Housing cracks: Median OC price drops to 690k (Aliso Viejo: 2013, foreclosed)

[CaliRestoration]

For those who think housing is going to crash, please, what will be the catalyst for this supposed massive crash?

[Teckeeee]

For starters the bond trading guys would have to make a move first to force the Fed's hand and they aren't doing anything spectacular so rates are not going up fast anytime soon.

[CaliRestoration]

Originally Posted by Teckeeee

For starters the bond trading guys would have to make a move first to force the Fed's hand and they aren't doing anything spectacular so rates are not going up fast anytime soon.

People have been expecting this for 5-6 years. The FED and those who trade in bonds are not going to introduce massive instability no matter what they do. The system is built for slow, decade long type changes, and we should all be glad it's like that. Sub-sahara Africa shows you what can happen with quick violent rate swings. It's not pretty.

The truth is, the last crash was caused by an extremely rare meeting of unfortunate circumstances. The largest financial collapse since the Great Depression. Even at the bottom of the crash, which eliminated 465 banking institutions from existence, prices in desirable areas of OC aka the high end (Coastal, South OC, etc) only dropped approximately 30% from their highs in 2006-2007.

So if those homes are trending right now for $900,000 to $1.5m right now, is it really going to help the people who are wishing/predicting 50% drops?

Those people would still be locked out even with a 2009-esque drop in prices (which isn't going to happen because banks aren't in the business of failing and they've learned their lessons).

[expatCA]

Originally Posted by Teckeeee

Good for that guy very smart. A family friend did similar and in retirement she is the Millionaire Next Door, except she drives a slightly used Audi not a Chevy. Her business partner died so she had to liquidate all of the properties because he was the true brains of the real estate investment, she just invested 50% with him.

I wonder if at the time 40k was perceived as $$$ or good value for those condos in the 70's? I mention that because a friend, his grandmother bought ocean front property in the 60's in Balboa/Newport Beach for 60k now that house, which the family trust still owns, is worth 2.5 million. He asked his grandma and she told him at the time people thought she was crazy to spend 60k for a vacation property........she is laughing to the bank now.

The father of a girl I knew bought a 2 story rental building in Newport Beach by the pier for .... $100,000.00 in the early 1960's. It is now worth well beyond 4 million. It sold in 2015 for over 3.5 million. I suspect she feels her father was a genius.

[LuvSouthOC]

Originally Posted by Teckeeee

Good for that guy very smart. A family friend did similar and in retirement she is the Millionaire Next Door, except she drives a slightly used Audi not a Chevy. Her business partner died so she had to liquidate all of the properties because he was the true brains of the real estate investment, she just invested 50% with him.

I wonder if at the time 40k was perceived as $$$ or good value for those condos in the 70's? I mention that because a friend, his grandmother bought ocean front property in the 60's in Balboa/Newport Beach for 60k now that house, which the family trust still owns, is worth 2.5 million. He asked his grandma and she told him at the time people thought she was crazy to spend 60k for a vacation property........she is laughing to the bank now.

Because location: Newport.

[russlancea]

Originally Posted by Joe Van Fossen

I met a landlord a few years ago while helping a tenant into a rental in Irvine. This guy owned four 3-bedroom condos in a Woodbury development that he bought in the 70s for around $40K each. He was retired and at the time he was leasing these units out for $2350/mo. Now they're going for about $2800/mo. That's a passive gross income of $134,400/yr, in retirement. That's on an initial investment of $160K ($627K adjusted for inflation). There have probably been half a dozen or more "top of the markets" since he bought them.

Back in the '90s, a friend told me to go into real estate with him. He was new to it and was gung-ho. He bought a condo in downtown Long Beach where his truck got broken into, etc. Nice newer condo, but still the ghetto, I thought.

I was young, didn't have a lot of cash (he didn't either, though), and more importantly, I wasn't a believer. Lost touch with him, but I'm sure he kept it up and is probably doing very well now. I'm a believer now, but too late! LOL.

[Joe Van Fossen]

Originally Posted by Teckeeee

I wonder if at the time 40k was perceived as $$$ or good value for those condos in the 70's? I mention that because a friend, his grandmother bought ocean front property in the 60's in Balboa/Newport Beach for 60k now that house, which the family trust still owns, is worth 2.5 million. He asked his grandma and she told him at the time people thought she was crazy to spend 60k for a vacation property........she is laughing to the bank now.

They were built in 79, so pretty close to the 80s at that point. Not sure if they were considered a good value at the time, but pretty great in hindsight.

Originally Posted by CaliRestoration

For those who think housing is going to crash, please, what will be the catalyst for this supposed massive crash?

Subprime mortgages are coming back! - Salon.com

I think it's inevitable that real estate prices will dip again at some point, but I don't think anyone can predict when, why or how much. If there's a crash in 5-7 years and prices dip 10-20%, will that even bring values back down to today's levels? Given the recent levels of appreciation it doesn't seem likely. Then again, some unforeseen global economic (or otherwise) disaster could break out any day and cripple our economy. The problem with that scenario is that while home prices will go down, individuals' financial security would drop just the same.

Originally Posted by russlancea

Back in the '90s, a friend told me to go into real estate with him. He was new to it and was gung-ho. He bought a condo in downtown Long Beach where his truck got broken into, etc. Nice newer condo, but still the ghetto, I thought.

I was young, didn't have a lot of cash (he didn't either, though), and more importantly, I wasn't a believer. Lost touch with him, but I'm sure he kept it up and is probably doing very well now. I'm a believer now, but too late! LOL.

Some people sayâ„¢ that owning real estate is one of the best ways to build wealth. It's not for everyone, but it's definitely worked for a lot of people.

[DawnW]

Originally Posted by Joe Van Fossen

Some people say™ that owning real estate is one of the best ways to build wealth. It's not for everyone, but it's definitely worked for a lot of people.

And some have lost their shirts. There is no way to have predicted the change in real estate in SoCal (LA County) from 1995-2005. We bought our first home in 1999 and our 2nd in 2001. Not at the same time. The second one was our money maker, but mostly just because of the timing. We sold in 2005.

Paid in 2001: $250K, put in about $50K in repairs/remodels
Sold in 2005: $600K
Currently worth: $725K
2005-2017: Slowly went up from worth $425K at the bottom of the crash

The buyers still own it, it is a good thing they didn't have to move or sell during the low point.

We still are planning to buy in 2018 again, when we move back to CA, but it is always a concern.

[CaliRestoration]

Originally Posted by Joe Van Fossen

Subprime mortgages are coming back! - Salon.com

Doesn't matter. The people who bought most of the inventory from 2009-2013 (when the getting was good) were all cash, or 25% down or more. Those people bought homes in the dip, and have high equity positions. On top of that, if they did finance part of their purchase, they were extremely well qualified since getting a loan during that period was difficult and income checks were strict.

Even if we had another once in a lifetime crash like 2008, those people would still have equity in their homes and were good buyers who probably had stable professional careers or high net worth.

Compare those people to the buyers of 2003-2007. Totally different type of buyer.

disaster could break out any day and cripple our economy

Yeah, and you know what? It would cripple the buying capability of people wishing for a crash right now. Economic crashes come with high unemployment and unstable markets. Do people really think they are exempt from the consequences? If they were, they would have bought 2009-2013 when prices were extremely good.

The truth is, there real estate is hard to predict and time. You could spend decades of your life "timing" a crash so you could get in good. 2009-2013 doesn't happen very often, and the type of people who can actually take advantage of those times are generally not people "wishing for a crash" so they can afford a home. I was fortunate that I had lots of cash at the time, more than I knew what to do with, but I'm not going to sit here and pretend I timed anything. I got really lucky, plain and simple.

[payutenyodagimas]

having a lot of cash opens a lot of opportunities, whether in boom times or not


if you are waiting for a dip, make sure you have the cash to strike on the opportunity when that happens