2018 In the Books My Prediction for 2019 Follows

In Sunday’s Denver Post there was an interesting article titled: Is metro Denver’s hot streak in home prices at risk? Analysts disagree,  concerning the forecast for the Denver housing market and how those asked to opine are not in agreement; what a surprise.

While Denver continues to be placed in the same tier concerning price appreciation on a percentage basis as Seattle and San Francisco I am not sure these markets are truly comparable. Both those cities are on a coast thus you have a geography limitation (of note the most expensive cities in terms of cost of living in the United States are all along coastlines i.e. historic transportation/commerce hubs).  The reality is concerning those cities and others along coastlines is a simplistic supply and demand correlation concerning buildable land.

Yet cities such as Phoenix and Las Vegas are mentioned as a caution of past markets concerning exponential gains in values only to come crashing down. While in geographical terms Denver is more akin to those cities; again the comparison is flawed. Those cities experienced wide-spread speculation within their respective real estate markets and while similar population numbers the cities vastly greatly concerning socio-economic and business diversity demographics.

What I find interesting is Denver is rarely placed in the same category of cities in the Midwest including Minneapolis, St Louis, Kansas City and others.  These are cities which share geographic similarities, similar population numbers and other demographic traits. My gut is those cities are not as sexy concerning the attraction of readership numbers. Also never to forget our 300 days of sunshine!

So what do I see for Denver and the Metro area for 2019 (and yes I will be looking back to this blog and filling the TBD in December 2019):

Overall Slowing of Sales: My gut is we will see a continued slowdown in sales due to various factors including:

• Continued mortgage interest rate pressures i.e. inverse to housing prices
• A mild national recession
• Slowing in-migration and increasing out-migration concerning the Metro Area
• Stagnant job growth
• Potential corporate relocations to locales with more affordable housing and larger  pool of labor

Yes I am well aware of VF Corporation relocating to Denver yet I am also aware of Chipotle relocating to the West Coast (more due to CEO desires versus labor and cost of living criteria).

While I do not see the Denver metro market cratering as mentioned I envision slowing concerning sales activity, a subsequent increase in inventory and by laws of economics stagnant to downward pricing to follow.

We have witnessed this already in the upper-tier of the market i.e. $500K and above and I believe we will see this trend trickle down to all price tiers and neighborhoods. On average I would suggest the overall 2019 across-the-board statistics at the end of the year will see prices 5% below 2018 and even more in real inflation adjusted Dollars.

In specific tiers of the market I believe closed prices will come down 10% of more based on a PSF basis especially in neighborhoods which witnessed exaggerated price appreciation since The Great Recession including areas where supply may be exceeding demand.

From a back of the napkin calculations and statistics gathered from REColorado:

Neighborhood               # Sold   2018 PSF     2019 Forecast  2019 Actual

• Country Club*:      73         $535                $495   (-$40)             TBD
• Cherry Creek**:    202       $425                $395   ($-30)             TBD
• Wash Park***:       88         $609                $540   (-$69)             TBD
• Highlands****:      386       $440                $405   (-35)               TBD
• Cherry Hills*****: 87         $452                $410  (-$42)              TBD

Avg. PSF is based on Above Grade/Finished

• *Country Club: 1st Ave. to 8th Ave., Downing St. to University Blvd.
• **Cherry Creek: 1st Ave./Alameda Ave. to 6th Ave., University Blvd. to CO. Blvd.
• ***Wash Park: Louisiana Ave. to Alameda Ave., Broadway to University Blvd.
• ****Highlands: 28th Ave. to 38th Ave., Perry St. to I-25
• *****Cherry Hills: Municipal Boundaries of Cherry Hills Village

I will be re-posting this blog on December 30, 2019 with the TBD to be replaced with actual numbers for a comparison.

Thank you for your readership and support and I forward to continuing to blog into 2019 and beyond. Have a Happy, Healthy and Prosperous 2019.

 

 

 

 

Month over Month showing Weakness

Late last week I posted a screenshot of the November 2018 sales statistics for Metro Denver. While the state economists today suggested 2019 should be a positive year for Colorado’s economy concerning job and wage growth across all sectors with a mild slowing;  the housing market may be advising differently.

Let me preface we have headwinds. While Denver may trail Seattle, San Francisco and Las Vegas concerning year-over-year price appreciation in percentage terms let us face the following realities locally and regionally:

• Our housing market did not go into a free-fall unlike Las Vegas and Phoenix.
• We have been in a 5+-year expansion concerning housing prices.
• Wages are not keeping up with housing costs in Metro Denver.
• New construction did not keep up with demand over the last 5 years.
• Our economy is not Seattle and San Francisco nor is our population as noted below or geography i.e. available hinterlands versus coastal (Statistics from varied sources including Federal and Regional Census Data):

San Francisco:

• Metro Population: San Francisco–Oakland–Hayward MSA: 4,335,400
• San Jose–Sunnyvale–Santa Clara MSA: 1,837,000
• Average Income: $96,600 / $110,000

Seattle:

• Metro Population: Seattle–Tacoma–Bellevue, WA MSA: 3,867,000
• Average Income: $78,612

Denver:

• The 12-county Denver-Aurora-Boulder Combined SA: .3,150,000
• Average Income: $71,926

In general housing costs in San Francisco and Seattle are more expensive then Denver HOWEVER their average incomes are higher and by geography their ability to expand and build outward is limited.

While housing prices in metro Denver were on what seemed like an exponential trajectory I have suggested prior and statistics may be validating we peaked a few months back. While sales prices continue to climb, inventory is increasing, days on market are increasing and eventually prices may begin to adjust downward or keep with inflation and not show oversized gains.

The November 2018 #’s are interesting and showing an impressive gain on a year-to-year basis and while month-over-month does not show a trend I suggest the real estate market is looking outward and showing some hesitation similar to how the stock market projects out 6-12 months.

What will be interesting in to see what November 2019 stats show. My gut is we will see prices either static or lower. Inventory will be higher and days on market will also increase.

This is not necessarily negative, as markets should over time trend back towards normalcy. For too many years we have been in a seller market and it is time to move back to equilibrium of sorts.  In high-end neighborhoods there seems to be a glut of expensive homes waiting a buyer or rental signs as owners wait our the market conditions. While there continues to be some blockbuster sales they are more of an anomaly versus weekly updates. Two recent high profiles sales in Cherry Creek North and Belcaro were to out-of-state buyers relocating as part of VF Corp. relocation to Denver.

My concern is for our local and regional population of move up and move down buyers. At present 1^sttime homebuyers continue to be challenged in the market and even as prices may be stabilizing; interest rate increases negate the opportunity of lower pricing.

Move-up buyers are being challenged in finding suitable inventory. This is worrisome as families outgrow their first home or desire more space find inventory challenged in central Denver and will migrate to the suburbs/exurbs or worse leave the state. Move-down buyers those who may be downsizing can take advantage of the sellers market HOWEVER again their inventory for replacement is challenged and thus may consider regional relocation or out of state.

As a 20+year broker in Denver as mentioned prior I have been through these cycles including:

• 1987-89: Downturn
• 1991-1995: Upswing
• 1996-2001: Pricing matching inflation
• 2002-2006: Irrational Exuberance
• 2007-2012: Downturn, depths of Great Recession and Foreclosure Crisis
• 2013-Present: Upswing potential leveling off

While I am not predicting a severe downtown I would not be surprised to see a 5%-10% correct concerning housing prices over the next year across Metro Denver. I believe there are segments i.e. the luxury housing niche i.e. $750K and above that will see more severe adjustments.

Let’s just use this blog posting as an opportunity to revisit in one year.

Is the slowdown in the housing market predicting an overall downturn for the economy?

In general we believe the stock market looks outward in the 6-12 month range concerning the economy and has priced in that forecast; however what about housing?

Granted housing is far from liquid. It is also in some respects a regional commodity based in supply and demand concerning micro and macro inputs. Like stocks housing and specifically mortgages are definitely impacted by interest rates presented in the equities market, which in turn impact mortgages, and credit card rates.

The news from the housing front seems to have gone from a seasonal pattern to one showing a trend. Some recent headlines from the housing front:

Pending home sales tumble to 4-year low in latest sign the housing-market correction has arrived

GOLDMAN: 3 reasons why the US housing market is slowing down

House price growth slows to nearly two-year low as Case-Shiller makes the slowdown official

Peers have suggested part of the issue is interest rates year over year are up one full percentage point. Coupled with somewhat inflated housing process nationally the 1% increase does in-fact impact affordability especially at the first-time home ownership market, which has been literally priced out of the market since the end of The Great Recession.

The paradox is the equities market continues to be at elevated levels leading to the overall “wealth effect”. Also the economy has the lowest unemployment rate that goes back multiple generations. Thus based on the above positive statistics the housing market should continue to be on an upward trajectory yet its not.

I went back a to the early 2000’s to see how the housing market reacted before The Great Recession reviewing notes from the Federal Reserve; some take-aways include:

• U.S. house prices began to rise more rapidly in the late 1990s.
• Prices grew at a 7 to 8 percent annual rate in 1998 and 1999
• In the 9 to 11 percent range from 2000 to 2003
• In 2004 and 2005, when the annual rate of house price appreciation was between 15 and 17 percent

Thus prior to The Great Recession there was a massive run up in housing values around the country. Part of the run-up was due to Adjustable Rate Mortgages i.e. ARM’s, which provided lower interest rates and thus lower PITI. Also there was rampant speculation in markets including Phoenix, Las Vegas and others where underlying economic statistics i.e. in-migration, average incomes and others were not in tandem with the rise in the underlying housing market. Thus a bubble formed and subsequently burst.

Personally I remember having a client purchasing a home with a 125 Loan to Value Mortgage meaning their loan was literally 25% higher than the underlying value of the home. Their i.e. buyers rationale as well as that of the lending institution was real estate values can only keep going up.

Are we witnessing a similar pattern in housing as seen in the early to mid 2000’s? The answer is yes and no. We have witnessed a serious run-up in values however the baseline from The Great Recession was historically low. Also we are not witnessing the frenzied pent-up demand for housing with buyers lining up for first opportunity to purchase spec. homes. Also lending requirements have become more stringent however I am seeing a return of no-document loans, low down payments i.e. 3% and other loan products that may be challenging in a downward cycle.

Is the housing market due for a bust? I do not believe so as we are not necessarily in a bubble. However are lower prices on the horizon? I believe so. Locally in Denver we have seen the revision in values from the luxury market all the way to the first-time ownership segment.

On the high-end a house in the Denver Country Club came on the market one year ago at $2.3M and sold within the last month for $1.7M. On the lower-end units in Monaco Place, a large condo complex at Hampden Monaco has 2BD units trading between $210-215 in the spring of 2018, more recently similar units are selling below $200 and some in the $180-$190 range.

My sage advice coupled with a historic perspective is as follows:

If purchasing for the longer-term i.e. more than 3-5 years should be OK. There may be continued softening in the market however interest rates are still below 5%, coupled with potential tax advantages ownership may be a positive.

If looking to fix and flip or rental may need to be a little more cautious. Unless the residence is quite underpriced to the overall market and/or there is upside due to renovation and/or location, again would proceed with caution.

If looking to buy and sell within the next 1-3 years I would probably suggest holding off. Between a softening of prices, rising interest rates coupled with costs associated with selling i.e. commissions, Title Insurance and so forth gain if any may be minimal.

If a seller, may be consider selling now as historically when the market softens we may witness increased inventory, which in turn will depress prices. At present inventory is still challenged and thus may be propping up short-term pricing.

Overall am I concerned? Not at all. Like all markets there are corrections. We have been in a seller’s market since The Great Recession and the markets are now moving more towards equilibrium, which is actually a positive for sellers and buyers. In general until this last generation housing was viewed as a solid investment to match or exceed inflation. It was not until the generation of easy access to money that housing becomes a commodity and home equity loans also known, as HELOC’s became the ATM of choice.

As we may remember the housing market started to show concern many months before The Great Recession hit full-force. While the underlying economy seems to be humming along are we on the later-side of the bell curve concerning economic activity? While we can collectively discuss stimulus, tax-cuts and so forth for every action there is a reaction. My gut and I hope I am wrong we have traded short-term growth versus longer-term health as I do not believe business cycles have not in fact ended.

The millenials may have the right idea concerning holding off purchasing homes. This generation witnessed the carnage between 2008 and 2012 and is proceeding with caution; maybe a good lesson for all of us.

 

 

 

 

 

Just Returned from Madrid, a Tale of Two Housing Markets

Spain was not immune to the worldwide Great Recession. Similar to the United States Spain’s real estate was also affected with banks lending sans oversight and subsequent defaults. When I was in Barcelona two years ago there were signs of a real estate market in recovery coupled with in-migration of younger entrepreneurs attracted to the city with its affordable housing and commercial space.

Visiting Madrid this past weekend I was impressed with the vibrancy of the housing market. Of note Madrid is enjoying its most robust year of home construction since 2008 with an average of 2,151 new residential licenses awarded per month in the first 7 months of the year. City-centric real estate seems to have strong demand from flats to even garage parking where a space cost can rival the cost of condos in the suburbs of Denver. Even in the northern Madrid suburbs development continues with demand fueled by affordability when compared to the center of the city.

Yet just beyond the major cities the carnage resulting from The Great Recession is still visible. According to a local broker and statistician the real estate sector’s recovery in Spain is developing at two clearly different speeds. While one part of the country is consolidating the recovery of the sector and even expanding, another part of the country is stagnating and is showing few signs of returning to pre-crisis levels in the medium- and long-term.

The major cities and tourism centric areas are booming fuelled by interest rates that are still near historic lows, an economic recovery, demand from other European residents and a banking system that has been stabilized. Like in the United States private equity firms including Blackstone Group LP ($25B Euros invested in Spain) is purchasing once-toxic assets and similar to their MO in the United States is converting properties into rentals as home ownership has yet to rebound in Spain which once had a quite high rate of home-ownership.

Yet beyond the city centers and tourism hot spots the market is struggling. Travel to the outskirts of smaller villages and ghost towns still litter the landscape – once ambitious developments, often started on agricultural land that was converted into building lots just before the Great Recession started.

An example and known by some urban planners like myself is the unfinished Bioclimatic designed development known as City La Encina. Situated on the edge of the village of Bernuy de Porreros, about 6 miles from Segovia, it promised to be Spain’s first environmentally-friendly town, providing solar energy and recycled water for 267 homes, two-, three-, and four-bedroom chalets and apartments. At present only about a dozen of the homes are occupied.

Related and what statisticans like myself look at is the mortgage market as an excellent indicator of the status of the overall real estate market. The volume of residential mortgages sold in Spain peaked in late 2005 before hitting a low in 2013. In the 5 years since the bottom the mortgage market has gradually recovered with 28,755 sold in August 2018, a 7% annual increase. The recovery of Spain’s real-estate is truly uneven and reinforces the oldest axiom of real estate it’s about Location, Location, Location.

 

 

 

Even Entertainers Can Lose Money in Real Estate

In the upper-echelons of real-estate we brokers may mention a property’s provenance. Such properties may secure an inflated value due to past or present ownership. The Bob Hope Residence in Palm Springs had his ownership as provenance and being designed by John Lautner an addition premium due to the design and demand for Lautner designed residences with one of his most famous being The Chemosphere and used in multiple moves including Charlie’s Angels and Body Double.

Thus it was a surprise when bold-faced names Keith Richards and his wife Patti Hansen took a loss on their well-pedigreed co-op at One Fifth Avenue in New York City’s Greenwich Village.

First the building; in addition to the address having tone in a city where such matters it is truly a beautiful and striking pre-WWII building. Located on the southern end of 5th Avenue and adjacent to Washington Square Park, One Fifth Avenue is a building that is always in demand and desirable.

The apartment, a duplex i.e. 2-floors features a large open dining/entertainment space, a leather and bronze open staircase and three private terraces — including two that overlook Fifth Avenue and Washington Square Park. The unit was purchased in 2014 for $10.5M and listed at $12.32M. The apartment recently sold for $9M; a substantial discount from the asking and a $1.5M loss from the purchase price 4 years earlier.

Concerning the provenance; not only owned by Keith Richards, a previous owner was art curator/collector Sam Wagstaff, photographer Robert Mapplethorpe’s former lover. Thus while one can place a value on location, ownership, provenance, history and so forth the reality is the market will provide true guidance.

I hope Keith Richards did not say at the closing “I can’t get no satisfaction“.

Zestimate In the Pipeline for Office and other Commercial Space

Zillow has been quite successful with their Zestimate algorithm concerning residential values.  Experienced brokers like myself have been doing this for years i.e. a Comparative Market Analysis (CMA) and Broker Price Opinions (BPO) however leave it to technology to update a practice around since real estate first transacted.

Thus it was only a matter of time before we would see similar algorithms designed for commercial spaces including office, retail, industrial and so forth. Commercial is much more complex; unlike residential there are other factors including free-rent, credits for build-out and so forth, however in theory such a system could be viable.

Office provider Knotel and leasing data specialist CompStak are collaborating to create an Automated Valuation Model for commercial real estate. Such a model according to the two firms would be a rough equivalent of Zillow’s Zestimate.

Unlike residential real estate; as commercial is usually investment oriented the model would be able to estimate the net operating income of a commercial property, especially office space, and thus come up with a valuation.

The company spearheading the development of the algorithm is Knotel (as mentioned above) a company which is considered a strong WeWork competitor. In addition to their partnership with CompStak, Knotel recently purchased 42Floors, a commercial real estate search engine and one assumes a collaboration to create their Automated Valuation Model.

CompStak recently rolled out its CompStak Analytics platform, which the company says comprises millions of lease comparable covering more than 10B SF of commercial real estate. Among other things, CompStak says its new platform allows subscribers to:

• Compare the effective rent performance of a portfolio of properties against those of competitors in real time.
• Identify investment opportunities by spotting properties that are performing above or below their peers.
• Track starting rents for tenants in different industries across submarkets.

As a broker who works in both the residential and commercial markets I am intrigued and will be sure to include their proprietary information in my quiver of information sources as an adjunct to personal qualitative and empirical research; an algorithm may be able to assess, analyze and forecast but human intuition and experience is still quite valuable.

 

Zillow Enters the Buyer and Seller Market in Denver with Cash Offers

While some claim Zillow is a disruptor on the real estate scene with their Zestimate (of note I composed a blog about this: The Internet Says My House is Worth) now the firm is launching Zillow Offers where Zillow will begin buying and selling homes with their own money.

While I personally tried the option with a few addresses and told the system does not yet participate with those addresses, the following is how the system is supposed to work:

A prospective seller would enter their address onto the Zillow website;  Zillow comes back with an initial offer approximating the home’s worth (similar to how one can obtain a Zestimate as present). If the seller likes the valuation, the company sends an estimator out to the home to calculate a more precise value and make a formal offer.

The seller can pick a closing date between two weeks and 90 days out. Zillow said its research has found that timing the sale of a home with the purchase of a new one is a top concern for sellers, and said the program will let sellers avoid “the extra work and time associated with a traditional sale.”

After buying a home, Zillow will list it for sale. Of note Zillow hired Denver’s Atlas Real Estate Group to provide agents that will represent the company in its purchases and sales.

As an experienced real estate broker while I am intrigued by the spin placed on the concept by some very astute public relations and marketing employees (and of note I am an alum of Edelman Worldwide), guess what the concept is far from innovative or disruptive.

• If you have ever received a mailer advising you can sell your home for cash, no inspections, as-is and so forth, not too dissimilar.
• Nationally a franchise titled “We Buy Ugly Houses” has been in the market niche for years.
• Fix and flippers, investors and so forth have been doing this type of prospecting since real estate became a tangible investment and money-making opportunity.

Granted Zillow may make the process easier i.e. input and address and receive an approximate value and if interested an estimator will come out and review, confirm and so forth. I would assume the estimator will like most real estate brokers review comps, look at the condition of the home and so forth to ascertain a valuation.

Yet my concern for prospective sellers; are they taking less capital in return for convenience? True one does not have to list, stage, have showings and so forth. However as brokers we do this for our sellers and our fiduciary duty is to our client to achieve the highest and best offer(s) for their home.

If a seller advises they are in dire straights, desires a delayed closing, wishes to cash out and so forth as licensed real estate brokers we usually have options for our clients to make their sales transaction as seamless and profitable as possible. The reality is Zillow Offer participants are NOT offering their home to the overall market and thus may not realize the true market demand and value and thus accept less than the house is worth on the open market.

There are circumstances when Zillow Offers and similar opportunities makes sense including but but not limited to estate sales, sellers who may be in financial distress, those needing to move or relocate quickly and so forth. However again most licensed real estate brokers will meet with their clients, ascertain their motivations and formulate options and opportunities to secure the highest and best payout.

Granted by selling via Zillow Offers or similar outfits there is no commission. Yet again is the seller getting the highest and best for their transaction (and of note, commissions paid go against one’s basis in the property and thus a tax advantage).

I do believe Zillow Offers is correct on timing and markets i.e. mid-size. With Denver moving towards more equilibrium between a sellers market and a buyers markets and eventually may move into a Buyer’s market Zillow Offers may offer the correct alternative for those wishing to sell quickly, avoid a commission and desiring flexibility concerning closing dates. Yet for every convenience and potential savings i.e. commissions and time is the seller being short-sighted concerning values and potential capital gains?

 

 

 

 

 

Taking a Loss on Real Estate it Happens

With the run-up in real estate prices in Metro Denver since The Great Recession we are finally witnessing the cooling of the market memorialized in the New York Times a few weeks ago in an article titled: Housing Market Slows, as Rising Prices outpace Wages.

While those sellers who have owned their residences for over 3 years are probably fine with selling and gaining  a small profit; over the past few months I have written about a few residential sales which has actually taken a loss via actual recorded sales price and additional losses when factoring in commission and of course inflation which seems to rarely be factored into the transaction.

In the present environment of housing prices adjusting downward, interest rates continuing to increase and signs of instability in the equities markets those taking losses on their residences may become more commonplace depending when they purchased and how motivated they are to sell.

Of note in general a loss on the sale of a home is NOT deductible on one’s income tax. In general a loss concerning real estate is only deductible when the property has been used for business or investment purposes. One tip if a loss may be forthcoming consider turning the residence into a rental and then sell; the property is now considered related to investment. Of course one would need to consult with their professional tax advisor or financial planner to ascertain the legality and proper filing but this is an option.

I predict we will start seeing some losses on homes in the Denver Metro area that had been purchased within the last 12-36 months when the market seems unstoppable concerning price appreciation coupled with historically low interest rates. While it may seem counterintuitive when the employment market is at its zenith that housing should be lagging yet that is generally how the market behaves. This is partially due to interest rate impacts, inflation eroding the value of money and other factors. This is not a new phenomenon; happens with every business cycle. This is why longer-term holds on housing usually generates a hedge against inflation but the key is long-term i.e. 7,10, 20 years out. A few examples if I may including my personal residence.

Two years ago (April 2016) I sold my personal residence for $535,000. The net after commission and closing costs was $520,000 (and no I did not pay myself a commission).

I purchased the house in October 1989 for $140,000 or $266,692 in inflation dollars. Thus my actual net gain was $253,308….no I am not complaining. On a monthly basis I made about $800 +/- and when factoring in taxes, maintenance, upkeep…..lets just say I had a house over my head.

Now when I bought the house in 1989 the Denver housing market was in a deep regional recession two years post Wall Street Crash of 1987. The seller of the house actually bought the residence in 1984 for $200,000 from the developer, another high-point of real estate in Denver that decade, here are the inflation adjusted #’s:

• 1984: $200,000 (or $238,566 in 1989 Dollars)
• 1989: $140,000

Thus not including commissions in real dollars the seller not only took a $60,000 loss from his purchase to the sale in 5 years, when factoring in inflation i.e. $38,566 and commission (6% at $140,000 = $8,400) the seller lost $45,000+ or almost a quarter of the value of his home in that 5 year period and the loss was not deductible.

As mentioned I sold the house in April 2016 for $535,000.

The buyers actually resold the house in June 2017 for $560,000 due to a relocation thus even after commissions and closing costs they did OK. From what I understand the new owners plan to reside long-term and thus are somewhat insulated from the pending adjustments in housing prices I believe will be headwinds in the near future.

Denver is not unique in this situation. In New York where I also hold a license there was a major loss on a truly trophy condominium apartment as follows:

The single biggest sale last month (September 2018), at $42 million, was a penthouse covering the entire 77th floor of One57, the vitreous skyscraper in the heart of Manhattan’s Billionaires’ Row, at 157 West 57th Street. Monthly carrying charges are $15,214. The unnamed European seller took a loss, however, having paid nearly $47.8 million for the unit in May 2015. The 6,240-square-foot apartment has four bedrooms and five and a half baths, not to mention breathtaking views.

While a $6M loss is painful when you consider the apartments were delivered with interiors unfinished, at that price-point you bring in your own designers and architects which can easily add $500,000 to $1M+ in finishes AND the monthly carrying charges i.e. HOA fees ranging increasing from $12,500/month to $15,214 at the time of sale that is over $150,000 annually just in common charges or another $500,000 paid during ownership. Thus all losses are relative; as we say on Wall Street you will never sell at the high and buy on the bottom.

A house is a home and should not necessarily be considered an investment or a hedge against inflation, it is shelter first and foremost.