Similarities between late 80's - early 90's
- Thread starter WillG
- Start date
I bought my first house in the logan area in 92 for $74, which was valued at $83 a year later, and valued at around $60k 8 years later, and is now worth around $125k.
I have begun to think there is a similarity in the 80/90's market, where massive demand (depite high interest rates) eventually led to an oversupply of housing, leading to stagnation until pent up demand led to a boom led by Sep 11 event.
I believe that the housing market now is getting to the point where areas are slowing, say high density units, first home buyers, and investors are finding it difficult to buy positive cash flow.
I think this will lead to lessened demand followed by stagnation, unless there is a sudden dramatic change in interest rates or unemployment, either of which could result in a bubble burst.
83% increases in 2 years are not sustainable - but that doesnt mean they wont continue to rise - especially when you think about overseas bi and tri generational loans for housing.
Cheers,
Tim
I have begun to think there is a similarity in the 80/90's market, where massive demand (depite high interest rates) eventually led to an oversupply of housing, leading to stagnation until pent up demand led to a boom led by Sep 11 event.
I believe that the housing market now is getting to the point where areas are slowing, say high density units, first home buyers, and investors are finding it difficult to buy positive cash flow.
I think this will lead to lessened demand followed by stagnation, unless there is a sudden dramatic change in interest rates or unemployment, either of which could result in a bubble burst.
83% increases in 2 years are not sustainable - but that doesnt mean they wont continue to rise - especially when you think about overseas bi and tri generational loans for housing.
Cheers,
Tim
Hi WillG,
We had an investment property in the 80's that we sold in 1990 for $110,000. The rental return was about $4500 net. Interest rates for deposits at banks (fixed term) were about 14.5%, or a return of about $16,000. (we had no loan on IP). No wonder the bubble burst at the time.
Move on to now and a similar type of property that we own is worth ~$200,000. The rental return is about $9,500 net. If we invested the $200,000 at the best bank rates we would get $9,500 at 4.75%.
It makes a lot more sense to me to be owning property now than in 1990.
bye
We had an investment property in the 80's that we sold in 1990 for $110,000. The rental return was about $4500 net. Interest rates for deposits at banks (fixed term) were about 14.5%, or a return of about $16,000. (we had no loan on IP). No wonder the bubble burst at the time.
Move on to now and a similar type of property that we own is worth ~$200,000. The rental return is about $9,500 net. If we invested the $200,000 at the best bank rates we would get $9,500 at 4.75%.
It makes a lot more sense to me to be owning property now than in 1990.
bye
