Comments on: Analyze a “Below-Market” Deal: Historic Pricing

By: Analyze a “Below-Market” Deal: Nearby Rents • Seattle Bubble

Analyze a “Below-Market” Deal: Nearby Rents • Seattle Bubble — Thu, 10 Feb 2011 06:58:29 +0000

[...] market.How To: Analyze a “Below-Market” DealIntroductionComparable SalesNearby RentsHistoric PricingConclusionPosted in Features | Tagged appraisal, how-to, overvalued, undervalued, valuation, value [...]

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By: kfhoz

kfhoz — Mon, 27 Dec 2010 20:36:20 +0000

RE: rationalguy @ 4 –

Thanks for the pointer to the article about baby boomer aging effects, RG.

Details may matter: the article does not include WA in the “colder” states that will see more sellers than buyers earlier than other states. In the table in Figure 8 on page 12, WA is grouped with AZ, NV, and FL as a state who will have more buyers than sellers until some time after 2030.

Of course 20 years is a long time and there is more risk that the biz situation in WA will change than risk that the climate will change in AZ, NV, and FL.

Reply – rationalguy @ 4<\/a> - \r\n\r\nThanks for the pointer to the article about baby boomer aging effects, RG. \r\n\r\nDetails may matter: the article does not include WA in the \"colder\" states that will see more sellers than buyers earlier than other states. In the table in Figure 8 on page 12, WA is grouped with AZ, NV, and FL as a state who will have more buyers than sellers until some time after 2030.\r\n\r\nOf course 20 years is a long time and there is more risk that the biz situation in WA will change than risk that the climate will change in AZ, NV, and FL.',''); return false;">Quote

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By: Macro Investor

Macro Investor — Sat, 25 Dec 2010 08:02:25 +0000

RE: rationalguy @ 4 –

True about the baby boomers. But instead of selling/downsizing, it will be walking away and renting. They’ve lost most of the equity they hoped to retire on. Yet they still have to cut expenses. So they’re stuck in a house that won’t sell and they have no option except to hand it over to the bank.

Reply – rationalguy @ 4<\/a> - \n\nTrue about the baby boomers. But instead of selling\/downsizing, it will be walking away and renting. They\'ve lost most of the equity they hoped to retire on. Yet they still have to cut expenses. So they\'re stuck in a house that won\'t sell and they have no option except to hand it over to the bank.',''); return false;">Quote

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By: David S

David S — Fri, 24 Dec 2010 23:08:14 +0000

Thanks for keeping it short and sweet Mr T. Have a wonderful Christmas everyone.

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By: Kary L. Krismer

Kary L. Krismer — Fri, 24 Dec 2010 21:42:12 +0000

By Scotsman @ 3:

RE: Kary L. Krismer @ 1 –

“why would you assume the value from 2003 (or some other year) was correct?”

Because the world was more rational then.

For every neighborhood?

Reply – Scotsman @ 3<\/a>:

RE:<\/b> Kary L. Krismer @ 1<\/a> - \r\n\r\n\"why would you assume the value from 2003 (or some other year) was correct?\"\r\n\r\nBecause the world was more rational then.<\/blockquote>\r\n\r\nFor every neighborhood?',''); return false;">Quote

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By: rationalguy

rationalguy — Fri, 24 Dec 2010 21:20:18 +0000

I must caution buying house based on historical prices. Even, if ignore what happened in last decade of housing bubble , weak economy, high unemployment rate, huge shadow inventory, the big blow would be coming from retiring of baby boomers in next two decade. Perfect storm.

This is good report on impact of baby boomers on housing market due to “net selling effect” (people tend to sell more than buy as they grow old) for next two decades.
http://www.informaworld.com/smpp/content~content=a789053981~db=all~order=pubdate

Sellers of existing homes provide 85% of the annual supply of homes sold, and home sales are driven by the aging of the population since seniors are net home sellers. The ratio of seniors to working-age residents will increase by 67% over the next two decades; thus
anticipate the end of a generational housing bubble

The effect of this will not be uniform with Florida/Arizona etc (warmer climes) will benefit but not so good for higher cost ( CA) and colder climes (Oh, WA, Wi).

Tim, would be possible to understand the impact of “baby boomer” retirement on seattle housing market??
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By: Scotsman

Scotsman — Fri, 24 Dec 2010 20:58:25 +0000

RE: Kary L. Krismer @ 1 –

“why would you assume the value from 2003 (or some other year) was correct?”

Because the world was more rational then.
Reply – Kary L. Krismer @ 1<\/a> - \r\n\r\n\"why would you assume the value from 2003 (or some other year) was correct?\"\r\n\r\nBecause the world was more rational then.',''); return false;">Quote

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By: rationalguy

rationalguy — Fri, 24 Dec 2010 20:01:53 +0000

US home prices started to get out of whack from historical prices since 1998. Before that house prices on average went up at the rate of inflation for last 100 years. Assuming, condition of house has not drastically changed, one simple rule of thumb is to add rate of inflation to the price of house from the last sale price (assumption it is pre-bubble time i.e before 1998).
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By: Kary L. Krismer

Kary L. Krismer — Fri, 24 Dec 2010 17:07:52 +0000

I don’t see what this gets you over just comparing current value. If you don’t think the current value is correct, why would you assume the value from 2003 (or some other year) was correct?
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