| CA Real Estate (#2)
Posted: 9/6/2009 11:52:28 AM | [the other thread is locked for what appears political debate]... I'm innocent this time I tell you...innocent. :-p
So where are we at now? With interest, I followed the other thread and the different takes on the market situation and side topics on our economy and how this effects the California real estate market. One question remains: Do you think that Arnold is capable of saying Cali-forn-ia fast three times? Okay that is not the question. *wink*
In the San Diego area -- home prices are up currently (some demographical areas and up by less than 1% with rises from 7k - as much as 30k, yet still allowing home owners to remain upside down in their investements). We see California as a forerunner in many ways in econmic and political matters, but do you think:
1. This is the beginning of a 'recovery' period?
2. and will this upturn in RE prices last?
Thanks all and remember left or right...we all are in the same sinking ship (so to speak...[and where is Gilligan?]). :-p | |
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| CA Real Estate (#2)
Posted: 9/6/2009 12:44:04 PM |
1. This is the beginning of a 'recovery' period?
According to other market indicators (unemployment & debt to income ratio come to mind...), no.
2. and will this upturn in RE prices last?
No. It's typical for the value of anything to go up and down, even if it's on an overall upward or downward trend. EG: when strong stocks are trending upward, they'll still dip from time to time. We call this “profit taking”. RE will still be trending downward.
Some people have been sitting on good jobs & cash reserves for quite some time, and waiting for mortgage payments to drop below x% of what that rental would net per year. I believe some of the plateauing we see are driven by such purchases (it's only been recently that mortgage payments for a property have dropped sufficiently below what it can be rented for). Some longer term buyers are recognizing this as well (that they can “buy” for less than they can rent) and aren't worried about a house loosing value in the short term.
Until the economy starts “healing” the general trend is going to remain down. | |
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| CA Real Estate (#2)
Posted: 9/6/2009 8:00:59 PM | | not only is it not the beginning of the recovery, housing prices are only taking a breather on their way lower. | |
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| CA Real Estate (#2)
Posted: 9/7/2009 2:21:52 PM | | I agree with you on that jbogie. Housing prices are dropping so low that I wouldn't be surprised to find housing at 30,000, already in Modesto you can find nice 3bd 2ba for 50,000. Incredible | |
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| CA Real Estate (#2)
Posted: 9/7/2009 2:37:26 PM | Real Estate is near and dear to my heart. Sari, you keep kickin' this horse don't you?
1) Real estate is on the rebound, you can bet on that.
2) The best thing about the temporary slump is that it got rid of the unprofessional realtors.
3) People want to live in California, it's the "sun tax" remember? You want a cheap home, move to Texas (or Modesto..:). Buggy and muggy. | |
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| CA Real Estate (#2)
Posted: 9/7/2009 3:52:33 PM | To pay for old and new nanny state programs, the U.S. Government is creating money as fast as it can feed the paper into the printing presses. Then, it is turning around and buying it's own T Bills. Therefore, nasty inflation is coming in a year or two. The Fed knows that America is effectively bankrupt at this point in time, and needs to cause inflation in order to try to repay America's lienholder, China, with inflated dollars which carry a deflated value. Watch interest rates climb. China is planning to move away from the dollar to a large degree, and establish a hybrid world benchmark currency. Then America will have trouble selling its fake money to service it's old debts and fund more vote-buying nanny programs, and Peter will no longer be able to pay Paul.
Bush II spent money like a drunker sailor for 8 years, and Obama is making him look like a tightwad. Now BHO wants to run up the already gargantuan deficit with socialized medicine that the country cannot afford. He claims that there will be savings efficiencies brought to the system by the government's participation, despite the government's horrible track record (they have already ruined Medicare, Amtrak, the post office, Social Security, Department of Energy boondoogle, etc., now they have nationalized banks and car makers to begin destroying.)
BHO and his congress and his media are soft-pedaling the cost-raising Cap-and-Trade fiasco-in-waiting until the socialized medicine mess is legislated into law. All of this means that chronic unemployment--brought about by the chronic sluggish economic growth--will dampen the demand for real estate.
Even if houses eventually go up in value due to monetary inflation alone, the lack of interest rate stability and ongoing stagnant job growth points to prices continuing to settle. They will reach their traditional historic benchmark of housing costing 2 to 3 times annual local salaries, if the current environment features interest rate stability and job formation.
Throw in the demographic, economic, and geo-political factors of:
1] The elderly who are depending too much on Social Security and other fixed income sources to meet their monthly obligations, cannot withstand the inflation that is coming.
2] Their adult children baby boomers are entering their own retirement years after suffering huge losses to their home equity and their 401k retirement funds.
3] Commercial real estate is going to get hurt next. Prices are off 45% in some parts of the country and even NYC is starting to freefall, too.
4] There is an Israel-Iran conflagation coming within a year that will spook the oil markets into huge price increases that will further injure economic recovery.
Anybody wanna buy a house? | |
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| CA Real Estate (#2)
Posted: 9/7/2009 4:13:51 PM | Dude I find much to recommend your take on the world it's ownself. Had BO surrounded himself with mainstream establishment Dems, with a sprinkling of R's, I would have imagined the wisdom of money and crowds were negotiating the best possible crash landing given $70+ trillion in unfunded liabilities with boomers having saved little and lost that in RE, 401K's and sick pension funds.
But now I think it's a government without a clue. I've always had an interest in Argentina in recent history as a model of a world class economy that lost it's way. There is a very real possibility we will suffer the same fate as Argentina & Great Britain, once proud societies now sick and lost and willing to trade freedom for free false teeth.
Nutty old baby boomers whining about free health care when in fact they will be the primary losers as health services are provided to the young and potentially productive while these old lefty boomers will be given the magic cure-all bullet, Oregon style.
I'm grown up enough to take bad news and be a part of a solution but these old lefties priapic response to BO, and this cast of tax cheating, corrupt czars freaks me out. | |
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| CA Real Estate (#2)
Posted: 9/7/2009 6:45:04 PM | I believe there's still going to be more of a decline for the next couple of years.
California sales and refis were pre-dominantly done with Pay-option-arms in California, starting in 2006. 2009 is the first year they're adjusting. That's what's happening now. Since it takes a while for the foreclosures to make it through the legal system and become REOs, we haven't even seen the beginning of the fallout from those foreclosures.
Also, the first wave of foreclosures were sub-prime borrowers with 100% financing etc. The foreclosures that are coming now are A and prime borrowers and houses in the mid price ranges.
The banks are still holding so much shadow inventory that's not on the market and they're bursting out of the seams. Together with the new wave of foreclosures it'll just hit the market again.
The buyers that are buying now are people that have held off for the past couple of years and that are now coming out of the woodworks by false cries of 'buy now or miss out on bargains' by the real estate agents. Basically, those recent sales are fed by a feeding frenzy, which is going to slow down again.
Jmho | |
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| CA Real Estate (#2)
Posted: 9/9/2009 8:28:55 AM | Here just to make you all feel really bad, the 2nd and 3rd wave of the real estate crash is not here yet.
http://www.youtube.com/watch?v=KhEsqLcWHyA | |
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| CA Real Estate (#2)
Posted: 9/13/2009 12:27:41 PM | All things -- Near and dear and not a dead horse...is it? Shall we bet on recovery 'now' or 'later?'
Sock --
Bush II spent money like a drunker sailor for 8 years, and Obama is making him look like a tightwad.
Are you suggesting that you would not spend upward to 82k on a night out on the town? ***shock***
Golf -- And will the bill for a gov. health care system as an 'option' be passed at our forefather's astonishment...and what about Canada as a model? Not to get side tracked off of RE, mind you (one thread closed under consideration is enough). *wink*
Varinia -
The banks are still holding so much shadow inventory that's not on the market and they're bursting out of the seams. Together with the new wave of foreclosures it'll just hit the market again.
The buyers that are buying now are people that have held off for the past couple of years and that are now coming out of the woodworks by false cries of 'buy now or miss out on bargains' by the real estate agents. Basically, those recent sales are fed by a feeding frenzy, which is going to slow down again.
Aw...music to my ears. An additional thought via this gov. worker is this: what we see in parts of CA/San Diego or 'gov./military' towns is stimulus increased productivity (production increased via taxpayer's expense versus a real market recovery, imo). San Diego is literally booming at the moment (that is if you are in gov. or hold a gov. contract. :-p).
As stimulus is being absorbed, slight momentary increases in housing prices might occur as contractors and others seek relocation/housing...as well as investors who believe the bottom to have hit.
Yet some believe this is a permanent and sound economic recovery. Hmmm...it's interesting to see in the midwestern states that one can still pick up a home for next to nothing and witness declining prices versus stablization or increases. *wink*
Thanks all -- throwing out pennies for thoughts. FZ -- stop that crying man...the third wave will come with joy to many with patience. | |
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| CA Real Estate (#2)
Posted: 9/13/2009 12:48:25 PM | Sari the only reason I cry is that nobody wants to see the writing on the wall once again. There is another crash coming. The entire real estate market over the last 5- 8 years was completely speculative and prices were driven up artificially. Everyone is waiting for their $350,000 homes that are now worth $150,00 to regain its value, hate to tell you but it was never worth more than $150,000. It was a completely artificial market and went through the biggest correction in recent history.
You will never be able to tell me that during the Balloon a 1700 sq ft 2 bedroom cottage was worth $300,000. That's $176 a sq ft, I can get commercial property cheaper than this.
The feds trying to help people turn there loans right side up is a load of crap, if you bought in an inflated market with a crappy loan you couldn't afford, its your fault. | |
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| CA Real Estate (#2)
Posted: 9/14/2009 2:56:33 PM | I've been a homeowner for +20 years, but when I moved to the bay area in 2007 I decided that renting is the way to go here.
I'm renting a gorgeous 3-story home, overlooking the bay . The owner bought it 4 years ago for 979K. Her monthly payment is 6.5K. The same house here now sells as REO for 500K. My rent is just a small portion of what her payment is.
And I use my cash to buy houses in another state for 10K, put 10K in rehab, and rent for $ 650.00.
In this market owning a personal home is overrated ;-) | |
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| CA Real Estate (#2)
Posted: 9/14/2009 3:57:55 PM | varinia
I'm thinking of doing the same thing. A friend of mine is doing it, but having difficulty managing the properties, and local management firms let the properties get destroyed or don't get them re-rented quickly enough. How are you having the properties managed? | |
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| CA Real Estate (#2)
Posted: 9/14/2009 4:17:07 PM | I have a great carpenter/contractor who does the rehab with his wife, and I have a great property manager. Have never even seen any of the homes.
Without them it would be impossible. Had to kiss a lot of toads over the years | |
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| CA Real Estate (#2)
Posted: 9/14/2009 4:54:57 PM | In this market owning a personal home is overrated
That's all good and well for speculators or people who invest in real estate. By that statement you're not factoring in the fact that owning a home to many if not most people is a goal. A tangible reality of having achived the American dream.
The market will come back, it's just a matter of waiting it out like the last time. | |
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| CA Real Estate (#2)
Posted: 9/14/2009 6:37:51 PM |
you're not factoring in the fact that owning a home to many if not most people is a goal. A tangible reality of having achived the American dream.
Isn't that what has gotten us into this mess in the first place? Everybody believing that they need to own a house in order to be respected or to have reached the dream or whatever people have sold them on? Every agent pushing people to 'buy, buy, buy, because it will only go up. You can always refinance!'
So, instead of looking at the big picture - can they afford this house in the longterm, everybody just signed on the dotted line and worried only being able to afford the payment now, so that they can feel that they own a house. Not thinking about the payments that will go up etc.
Same irresponsible behavior is happening now, if people don't really think things through and only buy because it's 'the dream' instead of looking at the big picture, whether it makes sense financially. | |
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jbogie
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Joined: 9/30/2008
Msg: 18 | |
| CA Real Estate (#2)
Posted: 9/14/2009 8:23:41 PM |
The market will come back, it's just a matter of waiting it out like the last time.
agree. kinda sorta. markets always come back but not necessarily like the last time. and the fact that the market will someday recover some of it's losses does not make this a good time to buy. prices will go lower i'm convinced and quite possibly far lower. you might argue that one might miss an oportunity to reap a bargain but even if i'm wrong about lowering prices there will be pleanty of time to buy when it's clear the markets are consistently rising for a couple quarters. the risk of missing out is far less than the risk that prices will plunge further imo. and with rents remaining stable it just plain makes sense to wait. if you own, buy all means, nothing to do but wait it out. | |
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jbogie
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Joined: 9/30/2008
Msg: 19 | |
| CA Real Estate (#2)
Posted: 9/14/2009 8:42:13 PM |
you're not factoring in the fact that owning a home to many if not most people is a goal. A tangible reality of having achived the American dream.
i can think of nothing LESS tangible than the american dream of owning a home. for something to be tangible it must physically exist. a home itself is a tangible asset but the "american dream" of owning a home is hardly a tangible factor when it comes to buying a home. the intangible dreams are precisely how we got into this mess. had the banks and buyers only considered the tangible factors in a deal and disregarded the emotional intangible factors such as the american dream, two things would have happened that would have kept us out of this trouble. one, home prices would have continued their slow steady rise without rampant speculation that artificially enflated prices. this would have continued the slow but sure gains in personal wealth. and two money lending would have remained within the capability of borrowers to repay and with growing home equity banks would have even more incentive to lend. | |
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| CA Real Estate (#2)
Posted: 9/14/2009 11:34:09 PM |
The market will come back, it's just a matter of waiting it out like the last time.
Of course, but the questions here are revolving around: Does it make sense to start buying now? Is the market going up or down?
By that statement you're not factoring in the fact that owning a home to many if not most people is a goal. A tangible reality of having achived the American dream.
Not sure I agree. Sounds like "In this market owning a personal home is overrated" absolutely takes it into account, and calls that dream "overrated". And, I agree - it's totally overrated. | |
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| CA Real Estate (#2)
Posted: 9/15/2009 8:06:17 AM | Renting vs. owning. I've read real estate as an investment has certain rules that have largely been in place since at least Roman times. The rule is:
A months rent should be approx. 1% of the value of the rental property, e.g., a $100,000 property should rent for $1,000. In most of the country, less California and a few other pockets on the east coast this holds true. Since I have lived in California, rentals have been approx. 1/3 % of the potential market value.
Obvioulsy there are other things affecting this number, Michigan has houses for sale for $100 but no jobs, mortgages unavailability at any interest rate, government changing the deductibility of interest, property tax (Florida and Texas had such high property taxes as to effectively cap home prices) but any discussion of "will residential property make a comeback" has to consider.
Willingness to buy in California will always be high, ability is questionable. | |
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| CA Real Estate (#2)
Posted: 9/15/2009 10:18:05 AM | I am thinking of buying this what do you think?
http://www.showcasebyagent.com/sba/index.php?sbo=r0s0614
I wish, this is Alan Jackson's house for sale. | |
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| CA Real Estate (#2)
Posted: 9/15/2009 10:30:21 AM | | The state of CA is becoming a less desirable place to live because of it's unfriendly attitude toward businesses. As the jobs move out, people will move out. Real estate values will fall as a result. | |
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| CA Real Estate (#2)
Posted: 9/16/2009 2:45:28 PM |
I'm buying stock in Smith & Wesson. Fixed!
(Actually, it isn't guns, it's the ammo that's hard to buy!) | |
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| CA Real Estate (#2)
Posted: 9/16/2009 4:08:52 PM | Here I am... Mr. Sounds-Like-a-Broken Record checking back in...
Gold just closed at an all-time high, meaning the dollar is shrinking (inflation is coming).
Interest rates will have to go up to attract buyers for our fresh-off-the-press play money U.S. Dollar (inflation is coming).
Inflation will have to accelerate to reflect the declining real value of the too-available dollar, thereby eroding consumer buying power, preventing loan qualifying, damaging small business viability (further unemployment), cause greater demand for social safety net assistance (welfare, utility bill subsidies, food stamps, school lunch programs, etc.), thereby tempting tax increases in an inflationary and recessionary environment.
Seniors (fixed incomers) will not be buying any houses once inflation melts their monthly budgets, their baby boomer children are trying to retire with ravaged home equities and retirement accounts, and many thirtysomethings will be strapped by having to pay even higher taxes to fund a monsterous deficit and socialized medicine program courtesy of Big Goverment/Nanny State socialist and voter-pandering president/congressional tools of the multi-national corporatists.
The government, for all of its lip service, has not yet reformed banking regulations, as the lenders are STILL creating and selling toxic debt “investments” to send the bag-of-shit bad loans down the line, and are still engaged in risky derivative trading while paying stupendously large “performance” bonuses to upper managers, and many banks are not lending out TARP monies but are buying competitors to gain market share and control. Therefore, financial instrument collateral is still being corrupted, while the extent of the toxicity within the commercial real estate collateral base is still unknown but will be revealed shortly in the imminent unraveling of that sector.
There are still 5 million home foreclosures to occur in the next several years in the United States.
Any real estate price appreciation that may occur soon will be due to simple monetary inflation and not an increase in real and actual value. The current activity is coming from the “investors” who are perhaps too optimistic about contemporary real estate values (and their own savvy. )
Oil will probably shoot through the roof soon due to geopolitical powder kegs, causing further inflation, recession and strain on social services/tax increases.
It’s third grade math, folks. Unlike “the old days” in California, housing prices will not be able to exceed the historic benchmark of 2 to 3 times local average annual incomes (Case-Schiller Index since 1890)--which presumes overall stable interest rates and job creation. The problem is that the current interest rate instability and unemployment shall be with us for quite some time, thereby preventing any sober, clear-headed penciling out of the numbers when assessing housing as an investment.
Shall we go on with this esoteric discussion of when real estate appreciation will resume, or recognize that it is and shall remain a horrible investment for a quite long time? | |
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| CA Real Estate (#2)
Posted: 9/16/2009 4:59:55 PM | Banks are paying a safe but measly 1% on C.D.'s, so I suggest the corporate bond funds that are paying 5 to 8 percent, but stay away from the risky 15% plus funds.
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