Wednesday, June 01, 2005

Real Estate On Hold (Too Hot)

The real estate prices are just crazy around here. I live in one of the real estate "bubble" regions. The interest rates are very attractive, but I just can't bring myself to pay these prices right now. I actually feel safer putting my money in stocks than in real estate. I'm going to put off buying a place for now. One of the tenants from my parents place moved out, so I'm going to take over the apartment. Lucky for me, it will buy me some more time...

It feels like a real estate top. Everyone is talking about real estate, i.e. The Nightly News, CNBC, etc... They interview people, who quit their day time jobs and just flip properties. People are actually saying that "it's different this time". They give the following excuses: low interest rates, new demographics, limited land supply, etc... It's not different this time and the market will correct. Whenever you hear people say: "It's different this time", it's pretty much over.

Keep an eye on the home builders like Toll Brothers, etc... They will be the leading indicator for home prices. Remember, stocks are a discounting mechanism, they discount info 6 to 9 months into the future. When the home builders finally enter a major correction, watch out... In the mean time, it looks like there's some more upside for the home builders. They are starting to break out into new highs.

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