House Prices

BOISE_CAT · Post by **BOISE_CAT** » Mon Mar 27, 2006 7:00 pm

INTERESTING STORY ON HOME PRICES---Is a correction Pending????
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Robert Shiller, the Prophet of House Prices
Economics Professor Predicted the Dot-Com Bust; Sees Another on the Horizon
By MARTIN BASHIR
March 24, 2006 -- - If a prophet is only as good as his last prophecy, then you'd be wise to listen to Robert Shiller. On "Nightline," Shiller offered his considerable analysis of the current real estate market ... and he doesn't bring good news.

It was back in the heady stock market days of 1996 that Shiller, an economics professor at Yale University, gave voice to his first prophecy. He warned that the stock market was overheating and that investment had risen to what he described as irrational levels. The stock market crash that followed was no surprise to Shiller and proved that he had called it right.

Now he's warning that a similar collapse may soon apply to the real estate market. And there's evidence that he may be right here, too.

In statistics published today, the Commerce Department reported that the sale of new homes during the month of February dropped by 10.5 percent. That's the largest decrease in almost nine years. It was also the second straight monthly decline and the possible emergence of a worrying trend.

Shiller said that the same psychology that applies to stock market investors now drives the real estate boom. He called it irrational exuberance, coincidentally the title of his 2000 book about the stock market.

Prices Driven By Emotion

Shiller argued that human emotion, not strategic economic factors, drives prices and property buying.

He argues that many first-time buyers pay inflated prices simply because they fear they'll be left behind. He believes that "glamour" locations, such as Las Vegas and Miami, drive prices upward but the real worth of properties in such giddy locations may be a great deal less.

Shiller has traced the actual financial return that houses produce for their owners. He says that over the long term, house prices roughly match gains in people's incomes and that booms are more often followed by busts, thereby dissipating any major increases in equity.

The National Association of Realtors, unsurprisingly, challenges Shiller's assessment and argues that the market is stabilizing and predicts continued growth, albeit at a more sober rate.

As long as Americans continue to believe that their money is only as safe as their houses, then investment in real estate will continue. But Shiller's warnings are well worth hearing.

Copyright © 2006 ABC News Internet Ventures

BWahlberg · Post by **BWahlberg** » Mon Mar 27, 2006 7:40 pm

Coming from a real estate sales perspective I would say that an adjustment will take place in many larger markets, such as San Fran (hey BAC what does a 3 bed 2 bath 2 car garage 1600 Square Foot house cost in your area?) but other areas that have experienced "the boom" such as the Missoula / Bozeman / Kalispell areas will see a slower increase in values these next few years especially if interest rates stay where they're at.

If the rates sink again you could see another big hike in values.

Post by **SonomaCat** » Mon Mar 27, 2006 7:56 pm

5 Billion dollars, roughly.

briannell · Post by **briannell** » Mon Mar 27, 2006 8:15 pm

Brint, this is the closest thing to that size I found in my parents town where I grew up , what 35 miles east of SF Bay. funny this same size home here in my town of yelm WA runs 254K. , so CA just sucks!!!!!!

CLAYTON, CA 94517
MLS ID#: 40149549
$729,000
4 Bed, 3 Bath
1,739 Sq. Ft.
0.17 Acres

Estimated payment:
$3,686 Per Month*
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Single Family Property, Area: Clayton, Subdivision: WESTWOOD, County: Contra Costa, Approximately 0.17 acre(s), Lot is 7350 sq. ft., Year Built: 1984, Two story, Garage, Central air conditioning, Community swimming pool(s), Fireplace(s)

This listing is brokered by: Alain Pinel REALTORS
Office: (925)934-1111

Property Features

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Single Family Property
Area: Clayton
County: Contra Costa
Subdivision: WESTWOOD
Year Built: 1984
4 total bedroom(s)
3 total bath(s)
3 total full bath(s)
9 total rooms
Approximately 1739 sq. ft.
Two story
Style: Contemporary
Fireplace(s)
Garage
Heating features: Central, Gas
Central air conditioning
Interior features: Carpet, Dishwasher, Microwave, Range and oven, Tile flrs
Exterior features: Patio, Public sewer srvc, Public water supply,
Community recreation facilities
Community swimming pool(s)
Lot is 7350 sq. ft.
Corner lot
Approximately 0.17 acre(s)
Lot size is less than 1/2 acre
School District: Mount Diablo (925) 682-8000
Elementary School: Not Listed
Jr. High School: Diablo View Middle
High School: Clayton Valley High

briannell · Post by **briannell** » Mon Mar 27, 2006 8:19 pm

reason why CA residents move to Missoula - check out the difference, and this home is still cheaper!!!!!

5325 Elk Ridge Rd. - Missoula, MT 59802

More Pics Virtual Tour Additional Information
Upper Rattlesnake

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Price: $699,900
Features:
• Bedrooms: 3
• Baths: 3
• Garage: Double
• Basement: Yes
• Sqft: 1223/1850/1240/1240
(upper/main/lwr/lwr finished)
• Age: 21-35 Years
• Site Size: 3.01 ac
Status: Active

Drastically Reduced! Seller Is Motivated - Bring Offers! Spectacular Remodel In A Secluded Upr Rattlesnake Location Offering Gorgeous City Views! Open Entry, Formal Living Rm W/ Cathedral Ceiling, Library W/ Wet Bar, Formal & Informal Dining, Gourmet Kitchen, Large & Elegant Master Suite, Lower Level Family Room, Hobby Rms & More! Amenities Included: Hdwd Floors Throughout The Main, Dramatic Marble Faced Frplc, Granite Counters, Hickory Cabinets, Sub-zero
Listed By: Diane Beck • Prudential Montana Real Estate • 1020 South Ave. • Missoula, Mt 59801 • Main (406) 721-4141

Post by **SonomaCat** » Mon Mar 27, 2006 8:24 pm

This is fairly typical of my current neighborhood ... on the higher side price-wise, but not "unreasonable" by the neighborhood standards based on how "big" it is.

http://www.craigslist.org/sfc/rfs/145103243.html

I live in the apartments that you can see in those photos ... they look down on me. In fact, I had a friend who had a place there, and he could see everything that went on outside of our place. He should have been on a neighborhood watch so he could have nabbed the bastages that stole my bike.

catsrback76 · Post by **catsrback76** » Tue Mar 28, 2006 8:13 am

Re/Max Griz wrote:Coming from a real estate sales perspective I would say that an adjustment will take place in many larger markets, such as San Fran (hey BAC what does a 3 bed 2 bath 2 car garage 1600 Square Foot house cost in your area?) but other areas that have experienced "the boom" such as the Missoula / Bozeman / Kalispell areas will see a slower increase in values these next few years especially if interest rates stay where they're at.

If the rates sink again you could see another big hike in values.

Great Falls better watch out then. We have BLOWN UP in value...