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United States Heading towards a Depression?

Discussion in 'Politics & Religion' started by decoyjames, Dec 27, 2007.

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  1. Mia

    Mia R.I.P. STEVE JOBS

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    #961
    I'm thinking now is the time to buy and or build... I am kinda torn between putting addition on my current home, or buying some acreage and building. The problem with the addition is, with the housing market completely overvalued, how much REAL value will it add? I mean would I be better off building with that cash?

    The land where I live is so out of whack in terms of price. I looked at a nice 1.5 acre parcel looking down on the city and over looking the lake and the guy wants $240k! Commercial property is typically about $50k/acre average here, residential, say $30k, then add $200k plus just because. I've got some commercial property for sale that is reasonably priced that has not had a single bite.

    Another parcel I looked at was 3+ acres with a sell price of $33k/acre or $88k for the entire parcel... You do the math on that one. Makes no sense.

    At this point, what makes more sense, build or add on? I'm land locked where I am, but have a little room, assuming I grease the right pockets I can skirt around some restrictions. I'm also comfortable with where I live, love my neighbors, and have spent a great deal of time and money on the current home to the point where I am not sure I want to start over again.

    What I really need is a larger garage... I'm running, actually, am completely out of room for toys.

    I spent a good deal of time today looking at foreclosure property in my area. One place in particular my wife and I looked at back in 2002 and after viewing found it already had an accepted offer.. Its the one we wanted. Its now in foreclosure... Figures. The bank wants about $100k more than they were asking for it less than 6 years ago. Something smells. If I buy anything in foreclosure, I really do not expect to pay more than the outstanding balance, less any equity pulled out. Anything more than that and you are being robbed.
     
    Mia, Mar 19, 2008 IP
  2. wisdomtool

    wisdomtool Moderator Staff

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    #962
    Frankly speaking, this is from a novice economist, not from those real experts, my opinion would be to wait for a while, the housing slide seemed to be still at infancy, we may see more action later. I feel that wait for a few months may be better and you may even get much better bargains.


     
    wisdomtool, Mar 19, 2008 IP
  3. guerilla

    guerilla Notable Member

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    #963
    The Housing situation won't get interesting until

    1) Unemployment goes up (be aware that the current measure is not the same as the traditional one, like most stats, it is hax0red)

    2) Interest rates rise above 10% or inflation reaches 20%.

    Then you're going to see people get crushed.
     
    guerilla, Mar 19, 2008 IP
  4. Hon Daddy Dad

    Hon Daddy Dad Peon

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    #964
    I know of some people who have bought properties at tax sales for as low as 4% of what was last paid for them.
     
    Hon Daddy Dad, Mar 19, 2008 IP
  5. bogart

    bogart Notable Member

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    #965
    After the election you will get more bang for the buck. Building can be a good option if you can find some unemployed construction workers willing to work at a good rate.

    It's going to take a couple of years for prices to wind down considering the trillions that the Government is putting into the market.
     
    bogart, Mar 19, 2008 IP
  6. Mia

    Mia R.I.P. STEVE JOBS

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    #966
    And that is what I am looking at. I figured out last night that it would be about $45k for a 500 sqft addition on my home, less or more depending on sweat equity. Or I could take that and more and buy something useful at a discount and sit on it..

    True... I just have to temper all this with the fact that I like my current home and the area. I just would like to have more land. My only other option is to wait for the house next to me to go up for sale, buy it and level it. I don't see that happening any time soon however.

    The housing market in Lake Geneva does not look the same as the rest of the country. It's still traditionally on its average. New construction in commercial and residential is still on an upswing here. We are in our typical cycle which looks nothing like what the rest of US looks like.

    Also the average sale price now, is pretty much the same as it was in the 90's (Clinton Years)... We have a pretty consistent market here with very consistent ups/downs. Land is way over priced IMO (raw land that is). But it has always been that way here. It is an extremely desirable bedroom community. Safe, clean, with some of the best schools I have ever seen. A lot of that is attributed to the high tax base.
     
    Mia, Mar 20, 2008 IP
  7. ferret77

    ferret77 Heretic

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    #967
    Didn't we look up your zip code and it followed the same pattern as pretty much most of the country?

    is it cheaper to rent or buy in lake geneva? what is the average home price compared to average income?

    personally I am betting housing prices will fall for years
     
    ferret77, Mar 20, 2008 IP
  8. Mia

    Mia R.I.P. STEVE JOBS

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    #968
    Ah no.. Someone was appalled at the suggestion that Lake Geneva had multi-million dollar homes. They had to be directed back to reality. I remember the thread.

    I guess that depends... You'll probably get more for the money renting, but find you can own a decent home for the same amount, so why throw the money away? My condo in 01 was around $900/mo. for 1400 sqft. Depends what you rent.. A house here, can be as much at $9k/mo. in rent. I'd say the average is around $1-4k/mo. My mortgage on 5000 sqft and 2 acres is around $4k, includes the property tax which is running me around $650/mo. I've got a mortgage on 850 sqft on 1/4 acre that runs around $900/mo. or so, including property tax as well.

    One piece of property I have was purchase in 98' for $298k and was previously purchased 4 years earlier at $345k. I'm asking $900k today. If the chart below went back any further, you'd see that same down trend in the 90's, perhaps not as abrupt, but it is there.


    Estimated median household income in 2005: $43,000 (it was $40,924 in 2000)
    Lake Geneva $43,000
    Wisconsin: $47,105

    Estimated median house/condo value in 2005: $161,400 (it was $121,200 in 2000)
    Lake Geneva $161,400
    Wisconsin: $152,600

    sorry that is the most current data I found... I'd imagine the increase is consistent with perhaps 2% per year.

    Well, typically corrections can last a year or more, so I do not disagree with you.



    House prices in Lake Geneva saw their last big drop in late 02 early 03 (mainly left over concerns from 01). It was a rather sharp drop with a moderate rise throughout the rest of the year into 04. From there, it has been pretty much FLAT for 2 years, until 06 where was see a rise through 07. Sadly, I do not find much Q1 08 data, so this may likely have changed, but I doubt it is anywhere near the numbers seen in 02/03.

    [​IMG]
     
    Mia, Mar 20, 2008 IP
  9. guerilla

    guerilla Notable Member

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    #969
    Not if the approach is laissez-faire.

    If the government intervenes with bailouts, price controls, wage controls, deficit spending, holding the line on taxes, hyper-inflating, it can go on as long as... oh.. a Great Depression.

    But if the approach is laissez-faire, historically, corrections have passed very quickly.
     
    guerilla, Mar 20, 2008 IP
  10. ferret77

    ferret77 Heretic

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    #970
    like how quickly?
     
    ferret77, Mar 20, 2008 IP
  11. Hon Daddy Dad

    Hon Daddy Dad Peon

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    #971
    Gene Simmons advises you should purchase your personal residence with cash - otherwise rent.
     
    Hon Daddy Dad, Mar 20, 2008 IP
  12. guerilla

    guerilla Notable Member

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    #972
    Less than a year in some cases. But bear in mind, not all bubbles are the same, and they don't all unravel at the same pace.

    I think the Austrian school has done a decent job of making the case that the more you try to prop up the bubble, the longer you prolong the pain.
     
    guerilla, Mar 20, 2008 IP
  13. smatts9

    smatts9 Active Member

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    #973
    The more and more I look at what is going on I have a feeling that we are headed for deflation and are moving past any inflation we may have had.
     
    smatts9, Mar 20, 2008 IP
  14. guerilla

    guerilla Notable Member

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    #974
    Deflation of what?
     
    guerilla, Mar 20, 2008 IP
  15. korr

    korr Peon

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    #975
    Well it looks like some of the investment banks and hedge funds are trying to de-leverage their investments before they are the next "shoe to drop." Gold and oil finally saw a major pull back, and this is the first sign of a "turn around" in the economic situation. The system might find its way to solvency without requiring the panic mentality of bank runs.
     
    korr, Mar 21, 2008 IP
  16. guerilla

    guerilla Notable Member

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    #976
    The system isn't stronger though. We're still going to see a lot of ARMs reset this month and next.

    Retail sales aren't suddenly going to rescue themselves. Inflation isn't going to magically drop. We're not out of the woods yet, by any means.

    If you read through an honest timeline of the Depression, there were eyes in the storms. It wasn't one endless and relentless torrent of bad news into oblivion.

    Now is the time for people who are leveraged to get out. It's an opportunity to cut losses.
     
    guerilla, Mar 21, 2008 IP
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  17. wisdomtool

    wisdomtool Moderator Staff

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    #977
    Also productivity isn't going to go up so soon too. Manufacturing and services sectors are what creates real value for your dollar, not the continual printing of paper notes.


     
    wisdomtool, Mar 21, 2008 IP
  18. korr

    korr Peon

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    #978
    This is exactly what I'm hoping. Declining jobs or sales doesn't really worry me so much as the other side of the risk we are facing. A good 'ole fashioned recession is one of the best ways off the edge we're sitting on.

    The risk now is if traders get too comfortable in thinking that the Fed will come save them and they go back to pumping more money (that really isn't there) into speculation... If there is a major bull run on equities and commodities in the short term I would be very worried about the ultimate outcome of that.
     
    korr, Mar 21, 2008 IP
  19. Silver89

    Silver89 Notable Member

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    #979
    What is a recession?
     
    Silver89, Mar 21, 2008 IP
  20. guerilla

    guerilla Notable Member

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    #980
    A rise in the DJ, and drops in commodity prices does not change the fundamentals. Again, this is an opportunity to clean up your portfolio or books, to get out of leverage without burning too badly.

    The DJ is not going back to 14,000 anytime soon, short of inflation.

    Price the DJ in real terms. Say, using the dollar of 1913.

    It's depressing.
     
    guerilla, Mar 21, 2008 IP
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