by SQT15 follow (0)
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Lisa,
What I've seen here in Portland has got to be the definition of the "greater fool theory". The Pearl District has been slapping up "lofts" like crazy. A friend of mine bought one a couple of years ago and it's about 500 maybe 600 sq. ft. He paid about $290 per sq. ft. Not long ago he had a great view of the river, Rose Quarter and bridges. Now he has a commanding view of other peoples abandoned balconies! It is so ridiculous, I've heard that they are now using a "lottery" system for new or converted units and they have people lined up to pay $400/500+ a sq. ft. What's more, the city is providing huge tax incentives that allow these speculators to flip the property 2/3 times before someone actually spends the night there! Think about it. If you have people foaming at the mouth to pay those kind of prices do we really need to subsidize this with tax breaks to boot? Like we're not subsidizing RE enough already?!
Rented for approx. $1200, selling for $400K
So, according to my calcs, they are betting on appreciation in the 10% range over the life of their purchase (much more if they are planning on flipping.)
Seems optimistic.
Cheers,
prat
Ha Ha Says:
"My unfderstanding of REAL ESTATE after all these years is
REAL ESTATE is a government sponsored way of liquidity extraction from economy. Government prints money which can be legally taken away via real estate transactions…"
Interesting...
Budget-wise, California seems to have lifted its head out of the water long enough to take a breath, and has finally "come out of the red." But for how long?
Same thing in Arizona, with its new-found windfall, state budget surplus.
I heard this is in large part due to the revenue from taxes on real estate transactions.
The condo conversion mania is just that: hysteria.
How in the world can there be a good ending to this insanity?
I think the Nasdaq collapse is a great example, symbolically speaking, of the results of financial reality exerting itself in the face of "irrational exhuberance."
Perhaps the real estate correction won't be as acute (maybe it'll be even more dramatic) as the Nasdaq collapse. But I think that the sh-tty apartment to condo conversion craze is merely the reductio ad absurdem
of a mercenary society that knows the price of everything but the value of nothing.
Indeed, this frenzied activity is an image of truth with deeper meaning for society as a whole. Call it the zeitgeist, if you will.
Such moral violence to the real economik cannot possibly end peacefully.
What goes up, must come down. Call it the physics of finance.
Oh great. Now those nice realtors are targetting the wives and the frequent female visitors of Match.com.
Of course, you can still find a home that sells for $400,000 in Oakland. But to be sure, buy a gun and learn how to use it.
Then you can be on your way to making $600,000 in 10 years.
Today's women-empowering message: I've just learned how to make $300,000 in 13 years from a website whose color theme is pink and purple.
Plus, there's an incentive for me to learn how to shoot a handgun, and the prospect of meeting an Oakland police officer as my future husband.
Looks to me that the realtors are so pissed that everywhere they look they see doom and gloom stories for real estate. The inventories are rising, they have no clients and perhaps with all the extra time on their hands, they believe if they start publishing their pep talks, they will encourage people to buy again. :)
My favorite quote from Lydia's homepage:
"Tell me what you want. Then let me deliver. I’m a realist"
How do you reconcile the first two statements with the last?
I can tell you any pie-in-the-sky, needs-based valuation that I'm convinced my home is "worth", and you will 'deliver' a buyer at that price. Or, I can tell you I want to buy a 50,000 sft mansion in Palo Alto on my Wal-Mart cashier salary and you will 'deliver'.
But, you're a "realist".
RIIIGHT....
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The developer's answer to the stratospheric rise in home prices seems to have become the condo conversion. What that usually means is taking a crappy apartment building, throwing a new coat of paint on it, maybe knocking out a few walls and throwing in an appliance or two and calling it a condo.
Do you know of any in your neighborhood? If so, how do they look? What do you think are the long term prospects for the condo conversions? I have heard in the past of condo conversions being turned back into apartment buildings when the market cools. Do you think that will happen again?
And what about pricing? How much are the crappy condo's going for in your neck of the woods? How far down do you think they will go in value?
And one last thing, do you think taking the apartments off the market will affect rents at all?
Per tannenbaum's request