I agree. Los Angeles Metro and surrounding areas seems to be falling out. I am in the Biz and I don't care what anyone says, the per square foot price is falling. (the news here is that the sales are slowing but the prices are holding... NOT true!) I found a new construction for $349 / foot and just about 5 months ago, an old existing house, smaller than the new construction was about $600 / foot. If your in my area, I would wait at least 5-6 months. I think then, it will be really prime pickings. --- My $0.02
The foreclosures haven't even begun compared to what will begin to happen when adjustable rate loans really begin to be adjusted higher and all the speculators get crushed. It isn't just subprime loans there will be debacle for prime loans holders also. Real esate prices became way out of wack. A shack in LA suburbs or the bay area for $400+K, I don't think so. Prices became ridiculous due to no down payment loans, subprime financing, massive speculation. All that has dried up. All those forclosure buuyers are taken out of the market for years due to missing pay,ments and having to default thereby damaging their credit and future financing without the available of these types of loans. The availablity of cheap no down loans is gone. Real estate prices are going to correct much further. The U.S. will set new records for forclosures in the next 2 years. This is going to play out in the next 2+ years. You buy now you will see your equity evaporate. Big mistake trying to jump into real estate speculation right now. All the other real estate speculators are going to get crushed. This has not even begun to unravel. Watch what comes next in the next 24 months. The bubble has yet to POP. Blood in the streets? The blood hasn't even started to flow. Flipping houses worked in a bull rising real estate market. That was part of what drove this market and home prices higher. People speculating and flipping homes with or without any improvements. You better LEARN about flipping and home renovation first. Bad time to be getting into this. Very bad time.
What about renovating and then RENTING out ? The rental market is going to strengthen with all of the homeless, foreclosed-upon people. I somewhat jokingly told my wife, it's going to get so bad in 2008, there will be people knocking on our door at night asking for a place to sleep. Roving bands of homeless....that's the ticket...heck, it may even become a Hillary campaign issue.
This post is a long list of trite bearish statements. 1. The U.S. will set new records for forclosures in the next 2 years. 2. This is going to play out in the next 2+ years. 3. You buy now you will see your equity evaporate. 4. Big mistake trying to jump into real estate speculation right now. 5. All the other real estate speculators are going to get crushed. 6. This has not even begun to unravel. 7. Watch what comes next in the next 24 months. 8. The bubble has yet to POP. 9. Blood in the streets? The blood hasn't even started to flow. Heck, he may even be right, but I see so many of these posts that just spout this stuff without providing support for their reasoning. Its funny to me. I think its a great time to get in the market. Rates are low, dollars have lost a lot of value and we're having to compete for materials on a world market. House payments, which are a function of interest rates and build costs may not go much lower. SM
You have been bullish on the housing market in every post for the last 2 years. You have been soooooo unbelievably wrong, yet you still won't change your bullish view.
$349-600/foot is insane. I honestly can't believe people are even willing to pay those prices. Where I live you can build high-end custom for $120/foot including lot. People always argue that the pay is high in other places. That might be true, but the pay isn't that much higher. The average paying job in those areas is only about 50% higher than here. So people there make $30/hr while people here make $20/hr. Take your average home then at about 2,000sq/ft and the cost here is about $220,000. Cost there is over $700,000. Here a person will pay ~$1,400/month on a $42,000 salary. There he will pay ~$4,500/month on a $63,000 salary. That is hard to do even if he is in a double income family. So they are forced to either get a piece of junk or something much smaller. That really doesn't make any sense for the average person. So why is it that average people tend to gravitate toward those areas?
Thats because its making me a fortune. For the last two years, if I had listened to the bears, I'd have missed out on low interest rates waiting for a "crash" that hasn't happened. Real estate is a great investment if you're a buy and hold person and you know what you're doing. Either the property values go up, or rents go up. Read all my posts...you won't find one where I advocate anything other than buy and hold, though I might have said that true flipping, where you hold the property only a few months is relatively harmless because the time horizon is short, provided that the deal makes sense in the first place. People still make money today flipping. Playing the Condo deposit game was lunacy unless you were willing to lose all the money you put down, and many were. Sure, there are some geographical areas where people lost all sense about how much they paid. But most of those people will still come out fine unless they were just stupid about how they financed it if they hold it through the downturn. Yes, some people sensibly bought properties with the intention of holding it long-term and then they had to sell due to death, divorce, etc. This is unfortunate. But people lose money on forced stock sales all the time....doesn't mean that stocks are necessarily a bad investment. They are just an investment vehicle like real estate, and when you make the biggest deal in your life you really ought to know what you're signing and have a historical basis for your decision making. For the last two years, anyone who bought a house with the idea that they were going to live in it and make payments on it would have been better off than renting it with the exception of a few isolated areas...and then, only for people that had a short time horizon before they sold. Interest rates on fixed notes have risen about a full point since then and the associated lower payment more than offset any bobble in price. And now, someone who wants to buy will be trying to finance under stricter standards from a smaller pool of lenders who are more demanding. It was a window of opportunity that made many rich, but it is virtually closed now. Its aggrevating reading articles about how homeownership dropped more than at any other time, or that foreclosures spiked compared to last year when homeownership is still near an all time high, foreclosures are below the historical average, and rates are still pretty low. I do firmly believe that if you want to buy a house to live in it for many years, now is a good time, and if you study up on real estate investing, you can still make a fortune in todays market. Holding hard assets while inflation goes crazy is always good. Leveraging the investment at 10 to 1 and getting a tax break for it is freakin' awesome. SM
This post is a long list of trite bullish statements. Heck, he may even be right, but I see so many of these posts that just spout this stuff without providing support for their reasoning. Its funny to me. I think its a great time to watch and wait in the market while the forclosure rates increase and cause home prices to drop.
Rental rates will be driven down as well, because all those foreclosed homes and condos will become rental properties, competing with the existing supply. :eek: