![]() |
US Homeowners & RE Investors -- What happens if...
The housing market turns on you?
Interest rate hikes are coming in steady now -- what's this, 6 in a row? The writing has been on the wall for a while now. http://www.washingtonmonthly.com/fea...ace-wells.html http://www.freerepublic.com/focus/f-news/1313194/posts Even longer when you consider this quote... "If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." -Thomas Jefferson ------- The same guy that predicted and warned about the dot com bubble has been talking about the RE bubble for the past few years. So what do you do? Where is the "smart" money now? Gold? Probably way too late for that - they've been buying gold while everyone else was chasing paper mortgages. Just compare the housing market to a gold chart. The average joe thinks it's no-brainer easy money to invest in real estate these days. Just buy a house... hell, buy the biggest house your lender tells you that you can possibly afford - why not? It's going to keep going up up UP right? When this US real estate bubble pops, we're so fucked as a country. :disgust |
cool post :thumbsup
|
But hey don't worry... they're building huge gated (caged) corporate ran apartment complexes everywhere like you wouldn't believe.
So you'll always have a place to live. :thumbsup |
Hmm we been in the real estate games since 89 and its been very good to us, not really concerned, me and the wife have seen it all. As for being fucked as a country? Nah not worried. Fire me up a few more FHA foreclosures on 1 year arms and let me flip em out in 30-45 days mmmmmmmmmmmmm I love it
|
You mean the bubble that started since the history of real estate purchases began?
|
Quote:
The average american homeowner thinks their new (or newly refinanced) home is a sound investment. They are betting on it. Hell they spend like 75% of their income on their mortgages every month - if they are locked into ARM's & the interest rates keep climbing it doesn't take a prophet to predict what happens next. People in that position will be squeezed out by their ARM + interest hikes + increased unemployment rates. They will be the first link in a chain of sellers, because when they put their shit on the market, others will panic and do it too trying to preserve their equity or prevent bankruptcy. Hmm... anyone know of a chart somewhere that shows what pecent of amercians rent and what its growth rate has been over the past few years? It would be intresting to watch that chart over the next year or so. |
Quote:
:1orglaugh |
Quote:
|
Quote:
It's like they say... the bigger they are, the harder they fall. |
Quote:
I think you're missing what I'm saying. It's not going to START with the people holding A paper ARM's. It's going to start with the those people with less than perfect credit that barely squeezed into home ownership in the first place, and when they did, they bought the biggest house they could afford. LOL... and if those people with bad credit starting killing their mortgage insurance and skipping payments what do you think will happen? These are people who have a poor track record of dealing with financial problems properly. What I'm saying is there are SO MANY people in that category now that if things continue to go the way they are going, they are going to get squeezed out... and because so many other people have bit off more than they can chew betting on the real estate market continuing to rise, then those people may start to bail as well. |
Quote:
Dot coms are a recent, might I add, very recent business model still breast feeding from Adam Smith books while Real Estate is a timeless investment; one which has always appreciated 7 to 10 percent (give or take). Include 4 depressions and you still can say roughly the same for stocks, which is very telling if you draw comparisons around the world. Rising interest rates "can" force more rental surges, depending on where you buy. Economies should not, IMO, be judged on a national scale, but more specifically by regions, maybe as narrow as cities, in the US. Gold is great, but look at the evolution of Gold. For each rich 49er you had 10 starving kids. BTW. Good thread. |
Quote:
|
Quote:
I'll be curious to see how the market shakes out in the next couple of years, but I'm not worried. I live IN the city, not some fucking suburb like Temeculah. (Those in SD/SoCal know what I'm talking about) |
Quote:
I'm talking about the RE movements of the last 10 years. I'm talking about when the smart money moved from the markets to RE, and now back to markets (because public perception left over from the dot.com.bomb is the market is too volatile and risky for the average joe). They always leave the average joe holding the bag. Money doesn't grow on trees. They don't let average americans make money hand over fist for very long like they have been with RE. It's now to the point to where the majority thinks RE is a solid and no-risk investment, hell, for quick gains even. It doesn't work like that. It's a trick. And people are about to get burned. Hell... Greenspan was PUSHING ARM's right before the first of the series of interest rate hikes. What does that tell you? :upsidedow Don't get me wrong, it's a pretty fucking ingenious plan they have working. :helpme |
Quote:
Exactly. Now go back to that Thomas Jefferson quote :winkwink: |
since i'm getting into the rental business, this can be good news for me.
|
Quote:
Does anyone have recent data for the average monthly mortage price Vs. average monthly combined household income? That would be interesting to know. |
Quote:
I see his point, I am just thinking of me right now :) But I don't see RE "not" appreciating over time... |
Quote:
Otherwise, if you are just going to buy some homes or small apartment complexes - then you are just getting in & (again, IMO) you are going to be getting in at the top. |
Quote:
I rent out, because we all seem to agree that a renter is now no problem. Your point can only be that massive deflation occurs on a long-term scale, a scale never before seen in the history of RE. Correct? And you are the only one seeing this coming...not even the banks seem to see it coming? |
Quote:
And many people buying those stocks in the 90's for $100-$200 a share couldn't see their stocks not going up another 100 to 200 points. The bottom line was they were making (or missing out on) so much money that they were blinded by the fact that they didn't know dick about the market, the data, or the intentions of the companies they were forking over their life savings for. Sort of lilke average people are doing now with RE. Most have put everything they have into it. It's their biggest investment. Yet, they don't know the numbers. They aren't monitoring the statistics that determine the stability of this huge investment they've made. They just see the numbers continue to rise and rise and think all is well. Sound familar? |
Quote:
|
Quote:
|
Quote:
LOL... Cory. Go back and read that TJ quote again. Read what I said about Greenspan. You better believe the banks see it coming :1orglaugh :1orglaugh |
Quote:
The sector of stocks you are talking about was fueled by a brand new business platform, one that changed the world on likely more levels than the automobile manufacturers. RE as long-term and short-term investments has been around forever. I just don't see the comparison. |
Quote:
My friends parents live in Del Cerro. Just had their house appraised for $650k. They bought it 8 years ago for $250k. Thats crazy. They're going to sell soon so good for them. But no way in hell am I buying right now. Over the past year I've seen the market around here changing. Of course the prices keep going up and up, but I've also seen more and more houses up for sale. There are 3 houses on my street that have been up for sale for over 6 months, I haven't checked the prices but I'm sure they're around $450k. Renting sucks, but buying at these prices just seems silly. I'll move out of San Diego before I pay that for a 3 bedroom average family house. |
Quote:
I almost went in on that one as well. I didn't understand. Suburbs in San Diego is solid if you ask me!!! |
Quote:
I'm sure you know the term "shaken out" right? I'm sure you've seen analysts issue buy ratings on stocks only to turn around and start dumping 90% of what they have them, or issue sell ratings only to turn around and buy up every last share you sell to them in the panic filled wake of their sell recomendation. :upsidedow Average american investors were the ones who were hurt (scammed) the most during that period. As far as 'my people' saying the industry would never recover... I guess first you would have to tell me who exactly my people were. I never once thought that the market wouldn't recover - once the richest of the rich were able to buy in at the bottom of bottoms. Just like I don't think that it will be doomsday forever for RE... just long enough to shake 95% of the people out so it can exchange hands and wind up in the hands of the richest 5% of the world. |
Very good post. Frankly, I anticipate entering the RE market in 3 to 4 years. Hopefully, much of the craziness re recent bubble will have subsided by then. :2 cents:
|
"my people" was just a term I used to describe the analysis of your prophecy. Not the best term....
|
Quote:
That number will be more accurate in a region as opposed to across the board. Our entire economy would collapse. I do however agree with you that the lines between socio-cultural relations is expanding. |
they are going to continue on this trend
|
Quote:
But seriously, you will probably look back in 4 years and think, "damn me, I should have just done it then..." |
Quote:
|
Quote:
I have to walk the dog. |
Yeah, I need to get back to work myself.
Have a good one people. :thumbsup |
Quote:
This happened in the late 80's. And your not fucked with your own house unless you are forced to sell. If you get a mortgage and plan on living in that house for more then 5 years then lock it up for 30 years, grab that 6% and tie it up. SO if the market goes cold then it wont affect you unless you have to sell. If you own rental property this is the same case. Also long as your tenants don't lose their job or something, then you should have a long term mortgage and if you dont sell you are fine. If you do have to sell? say you bought your house last year for 500K put 20% down so you fin. 400K the value your house will drop wil likely not be much more then what you put down so will basically lose your downpayment **IF the market went bad** Commercial property is a whole another animal. Simply because you have to refinance every 5 years (typicaly). So if you go into a deal with a 9% cap and your rates right now are 6% then you are making money. IF you refi in 5 years and the rates are 12% your in trouble. So basically in that case you will owe more money when you refi 5 years later then you did when you bought the building and put 20% down.... Bottom line, if you buy house now, get a 30 year loan. If you buy commercial make sure you have at least a 12% cap in my opinion. How to make money off of this if the market goes soft, well you will be able to pick up a lot of foreclosures real cheap and make a lot of money when the market rebounds and everyone starts buying again. Stuff like this is temp. Not like people will stop buying houses for every... From everything i heard the interest rates will creep back up slow, and will not be more then like 8% in 5 years... thats not too bad. If you have specific questions let me know. |
Quote:
If rates rise, so should rent. Good post by the way. |
(cont)
I doubt investors buying apartments in Phoenix are getting 30 year fixed. That said, if rates rise then so does the cost of the operation, for lack of a better term. Everyone whom owns units in that complex has to make up for the inflation, subsequently raising rent prices to meet the inflation.... |
Everybody's gotta live somewhere.
:2 cents: |
All times are GMT -7. The time now is 08:55 AM. |
Powered by vBulletin® Version 3.8.8
Copyright ©2000 - 2025, vBulletin Solutions, Inc.
©2000-, AI Media Network Inc123