Bank's December 20, 2005 daily update was worth
a pause for
thought. This analysis said:
prices in the UK rose for the first time in 15 months during November
with London leading the charge higher, a closely-watched survey found
today. In its monthly survey, the Royal Institution of
Chartered Surveyors said 4 % more chartered surveyors
prices than falls in November from the previous three months, against
the -8 pct balance in October. That was the first
increase since August
2004 and was better than expected.” See Jyske's reviews at www.jbpb.com
can London house prices rise? They already seem unbelievably
high. A previous message at showed
how a 1-bedroom, first-floor flat of approximately 836 sq. ft. situated
in the heart of Mayfair
all the amenities was selling for $935,000 or $1,168 a square foot!
recent article at this site outlined how in Naples, Florida a
new golf course development (Quail West) sold out to 303 people from
across the US and around the world at the tune of $306 million for
home sites in just 12 hours!
people were chosen by lottery from a pool of nearly a thousand who
had already paid a deposit in the hopes they would be chosen. In
addition to forking out between $600,000 to $1.6 million dollars
lot, they are also required to pay $175,000 to join the golf club and
$7,000 a year in homeowners’ fees.
some areas command such high prices? Will these sky
questions are worthwhile because the answers can help us understand
real estate growth, booms and busts.
examine how some areas have higher prices because of
demographic shifts. Statistics show that 53% of Americans now live
coastal counties representing 25% of the US landmass. This inequality
of distribution of Americans distorts house values. The average
value in the coastal counties is $308,845. The value elsewhere
nearly a third lower at $208,256.
article at CNN shows how some real estate markets are hotter than
others. This article says that the South and the West
of the US
remain hot real estate markets.
areas have a number of the fastest-growing states in the country
and for the 19th straight year, Nevada was the fastest growing state.
is the second fastest growing state and Idaho and Utah along with
Florida constitute the five fastest growing states followed by
Georgia, Texas, North Carolina, Delaware and Oregon.
of this growth came from migration (except in Georgia, Idaho and
do people move to these places? This move is certainly
a shift to the sun and escapes from winter. Atlanta and Portland
plenty of grey and rain. Boise has a very harsh winter.
seems to be price and cost of living. The Census suggests that homebuyers
are moving from high-priced markets to more moderately
to the CNN article, "Atlanta, Dallas, Jacksonville,
and Portland, Oregon, have been highly desirable in this regard".
Another CNN article gives more details on this downsizing.
article begins by saying, "NEW YORK(CNNMoney.com) - Many
of high-priced housing markets around the country are cashing out and
moving to more affordable areas."
in Massachusetts indicated that a quarter of those surveyed would
move if they could because of the high cost of living and housing
showed that a Hawaiian survey indicated that two out of every five
residents have considered leaving the islands because of
cost of housing.
points out that 100,000 Californians move to other states each year. Many
who cashed out appreciated homes originally moved to
Arizona, Washington, and Oregon but as prices rose in those states
are moving to the Midwest, where houses cost half that of Los Angeles.
The article says:
Long Island, the once bucolic suburb but now heavily developed
region next to New York City, about 70 percent of residents are at
least somewhat concerned that high housing costs will drive their
families from the region.
this is not a far-off issue -- 45 percent said it was at least
somewhat likely that they would move out during the next five years.
first is that younger Long Islanders aged 18 to 34 are unable to
afford decent homes.
"Many families spend more than half their income on housing," says
at the housing group.
second is that older residents who already own increasingly
valuable property find they can sell their present homes, buy in less
expensive locales, and have big nest eggs left over.
them, the numbers add up like this: A Long Island couple with
income of $100,000 wants to move to Daytona Beach. Florida as well
Georgia and the Carolinas are prime destinations for Long Islanders.
to CNN Money.com's cost of living calculator, they would need
only about $68,000 a year there to live as they're accustomed to. (Try
different scenarios with the tool calculator above.)
One reason I like investing in Ashe County are the high prices just
south in Watauga County and Blowing Rock.
selling their house and buying a new one down South would produce
a big fat dividend. The American Homebuilders Association reports
a comparable home in the Deltona-Daytona Beach area, for example,
costs about $194,000 compared with $434,000 in Long Island's Nassau County."
can see that price is factor. But why are some areas, such
Angeles and San Francisco, California, Naples, Florida, Long Island
York and London, England so expensive in the first place?
reason is international demand. All of the expensive
above have owners from all over the world. Here in Naples the
wealthiest portions of many societies from the US, England, Germany,
Belgium, Netherlands, Canada and elsewhere have a winter home in
Naples. Los Angeles and San Francisco have long had huge numbers
Asian buyers and New York is the Big Apple. Anyone who is anyone wants
to have a “pied de terre” or more there. Manhattan and
Long Island have
this appeal. The rich and famous of all the colonies want their
flat or townhouse etc.
wave of international buyers had wealth and this money attracted
other buyers who become the service industry to cater to
of these places also offer sanctuary to the poor from some other
less attractive place. Thus London has many immigrants from
economically depressed parts of the Caribbean, Asia and other former
colonies. Los Angeles is a first stopping ground for many poor Latins
moving north. New York and San Francisco have long been ports of
for "Your tired, Your poor, Your huddled masses yearning to breathe
free, The wretched refuse of your teeming shore, Send these, the
places may be more immune to real estate bubbles than others. Weather
favored towns Naples, Florida, Aspen, Colorado, Blowing
Rock, North Carolina command higher prices than normal.
centers such as London, Paris, New York, Hong Kong, Los
Angeles, San Francisco may also have this extra price appeal.
becomes more concentrated in the hands of a few (which it tends to
do) such centers will even have a higher demand. More of the
few will have large amounts they want to preserve and owning a bit
the other rich and famous is one way to do this.
suggests two (of many) ways to make money. First, find an
area with lots of international demand and despite high prices. Buy
hang on. The rule is location, location, location and a few locations
have exceptional value beyond normality. Prices can rise more
places even if they seem totally ridiculous already.
figure out where the places where those who have a normal income
and/or wealth, but live in the expensive places will go when
they sell out to the rich and famous, such as small town USA or
Ecuador. Buy ahead of the pack and wait for the middle classes huddled
masses to arrive.
I am taking
all three tactics investing in real estate in Ashe County, North
Carolina, Naples, Florida and Ecuador. Investments such
may also help you enjoy good investing!