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<i>*** I have some younger friends who I BEGGED to start buying RE after 9-11 when rates fell to all-time lows a few years back...</i>
Why would you recommend buying real estate when interest rates are at all time lows? Since real estate values have an inverse relation to interest rates, isn't that the riskiest time to buy?
BTW, I thought this article in Fortune was pretty good. Check out the tables for the details on their price to rent macro analysis.
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According to our calculations, prices in most markets will fall by double digits over the next five years.
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But if you read the chart, some markets aren't overvalued at all, including Detroit and Cleveland. Since each market is made up of thousands of thousands of homes, even if the average home in a market is over-valued, that doesn't mean they all are (but bargains may be real hard to find). Use the same benchmark, price to est. rental income, to give you an idea of whether any individual house is a good deal or not.
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After the Sept.11,2001 disaster,as well as the stock market fall that followed due the economy being put in jeopardy...interest rates plummetted .
Returns were too low to keep money in CD/money market funds ,bond yields were tooo LOW,the transportation industry came to halt,hitting manufacturing hard,commodoties like GOLD-oil were flat,etc.
I also felt investing in stocks was extremely risky due to increassed terrorist/anthrax scares,amongst others at that particular time.(remember we fell too NEW lows on the Nasdaq after that I believe)
IMO buying a piece of property to live in at that time was as safe/cheap an investment as one could get,and use as well to live in as a primary residence
Some of "those houses" I reco'd to my friends to buy as first time buyers....have since tripled+ in the NY area(even with this recent slowdown).With interest rates that low...I felt the housing market would continue to expand
I NEVER thought it would explode upward,that eventually culminated in this sub-prime/housing mess we are in now.But if you bought back then with a coventional mortage and continue to hold or live in this said home ...the chances of you being in this mess are ZILCH
So I was talking about buying YEARS ago before the parabolic rise in R/E....not in 2006!
I dont understnd what your getting at,and am confused at what your saying or the time frame involved?
SF [img]/images/graemlins/confused.gif[/img]
**I would say I gave them some pretty good advice ,as I also made some of my most profitable purchases and sales during this boom as well