Short vid on housing prices

[cannon_fodder]

ABC ran a short Odd tOdd video on housing prices that I found very enlightening:
http://abcnews.go.com/Video/playerIndex?id=4614590&affil=wabc

Housing prices were largely stable for 100 years and were not counted on as a source of income or investment growth.  Only toward the end of the 1990's did the trend start and really spike.  The average home price nearly doubled (85%) in those 8 years - when that kind of real estate spike happened in Japan the collapse lasted 15 years and ended at the levels the spike started from.

I guess I fell into the illusion that home prices have always kind of trickled upwards.  Which, I guess, they do... but looking at it from an "investment" standpoint and adjusting for inflation, they remain steady.

[TheArtist]

I have overheard several of my wealthy clients say that a home is NOT an investment. One was on the phone with his son, who was apparently fretting over which house he should buy. I remember the client saying, "Its a house, not an investment, its just a place to live. Pick one you like and be done with it." lol

[mrhaskellok]

Not affiliated with him, but I have heard Dave Ramsey say stuff like that before.  I guess it takes a hard gulp to grasp the fact that we can't all get rich quick in real estate one day.

One market of real estate though I do see people making money in even in markets where home prices are not climbing is when you find a dump, fix it up (do the work yourself) then sell it at fair market value.  And now many people wont qualify for a note because of credit issues so you can find more and more people willing to accept a lease to own options which often times increases the the investors net revenue.

I am not sure why this makes money except that I think a lot of new construction pricing is in the labor.  I had a plumber tell me once that he charged $2500 a bathroom in labor in new construction.