for an area….whereas, you can only buy what you can afford…….prices hit a ceiling and no one buys because it is no longer feasible to do so……then a pricing adjustment (bubble burst) happens and brings prices back to reality.

   NOW…..in each price correction cycle, there are a mountain of foreclosures due to lending on value or projected value with every one’s intention of refinancing. Problem, you have a $200,000 loan on a house that is is now worth $185,000…..the interest kills the people financially and they eventually end up in foreclosure because they can’t refinance due to appraised value nor can they sell for the same reason.

   corrections only last a few years and then will be back to where the prices were before the bust, then will rise until another correction and the cycle starts again.

   Long run? Prices are basically guaranteed to be stable, much more stable than stocks or bonds and will give you a much higher return over 10 years than a Certificate of Deposit for the same time period.

   My parents purchased their home in 1965 for about $9600, they still have it and was recently appraised at over $350,000……..with updates and modernizations, they could probably fetch $385,000
8. Terry S says:

   July 21, 2009 at 6:03 am

   Read this report, it should answer a lot of questions for you.
9. pdevans1963@rogers.com says:

   July 23, 2009 at 8:19 pm

   there are depressed areas that fall to urban decay. others with toxic waste associated never bounce back.

   Hydro lines now discourage new development so that adjacent areas may have a ceiling on their value. any other hidden factors may slow or halt the rise in value