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Old 03-21-2009, 10:42 PM
 
468 posts, read 767,959 times
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Somewhat on point, no personal offense to realtors living or dead, but I will never fully trust a realtor, much like I don't trust a financial (stock) manager. For financial managers, Lynch's "One Up on Wall Street" sums it up rather well. For realtors, does a similar book exist? Now, I've never purchased real estate, which is maybe a mistake (esp. in 2000), though Buffet never bought tech stocks either (he couldn't explain the valuations). With realtors, they will always say the market is going up. The home builders salesmen, too -- it's their business, and of course they want to "be positive" and they want to "See the Opportunity Everywhere". That might mean they can churn a profit on deals... it doesn't mean the consumer/owner is profiting. (I get blank stares when I ask a realtor how to "hedge" any real estate investment I might make, against possible market downturns; they just reply, "well... just live there until the price goes back up.. maybe it takes a 10 years?")


Austin & Texas in this sense has a good fallback if a possible downturn in housing prices occurs. People here don't seem to move much. It seems everyone I meet is "born in Austin, raised in Austin, stayin in Austin." Which is OK -- it's just different than CA, in my experience anyway (maybe someone has real statistics on this) -- in CA, many people move to different cities or states. Sometimes job related; so being "stuck" with a bad real estate investment means being stuck in the same location.. which could make life more difficult, or could get in the way of moving up a corporate ladder. (I moved 5 times from southern ca to northern ca while growing up, not that unusual, and the equivalent mileage on the east coast might be like... moving from georgia to VA?) So if downturn occurs, it seems maybe the majority won't feel "displaced". ?

A realtor's default response, as a SALESMAN, will always to assure everyone that the market is "great". It's the virtual-reality-force-field they live in. Which is why they're usually the last to know (or accept.. denial is not just a river in Egypt) that a downturn is occuring. This makes it VERY difficult to trust them, in my opinion. (My friends did trust them... now they are stuck with -20% to -50% under-water mortgages.)

Which is why I go back to the simple formula.. 2.5x annual salary.. ($50K x 2 for a couple here?)
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Old 03-21-2009, 10:55 PM
 
Location: Southwest Austin
5,002 posts, read 9,905,924 times
Reputation: 3497
Quote:
With realtors, they will always say the market is going up.
No we don't. I've said repeatedly to anyone who asked that I think we'll have a 3% to 5% slip in values this year, overall.

Quote:
I get blank stares when I ask a realtor how to "hedge" any real estate investment I might make, against possible market downturns
Buy in the right area at the right price. But cycles happen and the best hedge is to know and understand that. It doesn't always go up every year.

Quote:
A realtor's default response, as a SALESMAN, will always to assure everyone that the market is "great". It's the virtual-reality-force-field they live in. Which is why they're usually the last to know (or accept.. denial is not just a river in Egypt) that a downturn is occuring. This makes it VERY difficult to trust them, in my opinion. (My friends did trust them... now they are stuck with -20% to -50% under-water mortgages.)
Sorry you feel that way. Unfortunately, the stereotype is well deserved because most Realtors really don't know what their doing. Most wash out within 2 years, just long enough in the business to give the rest of us a bad rep. So you protect yourself by understanding that the most important decision is who you pick to help you. Get that right and everything else takes care of itself. There are a lot of really good Realtors in Austin.

And, no, we are not all Polyanna. It's just that, having lived in Austin almost 25 years, and watched several big downcycles, it's really interesting to see that buyers are always scared during the best buying opportunities, and they flock like lemings and overpay during heated markets. And they seem emotionally happier when paying too much (because everybody else is buying too), and they feel very uncertain when making a good buy in markets like the current one (because everyone tells them it's a bad time).

Steve
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Old 03-22-2009, 08:08 AM
 
Location: Round Rock, TX
22 posts, read 60,669 times
Reputation: 27
Quote:
Originally Posted by ILikeSmartHippies View Post
Austin & Texas in this sense has a good fallback if a possible downturn in housing prices occurs. People here don't seem to move much. It seems everyone I meet is "born in Austin, raised in Austin, stayin in Austin." Which is OK -- it's just different than CA, in my experience anyway (maybe someone has real statistics on this) -- in CA, many people move to different cities or states. Sometimes job related; so being "stuck" with a bad real estate investment means being stuck in the same location.. which could make life more difficult, or could get in the way of moving up a corporate ladder. (I moved 5 times from southern ca to northern ca while growing up, not that unusual, and the equivalent mileage on the east coast might be like... moving from georgia to VA?) So if downturn occurs, it seems maybe the majority won't feel "displaced". ?

A realtor's default response, as a SALESMAN, will always to assure everyone that the market is "great". It's the virtual-reality-force-field they live in. Which is why they're usually the last to know (or accept.. denial is not just a river in Egypt) that a downturn is occuring. This makes it VERY difficult to trust them, in my opinion. (My friends did trust them... now they are stuck with -20% to -50% under-water mortgages.)

Which is why I go back to the simple formula.. 2.5x annual salary.. ($50K x 2 for a couple here?)
I agree with your statements in your first paragraph. I can only speak from my own personal experience...I have found the population in mid-America to be much less mobile and somewhat less open to change. You have to look long and hard to find many Native Floridians anymore along with other east (and I assume) west coast states. My husband's family is from Kansas; four generations and all live in KS or MO (we being the exception). We found the same thing in OK. Many families here still live on the same land "great grand daddy" obtained during the land run. When we lived in Texas before the majority of our friends were third or fourth generation Texans. In mid-America we were the exception and not the rule; we were the outsiders. No one has ever thought badly of us moving into "their home" to my knowledge but on the east coast no one seems to notice so much, let alone care, if an out of stater moved in.

You are absolutely right about sticking with a simple formula before buying. We are finding short sales, pre-foreclosure, foreclosures, and fire sales ($59-79 per square foot) on more homes every day. You look at the pictures and see some homes that look like they've come from a decorator's magazine. As a teacher it has been easy to see the trend coming - for years it's been all about kids and too many young adults wanting to have it now. No one wants to earn it anymore; they want to live how they were raised. They got a good job out of college and wanted the good life. Then reality set in: bad investments, overextended, lost their job, divorce, etc. No one put a gun to these buyers head. They are adults who made a choice to buy, and oftentimes live, big. Sadly many of them are paying for their bad judgment now.

As for Realtors...I trust the people I hire. I do my research, meet with them, talk with people who have used them, and talk to friends who are in the business. Some Realtors are just the way you described them, they make the stereotypical used car salesmen or the shyster lawyer look good. However, my dealings have all been positive. I can't see blaming one profession for an influx of people into a state as one or two on this forum "seem" to do. For me, if money is involved then it's caveat emptor. I was taken once in my 20's because I believed and bought into everything the salesman said. Now it's simply due diligence on my part.

To those citizens living in states where unemployment is in double digits Texas looks pretty darn good. Most of those coming from the west or the north are paying at least twice as much in housing costs. Texas sells well on its' own stats and merits.
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Old 03-22-2009, 08:21 PM
 
Location: Austin
2,522 posts, read 3,789,437 times
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711mum and I like smart hippies...thanks for posting such insightful posts.....enjoyed reading them..
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Old 03-23-2009, 11:00 AM
 
4,049 posts, read 6,343,922 times
Reputation: 1657
Quote:
Originally Posted by ILikeSmartHippies View Post
Somewhat on point, no personal offense to realtors living or dead, but I will never fully trust a realtor, much like I don't trust a financial (stock) manager.
Agree completely. I remember having debates in 2007 with a mortgage broker. I was saying how the interest only arms were a timebomb and that people were buying way more house than they could afford. The mortgage broker insisted that was the exception and that interest only arms were great for so many people
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Old 03-23-2009, 11:09 AM
 
Location: central Austin
4,696 posts, read 6,958,021 times
Reputation: 1938
Where are you meeting all these native Austinites?!

I have been in Austin for 18 years and I only know a few folks who were born in Austin. My neighbors are from NY, New Mexico, Georgia (via LA), Dallas, S. Carolina, Seattle, Orange County CA, and the rest Texans from outside Austin.

While it is true that many Texans never leave the state, certainly folks who work in high tech, who work at the University, tend to come here from other places.
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Old 03-23-2009, 11:16 AM
 
Location: Austin, TX
8,762 posts, read 18,186,877 times
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My parents financed their retirement property with an interest only ARM (back around 2001?), because their invested money was doing so well. Around 2006-7, things didn't look so good (their investment manager apparently has a lot of common sense, btw, compared to most) and they paid off the house.

IO ARMs themselves are not bad....just not meant for everyone that was taking them. Only so much can be laid at the feet of others. People need to know what they are doing before they buy a house, and should spend some time doing the math (can people still do math?). Sure, lots of the numbers that realtors do is something that will never be an important part of your long-term purchase (closing cost, escrow, other fees and expenses) and you will want to lean on them for advice on what is normal and/or a good idea. The actual ongoing cost of you home should sit squarely on the buyers shoulders, though!
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Old 03-23-2009, 11:27 AM
 
468 posts, read 767,959 times
Reputation: 199
If we presume that a recession IS going to hit austin, what can be done in PREPARATION? This is the advanced thinking that's really not so advanced, that none of the so-called experts ever really focus on (except for trite cliches like "diversify").

Steve - as a good realtor-businessman, surely there's more to "saving the collective net worth" than just "don't pick the wrong place". Is there mortgage ins. here? Anything else? Do you know what "hedge" means, if so, how to hedge against a real estate backlash ?


As for a city recession.. it's sad to see these journalistic-sensationalistic stories about "Oh nos! I losts everythings!" while the family was paying mortgage on a credit card while still sending kids to expensive private schools, playing golf, owning boats, etc. Sure those things are great when times are prosperous, yet it seems that most people love to live in denial-fantasy-land. (Of course businessmen won't ever suggest cutting back on spending, since consumer spending is thier livelihood! And the journalists of today never ask the proper questions, pah!)


Enough of the "sky is fallin!" threads. Post some possible solutions instead..
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Old 03-23-2009, 12:52 PM
 
8,241 posts, read 10,563,503 times
Reputation: 3559
Pay off as much debt as possible. Start thinking about a possible second job/consulting. Collect info on house sales in your neighborhood to fight your appraisal (everyone should flood the appraisal office with protests in general). Stop watching the news!
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Old 03-23-2009, 08:21 PM
 
Location: Austin
2,522 posts, read 3,789,437 times
Reputation: 677
Quote:
Originally Posted by mimimomx3 View Post
Pay off as much debt as possible. Start thinking about a possible second job/consulting. Collect info on house sales in your neighborhood to fight your appraisal (everyone should flood the appraisal office with protests in general). Stop watching the news!
Minimom has a few good solutions.....paying off debt is the best.....I agree that the news, especially crap like FOX, and CNN as well, is sensationalistic.....they ride panic and greed in both directions......I think you can educate yourself by looking at basic economic stats....best place to find those are business journals, like WSJ, or Austin's own ABJ...

Austin Business Journal: Local Business News |

Just don't buy into hype or panic.....Austin tends to be large in PR, and
one has to tread carefully to avoid stepping in it while you research relocation moves to Austin.....all about timing....


Austin WILL pick up and grow its job base again, but not till late 2010.....
If you can wait a bit per that move, you will be far better for it, trust me!
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