Real Estate boom forever?
During the past four years, American and Canadian housing markets have experienced sharp increases in selling prices. Housing seems to have replaced the stock market as the "personal investment of choice".
The Detroit News has a rather stunning report "Metro Home Sales Tank":
"Southeast Michigan's housing market took a sharp dive at the end of a weak 2005, signaling more tough times ahead with interest rates rising and a scarcity of new jobs.
"Statistics released Monday showed median sale prices fell 4.3 percent in December -- the biggest monthly drop in 2005 -- and most sellers were waiting at least 3 months to find a buyer." (emphasis added)
ALL housing markets are prone to up-and-down economic cycles which cannot be easily predicted in advance. Closer to my area of the world, the Bellingham Herald is reporting "Chill Hits Housing Market" and raising concerns about a rather abrupt slowdown in what had been a hyper-active property sellers' marketplace.
When it comes to real estate, readers are reminded of a few timeless thoughts:
1. Leveraged Equity is a double-edged sword.
2. Stocks, bonds and mutual funds can be bought and sold on demand in real time, thanks to public equity markets and online trading. Real estate CANNOT be bought and sold in real time.
3. The exact market value of stocks, bonds and mutual funds can be determined in real time. The exact market value of real estate is UNKNOWN until an actual sales transacion is closed.
4. When borrowing money to purchase real estate, don't bite off more than you can chew.
The Detroit News has a rather stunning report "Metro Home Sales Tank":
"Southeast Michigan's housing market took a sharp dive at the end of a weak 2005, signaling more tough times ahead with interest rates rising and a scarcity of new jobs.
"Statistics released Monday showed median sale prices fell 4.3 percent in December -- the biggest monthly drop in 2005 -- and most sellers were waiting at least 3 months to find a buyer." (emphasis added)
ALL housing markets are prone to up-and-down economic cycles which cannot be easily predicted in advance. Closer to my area of the world, the Bellingham Herald is reporting "Chill Hits Housing Market" and raising concerns about a rather abrupt slowdown in what had been a hyper-active property sellers' marketplace.
When it comes to real estate, readers are reminded of a few timeless thoughts:
1. Leveraged Equity is a double-edged sword.
2. Stocks, bonds and mutual funds can be bought and sold on demand in real time, thanks to public equity markets and online trading. Real estate CANNOT be bought and sold in real time.
3. The exact market value of stocks, bonds and mutual funds can be determined in real time. The exact market value of real estate is UNKNOWN until an actual sales transacion is closed.
4. When borrowing money to purchase real estate, don't bite off more than you can chew.
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