Is the cat out of the bag?

I hope so too....

Harry, something doesn't work with your equation. I bought my first house for $30K, and sold it 13 years later for $96K. I bought my second house in 1995 for $135K, it sold 8 years later for $340K. I bought my current home for $165K, and after 6 years its market value is about $190K. I didn't buy any of these as an investment. They were all homes for my family, but job situations forced me to move each time. And our situation improved with each move. Taxes don't come near to the equity we got out of these homes.

As long as people are having babies, and the population continues to grow, real estate prices will rise, long term. It may take 10 years, but the price will go up. When I bought my current house raw land in this area was selling for 1500 per acre. Now it is 7000-10,000 per acre (if you can find it) and building lots are 30 to 70K. If I'd have bought 100 acres 6 year ago for 150K, I'd be sitting on nearly a million today.

I know that this is a local issue. Anyone else from northern PA can support my prices.

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The government can't give to anybody anything that the government does not first take from somebody else.
--Dr. Adrian Rogers

I respectfully disagree with your contention that the value of land is the money that can be made from it.

The true value of land is that there is no more being made. It is in limited supply, and the demand from an ever expanding polulation will keep the prices going up. When you own the last building lot in the county, and somebody wants to put a house there, they will pay through the nose. That is no longer a $1,000 piece of raw land, it has become a $100,000 buildable lot. (Yes, I'm in sales. Sorry, it's just the way my mind works.)

All those people evicted by the banks, where are they now? Wherever it is, once the economy settles (even if it takes 10 years) they will eventually be employed again, and looking for a home to buy. Then look out!

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The government can't give to anybody anything that the government does not first take from somebody else.
--Dr. Adrian Rogers

The money that could be made on it would only apply to farm land or commercial property. The money you can make in an area will become more of a factor as salaries decrease and retirement money disappears.

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"Education is the ability to listen to almost anything without losing your temper or your self confidence"
Robert Frost

.............Then , your property taxes should be decreasing , right along with the fair market value ! , fordy

The assessment on my home dropped by only $500. WILL my property taxes decrease??????????

Maybe. Possible. It could happen. but I will not hold my breath!!!!!!!

Whatver. The city needs money to maintain the streets and the fire department and such. And, we bought this house expecting to make the payments and be taxed!

I don't know how it works in Pa., but here in Michigan you are limited as to how often and how many "splits" you can do on a piece of land. I believe it is one split every 10 years. So if you had 100 acres, in 10 years you could have two 50 acre parcels. In another 10 years you could split them again and have four 25 acre parcels. In another 10 years you would have eight 13 acre parcels, ect. Keep in mind that with each split, each parcel gets its own tax number. Since the tax on a 50 acre piece is nearly the same as a 100 acre piece the taxes will eat you up, plus the cost of surveys and such.

You could become a developer and make small tracts, but corporate taxes are also high and you would have to pay the property taxes on each parcel until it sold. Then you also have to put in roads (not simple driveways) along with sewers and utilities and water. You would have to have the means to hire heavy equipment to contour the land to make sure no one would end up with a flooded lot. The list goes on.

"Harry, something doesn't work with your equation. I bought my first house for $30K, and sold it 13 years later for $96K. I bought my second house in 1995 for $135K, it sold 8 years later for $340K. I bought my current home for $165K, and after 6 years its market value is about $190K. I didn't buy any of these as an investment. They were all homes for my family, but job situations forced me to move each time. And our situation improved with each move. Taxes don't come near to the equity we got out of these homes."

Homeharvest, part of what "doesn't work" is that there has been a speculative bubble in real estate. That worked for years to allow people who sold to take a profit. I experienced similar "gains," and I don't dispute your experience.

Some of those gains are from choosing the right properties, some from inflation, and some from improvements. As you state, a lot of this is related to the local situation. We've heard of homes in Detroit that can't be sold for a dollar. The potential for those places being a good investment is so bad that people are staying away in droves.

I look at our house we sold in south Florida. On the surface, we took a profit that was 1.5 times the purchase price. Just deducting taxes, that "profit" drops to 1.25. Add in the new roof, the screened patio, the new heat pump, the landscaping, the ongoing pool repairs and costs, and the "profit" falls even further. Add in the insurance costs, and it drops yet further. Then, factor in inflation, and all of a sudden that rosy figure drops down to a modest gain. I haven't even mentioned one of the biggies - when you pay a mortgage, the interest you pay doesn't reduce the principal, so there are thousands of dollars that have gone out of your wallet that are never factored into those cheerful closing documents.

We sold at the tale end of the craze. The house now is valued, once inflation is figured in, at about what we paid for it. Had we not sold, we would still have a mortgage, still be paying interest on the balance, still be paying high taxes, and still be paying high insurance costs.

I can be guilty of using shorthand when I write posts. I used taxes as an example of why the investment potential isn't always what it seems. Every investment has risks, and most have to factor in inflation, which is largely beyond the investor's control.

I stand by my earlier post and caution that real estate can be a risky investment, now more than in the past twenty years. One train I see coming down the tracks is the possibility of huge increases in property taxes. A government can't cut income tax and increase services and bail out banks without finding some other source of real money. It has a choice between hyperinflation and socail disaster, or attempting to shift the burden. Property owners are an obvious piggy bank to raid.

Remember how income tax was introduced. At first it was only levied on the very wealthy. As time went on, more and more people got taxed, and at increasing rates. Be watchful for a NATIONAL small property tax, to only be levied on the wealthiest.

It usually doesn't matter what you tell your kids - they don't listen.

But since I like to annoy them, I tell them to avoid too much house.

I believe since the 1950's, square footage has more than doubled while occupants have been cut in half or less. In other words, over 4 times the space we once needed. A family of four doesn't need 4000 square feet! Heck, when I grew up, there was a bedroom for 3 boys, and a bedroom for 3 girls. I didn't know how deprived I was.

If I had to do it all over again, I'd do everything in cash. Buy the land. Maybe put in a shop with plumbing to live in. Then a small house - very energy efficient, designed for additions, if needed. Or just buy a small, efficient house in town and maximize production from every square inch of dirt.

Most kids only see what the neighbors have, or what they see on TV, and assume that's necessary. One show I hate is Extreme Home Makeover, where people in need are built near-mansions, and they are shown crying in joy. The message is that true happiness comes from a large fancy house. Then we wonder why people can't make payments, or why there's an energy problem.

Yeah, then those people getting those fancy houses end up losing them many times....there was one not so long ago, the homeowners took out beaucoup HELOC's, and then their business went belly up. I do believe they lost the house, of course.

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Do not meddle in the affairs of dragons...for you are crunchy and good with ketchup!

We're military, so move a lot, and first house we bought and sold (in 2000 after 4 years) we had to bring money to the table both buying AND selling (and same for a house we owned for only one year to help his parents move). I still can't understand whether we made or lost money on the one year deal- think the IRS said no re sched 1040E- and for the house where we lived for 4 years, I figured I paid fairly high rent (have to include interest, improvements and maintenance not paid for by a rentor, and the money we lost selling) but not too unreasonable for having 6 acres the house DH was happy with and no restrictions on what I did to the place. (I suspect landlords would fear piles of manure and compost and huge quantities of livestock.)

This prepared me for the house we live now so no one was going to convince me to spend the max mortgage we could get on a house (besides, I'd've had to work until I was 60 to pay the mortgage and there are few such expensive places with lots of land). I also could see (2006) we were near the top of a housing bubble and fully expected the house I bought would lose 25% of its value in a year or two. I expect I am right- won't know unless I am able to sell it if we ever try to. As DH and I decided the true cost is just our mortgage etc = our rent if we never move... The likely loss if we sell may convince us that we never WANT to move again! Or if we really need/want to move we'll have to downsize our next home to what we can afford after our losses here.

Anyway we've never seen real estate as an investment- only a way to own more land than is usually available on the rental market and to 'homestead' without terrifying the landlord. And we've had to be able to get a house that we might lose EVERYTHING on- if we move from here and no one will buy it for 75% we may have to try 50% if we would like to quit paying the mortgage for a price less than the total payoff.