Homestead mailing list

[Gene GeRue <genegerue AT ruralize.com>]

On Jan 24, 2008, at 9:02 AM, Clansgian AT wmconnect.com wrote:

> "“Houston-area home sales fell 4 percent last year, but 2007  
> stillmarked the
> second-best year on record after sales peaked in 2006. The largest  
> piece of
> the market, homes priced between $80,000 and $150,000,were the  
> hardest hit last
> year, falling 11.6 percent."

This seems to be a common trend: total sales are fewer, upper-priced  
homes are selling good, lower-priced homes are selling below normal.  
Again, understand the dynamics of our shifting economic classes.

> As to land prices, we have just barely begun a housing slump that  
> many say
> could last ten to twenty years.  People (you know some) are in  
> denial.  Most of
> the ASKING price for land around here is not much different than it  
> was at the
> fevered peak in '05, but nobody is buying any of it.

Local conditions. You are fortunate to have your land in a place that  
most people do not want. I chose Heartwood with undesirability in mind  
and recommend it highly. Other than buying huge acreage, it is the  
best way to ensure peace and quiet.

>  Bubble mentatity goes on for a while after bubbles burst.


Sigh. I suspect I will always have a negative reaction to the term  
"bubble" when used to describe a waxing or waning economic condition.  
As you write, "bubbles burst." Exactly. A bubble, dammit, deflates all  
the way when popped, down to flat, just a memory of its former bulgy  
self. A bubble does not deflate five or ten or twenty percent and then  
hold there shivering and waiting for more helium or ballast.

Always expect change but always also expect certain things to continue  
as before. People must have shelter. New boys and girls are making new  
babies each day. They start out in parents' homes or humble  
apartments. When the family grows, they seek more room. The ubiquitous  
American Dream causes the majority to buy a house as soon as they can.  
The family grows and their incomes grow (although that may well be  
changing and if the lower class continues to grow while the middle  
class shrinks then it's a new demographic and economic ballgame) and  
they sell the small house and buy a bigger house. They keep doing this  
until they reach a comfort level, a balance between the need for  
space, the desire for good schools, etc., and financial reality.

One of the good things I expect from this real estate slowdown is  
builders will build more small homes. While the affluent who feel the  
need to impress will continue to build mansions, the eco-conscious and  
the lower economic class alike will seek smaller homes that cost less  
and operate with lower energy inputs that lower family overhead.

Current conditions are creating a growing demand. The population is  
rising. No more land is being found. Builders are leaving town. Rental  
prices will increase. Eventually, it will again be as cheap to own as  
to rent. Then the pendulum swings the other way.

Optimists say it will take a year or two. Pessimists say it could last  
for decades. Nobody, repeat, nobody knows the timing. Some make money  
acting as experts. Writers make money by writing. All of us do the  
best we can.

This is a blip on the chart. Any open look at real estate history  
reveals ever-rising prices over the long term.