Real Estate Crash thread

[skier666]

Looks like a public housing project.

Yeah, the interior courtyard does nothing for me, but the exterior looks way better in person, ie not as futuristic as shown in the photos.

With the Twitter IPO and the HQ expanding in the mid-market area, all the developers in the area are sprinting to get these things done. There are a handful of developments littering Market St. Residents can jump on the Muni line or jump on a bike and be at work in minutes. Of course, SF desperately needs more housing inventory, as development was almost at a standstill in 2009.

[Hugh Conway]

Yeah, but, it's the coolest town closest to the Co. Ski hills and a major airport. I still don't understand why everyone gets all excited about the crappy road biking, though.

same reason they get excited about the rest of the crappy stuff on offer there - like the I70 ski resorts - ITS BOULDER ITS AWESOME(except the climbing that's good, but climbings too hard for most of them)


4matic - you want to start a pool on the number of HOA assessments on that place before the average 20 or 30 year mortgage would be paid off?

[Danno]

For once and for all, interest rates will not "spike"anytime in the near or not so near future. Not only our economy, but the entire world's would collapse. Everybody is pointing to a slowdown in our new housing bubble as evidence of that, but the emerging markets almost went into a free fall from just a little "taper talk". We live in delicate times.

reading is fundamental, I never said it was remotely likely. Just trying to be thorough.

[Benny Profane]

same reason they get excited about the rest of the crappy stuff on offer there - like the I70 ski resorts - ITS BOULDER ITS AWESOME(except the climbing that's good, but climbings too hard for most of them)


4matic - you want to start a pool on the number of HOA assessments on that place before the average 20 or 30 year mortgage would be paid off?

Whatever. You and I wouldn't pay the price to live there, but people with money do. Like Aspen. What's up with that place? Other rich people?

[Hugh Conway]

Just trying to be thorough.

BWAH! AWESOME! We've come full circle!

Aspen's a really nice location actually. I mean, there's a limited slate of places I get, boulder of 2013 is not on it. It's just a bastardized software/yuppie scene so stuff sprouts.

[mud]

Let's say a mortgage bond was sold on a $500k property and that property is now worth $300k. What is the market value of that bond? What is the market value on that bond if it is non-performing? If prices are falling what is the willingness of an investor to pay face value for a new bond? Isn't that why Fannie and Freddie have a large majority of current mortgage underwriting?

Your analysis of interest rates with regards to currency, and economic activity is not complete. Sentiment plays an equal and probably more significant role in determining market interest rates.

Oh course its not complete, I'm not running a classroom here just posting up between bites of my lunch. There is no way I would waste my time explaining stuff to Benny or some other knuckledragger that wouldn't understand this info if you paid them. That's why they are still renting and bitching about people keeping them down.

Mortgage Bonds values are based on a fixed percentage paid out on a fixed-income security on an annual basis. The value of that security ($500K property) can decrease but it does not influence current Bond pricing and what investors pay. It only influences that investors profit on that particular property. It's kind of like just because Facebook stock fell in value last week doesn't mean I can buy Google stock at a lower value today.

[Benny Profane]

Oh course its not complete, I'm not running a classroom here just posting up between bites of my lunch. There is no way I would waste my time explaining stuff to Benny or some other knuckledragger that wouldn't understand this info if you paid them. That's why they are still renting and bitching about people keeping them down.

Mortgage Bonds values are based on a fixed percentage paid out on a fixed-income security on an annual basis. The value of that security ($500K property) can decrease but it does not influence current Bond pricing and what investors pay. It only influences that investors profit on that particular property. It's kind of like just because Facebook stock fell in value last week doesn't mean I can buy Google stock at a lower value today.

OK, that's it, you are totally fucking clueless. And, you're in the fucking business? Doesn't surprise. Soon, your ilk will blow this shit back up again spewing that crap.


And, btw, the reason I'm renting is because I can at least recognize that this is still an overpriced market, driven up by easy money pushed be your type. I've resisted that middle class necessity to not be seen as a loser because I rent.

[mud]

..........

[Foggy_Goggles]

Mortgage Bonds values are based on a fixed percentage paid out on a fixed-income security on an annual basis. The value of that security ($500K property) can decrease but it does not influence current Bond pricing and what investors pay. It only influences that investors profit on that particular property. It's kind of like just because Facebook stock fell in value last week doesn't mean I can buy Google stock at a lower value today.

WTF are you talking about? Wait...I know the answer. The first give away is the term "Mortgage Bond". I think you mean MBS. Are you trying to tell me that the value of the underlying collateral has nothing to do with either the market price of the security or the coupon on similar new issuance?

[schuss]

Yeah, the interior courtyard does nothing for me, but the exterior looks way better in person, ie not as futuristic as shown in the photos.

With the Twitter IPO and the HQ expanding in the mid-market area, all the developers in the area are sprinting to get these things done. There are a handful of developments littering Market St. Residents can jump on the Muni line or jump on a bike and be at work in minutes. Of course, SF desperately needs more housing inventory, as development was almost at a standstill in 2009.

ugggghhhh, that location though. I hope it has a ton of soundproofing. That's basically the loudest intersection I can think of short of Market+Powell.

[shirk]

I mean, there's a limited slate of places I get, boulder of 2013 is not on it.

Care to share the slate? I assume you mean places that are worth the high prices?

[Kevo]

???

I wasn't disagreeing with you, I know that you know the market. Look at liv2ski's comment, telling him to wait because the market will soften. Do you really believe the Boulder market will significantly soften (barring some nationwide collapse)? I know that there will be a small jump in inventory, but it won't be much, and it won't really change the whole ballgame locally. The "best" that he can hope for is that it flattens, and I think even that's unlikely. And unless you know something I don't, we don't really know what he can afford. Based on his median income statements, he may be able to afford a SFR.

ETA: I'm not talking about the extreme ends of the market; the very expensive homes or the 1 BR condos. I'm talking the family homes that could reasonably be purchased by a 1st time homebuyer. I'm no rah-rah nothing can go wrong guy, FFS the whole place can get destroyed by flooding, but anyone who looks at the prices, inventory, and the history here and the overall regional economy cannot expect that the middle of the market in Boulder will likely suffer any significant downturn barring a nationwide collapse as bad or worse than 2008. Anyone who spouts otherwise is a fool who knows little/nothing about this market.

SFR=Single Family Residence, no? We are renting for $1,200, but could certainly afford more if we were going to buy. I'm confident that we could get approved for somewhere in the range of $500k. I'm not willing to take out that much of a loan though, especially not to live in the shit holes you can buy in most neighborhoods of Boulder for that price. I'm not buying a 1100 sq foot 1960s Ranch in Martin Acres for $500k. No thanks.

Louisville is equally, if not more insane than Boulder.

Look at this place- http://www.trulia.com/property/31327...-80027#photo-6
And this place- http://www.trulia.com/property/10313...-80027#photo-1
And this place- http://www.trulia.com/property/10727...-80027#photo-1

Who is buying these places and paying that much money? $480+/sq foot, to live in Louisville...

That seem to be the case in many areas I have been following. There are exceptions to every rule, but gravity has a way of catching up to every lofty thing eventually. As I said, feel free to buy today, watch it depreciate by 2015, then hopefully be a double by 2025. The guy is young, so fuck it. Time is on his side.

In the back of my mind, I think that there is a somewhat decent chance that I might have to move to SF or Seattle for my career in the next 4-5 years. I don't want to be underwater.

We have friends that make probably 2x or 3x what we do and live in a $300k house in Longmont. That seems like a pretty good setup. I'd love to have a house we could realistically pay off. I witnessed my parents buy way too much house that they are now underwater on. I'd like to learn from their mistake.

[Danno]

SFR=Single Family Residence, no? We are renting for $1,200, but could certainly afford more if we were going to buy. I'm confident that we could get approved for somewhere in the range of $500k. I'm not willing to take out that much of a loan though, especially not to live in the shit holes you can buy in most neighborhoods of Boulder for that price. I'm not buying a 1100 sq foot 1960s Ranch in Martin Acres for $500k. No thanks.

Louisville is equally, if not more insane than Boulder.

Look at this place- http://www.trulia.com/property/31327...-80027#photo-6
And this place- http://www.trulia.com/property/10313...-80027#photo-1
And this place- http://www.trulia.com/property/10727...-80027#photo-1

Who is buying these places and paying that much money? $480+/sq foot, to live in Louisville...



In the back of my mind, I think that there is a somewhat decent chance that I might have to move to SF or Seattle for my career in the next 4-5 years. I don't want to be underwater.

We have friends that make probably 2x or 3x what we do and live in a $300k house in Longmont. That seems like a pretty good setup. I'd love to have a house we could realistically pay off. I witnessed my parents buy way too much house that they are now underwater on. I'd like to learn from their mistake.

Those homes you linked are in downtown Lville, so you pay a premium for that, just like you would to buy a house on Mapleton Hill in Boulder. Homes in my neighborhood are in the low 400s, not ranch homes (but not necessarily better). Yes, the absolute bottom of the SFR market in Boulder proper is high 300s, it's probably low 300s for Lville. Longmont is certainly cheaper by a lot, for 300 you can get a pretty nice place. But historically, Longmont has also seen much greater value fluctuation.

It really is just a question of what you want, how much you can afford (or maybe what yo are willing to pay, which may be less than you can afford), and what you're willing to give up. For 400 you can get a fixer upper in Boulder, 3+ miles from downtown, a nicer home in Lville (1-2 miles from downtown) or a crappier home in downtown, all of which are fairly secure to the whims of the market, or a sweet mcmansion in Erie, that may be more subject to the whims of the market (these are just a few examples, obviously there's gunbarrel, Lafayette, Superior, or homes up in the hills above Boulder, that all come with the same equation with different tradeoffs). I am considering selling my home in another year or so and moving to Lville or Superior, so I pay close attention to what this portion of the market is.

[liv2ski]

In the back of my mind, I think that there is a somewhat decent chance that I might have to move to SF or Seattle for my career in the next 4-5 years. I don't want to be underwater.

We have friends that make probably 2x or 3x what we do and live in a $300k house in Longmont. That seems like a pretty good setup. I'd love to have a house we could realistically pay off. I witnessed my parents buy way too much house that they are now underwater on. I'd like to learn from their mistake.

Kevo, half the properties we have bought were close to a market top. They were worth less 2 years later, but 10 years later they had at least doubled. I don't know shit about your area, but I do have faith that what goes down will come back and more if you give it time. If you move, can you handle being a landlord for 6 years to give it time to come back? If yes, try and find something you like, roll the dice and see what happens. Having tenants pay off your property really isn't that bad if you screen them well and have a little luck.

[mud]

WTF are you talking about? Wait...I know the answer. The first give away is the term "Mortgage Bond". I think you mean MBS. Are you trying to tell me that the value of the underlying collateral has nothing to do with either the market price of the security or the coupon on similar new issuance?

When discussing different coupons within MBS's like FNMA 3.5%, FNMA 4.0%, FNMA 4.5%, & FNMA 5.0% they are referred to as Mortgage Bonds, when talking about a collection of hundreds of mortgages, rolling all those separate coupons together they are called Mortgage Backed Securities. MBS are packed as tranches which contain thousands of mortgages and sold to various investors who then repackage them as investments, IRA, retirement accounts.

The underlying collateral is tied to the mortgage and property when it is bought so if a mortgage goes into default the Bond investor losses out. The market price of the coupon on similar new issuance is not based on past loses its based on the ebb and flow of mortgage-backed securities. As mortgage-backed securities trade, they move in accordance with economic developments that are occurring.

The stock market has a very dynamic relationship with the trading of mortgage-backed securities. Typically, when stocks are selling off, mortgage-backed securities are rallying and vice versa. When mortgage backed security prices rise, home loan rates tend to move lower, when Mortgage Bond prices fall, home loan rates rise. In addition, each trading session brings economic data that impacts all capital markets as well as geopolitical news. Leave the Fe dout of this we all know they are supporting the market but these influences still rein supreme.


The important economic reports that rule over MBS's are;

Initial claims for unemployment each Thursday.

Federal Open Market Committee Meeting Calendar. The FOMC holds eight regularly scheduled meetings during the year, and other meetings as needed. This is when the Fed lets us know what they think of the economy.



The government employment report (Non-farm Payrolls) typically the 1st Friday of every month for the previous month.


Inflation readings from the Consumer and Producer Price Index along with the Core Personal Consumption Expenditure.


Two or three times a month the Treasury will offer new Treasury Notes and Bonds and the results could impact the movement of Mortgage Bonds. If they sold well intrest rates will drop, if they were shunned by investors interest rates will rise.


Reports on the nation's manufacturing.


The GDP.


Consumer Sentiment and Retail Sales.


As a general rule of thumb, positive economic reports will tend to push the price of Bonds lower and rates higher. The reason being is that when the economic environment improves or starts to heat up, it could mean that inflation may be on the rise.


Ownership of a bond is the ownership of a stream of future cash payments. Those cash payments are usually made in the form of periodic interest payments and the return of principal when the bond matures.


Inflation is the arch enemy of the Bond markets. Inflation erodes the purchasing power of a bond's future cash flows. Put simply, the higher the current rate of inflation and the higher the (expected) future rates of inflation will eat into those interest payments and purchasing price erosion so investors may sell their current Bond holding and seek out higher paying investments.

[mud]

I don't want to be underwater.

I hear there are some good deals in Lyons right now.
If you buy in shLongmont stay west of Main St. values are still dropping on the east side, might as well buy in Firestone or Erie.

[Hugh Conway]

And this place- http://www.trulia.com/property/10727...-80027#photo-1

prayer flags, open ductwork, random grade changes in the middle of a door, funky mix of flooring, unusable wood stove in the corner, random pots hanging from the ceiling. It's like every 6 months opened a design magazine and chose something else do to. That things awesome.

[jamesp]

fk me fixing that place is a career itself...

[Zedsdead]

$424K???

I thought Western WA was overpriced.

[Benny Profane]

Who is buying these places and paying that much money? $480+/sq foot, to live in Louisville...

Two income couples with nice incomes (not that nice), and decent credit who are tapping low money down loans sponsored by a government agency like the FHA (therefore, you and me, the taxpayer), probably paying a down payment with help from the one pair of parents who want to stick it to the other pair of parents by casually opening their meager savings accounts to enable this transaction. These people are very optimistic and pretty much clueless that there can be a downside to this transaction, since they think, if they ever do, what we just experienced over the past five years is some freak event that will soon be a bad memory and the real estate train has left the station again, on to newer heights, and they better get on or forever be lost to living like scum in a rental, or even their parent's basement. I like to think of them as echo fools. Poor kids. They go home from work, turn on their choice of news source, and are told by the big media that housing is "recovering", the bottom was in, and now, of course, is the time to buy. They don't know that most activity over the last few years has been cash buyers snapping up hundreds of homes with cash in some former bubble markets, like Phoenix, Vegas, California, Florida, and others, at very low prices (not 450 grand. no way), and preparing them for rentals or some sort of profitable exit. If that ever happens. I really can't see the rental thing working at all. Talk to a small landlord about the hassles and slim margin, It isn't easy.
Anyway, you really should stop and think here. Your rent is very manageable right now, right? Even if one of you loses your job, you could most likely survive, right? Now, what would happen if you took on a nearly half million dollar loan for something you don't even like all that much, and then one of you, or, maybe, sorry, both lose your source of income? Could you survive that? Is your rental all that bad? How's the rental market? Maybe you can find a nicer place for maybe 1400. Save the difference and put it into index funds. My bet is, that in five years, you'll be way ahead financially.
Of course, we are only hearing from one side of the couple here. I suspect that the lady of the house feels differently. She wants a home, maybe?

[mud]

........

[concretejungle]

Yeah, live you're life like Benny Shitstain.

[Kevo]

Anyway, you really should stop and think here. Your rent is very manageable right now, right? Even if one of you loses your job, you could most likely survive, right? Now, what would happen if you took on a nearly half million dollar loan for something you don't even like all that much, and then one of you, or, maybe, sorry, both lose your source of income? Could you survive that? Is your rental all that bad? How's the rental market? Maybe you can find a nicer place for maybe 1400. Save the difference and put it into index funds. My bet is, that in five years, you'll be way ahead financially.
Of course, we are only hearing from one side of the couple here. I suspect that the lady of the house feels differently. She wants a home, maybe?

Our rent has gone up by 25% in 3 years. Most other areas of Boulder have gone up by more than that. CU is now up to $29k/year in state for undergrad, $49k/year out of state. Rent in the student part of town is going for $800 or $900+/bedroom. Paid for with federal student loan money. It is nuts.

Mrs. Kevo is practical. She's very debt averse (hence us both being debt free), likes budgeting, etc. We both want a house, but not if it isn't the right financial move. Our short term plan is to pay as little as possible for a halfway decent rental and save cash/ invest.

prayer flags, open ductwork, random grade changes in the middle of a door, funky mix of flooring, unusable wood stove in the corner, random pots hanging from the ceiling. It's like every 6 months opened a design magazine and chose something else do to. That things awesome.

Real estate insanity. Louisville is not that nice. I honestly don't see a single thing that sets it apart from Longmont, except that it is 20 minutes closer to Denver.

[wooley12]

I seems to me that there are 2 RE markets. Buy to own and live in and buy solely to turn a profit. Not mutually exclusive groups but both after a house. A "buy to owner" can wait out the swings as long has always gone up. Plus, there is a lifestyle value of owning is what you want. IME interest rates had a direct relationship with asking prices for the buy to live in market. But what do I know. We only shopped 3 years for the first one and 5 for the second. Renting now and loving it but shopping for house #3 . Buy a house you like Kevo. And feel free to use "lifestyle value of owning" on the Mrs.

[cramer]

Our rent has gone up by 25% in 3 years. Most other areas of Boulder have gone up by more than that. CU is now up to $29k/year in state for undergrad, $49k/year out of state. Rent in the student part of town is going for $800 or $900+/bedroom. Paid for with federal student loan money. It is nuts.

Mrs. Kevo is practical. She's very debt averse (hence us both being debt free), likes budgeting, etc. We both want a house, but not if it isn't the right financial move. Our short term plan is to pay as little as possible for a halfway decent rental and save cash/ invest.



Real estate insanity. Louisville is not that nice. I honestly don't see a single thing that sets it apart from Longmont, except that it is 20 minutes closer to Denver.

Kevo, if you guys want to get a house, go get one. My only advice is not to sell the farm and invest all your money in one. Nobody on here can read the future. What i can tell you is that going FHA you're not draining your accounts. Thats why I did it. It seemed like a no brainer in this nutty housing market. I'm up a shitload over 5 years, but we all have seen how my 5 years of equity can evaporate overnight. I wouldn't buy on a normal 20% down loan. No fucking way. Not yet. I could watch my house drop 75K in price and you know what, who cares? I only put 7500 down. Go buy a house, it will be the best day of your life besides the day you got married. Its one of them pretty proud moments. Its pretty awesome getting keys to YOUR place!!! Good luck on whatever decision you make!