I found this pretty interesting, reminded me of the heated discussion when Lars brought up the topic around 6-9 months ago. I recall there was a camp here claiming that real estate was the best investment in the world even after prices have gone up 200% since 2001 in some areas, while others were more cautious. I never understood property, I'm not a tax, finance & credit expert. I know there are many who made a fortune in real estate, but I can't say I'm sorry I missed the train:
Check out what
www.thestreet.com writes about St. Joe's, a billion dollar NYSE listed property development company (full story
here).
Quote:
Meanwhile, prices are plummeting in the development. The real estate agent is currently listing a lot for $465,000 that his client bought for over $800,000. He said he'll be lucky to get $450,000 for it.
A look at the prices of lots for resale shows either some desperate or unrealistic sellers. For example, one lot is being offered at $1.3 million, while the one next to it (which appears slightly larger) sold for $660,000 in March -- and we know prices haven't doubled in the past three months. Next to that one, a larger lot is being offered at $1.285 million, while an adjacent and similarly sized property is listed at $595,000.
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With people borrowing money against their properties and interest rates set to rise this looks like trouble for some areas. Not only for the poor souls who will lose their homes but for all many of us doing business since people that move back to a 1BR rentals while paying off debt for the next 10 years are likely to have less money to waste on the fun things in life (like online porn).