You're going to KICK yourself later for NOT buying NOW!!!! (banks, price)
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Anyone have any thoughts on what effect the election will have on the real estate/financial markets?
sorry if this question was answered somewhere else!
Everyone gets a little on edge around election time. It really doesn't matter who gets elected because any policies that are/aren't put into play don't even effect us for years down the road. People just don't like uncertainty and until we know who's elected, it'll stay like it is now.
Sure, but the least likely place is real estate. Just as this was the largest run up in real estate in our history it will also be the largest contraction of real estate in our history. The attitude towards real estate is going to be similar to the attitude towards stocks in the 1930's.
Quote:
Originally Posted by chuck22b
.. they are leaning toward keeping "liquidity" and propping up current banks and status quos. This means the likelihood of some level of inflation risk is higher since I feel that the central banks and other nations rather face higher inflation than higher unemployment and restlessness.
Yes they are leaning towards that and they have not been successful in producing it. The TED spread is now 4.6! Its extremely hard to inflate after one of the largest expansions of credit in history. Things have to unwind before inflation becomes a worry, but this could take many years. Inflation may show its head after the economy starts to recover at that point they will have to target policy to reduce it. Have been you watching the commodity markets? Oil is now down to $77/barrel.
Loans are not THAT hard to get! My husband and I just got approved to buy a new home (when our current one sells) and we won't be putting anywhere near 20% down, we do have excellent credit but we also have 2 car loans and a significant amount of cc debt.
Every market is different, here in TX prices aren't going to be significantly lower than what they are now. We did not experience the bubble that many other places did, so we won't see substantially lowered housing prices. So how can you tell me now is a bad time to buy? That is such a blatantly ignorant generalization.
Finally a statement of wisdom. Many Texas metros are actually undervalued according to historical terms. Plus in places like Houston over 70% of the homes fall under the FHA loan limits. And it has never been easier to get a FHA loan. To add to this as long as you stay at or under the median home sale price for Houston or Dallas you will have lower living costs by purchasing than you would renting a comparable property.
Sure, but the least likely place is real estate. Just as this was the largest run up in real estate in our history it will also be the largest contraction of real estate in our history. The attitude towards real estate is going to be similar to the attitude towards stocks in the 1930's.
Humanoid, your statement about real estate being the least likely is untrue. Tons of people that yanked their funds from the stock market are now forming vulture funds. I just got contacted by three at the end of this week. I agree in some states you will surely see further declines as property values did not make sense for the incomes, but in others things couldn't be better for those that have their finances squared away. Here in Texas you have alot of fear and therefore a apprecitation rate lagging behind inflation in markets that are still undervalued according to historical terms. Add to this the fact that we have a fairly high number of foreclosures. 1:100 for August which is the last time I say numbers available. This leads to an opportunity to purchase a property for around 15% less than the as is market value in an already undervalued market. Sounds like protecting your down side to me. Then these people are turning around and renting the properties for a substantial cash flow as most of these properties are giving a 12% cap or better.
Another thing I think people need to realize is that the Phoenix area is starting to cash flow. I think they might be comming around very soon.
For all those thinking of buying but scared I have a little tip for you. As long as you make a purchase at or below the rental equivelancy for a property a worse case scenario has you saving money on your living expenses. Property values will not stay below the price point that gives a carring cost below the rental equivelancy.
I would like to conclude this post with what I think is a bit of irony. When home values were setting records for appreciation every month and prices had long passed a point that made financial sense. Very few people were afraid of paying to much for a home and most everyone around them were telling them that they couldn't loose. And that the way things are going the market is no where near a peak. Sounds like this line of thought was in error and that lots of people over paid for their homes. And now we have prices that have in many places declined significantly from their peak yet people are afraid of paying to much and many are saying the bottom is no where near. Hmmmm should I listen to the majority.
"Be afraid when others are greedy and be greedy when others are afraid" Warren Buffet
Another thing I think people need to realize is that the Phoenix area is starting to cash flow. I think they might be comming around very soon.
Rents are a moving target. If there is a severe recession rents will drop. As an investor you need to think about whether rents are inflated or not, in many cases they are by about 10~20%. Regardless, as far as I know Phoenix is still flowed with foreclosures so the market isn't going to bottom any time soon.
Quote:
Originally Posted by Jamesww
"Be afraid when others are greedy and be greedy when others are afraid" Warren Buffet
Buffet buys when things are good value (justified by fundamentals) right now many areas are still well above their fundamental value. A decline from a peak does not mean its a good value. The Nasdaq wasn't a good value at 3,000 even though it was 1,000 points down form its peak of ~4,000.
Regardless, real estate mania is over. People's attitudes towards real estate is going to change just as people's attitudes changed towards the stock market changed during the depression. The average person isn't going to be speculating in real estate anymore. The easy money in real estate is gone.
I think more than likely this short-term liquid capital will go back into the equity/bond markets. This is because, like someone else pointed out, there are heavy penalties (taxes, etc.) for cashing it out. Unless it's for a first home (no penalty for cashing out for first time home buyer). Or, in a couple years most of the boomers will reach retirement age and be able to cash out fully.
So, If you have cash, I'd be keeping an eye on the equity markets and how the governments react to the credit markets. If governments, central banks continue to inject cash and prop up markets... we can see an equity/bond boom. If the governments/central banks do nothing (which I seriously doubt)... we can see a highly deflationary spiral and more flight from equity/bond markets along with a fall in property.
-chuck22b
Hey didn't this just happen The short term liquid funds poured right back in after the injections.
Well I sure don't have a crystal ball, but we just bought a home and it was probably the best thing we could do. 30% down, great loan rate and a beautiful property. Its not like a stock, its not going anywhere, and its a long term (min 5 years) purchase. Got a terrific price and even if we are not at bottom of market, we are probably close. And you never know the bottom until its in the rear view mirror. All these doomsayers out there are the loosers, they will roll up in a ball and hide fearing the sky is falling. Instead I'll get out there and work and make money and and save a good portion of it and keep my credit cards at zero.
You and I don't see eye to eye on a lot of things but I do respect your knowledge base. Your last post was very thoughtful:
Regardless, real estate mania is over. People's attitudes towards real estate is going to change just as people's attitudes changed towards the stock market changed during the depression. The average person isn't going to be speculating in real estate anymore. The easy money in real estate is gone.
Humanoid is right. The easy money is over in real estate. People will stop seeing real estate as a get rich quick scheme, which will only leave the professional investors and those looking to buy a home to live in for a long time. Flippers will almost completely disappear as will many rehabber/flippers.
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The short term liquid funds poured right back in after the injections.
Rep points for Humanoid
