Real Estate Crash thread

[cramer]

100k/yr is lower class?! Quarter mil in rent over a decade?! Yikes! You Californians certainly are in your own little bubble of a world. And now your real estate market is booming again, bound to bubble and crash again, and again, and again. Something is certainly different about the real estate mentality out there, that's for sure.

Paraphrased dialogue I've actually heard on several occasions in more than one state I've lived in:
New guy fresh from California: "I sold my dump in CA for a cool mil. The seller only wants $125k for this nice house? What a deal! I'll give them 200k to make sure I get it. And while I'm at it, I'll take 4 of them, live in one, and rent the other 3 out at super high prices! I'm driving the market up too high? Screw the locals. That's how we do it in Cali! Hey, everybody can put no money down, do 50-year loans, interest-only loans, etc., right? What, they can't? Oh well."

As opposed to the local residents where the dialogue's more like: "Eeash. The seller wants $125k for this house? Not worth it. I'll give them $120k. Crud, some dude from California offered them 200k? Dammit. Now I can't afford to buy in my own neighborhood anymore!"

And thus the cycle of real estate idiocy continues...

Welcome to my world man. Its nuts down here. whats different about the real estate out here is everyone makes a fuckload of money. You have the porn industry, you have the high tech industry, pharmaceuticals, hospitals to support the population and the big banks. Well and you have a place with the weather. Biggest difference between here and the east coast is the humidity. Its not humid out here. You can't ask for better weather. There's a reason you've got 2 cities packing in 30-40 million people. Same reason people are willing to pay out of their ass for a house.

[MontuckyFried]

Welcome to my world man. Its nuts down here. whats different about the real estate out here is everyone makes a fuckload of money. You have the porn industry, you have the high tech industry, pharmaceuticals, hospitals to support the population and the big banks. Well and you have a place with the weather. Biggest difference between here and the east coast is the humidity. Its not humid out here. You can't ask for better weather. There's a reason you've got 2 cities packing in 30-40 million people. Same reason people are willing to pay out of their ass for a house.

Oh, I completely get why they're willing to pay out the nose IN California. I've spent plenty of time out there, and I agree. Visiting San Diego or SF, I get it. With the amazing weather and locale, I can even justify the high prices. What ticks me off though, is how when they've made their cash, and have had enough of CA, they emigrate to poorer states and completely wreck the local markets, and make it unaffordable for the locals. (Re: Bozeman, Austin, etc.) They leave CA for various reasons, but bring their Californian real estate mindset with them. Not to mention getting involved in local politics, trying to change city policies and ordinances. They come because they love xyz city, but then try to make it just like the very place they left.

[4matic]

Oh, I completely get why they're willing to pay out the nose IN California. I've spent plenty of time out there, and I agree. Visiting San Diego or SF, I get it. With the amazing weather and locale, I can even justify the high prices. What ticks me off though, is how when they've made their cash, and have had enough of CA, they emigrate to poorer states and completely wreck the local markets, and make it unaffordable for the locals. (Re: Bozeman, Austin, etc.) They leave CA for various reasons, but bring their Californian real estate mindset with them. Not to mention getting involved in local politics, trying to change city policies and ordinances. They come because they love xyz city, but then try to make it just like the very place they left.

We don't like them foreigners. Just don't like em..

[schuss]

Oh, I completely get why they're willing to pay out the nose IN California. I've spent plenty of time out there, and I agree. Visiting San Diego or SF, I get it. With the amazing weather and locale, I can even justify the high prices. What ticks me off though, is how when they've made their cash, and have had enough of CA, they emigrate to poorer states and completely wreck the local markets, and make it unaffordable for the locals. (Re: Bozeman, Austin, etc.) They leave CA for various reasons, but bring their Californian real estate mindset with them. Not to mention getting involved in local politics, trying to change city policies and ordinances. They come because they love xyz city, but then try to make it just like the very place they left.

To be fair, NYC/NJ people do this too. My dad is chief selectmen of a small town in NH where we get a lot of retirees and transplants. On the real estate side, they did a lot to limit lot size, but the ordinances/services thing is always a battle.

[Hugh Conway]

To be fair, NYC/NJ people do this too. My dad is chief selectmen of a small town in NH where we get a lot of retirees and transplants. On the real estate side, they did a lot to limit lot size, but the ordinances/services thing is always a battle.

People from every booming megapolis in the US do this.

I get living in nice places in Northern California and the attached premium. I don't get the large premium to live in, say, Salinas or Fremont or some other shithole.

[Benny Profane]

Or a half million for a shitty house in Bergen county in NJ.

[liv2ski]

Or a half million for a shitty house in Bergen county in NJ.

Obviously, it is close enough to areas, where the jobs pay the bucks, so the RE demands a premium. Once you get away from the high paying jobs, most areas go down in value accordingly.

[Benny Profane]

Obviously, it is close enough to areas, where the jobs pay the bucks, so the RE demands a premium. Once you get away from the high paying jobs, most areas go down in value accordingly.

So, you're implying that home prices these days have something to do with income? Dude, c'mon. This thread has been around for close to seven years. Haven't you learned yet?

[Boomer28]

Check in on this thread from time to time and can confirm what many are saying about the "heat" of the market out there right now. Few comments:

- CA, AZ, NYC, TX few other areas are screaming right now with demand...

- The investor $$ raised over the past 3 years to buy single family residential is absurd and is driving a lot of markets at certain price points where the rent option can work...

- BUT most funds that are pursuing this strategy really need some serious HPA to bring their returns where they need to go.

- On the supply side, the builders have been idling for years now effectively and so many still can't sell due to negative equity and the obscenely long foreclosure timelines are backing up distressed inventory....

- Loans are easy to be found at historically absurd rates, even if you have to pay MIP in an FHA loan you are getting done at < 5% for almost zero down. Nice free call option on real estate values....jumbo lenders doing 90% LTV 10/1 IO's for prime credit again too...


All in all it's nice to see things moving again but there are areas of the country that are still fucked sideways and going nowhere fast. Small cities and rural areas are hurting bad and the demand there is just not happening. The whole supply/demand equation is artificial as mentioned above in that our supply is jacked up and the demand side has this huge "investor" component.

For the record there will be some that crush it buying SFR on the way back up but I just don't subscribe to the believe that you can do so in huge scale. Still a lot of things that need to get better before this market is remotely rational and normalized.

[cramer]

People from every booming megapolis in the US do this.

I get living in nice places in Northern California and the attached premium. I don't get the large premium to live in, say, Salinas or Fremont or some other shithole.

completely agree. Fremont is retarded expensive not only for rent but to buy. Its like that though because thats where are the silicon valley ballers rent and buy at. Its double if you cross the bridge.

[cramer]

Oh, I completely get why they're willing to pay out the nose IN California. I've spent plenty of time out there, and I agree. Visiting San Diego or SF, I get it. With the amazing weather and locale, I can even justify the high prices. What ticks me off though, is how when they've made their cash, and have had enough of CA, they emigrate to poorer states and completely wreck the local markets, and make it unaffordable for the locals. (Re: Bozeman, Austin, etc.) They leave CA for various reasons, but bring their Californian real estate mindset with them. Not to mention getting involved in local politics, trying to change city policies and ordinances. They come because they love xyz city, but then try to make it just like the very place they left.

There was a huge migration of CA folks to WA state starting back in like 1989. When i was in high school, we had bumper stickers on our trucks. WA FULL GO HOME that my buddy made. I moved to CA in 1996. visited quite a bit through 2000. Then i started heading up every couple years. Its a shit show up there now (vancouver, wa/portland, or). It turned into a mini CA. Except the weather blows. One thing about that area though, is the mountain is nice and close. I miss those days of getting out of school and heading straight up to ski bowl for some night skiing. Thats the only resort that had it then. not sure about now.

[kathleenturneroverdrive]

We're trying to buy in Bozeman right now (mainly to drive up RE prices for the locals and make sure we can get our ideals through local gov ) and the supply/demand is insane up there right now.

About 3-4 months ago inventory that had been sitting for months just disappeared overnight and now we've been watching property after property come up and sell within 48 hours. Finally got an offer in on a place yesterday...only to find out 3 more offers came in after ours. At least we're in first, but I'm guessing one of those three offers is above asking price (what we offered).

I get runs on RE in urban areas, and I get that Bozeman's nice, but it's not like there are millions of jobs there - seems crazy people are pushing so hard to move there right now, but maybe it's investors, MSU parents, etc. Who knows. I just want a damn house.

[Benny Profane]

Didn't the RE agent tell you? It's different there.

[iceman]

Man I remember the last bubble, when Slip was having a hard time getting a place in Bozeman.

Whatever happened to Slippy? Come home Slip!

[corn dog]

hmm anyone want a 2 bed 2 bath condo in Bozeman? Near coop, MSU and Northern Lights.

[schuss]

What's wrong with it?

[Mazderati]

^It's not his?

Made an offer on a place today. Posted to the MLS Thursday but no showings or offers accepted until the open house today. Our offer was one of five submitted before the 5:00 PM deadline. Came in over asking price and just got an email saying the seller went with another, stronger offer. From what the agent told me, the accepted offer was somewhere north of $30k over asking.

[corn dog]

Don't think there is anything wrong with it, I just live in NYC now.

[13]

^It's not his?

Made an offer on a place today. Posted to the MLS Thursday but no showings or offers accepted until the open house today. Our offer was one of five submitted before the 5:00 PM deadline. Came in over asking price and just got an email saying the seller went with another, stronger offer. From what the agent told me, the accepted offer was somewhere north of $30k over asking.

Good god.

[iceman]

SELL!!!!!

[MontuckyFried]

^It's not his?

Made an offer on a place today. Posted to the MLS Thursday but no showings or offers accepted until the open house today. Our offer was one of five submitted before the 5:00 PM deadline. Came in over asking price and just got an email saying the seller went with another, stronger offer. From what the agent told me, the accepted offer was somewhere north of $30k over asking.

That sucks. I've also been dealing with the same bs in the area. What's ticking me off is how a home will sit on the market for a year or two, and the very same weekend we make a decision to buy something, we find out on Monday that there were magically like 3 other offers on the place over the weekend? Something definitely fishy going on.

I've been shopping for a house since November. I've lost out on no less than three properties due to this, as I refused to get in endless bidding wars. Sellers' agents never say what the other offers were, but simply come back with "Make your last best offer." Umm, nope.

We finally successfully got a contract on a home, but it was almost the same story. Home had been on the market for over two years. Was pulled off the market. Came back on for like 30 grand more. Still a decent price, so we pulled the trigger and offered their asking price. Oh, what do you know? We were the third offer in line over a weekend? WTF?! Seller's agent said we needed to counter, so we came back with 10 over, which happened to be our max we were comfortable budgeting. Seller's agent came back with the usual "last best offer" junk. We said that WAS our best offer and just had to stick with it. By some miracle, they accepted our offer, which we learned was not necessarily the highest, but perhaps we offered the most down, had the most appealing terms, etc. We supposedly close toward the end of the month, but I'll believe it when I actually have the keys in hand.

Housing market in Montana is definitely way out of whack with local wages. It's retarded.

Seriously, though. What the heck is up with homes sitting on the market for aeons, but suddenly getting multiple offers the very weekend you put in yours? Frustrating as hell.

[Mazderati]

Submitted another offer last night. First day on the market, first one to see it. Sellers wouldn't hear of anything less than list price and offered no allowances.

I don't use a buyer's agent and have tried using that as a bargaining tool in the past. Seller's agents have typically been open to taking the standard half commission (3%, 2.5%, etc.) to get the deal done. My offer was just slightly less than list price minus the half commission. The agent representing the property wanted full commission and wouldn't budge to close it out. Somehow I doubt he brought that up with the seller.

[4matic]

I'm going to sell the short sale house across the street that the girlfriends dad died in a month ago by myself (FSBO). I want to do this so I can learn the process. I have the time and flexibility to manage showings and open house. Here is some random items and any ideas or comments are welcome:

1. Consulted an attorney to handle all contractual/legal/title crap. $1k.

2. Listed featured with MLSMYHOME.COM. $280

3. Hiring professional photographer. $200 estimate.

Here's are some of the considerations:

1. I can't close this house until July 11th to make it a long term gain.

2. I could rent it to the buyer at a low rate if they want to move?

3. What % should I list the cooperation rate as that is a requirement of MLS? I'm thinking 2.5% with inventory so tight.

4. I'll run the open house and can appeal to Asian buyers with mandarin speaking girlfriend.

I'm going to list the house at $370k which is aggressive but low by Bay Area standards. This house looks great! I'll post up the MLS link and Craigslist add when it is ready.

[El Chupacabra]

Here is some random items and any ideas or comments are welcome:

1. Consulted an attorney to handle all contractual/legal/title crap. $1k.

2. Listed featured with MLSMYHOME.COM. $280

3. Hiring professional photographer. $200 estimate.

***

3. What % should I list the cooperation rate as that is a requirement of MLS? I'm thinking 2.5% with inventory so tight.

4. I'll run the open house and can appeal to Asian buyers with mandarin speaking girlfriend.

On the above:

1) Attorney -- maybe, depends on local practice in your area (i.e. whether attorneys typically are involved in residential real estate sales). If not, you might be better off having a realtor prepare the usual forms. I say this because if every realtor in the area usually just uses the generic forms, and you try and use something that your counsel drafted, that may be a turnoff to the buying agent.

2) List on MLS -- absolutely. If it's not on MLS, it's invisible, IMHO.

3) Photographer -- won't hurt, but probably overkill. I took the photos myself when I sold my last two houses. It's not hard to take much better pictures than 99% of all residential listings. (They mostly look like crap.) You just need good lighting, clean up the house ("stage" it well for the pics), a decent SLR, and (IMHO important) a wide-angle lens, which really makes rooms look big.

4) Percentage to buying agent: 2.5% is probably OK.

5) Open house: probably waste of time. Serious buyers are looking with an agent. Your neighbors are the ones dropping in on the open house.

[4matic]

Great advice, thanks. I agree on the Open House but, my next door neighbor had 500 people at his house and it sold that day. So based on current market conditions in my area I think it might be prudent to have one.