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Post by masalai on Jun 15, 2005 20:28:44 GMT -5
What are people seeing in their specific markets? I live in Dallas/Fort Worth and have seen some significant valuations over the last couple of years. Nothing like some of the coastal areas have seen but 10% a year for the last few years.
I have a close friend who has been a RE investor for the last three years. He has purchased 12 properties which he has held onto for rentals. I spoke with him last week about his views on the market ect. I prefaced it by asking what margin of equity he had in all of his deals. He said he makes sure he has 20% equity once they are rehabbed. This way he can refinance them, get his purchase/fixup money back out and not have to pay PMI. Sounds good up front.
I then asked what he thougth of the "bubble" and he sincerely feels this area is not experiencing one and that they are regional or localized in nature. He felt pretty confident that the DFW market wouldn't be affected if a national meltdown occured. I kept a very neutral stance in the conversation and just listened to what he had to say.
I have another friend who lives a little north, up in Oklahom City, OK. I spoke with him last weekend and he informed me he was going to become a RE investor. I asked him what kind and he replied that he is going to purchase distressed properties, fix them up and sell them. Making at least 50% on each property. When asked what if it didn't sell? He figures he can hold them long term as rentals if he has to. When asked why he was choosing RE as a vehicle to invest in he stated "that is where people get rich, wealth is created through RE."
It seems that just about everyone in my life is either ignorant to current valuations and the consequences of rate hikes and/or excessive inventory or they hear the "bubble stuff" and think it is all not applicable to them. One thing is certain, everyone thinks RE will keep going up.
I was wondering what other people are hearing, sensing in other markets. I look forward to hearing what people are experiencing!!
Masalai
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Post by Sol P on Jun 20, 2005 21:34:37 GMT -5
Comments By Scot Starr on June 20, 2005
Sol,
briefly there seems to be a 33 month cycle in residential building going back to 1920, this is the "minor cycle" with the big swings being a 10- 20 year cycle ( eg huge speculation followed by a big bust".
I think we are in the midst of the 10 - 20 year cycle , so there is still upside to go, but when she goes down it will go down big.
On a personal note, I called a chap who had 37 acres behind my house for sale. Around here acreage goes for about 1,000 - 3000 / acre. He wanted 7,000 per acre. this parcel is landlocked. Also beside my house a developer has built 5 homes, one of them being a speculative home, so by extension we can say that 20% of his homes are built as speculative. He's building 200 K plus homes in an area where the average income is about $35,000.
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Post by masalai on Jun 22, 2005 20:11:38 GMT -5
I am currently visiting San Francisco, my g/f lives here and I'm taking a week long class. I figured I would kill two birds with one stone and visit my g/f while learning something new. Not only that but if I took the same class in Dallas where I live she never would have forgived me  !!! I have taken this opportunity to speak with other people in my class who actually live in the bay area and ask them what they think of housing prices ect... They all seem to agree on one thing, that prices are definitely inflated and that they all expect things to settle down somewhat, or at least level off. Not one person has any inclination or idea that any kind of serious "correction" could occur. People are suggesting that things could just slow down and that is the extent of it. I specifically asked if there was any way prices could drop 30-40% or even drop to half current evaluations and everyone seemed to think that was not a possibility. While driving around the city over the weekend I also noticed that there seemed to be more for sale signs in house windows. One comment was that it didn't make any sense to purchase a house when it seemed so much more affordable to rent. I explained on a napkin how housing evaluations were not justifiable from a rent perspective. When I showed her this (female investor???) she understood the implications immediately. This has been an interesting trip so far and has shed a different perspective on what people think of the RE bubble. |
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Post by masalai on Jul 1, 2005 21:40:58 GMT -5
Another interesting observation, I have a friend here in Dallas who is now getting into real estate investing. I asked alot of questions about what it was he wanted to accomplish ect. and it was interesting to speak with him.
After a 30 minute discussion of his plan(s) and methods for investing in RE talk came up of the course he took. I spoke some more with him about this specific course and what it entailed. It was a 5 day boot camp style course which cost for him and his wife to attend 15K. I almost fell out of my chair when he told me how much it cost! Well, I fell half way out of my chair when he told me that, I fell the rest of my way out of the chair when he told me he charged it all on CC's and was hoping to pay it off with his RE profits.
It seems that more and more people around me that I'm personally acquainted with are getting more and more into RE type investments. I know it is the sheep that get led to the slaughter right before they close the gates behind them, ripe for the picking. This is the way it is looking for my personal spere of influence. It isn't until the last 90 days that people/friends who have shown little to no interest in RE are jumping out of the woodwork to get involved.
I'm curious how this corresponds with others experiences as well? I haven't charted this behaviour out but it would seem this would be another uptrend line, probably a third/fourth/fifth uptrend line.
Anyway, just thought I would throw that out there...
Masalai
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Post by gigabite on Jul 15, 2005 0:30:29 GMT -5
I'd like to share with you this interesting story:
An ex-coworker of mine living in San Diego (California) recently sold his house for 1 million dollars, and relocated to Oregon. What's so strange wasn't really the dollar value of his rather average four bedroom home, but the fact that the buyers were a Taiwanese couple who paid in CASH!
Apparently, this is the way Asians do business -- one lump sum, no loans. This brings up an interesting point: In the event of a real estate crash, what's there to keep the rich Asians from scooping up the properties as their value plummets?
Is there a possibility that the prices of homes will remain relatively stable as a result of this foreign influx of capital (i.e., it may never come to a crash)?
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Post by Sol on Jul 16, 2005 3:23:51 GMT -5
One word should serve as a huge reminder "JAPAN"
almost 30 years later real estate is still selling at less then 3/4 its peak value and hum the asians did not buy then and are still not buying there. When people panic they run like sheep, remember the story of the sheep in turkey. All it took was one to jump and the rest followed the reason only 450 died and not more is because the bodies of the dead sheep acted as a cushion but regardless they still fell from high ground to low ground. Panic knows no limits.
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Post by gigabite on Jul 21, 2005 2:12:53 GMT -5
Sol's July 19th Market Update had a lot of eye-opening statistics relating to the housing sector. To put them in the proper perspective, I'd like to share with you a very nice website which has numerous mortgage calculators for almost every situation that you might encounter. Bookmark it for future reference: mortgages.interest.com/content/calculators/index.aspEnjoy. ~gigabite |
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Post by gigabite on Jul 21, 2005 14:22:19 GMT -5
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Post by masalai on Jul 25, 2005 11:21:24 GMT -5
gigabite, I enjoyed those graphs... it was interesting to see the fluctuations and be able to correlate those with time frames and then remember what was going on in the RE markets at the time. for example the early 90's weren't too hot for So. Cal. and I remember a friend who lost about 30k on his townhouse. That was back in my military days, he got transferred from CA to the East Coast and he just took a bath on the house... I'm sure he is mad now he didn't just rent it out and hold onto it. that same townhouse he sold for 90k (he paid a little over 120k for it) would probably go for 500k plus.
INSANE is the only word I can think of!
Masalai
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Post by gigabite on Jul 26, 2005 2:51:22 GMT -5
Glad you liked the graphs Masalai. Don't they instantly put into perspective the obscene real estate prices in these five states? Also, note how within a few years after each peak the prices start plummeting down to the point where they actually depreciate, and go below the national average! Imagine the opportunity to go shopping for real estate at these levels.  |
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henry
Junior Member
Posts: 7
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Post by henry on Sept 6, 2005 14:39:47 GMT -5
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!!!