Real Estate Crash thread

[Benny Profane]

Jeez, haven't you heard? Housing has bottomed, and the future is bright! In no time, you'll be borrowing on that equity again, livin' the life.

And, c'mon, Zero Hedge is full of snarky young men, right?

[cramer]

Jeez, haven't you heard? Housing has bottomed, and the future is bright! In no time, you'll be borrowing on that equity again, livin' the life.

And, c'mon, Zero Hedge is full of snarky young men, right?

Housing bottomed out at the end of 2008 and beginning of 2009 in most areas. Dont hate the players benny, hate the game. Just because you played the game and lost doesnt mean you need to hate on the winners. As Sheen would say, im winning.

[liv2ski]

^^^^Pretty big claim there Cramer. It was only last month that the Case Schiller Index finally had a small YOY increase. I for one continue to follow RE in the Truckee area of N Lake Tahoe and the trend there is still down. So it depends on the location and how hammered the values were in the first place. I am not overly impressed with the legs the economy has on it. I can easily imagine a double dip next year, but we will see.

[iceman]

My contrarian nature is a little worried that traffic to Zerohedge.com is in steady decline:

There's that, but what really makes me scared is that Benny is thinking about buying a place.

SELL!!!!!

[Benny Profane]

Nah, you guys talked me out of it. For now.

[liv2ski]

Just get the WRX. Like many in Amerika, you can just have a PO Box and live out of the car.

[cramer]

^^^^Pretty big claim there Cramer. It was only last month that the Case Schiller Index finally had a small YOY increase. I for one continue to follow RE in the Truckee area of N Lake Tahoe and the trend there is still down. So it depends on the location and how hammered the values were in the first place. I am not overly impressed with the legs the economy has on it. I can easily imagine a double dip next year, but we will see.

I bought a house out in BFE. For those not familiar, Bum Fucking Egypt. Oakley, CA for the rest of you that doesnt know where BFE is. Double dip? maybe up in tahoe. when i bought the neighborhood across the street the builder walked. So in 2009 those houses were finished by the banks and sold for around 200K. 50+ of them. Right across the street from me. They all got snatched up 2009. Now they are building houses behind me, expanding the neighborhood. So tell me liv2ski...where did i go wrong. My value is on the rise, we are looking to invest in another place.

i want a smaller place with a pool.

[powder11]

I bought a house out in BFE. For those not familiar, Bum Fucking Egypt. Oakley, CA for the rest of you that doesnt know where BFE is. Double dip? maybe up in tahoe. when i bought the neighborhood across the street the builder walked. So in 2009 those houses were finished by the banks and sold for around 200K. 50+ of them. Right across the street from me. They all got snatched up 2009. Now they are building houses behind me, expanding the neighborhood. So tell me liv2ski...where did i go wrong. My value is on the rise, we are looking to invest in another place.

i want a smaller place with a pool.

Doomsday talk is the new bubble. Everything is shit and we're all going to hell.

[4matic]

i want a smaller place with a pool.

Think carefully about a pool. It's a considerable liability and if you have kids pools are #1 cause of teengage paralysis. Out where you are consider a pool chiller if you go for it.

[4matic]

Foreign buyers plowed $82.5 billion into U.S. homes for the 12 months ended in March, up 24 percent from $66.4 billion the year before, according to the National Association of Realtors, which does an annual survey on international buyers.

The sales - which represented 8.9 percent of all home purchases - were evenly split between recent immigrants and nonresident foreigners, the Realtors group said.

In the nine-county Bay Area, about 6 percent of all property searches by prospective buyers come from abroad, according to Trulia.com, which gets 100 million page views on its site every month. San Francisco is by far the most popular search location for foreigners. Since it is a high-cost area with a thriving job market, it seems likely that many searchers are not looking for rental properties for investment purposes but instead are looking to move to the city.


"Lower end" luxury properties are bargains these days. Anna Roberts of Coldwell Banker Residential Brokerage represents a Dubai oil executive who paid $1.75 million for a luxury home in the Marin community of Ignacio. "The owner had put over $3 million into it, so it was an excellent value," she said. Her buyer plans to use it for family vacations.

"There are cultural differences and sensitivities" in working with overseas buyers, she said. "They need lots of additional information."

Serbian national Milos Citakovic, 26, who moved to San Francisco four months ago as co-founder of a text-messaging company called Poosh.com, said he is seeking a two-bedroom condo here in the $800,000 range - and considers that a bargain, especially after having recently lived in Moscow, where prices are even more outrageous than here.

"The dollar is relatively weak against the euro. A million bucks in the U.S. is more like $800,000 in Europe, so we are basically saving 20 percent on the exchange rate when we come over from Europe to buy here," he said.

Read more: http://www.sfgate.com/realestate/art...#ixzz266Ha57GO

[4matic]

The new issue of Barron's has a pretty bullish message about home prices.

"A number of forecasters predict home-price increases around 10% or so nationally over the next three years, with some metropolitan statistical areas, such as Midland, Texas, and Bismarck, N.D., likely riding the energy-exploration boom to better than 20% jumps in residential-real-estate prices," writes Jonathan Laing.

Experts he consulted with include Moody's Mark Zandi and the National Association of Realtors' Laurence Yun.

Laing's quote from S&P's David Blitzer sums up the message:

"This increase in home prices, unlike the one that occurred in 2009-2010 as a result of the temporary tax credit for first-time home buyers, looks to be for real," says David Blitzer, chairman of the index committee at S&P Dow Jones Indices. "We probably won't see a V-shaped recovery in housing, with prices overall going up 20% in the next year. But this rally has legs, and prices will definitely be higher next year."



Read more: http://www.businessinsider.com/barro...#ixzz266PcF0XR

[Benny Profane]

Oh yeah, Barron's has a ton of credibility after they print something like this in that article:

"Even more upbeat is Lawrence Yun, chief economist at the National Association of Realtors, who, unlike some of his predecessors, is more a sober analyst than a cheerleader for the real-estate brokerage industry. "

Now, if you have been following the RE crash in the media for the past five or six years, you'll know that Lawrence Yun has been the major whore voice for the NAR consistently. "Sober analyst" my fucking ass. He IS the cheerleader of THE cheerleading organization who's motto should be, of course, "It's the perfect time to buy!". The fact that the author of that article wrote that tells me that he is just incredibly naive, and shouldn't be a reporter until he gets his driver's license, or, is just plain corrupt, and is schilling for the industry. I'll take the latter. He works for Rupert Murdoch, after all.

[liv2ski]

Honestly, it is in my best interests that RE does well, as that is the industry I have worked in for about 30 years. I do not feel I am a doomer P11, rather, I prefer to call them as I see them. I can offer you lots of documented facts to back up my believes, but really, I do not give a shit if you think I am full of shit. Everyone has an opinion and until 10 years down the road, who really fucking knows for sure. Just do what works for you and have a good time Benny called this correctly when he posted this thread and I really do not see the US economy keeping any short lived upside tick going strong into 2013. But hey, I have been wrong before.

[skier666]

Old article from this year but the above reference to Oakley, CA made me remember it.

http://www.forbes.com/sites/morganbr...ands-of-homes/

[Shredhead]

Think carefully about a pool. It's a considerable liability and if you have kids pools are #1 cause of teengage paralysis. Out where you are consider a pool chiller if you go for it.

I love my pool!
I wouldn't build one, but if it's already there, someone's already taken that hit. Teach your kids not to be dumb shits, but I would get an umbrella policy just in case. A chiller in northern Cal, get real?

[Benny Profane]

Old article from this year but the above reference to Oakley, CA made me remember it.

http://www.forbes.com/sites/morganbr...ands-of-homes/

Just watch this train wreck from the sidelines. Buffet said he would love to do this, but, he isn't, because he knows it won't work unless RE returns to bubble valuations. Ain't gonna happen, and, after all the horror stories of the banks fucking up mods and foreclosures, would anybody want BofA as their landlord, for god's sake?
Just make sure that none of your investments are involved, like the crappy REITs that these guys will create to fund this scheme.

[powder11]

Honestly, it is in my best interests that RE does well, as that is the industry I have worked in for about 30 years. I do not feel I am a doomer P11, rather, I prefer to call them as I see them. I can offer you lots of documented facts to back up my believes, but really, I do not give a shit if you think I am full of shit. Everyone has an opinion and until 10 years down the road, who really fucking knows for sure. Just do what works for you and have a good time Benny called this correctly when he posted this thread and I really do not see the US economy keeping any short lived upside tick going strong into 2013. But hey, I have been wrong before.

chill dude... I'm just poking fun at how people get so fixated on a particular mindset that it tends to create selfufilling proficies. It certainly happened when things were going through the roof, so why would it be any different now that the pendulum has swung in the opposite direction? I don't have any 1st hand professional knowledge of real data and certainly don't have the time to google newspaper articles in attempt to appear more informed than I really am [cough]Benny[cough], but I'm not buying into the hype.

[4matic]

it won't work unless RE returns to bubble valuations.

Why do you need bubble valuations? If they maintain reasonable occupancy rates and just steady pricing the return on equity will be 10% a year.

[Benny Profane]

Why do you need bubble valuations? If they maintain reasonable occupancy rates and just steady pricing the return on equity will be 10% a year.

Because they won't make that money sitting in a cube in NY and trying to manage a workforce spread out all over a state or region. You just bought a rental property, right? You're going to be hands on, right? Can you afford a repair person for every little thing? Nope. Well, maybe, but you can piss off your bottom line.
Then there's the tenants. You think they'll give a fuck when their landlord is Bain? Goodbye getting their checks on time and the housing not getting trashed.
Oh, and one more thing. What's going to happen to rents when thousands of these homes come on the market in a region all at once over the next few years? Yup, going down. Happened in Vegas already.

The people I have known who are/were landlords make money, but they worked hard at it. They would laugh at an Ivy leaguer and his spread sheet predictions doing this.

[Hugh Conway]

chill dude... I'm just poking fun at how people get so fixated on a particular mindset that it tends to create selfufilling proficies. It certainly happened when things were going through the roof, so why would it be any different now that the pendulum has swung in the opposite direction? I don't have any 1st hand professional knowledge of real data and certainly don't have the time to google newspaper articles in attempt to appear more informed than I really am [cough]Benny[cough], but I'm not buying into the hype.

there's definitely a bunch of that, but it seems to be back to the "real estate is an unfailing way to make money" around CA, just it's now landlords who see it as an unfailing way to make:

Why do you need bubble valuations? If they maintain reasonable occupancy rates and just steady pricing the return on equity will be 10% a year.

with little effort. Like I said before, people are dumb, but I don't get why decent honest people would rent in perpetuity in some East Bay suburb.

[4matic]

but I don't get why decent honest people would rent in perpetuity in some East Bay suburb.

That's rhetorical. Why would decent honest people live anywhere (in perpetuity) you don't deem worthy or is it just the East Bay?

[Hugh Conway]

That's rhetorical. Why would decent honest people live anywhere (in perpetuity) you don't deem worthy or is it just the East Bay?

The critical part is rent 4matic. Not live - RENT I don't see the 10% annual return no-work little-risk debt-cropper fantasy being anymore sustainable than the 20% annual increase in value or the 20% decrease in value. Even in "more desirable areas" say, Santa Cruz, where there's a decent VRBO vacation rental market the number of properties recently being refurbed and turned into short term rentals is pretty shocking to me relative to the market size. Equally shocking is the slumlord to students market - I got that in upstate new york, buy a home for $40k, rent it for $1k a month, who gives a fuck if it isn't there in a few year. When you buy the home for $800k and rent it for $3k the numbers look slightly different when you account for student wear and tear.....

I dunno, same bubble, different face

[4matic]

The critical part is rent 4matic. Not live - RENT I don't see the 10% annual return no-work little-risk debt-cropper fantasy being anymore sustainable than the 20% annual increase in value or the 20% decrease in value. Even in "more desirable areas" say, Santa Cruz, where there's a decent VRBO vacation rental market the number of properties recently being refurbed and turned into short term rentals is pretty shocking to me relative to the market size. Equally shocking is the slumlord to students market - I got that in upstate new york, buy a home for $40k, rent it for $1k a month, who gives a fuck if it isn't there in a few year. When you buy the home for $800k and rent it for $3k the numbers look slightly different when you account for student wear and tear.....
I dunno, same bubble, different face

My PITI on the rental in 94580 is $1050/mo which I lease for $1500/mo from a total investment of $60k before tax considerations. You can figure the ROI because I'm not really sure. The lease is $200 below current market rate in my area. The risk of an improving housing market will lower rents and increase vacancy rates. Returns are always comensurate with risk so I expect the 10% to contract slowly over time. Lifestyle choice and where you live are not reasonable choices for many people. Because I was lucky enough to have zero time unoccupied my chances are better. I believe the risk/reward on this investment is pretty good and the diversification is what I needed. All that said, I currently have two investment properties I'm managing, if given a choice I wouldn't do it. Just the uncertainty and having a shared interest in other peoples lives is a pain in the ass and not worth it even though they are great investments so far.

[Hugh Conway]

< shrug > as has been proven over and over it's an individual situation thing whether you can make money.

[meatdrink9]

RE still moving quick out here. Having more success with owner occupants/friends than investors right now (mostly because investor properties turn into bidding wars). I've got one investor property under contract that was not listed on the MLS. Helped a friend buy a fixer upper. The friend short sold his house 4 years ago. (Yes, those people are jumping back in the water and the banks are writing them loans.) I think that's one of the reasons RE has been so strong this summer. We're just far enough out from the original meltdown that people can buy again. His house payment is $900, his rent had been $1500. I had wondered if these prior homeowners would want anything to do with the "American Dream" again or not, but after 4 years of renting at those rates I can see why people are getting back in. Weird year for sure. Good prices and loan rates. It makes sense. I just wish we had a few more years of cheap buying ahead of us. I'm hoping things slow down a little in the winter.