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Originally Posted by clouwho
We moved into the Village of Largo two years ago. The homes in our area were built snd sold during the boom of 2005-2006. When you factor in the $20-30k in upgrades most of my neighbors put into their homes for birdcages, crown molding, plantation shutters, upgraded finishes, landscaping, etc…they JUST broke even on their investment when we purchased our home in 2020.
It took 14 years for the market to recover from the bubble they bought in!
The bubble we are in now puts the bubble of that era to shame.
The good news is that in this chapter of life the “investment” factor for buying our homes isn’t such a big deal if we have other retirement assets. But if your home is a substantial part of your net worth and you may need that equity for nursing home care or such in the future, buying in this bubble could be a costly long term mistake.
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clouwho,
I think your last paragraph, beginning with, “The good news is,” makes an excellent, common sense point.
There is a sense of urgency created by today’s real estate market that makes the market during the early part of this century look tame by comparison. This market has a far more emotional component than that one. I think this market is weirdly a big side effect of the pandemic. We have had too much time on our hands and with that has come the urge to “do something” — and for many that has meant making a move.
You are right about “this chapter of life” where some can afford to buy whatever they want — even though they might feel like the prices are ridiculous — while others should be more circumspect.
I think we are nearing the time where the quasi-flippers might need to tread more carefully. I also think that anyone who is close to being ready to move “back home” — especially if they have a house there, too — might want to think about gettin’ while the gettin’ is good. (They can always come back and rent if they want to.)
Although. . .profit on a home that is not the primary residence invokes capital gain. This is a reason why anyone who owns two houses should be on top of saving every record of any improvements on the secondary residence to close the gap between purchase price and selling price — but people who own more than one house probably already know that.
I don’t feel like we are going to see a drastic drop like the last bubble. But this market is going to have to take a breath eventually, for a variety of reasons.
But my guess is as good as anyone else’s — meaning — only time will tell — said Boomer, stating the obvious.
Boomer