Real Estate Crash thread

[stompinlines]

More often than not, someone gets rich off of a scam.

This company is still offering zero down with the appropriate credit.
http://www.rinvestments.net/

[4matic]

More often than not, someone gets rich off of a scam.

Owning rental properties is a scam? I thought it was hard work and risk management.

[XXX-er]

"Real Estate Investment" is one of the greatest scams in history.

I don't think so , like ANY other investment there is a time to buy and a time to sell which unfortunatley gets all mixed up with the motherhood issue of owning a house and needing a place to live

I waited 5yrs just bought a house made into 2 rental units in a rising market not affected by the crash not in the US. ,live in one rent the other to a ski bud ,his rent pays all the mortgage and most all the expenses ... maybe I am missing something but it looks good to me

[gunit130]

I said greatest scam in history referring to RE Investment in a more broad sense, particularly from a Wall Street viewpoint.

[Toadman]

Damn you and your Zero Hedge, liv. I was going to use that post for the fifth year anniversery of this thread in a week or so. Oh well, happy fifth, people. Sure glad I rent.

Can't you buy for less than it cost to rent these days? (At least 80% of the markets are in that category if you believe Zillow.) Assuming you can put 10% down, and have a job, and your credit rating is in the 800 neighborhood, it might not be that bad? I don't know, haven't tried to apply for a loan in awhile. Maybe the banks want a testicle or your ski quiver as collateral. Or just think of buying a house like buying a car. As soon as you move in it depreciates, just like when you drive that new car off the lot.

[liv2ski]

"Real Estate Investment" is one of the greatest scams in history.

Well, per that last post on page 108:

"Put another way: a house purchased in 1996 for $100,000 has to be worth $142,000 today just to keep up with inflation. Factoring in transactions costs, then the house would have to be sold for roughly $152,000 for the owner to extract $142,000--the sum needed to simply maintain purchasing power.

In other words, a house that rose 50% over the past 15 years has simply kept pace with inflation. The nominal "gain" is utterly illusory".

The good news is, many of us live in pockets were the prices went up a lot more that the 50% figure since 1996. So while in the short term RE may not be a buy for everyone. Longer term, I still have a lot of faith in it, especially compared to the rigged casino that is the stock market. Also, in that 15 year period, a wise person living within there means would have the home paid off and it is nice to not have a mortgage payment

[Benny Profane]

Can't you buy for less than it cost to rent these days? (At least 80% of the markets are in that category if you believe Zillow.) Assuming you can put 10% down, and have a job, and your credit rating is in the 800 neighborhood, it might not be that bad? I don't know, haven't tried to apply for a loan in awhile. Maybe the banks want a testicle or your ski quiver as collateral. Or just think of buying a house like buying a car. As soon as you move in it depreciates, just like when you drive that new car off the lot.

One problem - moving. You are now anchored to a place. Nice career move 200 miles away? Try to sell quickly at your price.

[Art Shirk]

One problem - moving. You are now anchored to a place. Nice career move 200 miles away? Try to sell quickly at your price.

They can just rent to you.

[ass-to-mouth]

This company is still offering zero down with the appropriate credit.
http://www.rinvestments.net/

Zero down financing is alive and well. I know two FTHB who bought in the past month and put zero down. One of the deals was a 115% LTV.

[Benny Profane]

http://www.smartmoney.com/spend/real...1304981110838/

For homeowners who are wondering if prices are done falling, and for renters who want to know if now is the time to buy, here's my best guess. In April 2007, when I first wrote that renting had come to make more financial sense than home-ownership, I calculated that prices would have to decline by half to restore the historic relationship between prices and rents. Since then, they've fallen 30% nationwide. Inflation has eaten another 8% of their value. So the worst of the plunge seems done, but prices might drift lower or lose ground to inflation in coming years. In some hard-hit markets, of course, houses are a good deal. For a very rough gauge of value in a specific area, divide recent sale prices by the yearly amount charged to renters for comparable properties. If the result is over 20, prices are probably too high. If it's less than 10, houses might be a steal.

[Moeghoul]

You haven't taken into account that rates are still low. That won't last forever. If rates start going higher, expect more downside. My wife and I are lookin for a place in VT and hope to get a place soon (within 18 months or sooner). I've been crunching numbers and with residency in VT and getting our health insurance thru BC/BS of VT, I basically got a mortgage payment out of the savings in premiums for what I'm getting raped for in PA.

[skier666]

Our rental properties in Silicon Valley are completely full, rents have been increasing every two weeks or so. One negative, fucking asphalt is so damn expensive right now due to the oil prices, you wouldn't believe the shit you get for $10K. Went to an Apartment Expo last week and it seems that a lot of landlords are installing sub-meters to charge the tenant for every little thing (water, electricity, etc) as if you owned your place. Just FYI....

[meatdrink9]

I can't see my locale going down too much more. It's already so cheap. The investors that I'm helping buy houses now are getting them for 10-20K less than I was paying for comparable properties a few years ago (I was paying mid 50's and they're paying mid 30's to 40's, properties still need remodel, time and money). I'm comfortably right side up on all of my properties, but certainly don't have the equity I once had. Rents have held strong the entire time and I'm in for the long haul. This is my retirement. I wish I had more capacity to buy right now.

This winter was the most skiing I've done since the 01/02 season of funemployment post 9/11. The reason why is the rental income. Good pay and free time.

[XXX-er]

I'm comfortably right side up on all of my properties, but certainly don't have the equity I once had. Rents have held strong the entire time and I'm in for the long haul. This is my retirement. I wish I had more capacity to buy right now.

.

thats because you never actualy did have the equity you claim you once had cuz that would have required cashing in all yer chips at the peak and walking away from the game ,don't be greedy ... be happy

[cramer]

One problem - moving. You are now anchored to a place. Nice career move 200 miles away? Try to sell quickly at your price.

You rent your house out. Which right now, its pretty easy to find tenants. My buddy bought in 2009 and bam, he has to move to north carolina. He's had no problem renting his place out. You can get more rent than your house payment is if you bought in the last couple years. Once again, depends on where you live as well.

[4matic]

thats because you never actualy did have the equity you claim you once had cuz that would have required cashing in all yer chips at the peak and walking away from the game ,don't be greedy ... be happy

That's called profit. Equity can be unrealized. Ask Warren Buffett.

[iceman]

thats because you never actualy did have the equity you claim you once had cuz that would have required cashing in all yer chips at the peak and walking away from the game ,don't be greedy ... be happy

Did you manage to read all the way to the end of the post? 'Cause I coulda sworn he sounded pretty happy to me, in the very next sentence.

[Nobody Famous]

http://www.calculatedriskblog.com/20...ned-15-in.html

I love these guys, always interesting reading.

Can't you buy for less than it cost to rent these days? (At least 80% of the markets are in that category if you believe Zillow.) Assuming you can put 10% down, and have a job, and your credit rating is in the 800 neighborhood, it might not be that bad? I don't know, haven't tried to apply for a loan in awhile. Maybe the banks want a testicle or your ski quiver as collateral. Or just think of buying a house like buying a car. As soon as you move in it depreciates, just like when you drive that new car off the lot.

That same blog above has a summary of an annual update on rent vs. buy: http://www.calculatedriskblog.com/20...matter-of.html

[XXX-er]

That's called profit. Equity can be unrealized. Ask Warren Buffett.

yer right BUT equity can go up and it can go down which is what a lot of folks don't take into account and they get overextended SO is more capacity getting overextended OR a good idea ?

And how/why do people get overextended in the 1st place ... stupidity ,unhappiness ,greed ?

[liv2ski]

By DAVID LEONHARDT

My column this week revisits the question of whether to buy a home or rent one. In the newspaper, we included a chart showing average rent ratios — the purchase price of a house divided by the annual rent of a similar house — for several metropolitan areas. Here, we include a longer list.

As a rule of thumb, when the ratio is below 15, people should lean toward buying a home. When it’s above 20, they should lean toward renting. When it’s in between, the decision should be based almost entirely on stage of life: Are you ready to settle into a home for at least five years, if not more. As I note in the column, your stage of life should often dictate your decision even when ratios are below 15 or above 20.

For the following metro areas, Moody’s Analytics, which provided us with the data, had numbers going back to 1986:

Look at this for the data as it is pretty interesting: http://economix.blogs.nytimes.com/20...a-longer-list/

[Toadman]

That's called profit. Equity can be unrealized. Ask Warren Buffett.

. MD9 has probably got loads of intrinsic value in those properties. To bad none of us has access to the Fed window.

Toadman -"Hello Ben, I'd like a no risk loan for $1 billion please."

Heli Ben - "Got any collateral?"

Toadman - "Hell yes! I got a ski quiver I can put up."

Heli Ben - "Here's a $1 billion."

Toadman - "Thanks, dude. See you this winter at Wiegele's."

[4matic]

yer right BUT equity can go up and it can go down which is what a lot of folks don't take into account and they get overextended SO is more capacity getting overextended OR a good idea ?

And how/why do people get overextended in the 1st place ... stupidity ,unhappiness ,greed ?

That doesn't describe MD9 who you were referencing.

[Downbound Train]

A Renewed Crackdown on Redlining

In the wake of the subprime implosion, the Obama Administration has stepped up its scrutiny of disadvantaged neighborhoods' credit access.

Lawyers and bank consultants say regulators and the Obama Administration are scrutinizing financial institutions for a practice that last drew attention before the rise of subprime lending: redlining.

Stepped-up government scrutiny could backfire if financial institutions decide to shrink their operations rather than yield to pressure to do business in areas that don't make sense for them.


http://www.businessweek.com/magazine...8031594062.htm

The Enemy Within is relentless in its desire to destroy America.

[liv2ski]

http://money.msn.com/exchange-traded...aspx?GT1=33009

Leveling that supply?
Redfin CEO Glenn Kelman chimes in on the oversupply situation with an optimistic note, saying that there are "not enough pretty homes" out there, as much of the "shadow" inventory is dilapidated, low-quality stuff. Kelman, who runs an innovative online listing and brokerage service, has heard lots of complaints from buyers that there are not enough homes to buy. And in some cases, such as a recent example he told me about in the San Francisco area, bidding wars have erupted over desirable properties.

How do we reconcile all of this? With a bulldozer.

The fact is that much of the shadow inventory is probably a lost cause and will be razed. Back in December, I talked about how places like Detroit and Cleveland are leveling old, empty, unwanted homes to fight urban blight and help boost the value of existing, occupied homes. Watch for more of this as banks and local authorities realize that many properties are simply lost causes.

So maybe the supply overhang, after accounting for unsellable properties, isn't as bad as it seems. But it's still a problem.

Kelman believes that two separate markets have developed, one for bank-owned or "short sale" distressed properties and one for nondistressed units. The banks are in a race to the bottom with their units as they try to unload what they have before the ravages of nature and vandals erode whatever value is left. But for the "pretty" nondistressed units, Kelman thinks that sooner or later an absence of high-quality inventory is going to "stabilize prices in some segments of the market."

But first, it appears that the prices of these "pretty" houses are set to fall a little more, say Morgan Stanley analysts. The team, led by Oliver Chang, is looking for home prices to fall around 10% this year before finally bottoming. This is based on recent observations that much of the renewed weakness in the housing market is being driven by nondistressed homes. Their research shows that distressed property prices have largely stabilized over the past 12 to 18 months.

Analysts at Capital Economics are also predicting a 10% fall.

It appears that owners of high-quality homes are going to have to cut their prices to close the gap with bank-owned properties if they want to sell in this environment, at least until the supply of distressed properties dwindles enough that Kelman's optimistic scenario can play out.

Not bad for everyone

From the perspective of investors and landlords, the situation looks much different and much more attractive.

Cash buyers are becoming an increasingly dominant force in the market for distressed properties as financing gets harder to secure for potential owner-occupants. Not only that, but a steady drop in the homeownership rate has pushed down the rental vacancy rate as apartments and lease properties attract new tenants.

Rents are moving higher again as a result -- pushing up the earnings yield of investment properties relative to financing costs to levels not seen since the 1960s. That's creating a great profit opportunity for current and potential landlords. Paul Dales of Capital Economics wrote in a note to clients this week that over the next five years the rental market "will be a rare bright spot in the otherwise gloomy residential housing market."

As for when we could expect to see prices finally stabilize and move higher, Zillow's chief economist, Stan Humphries, believes that these cash landlords will play a critical role in getting the housing market to finally find a bottom. Next up would be second-home buyers and retirees. These are the kinds of buyers with the longest time horizons and the least sensitivity to price fluctuations.

[meatdrink9]

Great article. It's pretty much exactly what I'm seeing here. I've seen a couple of properties razed after notices from the city (usually REO's or absentee slumlords).

I've been saying this for years, but if they want to get all these empty, beat-up houses fixed (and off their books) they need to start lending to the people that can make it happen. Experienced landlords. I have perfect credit, great assets, would be willing to put 30% down, but due to the number of mortgages I have (see experience) I'm effectively cut-off from conventional financing as are the other investors dieing to buy up this inventory and put it to work. As mentioned rentals are crushing it right now. Instead we have Realtors and Lenders petitioning to keep LTV's low and no money down purchasing around. IMHO if you can't save up enough for a down payment you probably shouldn't be buying.