The real estate bubble

[YumiChoji]

Maybe it is not really a bubble, remember land is limited and people each day are born.

There will be less and less people who will own lands for future to lease, the land price will increase overtime. Unless we have a world war 3.

[audaciousbeing]

I've been looking at the local real estate market for quite some time. People are buying like crazy. Less and less of them are choosing to hold money in the banks and everyone is telling me to buy real estate. This seems to be the dream of every young and old, to have a portfolio of apartments for rent. Who is going to live in your apartment when everyone around you starts to own a spare one? There's not enough people coming to towns to satisfy the market.
At the same time companies are building more and more. There's flats and houses for sale everywhere and new ones are cheaper than the old ones. Why? Because people bought them years ago for e.g. 100k USD and then invested another 20k into remodelling and furnishing. They would like to get at least 100k back, but developers are pumping cheap new flats for 90k now, who's going to buy a used, older one for 100?
These sellers are now waiting because they think it will normalize, but it won't because new ones are still built.
In a couple years people will start lowering the prices of old properties to be able to sell at all and developers will run out of options, because they are building on credit, they have to keep selling. The real estate bubble will have to burst, it's inevitable.

Are you noticing the same pattern around you where every person is trying to save up for a house to rent or buy cheap, remodel and sell with a profit (so called swaps)?

Over here, the same thing is happening that the only achievement that is worthy of celebrating as a young man or woman is when you have a form of real estate investment to your name whether land or building to the extent that when you buy a car as a result of necessity before owning a property, you must be a foolish man. This your observation is a very valid one in that here, we have housing deficit and at the same time, there are empty apartments all over the place in certain areas of the country because of the cost of building and investor want to earn their returns faster and move on to something else. Eventually, it is the cabals who are in charge of sale of lands and building materials get to win at the end.

However, its good to invest in real estate but one needs to be strategic about it. Development happens, cities move, a business centre today can be a deserted environment tomorrow but in the midst of all this, some cities would continue to be in existence and those are the areas that would always turn out returns on investment and even when there is a bubble, it won't burst because as the city continues to grow, the need for housing becomes a necessity for countries that are in the peak of their development process.

[BrewMaster]

i feel like i live in a different world after reading this topic. suffice it to say that it is not a developed country and the inflation rate is high!

Who is going to live in your apartment when everyone around you starts to own a spare one? There's not enough people coming to towns to satisfy the market.

not everyone is going to buy real estate and there will always be people who want to buy it so there is always demand and there will always be others who want to rent.
it also depends on where the real estate is. for instance in big cities and capitals there is always going to be a demand and increase of real estate prices.
there is also the case of Up and Coming Neighborhoods. it is an investment after all and you always want to invest in something that has a potential of rise or is already rising instead of buying something that might rise or not! it is like buying altcoins, you don't want to buy some altcoins that is already big and pumped. you buy an altcoin that has not yet been pumped and is starting to get hyped up.

new ones are cheaper than the old ones. Why?

i have seen cases of houses that were old but more expensive but that was because of the location of them and the demand for that location but generally speaking the new ones, specially the brand new ones that nobody has been in yet is always higher.

[Veronika94]

Real estate is always needed.  You will have children, they need somewhere to live.  Therefore, many choose the direction of investment as real estate.  Very convenient, because you can take time and earn income.

[Ridwan Fauzi]

It depends on someone living in a country. If someone who lives in a developed country, then I will agree with you that real estate is a bubble that will explode if many companies make real estate.

So as real estate prices will decrease because many people already have homes to live in, and remember that the population of developed countries is very little so that it will provide opportunities for the future.

However, if someone who lives in a developing country and has a large population, then real estate is a long-term investment place. Community economy will change slowly and they will buy real estate for live in or just for rent.

[cellard]

The attractive of real state investments is within the fact that even if it went to 0 (which obviously would never happen, because a place to live will always have some value, of course unless the place wherein the real state resides goes full Chicago or something disastrous happens) will always have some value to it. No matter what the market says, you can still live there. If you are holding a stock and it collapses, you have nothing, same for a crypto and so on. This is why real state will always be desirable.

It will always be attractive to have something which you can milk for passive profits, in this case, having a nice portfolio of apartments. This comes at the cost of having to keep up with any problems that could happen with the renters, being a landlord is a job. I have never been a full time landlord but that's what they say. It is sure a less time consuming job that the average wage slaving one tho, and you could always hire someone to do all the paperwork. If I had the money I would try to own at least 4 apartments in big cities which would deliver a rent high enough to not have to work and live pretty comfortably. These will ALWAYS have a demand. In a globalized world there will always be people willing to pay for it. Many exchange students come to these cities if no locals want to rent it. There is a big demand. Just try to get them in places without troublesome people so you don't have to lose sleep over some fucktard destroying the furniture or whatnot.

If this is of any guidance:



It may be smart to keep focusing on improving your Bitcoin holdings and forget about real estate for now. Our time to own nice houses will come. We may be able to pick up some really cheap deals while Bitcoin as at 6 figures or more in a couple of years.

[target]

I own a lowcost housing project in our country which is quite cheap when I bought about 2011. Price has almost doubled already base on the selling price of my neighbors. I'm not selling it though but I rent it out. The newly developed housing projects and apartments are going to be lesser in selling price because they are developing them in the outskirts of the cities. The lesser its price when you buy the property while its not yet built.

[deloreswest]

Definitely not the case in the country I live. Too many fucking restrictions. And there's no way in hell are new apartments cheaper than the old ones. The old ones are getting renovated or totally destroyed. And new ones come up again. And the newer buildings are fucking expensive, like too much. I don't think the situation you're talking about is prevalent everywhere, its mostly only in the US or in cheap developing countries. One factor that needs to be considered here is where the buildings are being built. From your case, I think people are buying the apartments in the outskirts of any given city and overtime people will start moving there and the rent/land value will go up.

i suppose it seems the same happening in my country. No cheap house and land keep getting expensive and all people trying to get a house for invest or for living. I do think real estate still good investment but its not for everyone. The real estate price getting expensive and it takes a lot of money to buy a proper one for investment.

[jarojak]

I live in a fast growing industrial town in my country where you can find construction project every where but I think it's still far from real estate bubble.  Yes, lot of people buying for second or third house but the price still rise every year.  Industry and urbanization make the town grow bigger and bigger.

[darkangel11]

If people are buying houses, remodelling them and then selling, it is a normal and safe practice. It would be problematic if they had mortgages on the houses and couldn't pay them out, like during 2008. Okay, new flats are cheaper than the old ones. This is weird, but not bubbly, since low prices mean low demand, while bubbles are about very high demand for essentially empty offer. In my country real estate prices are lower now than they used to be about 5 years ago, but well-furnished new flats are obviously more expensive than the old ones.

The problem begins when too many people are trying to buy houses for rent or to swap and the market crashes. You're left with properties that nobody wants to rent out or buy, or in case of swaps nobody wants to pay you the price you expected and you have to pay the bills as the owner, so keeping the property on the market for years is going to bankrupt you.
Also, the demand might be decent now, but since average Joe is buying a property for rent, we'll at some point have dozens of people owning more than one property and trying to rent out, which won't probably end well for them as they will be left with properties that aren't making them money, but have to be maintained.

One factor that needs to be considered here is where the buildings are being built. From your case, I think people are buying the apartments in the outskirts of any given city and overtime people will start moving there and the rent/land value will go up.

Yes, those aren't downtown apartments. There are many factors to consider, one of them being construction materials. Older buildings are made of bricks, at least here in Europe. The newer ones are prefabricated and built within months. If you compare 50 year old buildings to the new ones, for the same price you're getting underground garages, terraces, huge panoramic windows, and cheaper per square meter than a 50+ year old downtown apartments.

[Dart18]

I am noticing a lot of real estate agent scattered in the streets forcing their way to sell the a house or a condominium. 

Yes it is not normal anymore. It is not a panic either. I guess people just got to think that there is better option than just letting it rot in a bank. I also prefer it that way. I've bought a house also thinking the price is getting larger every year which actually does.
My Uncle bought one near where I bought mine and its price is just half than what I am paying for right now. That is just 3 years of a difference.

I guess it really depends on where the house will be.

[darkangel11]

There are quite a few automobiles that appreciate in value (limited model high end brand models).  

Only if you don't maintain them and find someone willing to restore them. For instance, if you had an old Ford Mustang, like 1970 and kept it in your backyard, it would still most likely be worth a lot of money, but if we count in inflation, it wouldn't be that much more than it costed 50 years ago. On top of that it would be rusty and need a new paint job, new wheels, and all rubber parts would have to be replaced. So the car would be undrivable without at least 10k USD being thrown into restoration. It's not a great investment.

Owning a house can be a major headache and in the USA you never really own your house.  The U.S. government can take any piece of property they want.  How can you ever truly own something if you are basically paying rent (property tax) to the government.  So ownership in most places is just an illusion

Yes, this is another problem. In many countries your land can be bought back by the state. This allows them to take your land from you for a fraction of its value if they ever find something in the ground (oil, natural gas) or just want to build a highway.

Liabilities and cost of living are increasing @ a greater pace than wages for the majority of people. This negative trend makes it more difficult for people, on average, to afford real estate annually. Every year real estate, university education, healthcare and assorted expenses become more difficult to afford.

This trend could make real estate a bad investment as it could imply demand will decrease yearly on the dwindling buying power of consumers. Decreases in demand could translate to lower prices being necessary to sustain purchasing volume.

If you take ad valorem tax  into account, owning a real estate can potentially bankrupt you. Imagine having to pay 1% of its value a year as tax and the government decides to value the property ridiculously high. This can suddenly happen if something that adds value to your property is built nearby. For instance, the area around your land becomes a national park, which means that nothing can be built, so you will never have noisy neighbors or a factory built nearby. If the value of your land doubles so will the tax. This is an extreme situation but we all know that strange things have a tendency of happening in the most unexpected moments.

There are potential points which could offset this trend. Demand from foreign investors is typically high. There are many wealthy demographics from foreign countries who wish to buy land or real estate and legally immigrate to america. This is likely one key figure preventing a second US housing bubble from collapse.

IMO The Trump administration is doing its best to discourage people from moving to the US.

Home and real estate development also has not kept pace with population growth. This makes real estate a somewhat scarce commodity which also potentially inflates price. This could imply that real estate is overvalued and there will be a significant price correction if or when real estate development keeps pace with population growth.

This is an important factor. The  problem is that most EU countries have negative growth. Some have neutral, but a positive is a rarity.

This is a tough topic to breakdown and analyze. What makes it even harder is practically no one in the media giving a fair or objective overview on things.

Has everyone seen the volcanic eruption in hawaii? I've been looking at real estate prices there thinking there could be a significant price reduction for land near an active volcano with real lava. But it seems even there, prices are not decreasing. Real estate markets are crazy. I would be very careful if I were a buyer.

Yea, that's crazy.

If I had the money I would try to own at least 4 apartments in big cities which would deliver a rent high enough to not have to work and live pretty comfortably. These will ALWAYS have a demand. In a globalized world there will always be people willing to pay for it. Many exchange students come to these cities if no locals want to rent it. There is a big demand. Just try to get them in places without troublesome people so you don't have to lose sleep over some fucktard destroying the furniture or whatnot.

I'm actually not sure about this part. Just a couple examples that could make your apartments completely worthless:
A natural disaster (flood, earthquake)
A problem caused by tennants (fire, gas explosion)
A war

Sure, you can insure them, but this will reduce your earnings and the insurance will never cover 100% of the damages.

[richardsNY]

It has gone too far now. It has forced a lot people to rent instead of buying a house, which on its own makes sure that even the rent of most houses has gone up due to the demand. I remember how the average rent in the private housing market was around $900 on average per month, but has gone up all the way to $1300 and I don't think we have seen the peak yet. If you have a decent enough income you might comfortably pay that $1300 per month, but for a lot people it's near impossible to cough up that much money and still have a decent life. I know people who struggle to make ends meet just because of their crazy high rent....

[Lagrood]

Not only you are surprised about the building boom. I researched the real estate market in my country (Russia, Moscow and the nearest places) and the situation is absurd because developers build new houses but most part of people cannot afford to buy a flat for themselves in that houses and some part of houses stay almost empty. Moreover in the national currency prices are growing a little but in dollars the prices has fallen down in two times yet. Despite of the prices falling people still  consider that buying a flat is a good investment. I am waiting that prices on flats in my country will be dropped in dollars again. I even do not mention that houses often are build so near each other causes a lot of troubles.
So, buying a real estate is not a good investment in my country at the current moment of time.

[blockman]

Are you noticing the same pattern around you where every person is trying to save up for a house to rent or buy cheap, remodel and sell with a profit (so called swaps)?

Yes, I see this pattern and most of them are influenced by popular financial coaches that they can follow and watch his tips on youtube.

If you know who that person is, he said "real estate is the best investment". And that is giving encouragement to most that everyone must get into real estate no matter what.

Lot and property appreciates, this is the assurance for most. You get the property, you can rent or live on it and if you're done you can sell it still with good price, it's the new modern gold.

[pitiflin]

Yes, those aren't downtown apartments. There are many factors to consider, one of them being construction materials. Older buildings are made of bricks, at least here in Europe. The newer ones are prefabricated and built within months. If you compare 50 year old buildings to the new ones, for the same price you're getting underground garages, terraces, huge panoramic windows, and cheaper per square meter than a 50+ year old downtown apartments.

In my country, the older buildings are deliberately devalued, and most of the people buy it, but only to find out that the building will be soon collapsed by a bulldozer.

IMO The Trump administration is doing its best to discourage people from moving to the US.

Yeah and other countries are promoting tourism,including mine and making the cost of living go only more higher.  

This is an important factor. The  problem is that most EU countries have negative growth. Some have neutral, but a positive is a rarity.

I see why things are totally opposite in the EU.

If I had the money I would try to own at least 4 apartments in big cities which would deliver a rent high enough to not have to work and live pretty comfortably. These will ALWAYS have a demand. In a globalized world there will always be people willing to pay for it. Many exchange students come to these cities if no locals want to rent it. There is a big demand. Just try to get them in places without troublesome people so you don't have to lose sleep over some fucktard destroying the furniture or whatnot.

Yeah don't do that. It seems to be a go to thing for a lot of people in my country and people do successfully do it, but its not ideal. Some people buy a 3 BHK and rent the two rooms and boom, they don't have to get a job. And the apartments will only be in demand, if they have their working environment around them, with essential stores around. You could earn a fuckton of money, but be careful, subletting is not allowed in some places.

[nazaididuan1]

High land prices and high housing prices are far-reaching, not only hindering the sustainable development of the economy, overdrafting the future economic development space, and more importantly, as the burden of the family continues to grow, the happiness index of the people is decreasing day by day, and the social instability factor will be greatly increased.

[BitHodler]

In my country, the older buildings are deliberately devalued, and most of the people buy it, but only to find out that the building will be soon collapsed by a bulldozer.

I remember a similar case here, but with someone who just didn't want to leave, and rightfully so. Eventually that person got paid what he wanted for his property and left to see how it later was reduced to dust.

It was far more expensive and time consuming to get that person to leave through a legal battle, so they went with the easiest option. As last person standing you can achieve quite a lot if you don't let them scare you off.

I'm however not sure how friendly the situation would be dealt with in Asia and Africa. People's rights there are of less value and you probably lose more by playing hard game if you're unwanted.

[Jennifer_Elam]

If this is of any guidance:

https://steemitimages.com/DQmQyB7qCxvH8qpYdiLYdo5x79S527yyXakQSiDpjPg5J3E/US%20Housing%20Index.jpg

It may be smart to keep focusing on improving your Bitcoin holdings and forget about real estate for now. Our time to own nice houses will come. We may be able to pick up some really cheap deals while Bitcoin as at 6 figures or more in a couple of years.

That's a scary chart if you ask me. It looks like it's preparing for another dive off the edge into the abyss. Although things are a bit different this time as the FANNIE MAE (https://www.investopedia.com/mortgage/fannie-mae-loans/) projects aren't shilling out money in every direction like they were before the last crisis.

Anyone who's seen or read The Big Short remembers how easily the banks were handing out mortgages for houses at that time. It was like those free cheese stands at the supermarket. Then the banks were packaging the non-performing loans as AAA and selling them to susceptible Scandinavians (among others). There's no way that something of that magnitude will repeat itself, but a similar instance could occur if there are too many empty houses and not enough renters. They're getting ahead of themselves.

[cellard]

I'm actually not sure about this part. Just a couple examples that could make your apartments completely worthless:
A natural disaster (flood, earthquake)
A problem caused by tennants (fire, gas explosion)
A war

Sure, you can insure them, but this will reduce your earnings and the insurance will never cover 100% of the damages.

Well everything has its risk. Certain stocks could be affected by floods and earthquakes depending on what you are holding. A war for sure would have an impact on pretty much everything else as well.

Maintaining a small 3 room apartment is not that much of a nightmare. We aren't talking about a villa with a pool, a garden, vegetation, a couple bathrooms.. just small city apartments which will always have a demand. You can get them in places known to never be affected by earthquakes or floods, just study the area before buying. Fire or gas explosion is always there tho, but that's life.

Perhaps you could look at parking spots. You can rent them too and they have next 0 maintenance since it's just a small rectangle of cement. The % of danger of flood is much higher too, since they are underground. But even then... assuming your car isn't there, the person renting it will have the problem, not you. If it floods, it will dry, again it's just concrete, nothing of value on your name is lost. Parking spots seem like a winner in terms of passive income. Im not sure how taxes go in these, but there should be a good demand for parking spots in cities.

I know a family that owns an entire parking building next to an airport and they make millions out of it. They've had it for years and family keeps inheriting it. A money making machine.

Having an entire building is maybe overkill for most of us, but with 20 to 50 spots you could be very well off. When BTC goes to $500,000 or so you will be able to afford a bunch of these with a single BTC.