Having never actually worked in the real world, and always wondering "how to make money" in theory ...<p>why hasn't property prices gone back up?<p>it seems that in these days, rich people (like those with dynasty wealth) can easily buy up entire blocks ... wait until prices go back up, and rent them out in the future?<p>like in the biblical story, when Egypt had the huge food famine, the rich (Pharaoh) bought up all the poor people's land<p>except that in this case, why aren't the rich and wealthy buying it up? seems like a beautiful 'hack' in the classical sense
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 <i>significant risk</i> and requires <i>lots of manual labor</i>. (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.)<p>Risks:<p>+ Property prices fall.<p>+ 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?<p>+ Can't find a tenant, get to eat mortgage.<p>+ Renters trash house, enjoy $20,000 repair bill.<p>+ Renters stop paying rent. Enjoy eviction process.<p>+ 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.
There is no such thing as "back up." Prices go up and down. "Back up" presumes a certain price is the appropriate one, but in reality no price is more appropriate than another.
You should look at the chart:<p><a href="http://www.nytimes.com/imagepages/2006/08/26/weekinreview/27leon_graph2.html" rel="nofollow">http://www.nytimes.com/imagepages/2006/08/26/weekinreview/27...</a><p>We recently passed 150 on the way down. Still got a ways to fall.<p>When will prices go back up? 10 years? 20 years? Never? Why should they go up? I've only heard one reasonable explanation for increasing prices. Apparently certain areas, like New Jersey, are now effectively "full". Therefore people who want to live there will be spending a higher percentage of their income on housing going forward.<p>I don't know if it's true, but it sounds plausible at least.<p>EDIT: the reason for New Jersey being completely built out is NIMBY laws, not that all the land has been used.
Prices go up when babies are born, and down when homes are built.<p>Except that in many cities there is no room to build any more houses, so prices go up based on how many people want to live in a city.<p>People want to live in a city usually for economic reasons. (Close to jobs, cheap services etc).<p>So basically, unless you are buying rural property, prices will go up when people want to move to cities.<p>All that's economics - but the real world is a bit more complicated. People determine how much to pay for a house based on two things: how much the seller wants, and how much money they have.<p>Easy loans made it such that people had lots of money for houses. Sellers like to make a profit when they sell a house (it's emotional, not logical).<p>Put those together and you have a housing price boom. But it can't (couldn't) last because it doesn't match the real economics of the situation.<p>At the end of the day prices should move based on population in cities, and inflation.<p>And BTW people are already buying up city blocks in Detroit. The biggest problem there is crime though, which makes it hard to buy a house and hold it for a while.
> wait until prices go back up, and rent them out in the future<p>Or sell - rental housing is work and illiquid. After "back up", there's probably something better to own.<p>> except that in this case, why aren't the rich and wealthy buying it up?<p>What makes you so sure that they aren't? (I know folks who are.)<p>Also, some may be waiting for a better deal. For example,<p><a href="http://justoneminute.typepad.com/main/2009/03/give-investors-a-place-to-rest-their-fulcrum.html" rel="nofollow">http://justoneminute.typepad.com/main/2009/03/give-investors...</a><p>and<p><a href="http://www.marginalrevolution.com/marginalrevolution/2009/03/at-first-i-thought-these-numbers-were-a-typo.html" rel="nofollow">http://www.marginalrevolution.com/marginalrevolution/2009/03...</a>
Prices were bid up to artificially high levels by the pretend money that banks were lending. (Pretend because there was no reasonable way it could be paid back and nearly anyone could get it).<p>Prices probably won't "go back up" the way anyone hopes. The prices were fake. The crisis will end when the prices either 1) Fall to their "real" market value, or 2) The government pulls a fast one and inflates the currency until the shrinking value of the dollar meets the prices people have come to expect at that real value. (And everything on the dollar menu at McD's costs $2.50)<p>I think its fairly obvious which choice has been made by the suit-monkeys.
Hopefully never. Why should housing for humans grow more expensive? We aren't running out and materials continue to grow cheaper.<p>It seems inhumane to me to hope that one can profit off of homelessness and a reduction in the overall quality of life of your fellow citizenry.