81399672
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join:2006-05-17
Los Angeles, CA | reply to laserjobs
Re: CA Real Estate Market Study
you're taking about 10mil property, yes those will be on market for long time. Anything below 1 mil is being sold with out much problems. Btw, i must be going to wrong open houses i rarely ever see food |
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No_Strings
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| reply to laserjobs
said by laserjobs  :The only way someone would be priced out of the market is they are not keeping up with inflation. Not keeping pace with an over-heated housing market can be quite different, even if you're keeping pace with inflation.
said by laserjobs :On the other side if the equity on the house becomes negative then just hand in the keys to the bank and take your lumps. Unless you care about your credit and the consequences of defaulting on a loan.
After living through some perpetually flat markets, I watched the Houston collapse in the 80s and experienced the last SoCal correction up close. When I moved here in 1990, I saw people standing three deep to bid over the asking price for homes as others taking out equity to pay for cars (not college or home improvements ... cars). I waited it out - even took a capital gains hit on my house in No. VA. I'm not smart enough to predict how these things will go, so I take a conservative approach: Bought at what seemed to be a good time ('94) and have done several major improvement projects. All were funded with cash and should add some value to the home.
I've missed out on a lot of opportunity in the stock and real estate markets by being too conservative, but I sleep better knowing that I could ride out anything short of a collapse and extended unemployment. Plus, I get the smug satisfaction of knowing I'm living in a house I couldn't afford to buy.  |
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laserjobs
Premium
join:2004-05-02
Las Vegas, NV
 ·Cox HSI
| reply to 81399672
said by 81399672 :Actually in the recent years it was pretty easy to be priced out. Prices of the houses have been going up at higher rate then the wages during the same time. Unless a person(couple) made 100k+ a year, it was pretty easy for them to be priced out if they waited to long to get in to real estate market and wanted to buy in neighberhood that was out of their reach. I agree that some people may be "priced out" or "priced in" with an affordability index of around 12%. It will eventually reverse to be around 40% again and then it will be a real buyers market.
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laserjobs
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join:2004-05-02
Las Vegas, NV
·Cox HSI
| reply to No_Strings
said by No_Strings :said by laserjobs :The only way someone would be priced out of the market is they are not keeping up with inflation. Not keeping pace with an over-heated housing market can be quite different, even if you're keeping pace with inflation. said by laserjobs :On the other side if the equity on the house becomes negative then just hand in the keys to the bank and take your lumps. Unless you care about your credit and the consequences of defaulting on a loan.
After living through some perpetually flat markets, I watched the Houston collapse in the 80s and experienced the last SoCal correction up close. When I moved here in 1990, I saw people standing three deep to bid over the asking price for homes as others taking out equity to pay for cars (not college or home improvements ... cars). I waited it out - even took a capital gains hit on my house in No. VA. I'm not smart enough to predict how these things will go, so I take a conservative approach: Bought at what seemed to be a good time ('94) and have done several major improvement projects. All were funded with cash and should add some value to the home. I've missed out on a lot of opportunity in the stock and real estate markets by being too conservative, but I sleep better knowing that I could ride out anything short of a collapse and extended unemployment. Plus, I get the smug satisfaction of knowing I'm living in a house I couldn't afford to buy. An over-heated housing market will eventually cool and has to meet market affordability and demand. If too many people are priced out then houses do not sell. It is all about supply and demand. Actually average housing gains have been only around 4.8% over the last 50 years. Which coincidentally has been around the same as wage growth.
Watch the bankruptcies go through the roof because of people over extending credit.Some people are not going to have a choice if the equity on their home goes negative. I read somewhere that 30% of people who bought in 2005 now have negative equity in their homes. The lenders and realtors are a lot to blame here for acting as an authority and selling uneducated investors on questionable lending products just to purchase a home. I foresee a lot of lawsuits in the next few years.
Being conservative is not a bad thing. Most people trying to time the markets get to greedy and end up losing their shirts. As Warren Buffet says "You don't know who is wearing shorts until the tide goes out".
I can tell you I also "missed out" on the stock market and I am sure glad I did since I did not know much about investing at the time. I did however buy real estate in 1997 and sell in 2005 based on market fundamentals based on rent prices, mortgage payments, affordability, momentum and lending types.
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81399672
Premium
join:2006-05-17
Los Angeles, CA
| First rent price must go down before the real estate cool down can even begin. Currently monthly rent price for a appartment is going up which means the real estate market is strong. Once rents starts dropping and it makes more sence to rent then to pay for the house, you may the price drop. Till that happens, the houses will continue being expensive and majority of the people will not be able to afford the first house.
Regarding interest only loans, negative loans et and the lawsuit. Unless real estate broker(sales person) made a mistake of having a client sign all the right forms they will not be liable. |
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dogma
Premium
join:2002-08-15
Boulder City, NV
| Ylen, I mean,..uh..worldvision, rents are NOT tied to housing cost. The cost of rents goes up in a linear fashion, not a cyclical fashion.
10 years ago rent for a 2 bedroom apartment was $800/Mo around here. Today, it's about $1,400/Mo. So rent went up 70% or 7% a year. The 2 bedroom house next door to that same apartment building was selling for $180K 10 years ago. That same house recently sold for $880K, this is a 500% increase.
Interestingly enough, if you were to purchase the 12-unit apartment building where the 2 bedroom rents for $1400/Mo., it would only cost about 2.5 times more than the 2-bedroom house next to it...even though it has 24 bedrooms. The acquisition cost on apartment property is tied to the income it produces. But more importantly, there are no funky mortgage products allowed for non owner occupied income property. If you want to buy the apartment building, you gotta do it the old fashioned way; at least 20% down and fixed rate at 1.5% higher than for a home. |
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laserjobs
Premium
join:2004-05-02
Las Vegas, NV
·Cox HSI
| reply to No_Strings
I have to agree with dogma. Rents are not tied to housing costs. If this housing market was based on rental cash flows no one would have been buying for the last few years. This housing market boom has been based on appreciation potential.
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81399672
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join:2006-05-17
Los Angeles, CA | while it's true that rent is not tied to housing cost, if rent goes dramatically down it will affect real estate prices. |
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jig
join:2001-01-05
Hacienda Heights, CA
| i don't think it will go down before any sales price drops. first the homes go down, then the rents go down gradually to keep pace, but rental owners will pump it up as much as they can along the way, trying to maximize their income. there were at least some shifts in ownership in the rental market, and those guys need to put dents in their mortgages.
the thing with rentals, though, is that their demand market isn't strongly tied to the housing market. especially around colleges, but i think it goes beyond that. younger, more transitory people will naturally tend to seek out rentals, and i think that market will continue to see high levels of demand.
as far as housing costs.. $10 million and above homes have always been hard to sell as an investment. it's a disjoint market at best. and when we're talking about large fluctuations in housing sales, probably not worth discussing as any appreciable percentage of the homes on the market.
finally, unless there is some reason for the demand to take a dive (large scale building of affordable rental properties, dirty bomb exploding over the city, job market dissolving), it will always sufficiently support the housing prices, and i don't see a large correction even if the banks foreclose on a lot of homes. they won't want to sell at a loss either...
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No_Strings
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| reply to 81399672
said by 81399672 :Currently monthly rent price for a appartment is going up which means the real estate market is strong. said by 81399672 :while it's true that rent is not tied to housing cost, ... Can you at least be consistent even if you're wrong?
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laserjobs
Premium
join:2004-05-02
Las Vegas, NV
·Cox HSI
| reply to No_Strings
Rental vacancy rates are high right now I think it is 93% occupancy vs 97% a few years ago. This is why if you look around you will find discounted first months rent or move in bonuses everywhere. These numbers do not include individually owned rental units which there is more than half of them vacant in my building alone. From what I can gather is that the owners are leaving these units vacant and calling them their residence for a break on the capital gains when they sell. As the equity gains move negative I expect a lot of rental units to come available and more sales inventory to hit the market.
IMHO We are in a situation of overbought and overbuilt.
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No_Strings
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The OC
1 edit | What's happening in commercial real estate, and is there any direct correlation between it and residential? If so, does commercial tend to lead or lag. |
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laserjobs
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join:2004-05-02
Las Vegas, NV
·Cox HSI
| said by No_Strings :What's happening in commercial real estate, and is there any direct correlation between it and residential? If so, does commercial tend to lead or lag. I really have no idea about commercial real estate. Just from what I see on the street I think the values will decrease in my general area because there is a lot of vacancy already and tons of commercial spaces are occupied by real estate, mortgage brokers, contractors and construction materials companies. Also I am pretty sure there is a lot offshore investment in commercial real estate and if the dollar drops more there will be a bigger reason to pull out of American assets.
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Bush has spent more $$$ than all other presidents combined in over 200 years!!!
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laserjobs
Premium
join:2004-05-02
Las Vegas, NV | reply to No_Strings
This is how desperate it is getting someplace to sell homes 
»www.dailynews.com/news/ci_3847768 |
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81399672
Premium
join:2006-05-17
Los Angeles, CA
| :( i do not want to see homeowners at home when i am at open house or for that matter stage family |
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jinjimbob
Troy Mcclure
join:2001-11-13
| reply to laserjobs
said by laserjobs :said by jinjimbob :"SoCal is in for a big correction in prices." I have been hearing that for almost 5 years myself. They might stop going up as fast, but they won't go down. Then answer me this, what made the prices go sky high? Do you think the reversal of the same thing might cause the reverse effect? Here is a clue: Interest rates and lending practices While true the lenders are offering creative loans. But the 40 and 50 year loans really don't offer a lower payment.
People are moving to California from other countries, where they were used to substandard living conditions in cramp quarters. Whole families move here, club together to buy a huge house with a monstor mortgage, living in the same house with multiple generations.
Most of us wouldn't dream of this, its very un-American-like. But for newer Americans, they think splitting a $6k mortgage 6 ways between 6 wage earners is the best thing since sliced bread, and they feel lucky. |
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No_Strings
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That link describes a marketing ploy for a new development. I don't think it is a good example of the market for existing homes, although it's obvious that it's softening.
While the 50-year mortgage may be new, I took a 40/5% on our current house just to get a payment I was comfortable with and not be house poor. We refinanced to a 30 year fixed later when circumstances changed.
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jig
join:2001-01-05
Hacienda Heights, CA
| reply to laserjobs
said by laserjobs :Also I am pretty sure there is a lot offshore investment in commercial real estate and if the dollar drops more there will be a bigger reason to pull out of American assets. i don't think so. a dropping american dollar is a reason FOR foreign investment in american assets (their currency buys more). maybe at the peak you'd want to get out with value, but the american dollar has been slipping for some time now (though with demos possibly getting the house and the presidency, that might turn around soon).
i know we're also talking rental income, but i think foreign investment in commercial property is more to get a solid foot in, not to get a high yield investment from. i may be wrong..
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A man compounded of law and gospel is able to cheat a whole country with his religion and then destroy them under color of law. -Ben Franklin |
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RR Conductor
RailRoadDude
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join:2002-04-02
Redwood Valley, CA
·Comcast
1 edit | reply to No_Strings
Well, Conductor's and Engineer's can earn anywhere from 40K-100K, depending on time employed, seniority rank, time spent on long runs over the line (ie.San Diego to Barstow) vs. locals (ie.San Bernardino to San Jacinto and Perris) or yard jobs (ie.switching in Barstow or LA), etc. Of course, take taxes out, figure in food, utilities, kids, etc, and with the high prices of homes in many areas, it can be tough, or not even possible.
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americanada
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Covina, CA | Especially if you're not even working. |
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