Ask HN: when will property prices go back up?

Re:Ask HN: when will property prices go back up? by patio11 on Monday March 23, 2009 @02:21AM (#528148)

You don't need "dynasty wealth" to manage property. It is one of the most common small businesses in the United States. (Fairly low capital requirements by the standards of physically-extant businesses, low expertise requirements, well within the capability of many middle class families.) It also has significant risk and requires lots of manual labor. (That is why I don't do it. You can outsource the manual labor but that ends up outsourcing the positive part of the cash flow, too.)

Risks:

+ Property prices fall.

+ Competitive options for housing in vicinity of your property decline in price, causing rent you can charge to fall. For example: if you can buy a modest house in Detroit for $10,000 why would any worthwhile prospective renter pay you the $500 a month you need to cover the mortgage and maintenance on the modest home you bought back when Detroit had viable industries in it?

+ Can't find a tenant, get to eat mortgage.

+ Renters trash house, enjoy $20,000 repair bill.

+ Renters stop paying rent. Enjoy eviction process.

+ Your local government decides evil landlords are exploiting poor people to make money, institutes rent control. Enjoy low rents, impossibility to unload property on another sucker, etc.

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Re:Ask HN: when will property prices go back up? by RyanGWU82 on Monday March 23, 2009 @02:32AM (#528164)

Exactly, and at the moment, people are incredibly risk-averse. Everyone's worried about losing their jobs; consumer confidence is low; etc.

Demand will rise again once the general mood changes and people are willing to take on a bit more risk. Renters will be more likely to buy homes when they feel their jobs are safer. And landlords will buy more rental properties when they feel more confident about the risks patio11 outlined above.

[ Parent | on HN ]