I’ve been wrong a lot about the price of real Estate because it is hard to know how gullible the public is about tangible assets. Gold is a good example. Gold is a useless commodity that continues to attract investment dollars.
There are millions of housing units here in the United States that attract buyers. In Miami condos that sold for $240K are now selling for $30K. Never mind that ten short years ago you couldn’t give a condo in Miami away, today people are lining up to pay $30K for a Bank owned REO.
I could have never predicted that some one would pay that kind of money. I for sure could have never predicted some one, an investor, would be plunking down $225K for a condo I could have bought for $60K in Barcelona. Better yet people in Peru are paying $90K for condos, when ten years ago you could buy a house for $35K.
The global housing market is over inflated in price, and inventory. The fed this week announced they would be buying government bonds in order to increase liquidity, with the hope of propping up United States property prices. That would only work if we had scarcity of inventory, but we have an over supply.
The way this works in your favor is to buy what has value. Price, and value are two different things. Buying high quality value at a reduced price is a good thing. What you need to know is the value for the price you are paying, and that is the value of this site.
As an example, here in Seattle we have two side by side neighborhoods of similar development. One is Ballard, the other is Fremont. Ballard was a working class, fisherman’s district, and Fremont was a little bit more free form. They are about two miles apart. Fremont has pulled way ahead of Ballard in terms of value.
I’ll do a separate post about why, but Fremont is a job center, and Ballard is still a fisherman’s district.
