real estate forecast in washington DC area - Posted by tim A

import · August 19, 2003, 9:22pm

Posted by tim A on August 20, 2003 at 11:53:52:

thanks for your reply Ron and John. actually i am not looking for long term investment,only for 3-5 years at the max and am researching if the prices are going to go up in such small time frame. looks like for investment into real estate, i should be looking for at least 10 years and more ?!

import · August 19, 2003, 9:22pm

Posted by tim A on August 19, 2003 at 21:22:26:

Hello all,

sorry to a pose a similiar qs asked early: but this one is for Washington DC area.

will like to know what does the board feel about the real estate price forecast of washington DC area.

am planning to buy a new house for investment purpose. if anyone can suggest anyweb site for research / tutorial/ market report, will appreciate that very much.

thanks a lot in advance,

import · August 20, 2003, 1:19pm

Re: real estate forecast in washington DC area - Posted by Todd B (Va)

Posted by Todd B (Va) on August 20, 2003 at 13:19:59:

My forecast,overall, is prices stablizing(a modest increase or decrease) for the next 2 or 3 years, and then growing 5% or so per year after that.

Here are some of the factors I considered.

Positives:
Continued Population growth
Perceived as very good long term investment.
Strong local economy, which will get better as economy improves.

Negatives:
Interest rates go up, decreasing everyones buying power 20% or more.
Interest rates go up,making payments higher relative to rents, making a poor cashflow even worse.
Loss of perception of real estate as good short term investment, with no appreciation expected.
Flow of money out of real estate, and into stock market, as Real estate weakens and the stock market strengthens.
Time on market will increase, making buyers less motivated, and sellers more motivated.

This is just an opinion, and I could be way off, for a variety of reasons.

Good Luck

Todd B (Va)

import · August 20, 2003, 11:03am

Re: real estate forecast in washington DC area - Posted by John V, FL

Posted by John V, FL on August 20, 2003 at 11:03:57:

Tim, if the home prices in your area are above 10 times gross annual rent the properties are to expensive and you are paying for negative cash flow and an assumption of appreciation levels that probably won’t happen till the next up cycle. Right now all the federal government stimulus, historic low interest rates and frenzy for housing in DC is baked into the high prices. A wise man once said if you leave to early you miss the best part of the party but if you stay to late you get to attend the funeral.

import · August 20, 2003, 1:15am

Re: real estate forecast in washington DC area - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on August 20, 2003 at 01:15:22:

Tim A-----------------

So, what difference would it make in your investment program if we all jumped up and shouted, in unison, “prices are going to go up for the next ten years” versus that we chorus “prices are going to drop at least 8% a year for the next two years?”

I have said it several times, you don’t have to pay any attention to the short-term price fluctuations of real estate. Whether you are doing long term investing or quick turn-over investing. As long as you do those appoaches sensibly.

Now, could I be wrong? Maybe. But nobody has provided convincing argument yet to change my way of thinking.

But, just to help you out, if you can answer the question I posed in the first paragraph, I will try to seriously answer your question.

Good Investing********Ron Starr****************

import · August 20, 2003, 10:59am

Re: real estate forecast in washington DC area - Posted by John V, FL

Posted by John V, FL on August 20, 2003 at 10:59:47:

With all due respect Ron he is making a decision on what appears to be a long term investment in a house at the top of the cycle. If it was a flip I’d agree with you. You know that houses in California and the Northeast corridor cracked big during and after the 1990-91 recession. Are you buying those 600k homes these days in the Bay Area and renting them for maybe $2200-2400 a month that take 3-4 months to even rent? Ponder that in the past century housing has always had a major correction when a recession hits. So far many areas of the country have been spared. So this time it will be different even though we are in a rolling depression the worst in 70 years and housing supply has grown at record levels.

import · August 20, 2003, 12:35pm

Re: real estate forecast in washington DC area - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on August 20, 2003 at 12:35:20:

John V–(FL)--------

I just had a very long, wonderful post to this.

Unfortunately, I hit a wrong key somewhere and it disappeared.

If I get some more time later I will try to recreate the wonderful response.

I’m going to stop typing response on this program and instead use word. Then I can paste them.

Good InvestingRon Starr********