Yup. What he said. With the greatest emphasis being how many people cannot participate on the buy side for many years, and how loans went from 0-3% down to 20% now, with many banks not even allowing any jumbos any more. This is going to get a lot uglier, we've seen at most about 1/2 the move down in prices as a whole. Nothing goes straight down, people will buy it all the way down, the suckers believing the mass media telling them the bottom is in are buying now. Wait til you see how many more foreclosures are still coming. There are some books on Amazon calling the coming decade the 2nd Great Depression (and they were written before this whole mess started), and they certainly have somewhat of a chance to be right.
i would say when its all said and done we'll see around a 40-45% nationwide decline. now that could be 25-30% in some areas that had small upside and 50-70% in places that went parabolic like fla and california. we've all been programed for the last 30-40 years to buy every dip in wether its stocks or real estate as it always comes back. this looks like the mother of all perfect storms as the motor behind this whole bubble(banks) are now paranoid to loan money which will cause prices to fall even further. people on here are mentioning buying real estate to rent out. what happens if unemployment goes to 10-15%?many people will be unable to pay rent and you'll see a lot of 2-3 families living per house like many other countries causing housing demand to plummet. this looks like payback for decades of over consumption. if buying a house i'd put a min of 25-50% down . anyway thats my take
Just understand there is no efficient pricing in real estate. A 3 bedroom house on one street can sell for a much different price than a similar house just a few blocks away. It all has to do with the motivation of the seller." __________________ I disagree on the last sentance. The Seller has nothing to do with the RE equation. It is the Buyer. PERIOD. The buyers control the market, even in a "SELLERS" market. ANY HOUSE THAT ONE HOLDS, IS ONLY AS GOOD AS THE "BUYER" IS WILLING TO PAY FOR IT. PERIOD! Right now, there are plenty of liquid people, I deal with them everyday. A few of my Private Equity clients have been buying Commerical and Residentail RE. They are getting increadable prices. One client had a "BMW" 2005 and all furniture thrown in to a house he purhased on A1A, north of BOCA. The MEDIA does not represent the true money makers in this country. The "HOME CRISES" is not a crises of those who are liquid, or those who are doing well. Regardless on what "STAR" or "CONGRESSWOMEN" has a house under forclosure. I would say, that starting to dip your toe into certain areas to pick up property is a wise idea. The lending rules are changing so fast that most of the "EMPTY" Real Estate will be worthless due to fact that many will not be able to buy them. so you gota understand the area your buying into and your timeframe to hold and build your portfolio.
wages have to come in-line with SFR prices. the relationship of rental cost to PITI have to come in-line. CRE is gonna roll behind residential. i dont follow resi that closely, but commercial is too early - IMO. the best deals will never hit market. REO/"Special Asset" Mgrs sometimes keep a list of buyers and call and offer props. no broker commish... also, when things get really bad, you'll see buyers trying to give haircuts to the sellers at the closing table, and sellers will take the cut if they think the market will continue to decline/worsen picking the exact bottom isnt that important if you are adequately capialtized and experienced, but i dont feel the fear & depseration yet in CRE.
many times, pricing tends to be less efficient toward the bottom - im talking smaller commercial... people buying vacant buildings based upon $/SF, preceived underlying land value, or just "gut". the market gets so bad its hard to say how long it will take to stabilzie a property & at waht level. Old Trader - the real estate market is suprisingly efficient overall. supply, demand, price equilibrium.
No, it's not efficient at all. Take a seller whose house needs signficant repair. Who is he going to sell to? He can't sell to the retail buyer, because the retail buyer's lender won't loan against a house that needs that much repair. So he has to sell to someone with cash....and that is always a pro, who is offering lower than market. Take a seller who is in foreclosure, and must sell in the next couple of days. Who is he going to sell to? And let's say you're a buyer with cash, who would be willing to buy either of the above houses, but you don't know they exist. I've bought many houses where I was the only potential buyer. So the seller either agreed to my price, or didn't sell. And my price was one that gave me a signficant profit. That's not an efficient market. And if you think it's only individual sellers in these circumstances, think again. I've bought many houses from bank REO departments where I was the only buyer. OldTrader
geez, come on? you cant figure out that a property with significant deferred maintenance will sell at a discount in comparison to a property in prime condition? im not talking about "distressed" or atypical markets - did you really NOT get that? im talking about properties selling under typical "market value" situations. the vast majority of sales occur under MV circumstances. im mean really - if there is a market with only one buyer, any market not just real estate, is that a "typical" market? you cant figure that out? seriously? if GM opens tomorrow and miraculously you are the ONLY buyer all day - is the price action gonna reflect "typical" supply-demand price equilibrium? come on, you're not stupid, right? almost anyone can buy real estate and in the right market make money. it doesnt mean they arent clueless... ive written demonstration report for professional designation and i can tell you, i was amazed at how efficient the markets are... the issue is, no one is gonna spend 6-8 weeks doing research & analysis.... pair sales, go back in time to get market adjustments... please dont respond - lets just say we disagree and leave it there. i concede you made some dough on a few SFRs over the years. the more distressed this market becomes, the more inefficent the price mechanisms. that is NOT just true of real estate markets either.
Another vote expecting 2000 level pricing to return in this cycle. Long way to go yet, 50% to go in some areas last to see the recession, such as WA.
depends on the area, some hard hit places may have very well bottomed. But around nyc/jersey waterfront, there has been very little movement from the highs, so definitly not a good "low risk high probability" play yet. Dont forget you will also tie up significant cash and deal with all the aggravation that comes with owning/renting investment RE.