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Too many stories as a child and even today from co-workers with family in countries where money is near worthless... well not exactly but inflation is rampant.
I'm in escrow right now on a property... so the discussion is most relevant.
The last few years... ANYTHING on the market went pending in days... I have helped family with For Sale by Owner and outstanding results.
The last 60 days... two homes in the neighborhood where I am pending have just sat on the market... lots of advertising and open houses... one just changed Brokerage Firms...
So the thought has crossed my mind... especially since both have had price reductions.
I wonder if there's some index, or available statistics, that would show the percentage of the real estate market that is speculative in nature. My guess is that people buying homes hoping for a short term gain in value that they can then "flip", is much higher than it was twenty or thirty years ago, when I believe most people primarily bought a home to live in and raise a family. If my hunch is right, then this would be a big contributor to real estate becoming a "bubble asset", where you see cyclical periods of rising and falling prices, just as you do in the stock markets. God, I hope not, especially if the gub'mint will keep bailing out speculators who got in over their heads just to save the banks. What a nightmare scenario, and I would hope legislation is passed to prevent this going forward.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,345 posts, read 8,557,056 times
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Quote:
Originally Posted by kmarc
You do have a point, but also remember these situations can start with a small slip that mushrooms into an avalanche. Of course, the opposite happens, too, and there's a recovery. This would be a period that doctors call "watchful waiting". See if it recovers or slips further and act accordingly. If I had a property I wanted to sell, and saw further slippage, I'd pull the trigger and sell as fast as I can, especially since the FED has more rate hikes planned (or so they say).
I hear you on that situation you had where the bears were telling you to wait, it'll go lower. What was it, 2011 or 2012? There were some deals to be had and those who sat on the sidelines lost out. But you can't time the market. I guess, if it looks like a good deal, grab it and don't wait. And don't regret it. Listen to your own voice and not that of others.
I apologize for the cheap shot about Georgia. Truth is, all I know about Georgia is Hartsfield Airport, travelling from Florida to Connecticut and back over the years, and a few days I spent in Buckhead on business. That's it. For me to say otherwise would be blowing it out my behind.
It was actually before the big recession by about a year and a half. I sold both after owning for a year for $700K. Within about 4 years they had dropped to about $550K for the new owners. I believe they held tight and now they are worth $975K so they did well.
I bought one house in Ca for $135k that was a foreclosure. I sold it a year and a half later for $345K in April 2015. The buyers are doing ok as zillow has it valued at $461K today.
If you are buying for your own home and plan to stay then I think it's a good idea to buy. It's like the stock market, over the long haul you will do ok.
I do notice people taking opportunity to sell high now. As long as they have a place to go they are ok or if they are investors looking to cash out.. In Ca prices went up partially because of low inventory. Thing were so crazy they were afraid if they sold they wouldn't be able to find a house to buy in the same area.
Thanks for the apology
It was actually before the big recession by about a year and a half. I sold both after owning for a year for $700K. Within about 4 years they had dropped to about $550K for the new owners. I believe they held tight and now they are worth $975K so they did well.
I bought one house in Ca for $135k that was a foreclosure. I sold it a year and a half later for $345K in April 2015. The buyers are doing ok as zillow has it valued at $461K today.
If you are buying for your own home and plan to stay then I think it's a good idea to buy. It's like the stock market, over the long haul you will do ok.
I do notice people taking opportunity to sell high now. As long as they have a place to go they are ok or if they are investors looking to cash out.. In Ca prices went up partially because of low inventory. Thing were so crazy they were afraid if they sold they wouldn't be able to find a house to buy in the same area.
Thanks for the apology
Thanks for accepting the apology, aslowdodge. You're good folks and I appreciate it. And you are right on the money about the bears who convinced people to stay on the sidelines, when they should have been buying, and are now priced out.
Too many stories as a child and even today from co-workers with family in countries where money is near worthless... well not exactly but inflation is rampant.
I'm in escrow right now on a property... so the discussion is most relevant.
The last few years... ANYTHING on the market went pending in days... I have helped family with For Sale by Owner and outstanding results.
The last 60 days... two homes in the neighborhood where I am pending have just sat on the market... lots of advertising and open houses... one just changed Brokerage Firms...
So the thought has crossed my mind... especially since both have had price reductions.
It is definitely slower right now. Just a bit. But we have no idea what it really means, yet.
Maybe it slows, gets a little harder to sell, but we still go up YOY 1-3% in price for the next 5 years or maybe RE keeps slowing and this year was a price peak etc... Too soon to tell.
What I do know is if you buy real estate in the top desirable areas, it is about as good as it gets.
Friend of mine bought in San Diego at the absolute very peak before the bubble drop. If you looked at a graph and saw what month the peak happened, he bought that month. About the worst situation you can be in, right? He was still able to rent it out at a positive cash flow, not lose any money, sold last year and put 100k in his pocket.
Not a bad outcome after buying at the absolute worst time after the biggest housing crash in recent history.
It is hard to lose when you buy in desirable areas.
I wonder if there's some index, or available statistics, that would show the percentage of the real estate market that is speculative in nature. My guess is that people buying homes hoping for a short term gain in value that they can then "flip", is much higher than it was twenty or thirty years ago, when I believe most people primarily bought a home to live in and raise a family. If my hunch is right, then this would be a big contributor to real estate becoming a "bubble asset", where you see cyclical periods of rising and falling prices, just as you do in the stock markets. God, I hope not, especially if the gub'mint will keep bailing out speculators who got in over their heads just to save the banks. What a nightmare scenario, and I would hope legislation is passed to prevent this going forward.
Don't have a current stat but last time I looked over 40% of Bay Area homes were sold for CASH... no mortgages involved... simply takes too long.
Never bought a home to flip... but I have bought for investment.
Thanks for accepting the apology, aslowdodge. You're good folks and I appreciate it. And you are right on the money about the bears who convinced people to stay on the sidelines, when they should have been buying, and are now priced out.
The homes that are still selling briskly here are the ones in the bottom of the market...
In other words... if you want to own a single family here... this is the minimum it takes to buy in... 1920's single family, 2 bedroom 1 bath around 1,000 square feet... gutted to the studs and redone...
Electrician4you thank you for your reply. What we are seeing now, that the FED has begun unwinding its balance sheet, and the EM economies are crashing, that the tampering has just DELAYED the deflation cycle, and that we are still going to have to live through that deflationary hell. What that means for overinflated housing prices of today? Well it means that housing prices will be cut in half, even more in some markets.
We should have been destroying debt from 2001 till now. But, instead, in the wisdom of our leaders, we added to the debt instead. Can we lower total debt vs gdp from 370% to about 150% using some monetary tricks, tricking our mother nature? I don't think so. 1929-1947 lowered total debt/gdp from about 300% to 150% - but it did it with a great depression and a world war.
I think Bernanke's Great Experiment will probe to us that we will never try that again. This Madman spent way too much time trying to FIX the 1930s instead of what he should have been doing, trying to understand the 2000's. Academics are always looking back. That means they can't see the future, or even the present, very clearly.
Sorry, but we still have to go through our Great Depression. All Bernanke did was stall. Delay. Stole future money to spend today (back in 2008) and to "kick the can down the road". And, he is now not the goat, is he. The new FED chair, Powell, is the goat.
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It’s a possibility. Unfortunately nobody here has a crystal ball. We can sit and say Helicopter Ben and the FED should of done this or that. Yeah rates were low for a long time QE went on and on. But all raising rates at the time after the bubble would do is simply grind what was already a badly halted economy to a dead stop. Sure they eventually stopped the house hemorages. NOBODY wanted a house in 2009/2010. I did but nobody knew what to do. I remember foaming at the mouth trying to buy this house in Newport for 750,000. That same house 8 years later is worth about 3.5 million.
Hey trust me I had 120,000 for a down payment, parked in a basic account while I was looking for a house. In one year I made i kid you not $48 in interest. On 120,000. None of my investments was doing anything. So two years ago I ended up buying a house.
I remember when the fed raised rates and they had a deadline a few years back for I think implementing lifetime PMI on their loans. After that deadline all loan and refinances stopped like they hit a wall for a while.
I went conventional so I didn’t much care. Besides my rate was so stupid low it’s almost like free money.
Yes i took advantage of a low rate. Plenty of people did.
None of us know what’s gonna happen. We can get a feel. But nobody really knows.
Remember the goal was to get as many into homes as possible...
The bar has been lowered so many times it was almost non-existent...
Plus... you couldn't pick up the phone without someone trying to do a refi for you back then.
The grocery clerk at the local Safeway bought several homes... with 3% down... money was flowing and home ownership was up.
Banks that redlined my city were FORCED to do outreach... minorities were being denied homes because banks required 3 years of income tax statements, several years on the job with steady work, home had to have pest clearance, etc...
All that went out the window and then the house of cards crashed.
Had a neighbor that did the refi 5 times in 9 years... had a classic Mercedes convertible, large boat... brand new car for his 16 year old... lavish vacations and we are all scratching our heads...
Turns out he used his home as an ATM... and then the day of reckoning came... he was selling the furnace and water heater from his home as foreclosure approached... it was quite a ride... his home with 800k of debt sold by the bank for 220k... he paid 230k for it when he bought it but accumulated 600k of extra debt to finance his spending... ended up divorced and homeless...
It’s a possibility. Unfortunately nobody here has a crystal ball. We can sit and say Helicopter Ben and the FED should of done this or that. Yeah rates were low for a long time QE went on and on. But all raising rates at the time after the bubble would do is simply grind what was already a badly halted economy to a dead stop. Sure they eventually stopped the house hemorages. NOBODY wanted a house in 2009/2010. I did but nobody knew what to do. I remember foaming at the mouth trying to buy this house in Newport for 750,000. That same house 8 years later is worth about 3.5 million.
Hey trust me I had 120,000 for a down payment, parked in a basic account while I was looking for a house. In one year I made i kid you not $48 in interest. On 120,000. None of my investments was doing anything. So two years ago I ended up buying a house.
I remember when the fed raised rates and they had a deadline a few years back for I think implementing lifetime PMI on their loans. After that deadline all loan and refinances stopped like they hit a wall for a while.
I went conventional so I didn’t much care. Besides my rate was so stupid low it’s almost like free money.
Yes i took advantage of a low rate. Plenty of people did.
None of us know what’s gonna happen. We can get a feel. But nobody really knows.
All I know is that DEFLATION can't be avoided, it needs to be endured. We are not THROUGH the Great Recession. Bernanke stole money from the future to spent now. But that only has delayed what we have to face. Spending, spending, spending of the FED since 2001 has been the aberration and now we have to pay for it. The FED did not fix the problems with QE and ZIRP and NIRP, they delayed facing the truth. Now, as they begin unwinding the FED excess, the DEFLATION ENGINE the FED repressed, beginning in 2001, is now back with a vengeance.
Is it a good thing, deflation? It is a necessary thing. Deflation lowers prices, explodes the global debt bubble, and saves the local currency, encouraging the investment season of SAVING.
There are two investment seasons: SPENDING and SAVING. The FED tried to pervert this law of nature; and now they are starting to see the truth of it.
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