Bernie, Housing Bubble- In reference to valuations I was rtalking about residential real estate prices. I have read that 40% of current homeowners could not afford to buy the homes they live in off of their current incomes. When homes get to that level I be;ieve that we are seeing massive overvaluation in housing prices. My point about not buying or build your own is that replacement cost has been greatly discounted to market valuations. Land cost of course would be in bubbleville but materials are cheap as indeed labor is too relative to recent times.
I did reference my commercial property experience but also in the early to mid 80's I bought and renovated homes in the intown area of Atlanta. I know of several cases where homes were purchased from me prior to 1987 and the new buyers were selling those same homes for less than they paid in 1990-91. I see the same scenario in the works now.
You are right. Most people should not attempt to build their own home. I was only suggested that from the economics viewpoint.
From a demographic viewpoint, Harry DEnt wrote a good book in 1993 called "The Great Boom Ahead". In it he proclaims that the average person buys their most expensive home at the average age of 43. Population stats show that we had a surge of births between 1950 and 1957. that would give us a surge in homebuilding between 1993 and 2000. Since new home sales account for much of the grwoth of our economy, robust economic growth was expected too.
Well Dent was pretty much on target with his building boom as we did see a start of slowing in 2000. But, something that he did not count on was the fed flooding the market with liquidity and also the relaxation of lending criteria for new home buyers which extended the building boom or, the creation of a real estate bubble.
Joe
AI
