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hogwash. real estate is local. there are plenty of markets with smart (informed) buyers.
Most buyers are semi-informed (at best). In fact, real estate agents got hurt the worst during last round (Leveraged Investing). In theory, they should have been the poster child of informed buyers.
Sure markets differ (Denver being more stable than most). Those who listen to their agents and are buying up those "deals" in Aspen are in the processes of catching knives. Relatively safe markets early last year caught colds this year (think Aspen, San Fran, etc). If this hangs on, Denver might feel it next year.
That article shows why its not over. If you call that Hog Wash, then you have your blinders on. Denver (or any other US market) will have increased unemployment and increased foreclosures in the coming months. That's the unfortunate reality. Upside down equity and prolong unemployment can take down any "stable" market. While it might be a lot milder than the article states (the jury is still out), it won't be a walk in the park and it could very well be as bad as it is written.
As a side note, I was at a friends cabin this weekend. I grabbed an old October of 2007 Money Magazine. It was chalk full of THE most terrible advice. They explained why you should stay in the market (it was at 12,000 then), why housing will only go down 4-5% because Austin was the worse market (-20%) in the late 80's and the depression was only -20%. If you needed to relocate and your other home didn't sell, take out equity to buy your new place till your other home sells. Don't panic if you can hold out till the market turns. You know, great advice from the experts! Probably the same advice that was given if I looked back at the 2007 threads.
How can you honestly say the article as a whole was Hog Wash??
Last edited by MN-Born-n-Raised; 08-25-2009 at 10:19 PM..
Location: Georgia, on the Florida line, right above Tallahassee
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Please excuse my cynical snort. Being a landlord/landlady is not an easy business. Human being have all sorts of perverse reactions to higher rents, such as moving out and leaving you with big fat vacancies. Humans under financial stress also display all sorts of quirky behaviors such as not paying the rent, or paying sporadically. And when you try to evict them, other quirks can kick in, like suing you for discrimination, claiming you failed to keep the property habitable, and so on. Some might take out their anger at your unreasonable greed by trashing the house. To make them go away usually requires a few thousand dollars' cash "incentive." So much for those "easy profits." Most annoyingly, houses actually require constant upkeep and financial investment to be rentable. Houses are not bonds. They do not pay "dividends" with no work and no further expenses. Costly things are always going wrong. You can ignore them and be a slumlord, but then an amusing reaction called "karma" sets in and you end up getting the kind of tenants you deserve.
So bascically, if you take care of the home, you get crappy tenants, and if you don't... you get crappy tenants.
And for those who are NOT informed they have nobody but themselves to blame.
How about the agent who is showing this "investor" homes. Can we put any blame on them? I'm guessing most agents are asked if it is a good idea. There are so many newbie "investors" buying single family homes to rent without a clue. The "investor" might ask the agent if it makes sense. Generally speaking, buying a single family home as an "investment" is a net loss once you roll up all of the numbers including depreciation, etc.
So what do you think most agents will tell them. They will tell them that is is GREAT time to buy because housing is so low and that multiple buyers are bidding etc. In fact, I think it would be rare for an agent to tell them all of the trade-offs. You know, "they have nobody but themselves to blame" but themselves.
Reasons people buy are individual to their own situation. If everyone re-acted the same while looking at these fancy graphs, then the true bottom would be changed yet again as people would quit contemplating a purchase for 11 years and a true downward spiral would take us into an abyss of no return. Peaks and valleys are created by people over-reacting and moving as sheep do in a heard. It is the individuals that pay little attention to the crap and carry on as usual that bring us out of these messes and keep them from being worse than they already are! Forget the heard, buy and sell when it is right for you and your situation not when everyone else says to.
Reasons people buy are individual to their own situation. If everyone re-acted the same while looking at these fancy graphs, then the true bottom would be changed yet again as people would quit contemplating a purchase for 11 years and a true downward spiral would take us into an abyss of no return. Peaks and valleys are created by people over-reacting and moving as sheep do in a heard. It is the individuals that pay little attention to the crap and carry on as usual that bring us out of these messes and keep them from being worse than they already are! Forget the heard, buy and sell when it is right for you and your situation not when everyone else says to.
It's hard to argue with your logic. Point taken.
I am looking at the "investment" side of it. As in trying to predict when we are coming out of this mess. Personally, I want to understand when to buy a home in AZ or FL for semi retirement. I don't buy big purchases (other than my home) unless I at least break even. Think "Rich Dad Poor Dad" (the book). So I have put a lot of time and effort into the timing and understanding the idiosyncrasies.
But before we agree to completely over simplify all of this, let's say you "forgot what you heard and bought and sold when it was right for you". Rewind to 2006. It was right for you to buy that $479K 2000 sq footer in AZ. Ops!!!!!!!!!!!!!! You are upside down because it is not worth $225K. $200K in losses (after tax) is BIG money.
Now let's say you wanted to buy it and later sell it for more money that you paid for it when the market heales. So let's say you decided to buy it a year ago? So it seems it might be logical to make sure you are at least comfortable that you are close to the "bottom"?? Right? What about you want to buy that $600K place in Scottsdale (they were bragging a couple years ago that it won't hit them) and a year from now, it is worth $450K. So you are not bother with the details of predicting if there is another $150K to go?
While I get your point, it makes sense to try and time a once in a life time mega adjustment in the housing market. These are unprecedented times. Don't worry, the masses won't dare and try and understand what is going on. That's good news for a lot of people because not a person ended up in jail over this fraudulent housing mess.
Last edited by MN-Born-n-Raised; 08-26-2009 at 01:23 PM..
I am looking at the "investment" side of it. As in trying to predict when we are coming out of this mess. Personally, I want to understand when to buy a home in AZ or FL for semi retirement. I don't buy big purchases (other than my home) unless I at least break even. Think "Rich Dad Poor Dad" (the book). So I have put a lot of time and effort into the timing and understanding the idiosyncrasies.
But before we agree to completely over simplify all of this, let's say you "forgot what you heard and bought and sold when it was right for you". Rewind to 2006. It was right for you to buy that $479K 2000 sq footer in AZ. Ops!!!!!!!!!!!!!! You are upside down because it is not worth $225K. $200K in losses (after tax) is BIG money.
Now let's say you wanted to buy it and later sell it for more money that you paid for it when the market heales. So let's say you decided to buy it a year ago? So it seems it might be logical to make sure you are at least comfortable that you are close to the "bottom"?? Right? What about you want to buy that $600K place in Scottsdale (they were bragging a couple years ago that it won't hit them) and a year from now, it is worth $450K. So you are not bother with the details of predicting if there is another $150K to go?
While I get your point, it makes sense to try and time a once in a life time mega adjustment in the housing market. These are unprecedented times. Don't worry, the masses won't dare and try and understand what is going on. That's good news for a lot of people because not a person ended up in jail over this fraudulent housing mess.
Buying a 600k home with with zero down on a variable rate loan in a market that was doubling over in just a couple of years while wages were stable at best was acting with the heard. It's the areas that the employment crash preceded the housing crash where I feel the most sorry for people as it was out of their hands. I can understand getting a vacation/retirement home Further south, I spent many winters not far from MN burrrrrrr.
As far as your areas of interest/situation, it does seem very logical to ride this thing to the bottom..
Last edited by eric#1; 08-26-2009 at 03:58 PM..
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In fact, real estate agents got hurt the worst during last round (Leveraged Investing). In theory, they should have been the poster child of informed buyers.
Relatively safe markets early last year caught colds this year (think Aspen, San Fran, etc). If this hangs on, Denver might feel it next year.
Probably the same advice that was given if I looked back at the 2007 threads.
