I suppose your biased, inner gut feelings are more accurate than NAR's median price statistics used by CNN.

As per my own financial peril, the real estate market has been very kind to me wherever I have bought, NYC or Center City. Renters like yourself should try not to give me any financial advice, FYI.

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This thread can never die.

This may be the one topic which will always ALWAYS be on the first page of CC.

I count on it like a cup of coffee and a poop.

Yeah! You dirty, poor renters need to learn your place!

Biased? You're assumptions are hilarious. I actually own my house (since 1998) and am about to list another that I just rehabbed (it was bought as an estate sale last year). I should make a decent profit -- but finding such opportunities are becoming much, much harder to find. I actually wish that housing values would continue to move up.

But I don't see it that way. So I also have shorted several mortgage lenders to hedge what I own because it is was very obvious to me that the credit bubble -- which caused much of the appreciation in home values -- would come to an ugly end.

It's not about gut feeling. It's about not denying the obvious. I submit that you are going on gut feeling, not the realities of the market.

I suppose because CNN quotes the NAR's numbers, then the NAR's numbers must be meaningful. Hilarious!! BTW, Fox News uses the same numbers from the NAR. Are you going to trust the NAR's numbers because Fox uses them, too?

You're really reaching for logical reasons to back your position on housing.

OK, they're paying $1500/month for those units. Do you know how much the units were purchased for? That info for make the rent/investment comparison meaningful.

I agree. Anyone who bought through 2004 is still in good shape (as of now). But what about those who bought in 2005-2006? They were told that RE always goes up -- and many of those more recent buyers are realizing that things aren't always what they seem.

BTW, how do you know that the builder is making a 30+% profit? Do you know how much it cost to build and finance the entire project? I'd be interested to know. My guess is that it cost $125K to buy the land and $110/sq.ft to build. That's $400K right there. If the project was financed, figure at least another $30K (especially condisering that the property has been on the market for 6-8 months). Sell it at $500k and the seller nets about $465K after closing costs. So by my estimates (and please refine them if you have better knowledge), the seller profited $35K on the deal.

That leaves the big question that the future of neighborhoods like G-Ho is depending on: Why would another developer try to do the same deal if the profit potential is only $35K? If there isn't room for serious profits, then those undeveloped eyesores -- that everyone assumes will be developed -- will remain eyesores. That's not a good scenario for any neighborhood that is in mid-transition.

It looks like the housing market is already sick for Pennsylvania subprime borrowers.

If your home goes to foreclosure, you may owe income tax on the amount of debt that gets forgiven by the bank.

If this amount is significant, you will also owe a penalty on this amount for Non-payment of Estimate Tax.

Read this NYT article today, which discusses the problems going on close to where we live in Pennsylvania:

http://www.nytimes.com/2007/08/20/bu...l?ref=business

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That is hard to say. The building itself is mortgaged (most likely) as the developer used financing to revamp the property. I seriously doubt that came from spare cash.

So say the landlord went and got terms on the note for $4,700,000.00 in renovations at 30 years including interest, fixed for the total cost of the note.

Let's say the building has 20 rental units with an average income of $1750 including the high priced units and 3 to 4 vacancies through an average year, yielding a monthly revenue of $33,000.00. Mortgage expense is fixed around $13,000.00. Rents go up 5% a year.

In the first year, rental income is $396,000.00. More than enough to pay city taxes, current payments on the note and whatever the fee is for the property maintenance company to deal with the renters.

By 5 years rental income is $481,340.00
By 10 years, $614,325.97

This is totally viable and is a sound investment. In fact, if the landlord who owns the building is using other payments from securities to cover the note payments, more of the rental income is pure profit for the landlord.

If rental stays tight, which it's been this way historically in Philadelphia in the CBD area... the landlord has nothing to worry about.

The risks? Should a much nicer building open up nearby that has more units, more amenities and offers lower rents... than this hypothetical landlord may face a huge decrease in income, as people will scurry away in favor of the other property. Either his units will sit vacant, or he'll have to lower the price in order to attract interest.

Does this happen in Philly? Almost NEVER.

__________________
You can never have enough check cashing, wig shops, nail salons, hair braiding, cell phone, gold plated jewelry and sneaker stores in Philadelphia!!!

Take a stand. Today, I will do better.
http://www.hotghettomess.com/

Hey Gekko,
I've been keeping an eye out on prices in the areas I was looking in. They seem to be stable. Real estate prices are sticky since sellers will not want to take a loss and most are still asking only a slight discount from comps. It is going to take years until prices normalize and retrace slightly to historical levels. The best case scenario is that they stay flat until inflation catches up.

This right now feels like the calm before the storm since unemployment is very low and inflation is in check. It's also the typical combination before a recession.

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Pretty amazing or really stupid. That area is so overpriced. The fact that someone would pay that much on a block with abandoned homes makes no sense to me unless they plan on staying there for 15 years. Center city has improved, but it's not a thriving metropolis like boston, NYC, and DC. I know what the come backer is going to be "That's why the house cost ONLY $500k". I can get a real nice condo in DC for that price.

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