I sold all my RE holdings a few years ago in 2007 when Stock market topped on the monthly charts. And I will not buy again till interest rates are very high and many are being foreclosed on. But you have to be buying them outright and not on credit, otherwise wait till interest rates starts moving down after it peaks. But I see with interest rates being so low, upside appreciation of properties will only go down. If you going to just buy it and keep it 30 years, no problem, but seldom anyone does this any more. Check out Las Vegas houses, way way down, and being the economy is down in gambling, they will go down even more.
if you buy to live in, it can make sense. Generally, I don't think housing is cheap. If you consider the bubble started in 1998, and you look at what prices sold at before then in desirable areas, even in hard hit areas prices are still above inflation, they haven't even overshot to the downside yet. I am talking about desirable houses in good locations. You can find 3/2/2 (3bed, 3 bath, 2 car garage) and get maybe 8-10% after all expenses if you rent them out, but I don't think it worth it and I agree prices will have to go much lower. AND that would be sub $250k houses, anything above that is generally overpriced except for destroyed/rehab houses but there is a reason for that. The point being, housing to live in desirable areas/good house is still MORE expensive inflation adjusted then it was prior to 1998 (when the bubble started). Hard to believe, but even hard hit markets, its true. People will discuss low interest rates but thats also largely a function of expected inflation. Prices could correct by going sideways for a long time (and not keeping up with inflation) until they become cheap, but the most likely outcome is constantly dropping at 1-3% a year for many years (overall) which could also be short bursts of upside followed by years of decline. Basically, I'm staying away for real estate. There are deals to be had in 2009 but even then I can't say we're anywhere near a bottom on DESIRABLE areas, yeah you can find blasted areas where you can get a return but its just not exciting. Its not the type of buy where you can't help but buy it, you're salivating. Thats how it SHOULD be in a cratered market.
a bit late? prices in most areas of So Cal were going down until January 2012. For bigarrow the house I funded escrow on, is in Orange county CA. I should have it back up for sale on the MLS in about 3 weeks.
I think buying a house to flip and buying based on long term value are two different things. If houses are selling and there is profit to be made after fix up and sales expenses the it's a good deal to buy to flip. It has nothing to do with where prices are when compared to ten years ago or where they will be ten years from now.
being a bit conservative after losing a ton of money in florida, I wanted to wait for a potential bottom before I bought. I think the bottom is in for as long as we have these very low rates.
I've always had the goal to build a portfolio of rental properties so that my tax bill is greatly reduced with depreciation deductions. Anyone have a bunch of properties that can vouch for that goal still being valid today? I wouldn't be a flipper, just rent it out and hold until i'm 70 which is 46 years away. If rates are low for the next 5 years I could get a nice portfolio going. If one plans to pay the locked in mortgage for 30 years and not jump around then I would prefer to buy when rates are super low. How about rents and inflation? Any thoughts on that?
This chart is a bit dated but still a shocker . Earlier poster is right, 98 was the start of bubble. 1894 to 1920 was brutal, wonder if thats what were facing in the coming years. Presently today I believe we are at about $150, 000 avg home price give or take a few thousand.
I worked for a guy who thought similiar. Problem is depreciation recapture when you sell. He eventually got tired of dealing with tenants. The location basically remained the same for years. It didn't deterioate nor grow. What happened though was the entire city went to shit tax wise. Taxes became higher than the mortgage payments over time. (making it somewhat difficult to sell) Overall the rental project was something to do in your free time.
bottom hit in phoenix late last year. Bought 2 homes one i got for $73k last June comp of exact model/size one street over closed escrow for $118K march 23rd. with rent at 10% cash-on-cash yield after-tax plus appreciation phoenix is looking better. friend is realtor 10-15 offers on all short sales and foreclosures, he was buying one per month all cash last year and he's bring in $15k-20k per month in rent now. renting is frustrating though, lost original tenant on one house after six months, new tenant just lost job and will leave in two weeks, other tenant is awesome because it's section 8 so never late on rent but some punk kid smashed the rear sliding door window. still with all the bull, up $58K in less than one year on two homes after-tax and after commission if i unloaded today on $156k invested. i keep hearing 'flood of forclosures to hit/next wave coming'...not in phoenix that i have seen, hedge funds, all-cash investors, and canadians are scooping everything up. if this 'wave' hits again in phoenix i'm liquidating my brokerage account and buying more homes.