Are we at the end of the RE bubble? - Posted by Alan-Baltimore

Posted by Alan-Baltimore on August 30, 2001 at 18:23:06:

After reading JPiper’s response to the post below (, I noticed that Jim said he wasn’t buying right now and was waiting for a better time. This make me think that perhaps Jim has come to the same conclusion that I have: Specifically, that we are at the crest of a real estate wave that’s the result of the stock market bubble and low interest rates. I know that the high-end houses are already falling as millionaires are forced to sell but maybe this is the leading edge of a tidal wave as the heavy consumer debt burden catches up with the middle class.

This worries me because, like Jim, I’m concentrating on lease/options. Unlike him, I don’t have enough property right now to live on the current cash flow. If this is the high point of the RE market that means I might wind up buying houses that won’t be worth nearly as much as the economy cools off. This will translate into holding the houses and waiting for the market to come back before they can be sold at my target price or taking big hits when my tenant/buyers can’t get a mortgage due to appraisal problems.

Of course, on the other side of the wave (1-3 years from now?), houses might be going for ten to fifty cents on the dollar and great fortunes will be made by those who have the cash/credit to pick up those bargains.

Maybe it’s time to switch to flipping (wholesale or retail), sock away the money and wait for the bargains in a couple of years.

What are your thoughts about this?