Posted on 01/21/2006 4:28:51 AM PST by ex-Texan
Latest analysis of 299 markets: See how your hometown ranks.
NEW YORK (CNNMoney.com) - Sixty-five of the nation's 299 biggest real estate markets are severely overpriced and subject to possible price corrections.
That's according to the latest (third quarter) Housing Market Analysis conducted by National City Corp, a financial holding company, in conjunction with Global Insight, a financial information provider.
The report named Naples, Florida as the most overvalued of all housing markets in the United States. A single-family, median-priced home there sells for $329,970, 84 percent more than what it should cost -- $180,956 -- according to the analysis.
National City arrives at its estimates of what the typical house in these markets should cost by examining the town's population densities, local interest rates, and income levels. It also factors in historical premiums and discounts for each area.
Other markets deemed wildly overpriced included Merced, California (by 77 percent), Salinas, California (75 percent), and Port St. Lucie, Florida (72 percent).
(Excerpt) Read more at money.cnn.com ...
Take a day off...or maybe a year/decade...Agenda driven posting is getting old...
But what do I know, I'm $400,000.00 in debt with my interest only mortgage...
Interesting. I wonder what criteria they used? I always figured it boils down to "what the market will bear", or simply put, what people are willing to pay to live in a certain area.
I've been predicting that the bubble will pop in the Downtown Chicago condo market for years. I've been wrong for so long, that when the bubble finally bursts, I won't even be able to tell anyone "I told you so."
Dave does take something of a cookie cutter approach to finances, and in some situations, your mortgage could make sense, such as you move frequently, your company buys you out when you move and it's proper to have an image lifestyle because of the job and being backed by the company.
Interest only allows you to have lots of house for little $$. In a rising market, you win......with a bust????
They explain the basis in the article. Basically, local incomes with some historical pricing.
I suspect that the "basis" is totally invalid for a location like Naples. FL. There, the homes are probably owned by out-of-towners (2nd homes) or real-estate investment firms. Since they are not "local", their incomes are not factored into the "basis", and the results are skewed.
It's the old problem of "garbage-in garbage-out". But what the heck, if the garbage information supports a specific agenda, why not just keep quoting the garbage?
Didn't even read the article but I can spot the flaw already. They say Naples is overvalued compared to the parameters of the local economy.
Well, I didn't stay at a Holiday Inn Express last night, but I can tell you that Naples is probably filled with retirees and/or homes purchased as second homes for people who have residences elsewhere.
So the jobs in Naples are probably service industry jobs primarily, but the housing market is driven by people from outside the local economy.
I've been to Naples exactly once in my life, but you don't need to spend a lot of time there to figure this out.
Guess you beat me - OK well great minds and all that. Cheers.
I guess I should have read a little farther down the thread.
Oh well, this is just my .02 worth.
Can Dave Ramsey save me on my taxes?
I paid over $45,000.00 in fed taxes in '05...I'm supporting an "average" American family...
If you only look at the immediate community you will get the wrong results. Home buyers in these two areas may live in Merced or Salinas, but they work elsewhere.
The work (and income) is from the San Francisco Bay area, and this is what is driving up the home values.
When I was looking for a home in 1985 I could not find any I could afford close to my work (in the Bay area), and I kept looking further east, and ended up in the San Joaquin Valley, a 70 mile commute.
Many that live in this area commute each day to their jobs in the Bay area, so if you were just calculating the local area as to what could be afforded you would get a distorted picture of the situation.
(Fortunately I no longer face that commute.)
Driven in large part by how people value their time. I live in DC and have coworkers who are on the road at 5:00 a.m. and get home at 8:00 at night. Provided, of course, that no one in Northern Virginia has a flat tire and snarls things hopelessly. Ah, the suburban lifestyle. I prefer to know my children.
Are housing prices in this area due for a correction? I dunno. But we continue to have robust population growth, a strong job market, and galloping gridlock. I don't think the bottom is going to fall out of values in the city, where they are going through the roof, or close in suburbs.
In fact, I think a lot of people are going to have to acquire a whole new set of stereotypes about D.C. Some of the usual suspects, alarmed by gentrification, are trying to gin up a slum stabilization campaign, but with Marion Barry over the hill and back on crack, I don't know if they have anyone to lead it.
You're support half an average federal employee here in the DC metro area. (Lots of senior civil service and military here; don't transpose those figures to real America.)
Just to comfort you while you're doing your returns this year.
I agree. But I think some things are just overpriced, and cars and houses are the first things to come to mind.
It would be interesting to see how much (and why) certain things seem to have gotten much more expensive(cars, houses, medical care), vs others (most groceries, computers, clothes). Then again, I'm still PO'd at how high the price of milk is currently. I know there's no cow shortage (shouldn't be anyway lol) so to me that says there's a price structure independant of supply/demand which IMHO fubars the price.
http://www.recordnet.com/apps/pbcs.dll/article?AID=/20060113/MONEY/601130315
The true measure of home value is not "what the market will bear." It is affordability.
hahaha...very comforting...
In many, but certainly not all, cases.......you can look straight to governmental interference. I believe (but may be wrong here...) that the Feds mandated certain additives in milk that drove the price up significantly. As a father of 7, I can tell you we felt the hit in a big way.
Other items.......look at increased taxes, either at the local, State, or Federal level. "Sin taxes" come to mind for things such as cigarettes and alcohol.
I've always looked at housing markets as being similar to the stock market: perception is reality. If a particular area is perceived as "hot", something akin to a feeding frenzy occurs in the real estate market for that area. This can happen in numerous ways. High tech centers attracting beaucoup out-of-state talent (Silicon Valley, Austin, Boston, Huntsville, AL, Raleigh......all examples). A widely-read article about "best places to live".......next thing you know, herds of people start to locate in these areas. You name it......but the media seem to have a lot of say these days as to what areas are "hot", akin to certain high-profile traders or Alan Greenspan making 'sage' statements about the stock market. People just react to those they perceive as 'experts'.
Let me ask you about that. Do you think we will see a downward trend in real estate pricing in Gulf areas due to all the 'hits' from severe hurricanes in the last few years? Hurricanes have always been a threat in such areas, to be sure, but just seems the last few years the Gulf region has had such MAJOR hits.......was just wondering what the impact is or what you think it will be.
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