Selling my home

[WILDERTHANU]

So I'm thinknig of selling my place in dec. I've been here two years and would like to take the money I've made here and use it to step up. Sometimes I think I would be better off selling now while I can get the most out of it, rent and wait for house prices to fall. Maybe find a foreclosure??? I have quite a big chunk I'm sitting on right now and would make a healthy downpayment on my next home. I'm just looking for some opinions, thanx.

[Phat Matt]

If you are going to move up I would think you would have to move east.

[Kilrtoy]

Do what you think is best..
I know they keep saying its going up, but who really knows.
But with this new Hurricaine they say new house prices and used will dramaticly rise because of the lumber needed to rebuild N.O.
I already did what you are comtemplating... I dont regret it, but it has me wondering...

[WILDERTHANU]

Well its articles like the one below that keep me thinking go for it. The loan market is so crazy it seems like everyone is buying these days. That does not = a dive to me. So I'm thinking its safe to still buy, and dump my equity into another home locking in a conservative 30 fixed. Then I can just sit on it until It adds up for me to make another jump. I'm only 23 so Its a long road for me, I started young as so I can work my way up.
Nearly four out of 10 (38.1%) home buyers who bought houses in the first half of 2005 put down less than 5% of the purchase price, up from 30.6% in 2000, according to a study released Tuesday by SMR Research, a Hackettstown, N.J., firm that tracks mortgage debt. Nearly half (49.9%) of buyers put down less than 10%, up from 44.8% in 2000.
Another potential red flag is the growing use of so-called piggyback loans.
Traditionally, home buyers who did not come up with a 20% down payment had to pay an added cost each month for private mortgage insurance. But recently, more strapped borrowers are taking out two loans - one for 80% of the purchase price and a second, or piggyback, loan in the form of a line of credit or home equity loan. So far this year, nearly half (48.2%) of buyers used piggybacks, up sharply from 19.9% in 2001.
The statistics suggest that many home buyers are stretching their budgets well beyond their means. The risk is that recent buyers have such minuscule equity in their homes that if prices fall, they could owe more on their mortgages than their homes are worth.
The National Association of Realtors says the median price of an existing home rose 13.6% to $208,500 from the second quarter of 2004 to the second quarter of 2005.
"As home prices rise, people can't afford them," says Stuart Feldstein, president of SMR. The study, he adds, highlights the fact that most people haven't saved enough money to buy ever-more-expensive homes. Home buyers are "using much more leverage," he says.
Americans' ability to take on massive mortgage debt has been fueled by the availability of "exotic" mortgages, such as interest-only loans and adjustable-rate mortgages that provide borrowers with a lower monthly payment for a short period of time, says Dean Baker, co-director at the Center for Economic and Policy Research.
"Home prices are going through the roof, forcing people to turn to exotic loans and unorthodox financing," says Baker. "These people have no room for error."
SMR warned that the risk of foreclosures rises when borrowers take out loans in excess of 80% of a home's purchase price. While rising prices have reduced some of that risk, the "future foreclosure risk is rising," SMR claims.

[C-2]

We are also gearing up for the same, but selling then building a custom. If we weren't building, I would probably rent and see what happens over the next few years. My neighbor is selling and looking to build in Havasu- I think he should wait at least a year to see what happens there.
And I'm no longer buying the "the market won't crash, only adjust itself" bullshi t anymore. When the market crashes, it WILL be a repeat of the early 90's.
100% financing, with the only requirement being is to pay off existing debt? If you can't pay off your existing debt and at least cough up a minimum down payment - then you can't afford the home you are buying!
My sis in-law and her husband just did a 100% $700K loan in HB - she's a teacher and he's a machinist ~ and both are living in Wonka land if they believe a $4500 mortgage is within their budget.
Equity is only good if you cash it out - otherwise it can disappear.
Sell, rent and see what happens.

[WILDERTHANU]

We are also gearing up for the same, but selling then building a custom. If we weren't building, I would probably rent and see what happens over the next few years. My neighbor is selling and looking to build in Havasu- I think he should wait at least a year to see what happens there.
And I'm no longer buying the "the market won't crash, only adjust itself" bullshi t anymore. When the market crashes, it WILL be a repeat of the early 90's.
100% financing, with the only requirement being is to pay off existing debt? If you can't pay off your existing debt and at least cough up a minimum down payment - then you can't afford the home you are buying!
My sis in-law and her husband just did a 100% $700K loan in HB - she's a teacher and he's a machinist ~ and both are living in Wonka land if they believe a $4500 mortgage is within their budget.
Equity is only good if you cash it out - otherwise it can disappear.
Sell, rent and see what happens.
I've been looking in to building a custom home, the #'s are alomost right there, when compared to what I'm looking to spend. But to find a good decent priced lot around here is not looking good(like no way). I really dont want to move out of the area, my business is here and I do like the foothill communities.

[Kilrtoy]

Granted im not the RE just my perspective as I tend to follow RE
This last staement is true and not true
SMR warned that the risk of foreclosures rises when borrowers take out loans in excess of 80% of a home's purchase price. While rising prices have reduced some of that risk, the "future foreclosure risk is rising," SMR claims.
I bought my house on a Fannie Mae 3% down 97% fixed , 30 year 1 first only, i1st time homebuyer program. I planned on not leaving for awhile......Well I turned a XXX profit on it 9 years later... I bought at the bottom of the market
But alot of people now are buying at the top and interest only loans.. Well when they come due in 2,3,4 years, if they dont have the equity to refy into conventional loans, they must keep the exsisting loan and the super high interest that continues to grow... That is where Foreclousres come from...

[Kilrtoy]

My sis in-law and her husband just did a 100% $700K loan in HB - she's a teacher and he's a machinist ~ and both are living in Wonka land if they believe a $4500 mortgage is within their budget..
WHOLY F***IN SHIT
Equity is only good if you cash it out - otherwise it can disappear.
.
EXACTLY

[Roxysnow]

WHOLY F***IN SHIT
EXACTLY
I see this shiat every day! Unbelievable! The smart ones will take an I/O or Negam loan out knowing they will never pay the home off and actually pay the I/O and understand the loan. It's the idiots that think they are going to pay the home off with one of these loans and have no clue what's going to happen with the loan 5 years later??? :confused: Do what you got to do!!!

[h2oski2fast]

Nearly four out of 10 (38.1%) home buyers who bought houses in the first half of 2005 put down less than 5% of the purchase price, up from 30.6% in 2000, according to a study released Tuesday by SMR Research, a Hackettstown, N.J., firm that tracks mortgage debt. Nearly half (49.9%) of buyers put down less than 10%, up from 44.8% in 2000.
Bullshit!!!! Thats what they'd like you to believe! Don't look at So Cal as part of the norm. Too many people have "creative financing" that they won't be able to afford in the next year +. Put that into the equation.

[YeLLowBoaT]

I know 2 morage writers that work for country wide home loans.... They are both very good at what they do and make a lot of $$$.... the things they tell me scare the crap out of me..... 1st they have like 750 loan programs.... 2nd and this is a qoute "the loans we are making today, they would have put us in jail for 5 years ago.
Personally if you like where you are now I would stay there. the old "moving up" imo right now is not a very good idea... I think its asking for for it... the market will crash-- it has to in CA almost no1 can afford the prices. Selling and renting is not really a good idea ether since rent is basicly gone onces you write the check.
AS far as building a custom that is something I deal with every day of the week. I have never seen a custom home finish on budget with out cut cost some where.
I would say that most ppl buying homes in ca right now are 1 month away form losing every thing.

[Ivan Dan]

Being in the real estate game on a daily basis what I keep telling my clients is that NO ONE KNOWS whats gonna happen. At this point short term signs are showing growth for atleast this year.
In my opinion....there would have to be several key things happen for the market to "crash" as some say. 1) Interest rates would have to go up a considerable amount (meaning 3+%) 2) Job market would have to take a dump and 3) demand to live in So Cal would have to drop. Honestly I really don't see any of these happening anytime soon.
My prediction based upon what I've heard and seen is that the market will level off and maybe see some patchy depreciation in areas that have gone overboard with appreciation. I really don't see the market "crashing" like some people are thinking because things are A LOT different than they were in the early 90's. Orange County in general was literally bankrupt, the job market was horrible in So Cal because defense spending was cut exponentially and none of these things are the case now.
Again, I'm the first person to say that NO ONE KNOWS what will actually happen. My best advice is to find somewhere that you are happy with and could stay at for 5+ years if needed to ride out the market if it did go down. You only lose money if you sell when the market is down.
Feel free to e-mail, PM or call me with any questions. I would be more than happy to help however I can.
DAN

[Kilrtoy]

Great post DAN.. I agree with alot of what you said.
One thing that sticks out right now from your post is #2 job lose...
have you seen what is going on right now as far as the state, they are claiming they are broke. ARNOLD is trying to fix a state from the depths of hell,
The government employs alot of people..
I know alot of people that have lost there job in the last two months. There is the trickle down affect.
Im with the guys who claim 06 is gonna be a bad year

[Ivan Dan]

Great post DAN.. I agree with alot of what you said.
One thing that sticks out right now from your post is #2 job lose...
have you seen what is going on right now as far as the state, they are claiming they are broke. ARNOLD is trying to fix a state from the depths of hell,
Ya true...but how long has California been in debt? Sh*t for that matter how long has the US had a defecit? Every year they say that the defecit is growing but yet we have spent how much on the war in Iraq? How much in Afghanistan? My point is since you can remember has there ever been a time that the country or any state has said "we are kicking a$$ and making more money than ever?"
The government employs alot of people..
I know alot of people that have lost there job in the last two months. There iks the trickle down affect.
Im with the guys who claim 06 is gonna be a bad year
Again...you never know whats gonna happen. I've been hearing for the last 2-3 years that the market is gonna tank and year after year we are seeing record appreciation rates. This proves my point exactly that NO ONE KNOWS!
Only time will tell IMO.

[Kilrtoy]

Ya true...but how long has California been in debt? Sh*t for that matter how long has the US had a defecit? Every year they say that the defecit is growing but yet we have spent how much on the war in Iraq? How much in Afghanistan? My point is since you can remember has there ever been a time that the country or any state has said "we are kicking a$$ and making more money than ever?"
I have been hearing this for 17 years..... I beleive it this time....That is why I am scared
Again...you never know whats gonna happen. I've been hearing for the last 2-3 years that the market is gonna tank and year after year we are seeing record appreciation rates. This proves my point exactly that NO ONE KNOWS!
Only time will tell IMO.
I agree 100 % with this..i almost sold 2 and 1/2 years ago...
SOOOOOOOOOOOOOOOOOOOOOO glad i did not

[Jbb]

I would say that most ppl buying homes in ca right now are 1 month away form losing every thing.
That is a frightening statement.....and I bet its 100% accurate.
Even where I live..where housing is inexpensive.....more people than not live one month away from living in a shelter......new cars, new boats, new houses new bikes....all financed to the hilt.....no equity in any of it credit has gotten way to easy....I work with some of these people and when I ask them what would they do in the event of say....an economic turndown ,,,or a long term illness or injury.....the response is always the same.......**** it ...I will file for bankruptcy......

[Sherpa]

being that the LA area is a very, very diverse population and industry varies
greatly, and one, or even few types of business's would have to fold to make
jobs scarce.......... that is a good thing for you all living there..
here in the bay area, (silicon valley) to be more precise, the jobs are LEAVING. there's no way to describe it any other way.... tech in this area
is now rated 8th in staetwide standings........ even below san diego. not good
for our area.
but the kicker, homes here are still selling for ungodly amounts. with no end in
sight............ go figure.
KIlr pointed out the decline in the early 90's.......... that's when we bought
our home here.......... fairly decent pickins' valuation increase must be
about 5x since then....
I still don't think "the crash" is gonna be huge....... I do believe it will stagnate
the market, with small declines.......
so, anyone looking to sell, then rent a place and wait for the "crash" just
might be missing on more equity building, along with no tax savings for renting.
--Sherpa

[throwerb]

I was going through the same thing this time last year and took a trip out to Nashville to meet NashvilleBound Jones and his wife. We looked at homes while we where in town and decided to go home and sell our 1500 sqft craftsman in Pasadena Ca that we paid $197k for in Nov 2000 and sold it for $565k 4 years later to pay cash for 4200 sqft home on Old Hickory lake 25 min. north of Nashville. Since then my mom and sister have both sold their homes in Pasadena and bought on my same block.
As far as the boating here goes, you just can't believe how uncrowded the lakes are, sunday in NashvilleBounds boat we had to go looking for rough water.
I know that both NashvilleBound and I would tell you to sell it and don't look back, life is just alot better here.

[WILDERTHANU]

Again, I'm the first person to say that NO ONE KNOWS what will actually happen. My best advice is to find somewhere that you are happy with and could stay at for 5+ years if needed to ride out the market if it did go down. You only lose money if you sell when the market is down.
Ya, this is what Im thinking.

[haulina29]

Sell it and invest wisely you have nothing to fear but fear itself . with the high cost of replacement " materials" the market is going no where but up . I have been doing what you are talking about for 16 years and heard all the tales of what if when I started. With out going into details it was worth every sleepless nite . Pick your property wisely hang on to your equity cash for back up , finance 100 percent interest only or neg am . and dump it every two years and get the tax free gains . A piece of property that is paid for is useless cash is king . H29

[river redy]

The best advice that makes the most sense, at this point is save your money, and wait for the idiots that have ARM'S and when they cant afford to pay their increased mortgage and file bk then go in and buy investment properties and take advantage of the market in about 2 to 3 years, it will happen beause people live way beyond there means and thats why the rich get richer ;)

[Boatjob26]

That is a frightening statement.....and I bet its 100% accurate.
Even where I live..where housing is inexpensive.....more people than not live one month away from living in a shelter......new cars, new boats, new houses new bikes....all financed to the hilt.....no equity in any of it credit has gotten way to easy....I work with some of these people and when I ask them what would they do in the event of say....an economic turndown ,,,or a long term illness or injury.....the response is always the same.......**** it ...I will file for bankruptcy......
This is what makes me laugh/worry everytime I'm in Havasu. How many people who have these $100K++ boats actually can "afford" them? All this creative financing is being used to buy toys. Honestly, 5 years ago how many $100k+ boats would be out on Havasu on a normal weekend? I'm scared to see what is going to happen to the boat market when houses start to depreciate. I sure hope that some people are not as STUPID as it appears. I know that most people will say, "you only live once," but where does the line get drawn? Is it really worth it??

[callbob4homes]

From another REALTOR prospective.........alot depends on where you are and where you want to be. Here in the Phoenix area, supply and demand are running the show. The builders cannot build new homes fast enough for the demand. As long as there is work, they will come. Resales are starting to pick up in numbers again and we see some of the demand slacking off. Re: less multiple counter offers and offers way above asking. I think alot of that has to do with instead of pricing homes at comparable values, most resellers were pricing homes at the max end and beyond. But they were getting it because of the demand and shortage of "affordable" resales. The "bubble" bursting? I don't think there is a bubble, at least not in this area. I look for the market to stabilize, I think we are starting to see that now, but go away? IMO, No way. I think we are going to see a readjustment period during the hurricane rebuilding effort, because lumber and building materials are going to routed to that area first. I have seen it happen before, but not to this extent of damage, so I think that is a given.
Now, adjustable rate mortgages and 100% loans? Again, it depends on where you want to be in 5 years. If that is the only way you can buy a home, I would have to say you should probably wait. If you have a rapidly rising appreciation in your area and don't plan on living there over 5 years, by all means look into it. Is it a gamble? maybe, but do your homework first. Talk to a professional that is interrested in having you for a long time investor or client, not just a sale today. I do take my own advice, btw, I bought a home on a golf course, (backs to a green) and in 6 months has gone up in value over 80K. (appraisal value) I don't plan on keeping this home another 3 years, so unless something drastic happens, the interest only loans make sense in this case. My rate is locked for 5 years, so depending on what happens, I can either refinance or sell. Is it a perfect world? No, but it is the one we live in.
I need more coffee. :2purples:

[core attitude]

Sell it and invest wisely you have nothing to fear but fear itself .
This is a part of the equation that keeps moving the market forward.......without the disintermediation of previous years, real estate is still providing one of the best investment returns out there. If there were more alternatives for "safe investments" (most people seem to believe that if you wait long enough real estate will always return an increase) then the market would realize more slip. Fear of loss due to market changes will be the first thing that significantly draws new money from the RE market.
The best advice that makes the most sense, at this point is save your money, and wait for the idiots that have ARM'S and when they cant afford to pay their increased mortgage and file bk then go in and buy investment properties and take advantage of the market in about 2 to 3 years
This is happening already......but the ones that I have seen are new "investors" (just entered the game in the past 1-2 years) who for one reason or another now have a vacant rental that no longer covers it's own nut. Most of the risky residential buyers will be able to "tap a family vein" here or there to get through a rough spot.......it's a whole different story if cousin Ray went out on a limb to be a "RE investor".
Pete

[Boatjob26]

I used to think that, but if you scrimp on some other things, it's really not that hard. We stopped going out to eat three times a week, lowered some household expenses, got rid of our boat storage and the difference between our old boat payment (21' Shockwave LS) and our new boat payment is now just a couple hundred a month.
But why have to scrimp for a toy? Why not put the money into something more pertinent like a college fund for your kids? I'm just looking at the situation from a different point of view. Everybody in Havasu acts/spends like they are wealthy. But I'd guess that maybe 5% of the people there actually are, and have no boat payment. Just my 2 cents.

[cdog]

From another REALTOR prospective.........alot depends on where you are and where you want to be. Here in the Phoenix area, supply and demand are running the show. The builders cannot build new homes fast enough for the demand. As long as there is work, they will come. Resales are starting to pick up in numbers again and we see some of the demand slacking off. Re: less multiple counter offers and offers way above asking. I think alot of that has to do with instead of pricing homes at comparable values, most resellers were pricing homes at the max end and beyond. But they were getting it because of the demand and shortage of "affordable" resales. The "bubble" bursting? I don't think there is a bubble, at least not in this area. I look for the market to stabilize, I think we are starting to see that now, but go away? IMO, No way. I think we are going to see a readjustment period during the hurricane rebuilding effort, because lumber and building materials are going to routed to that area first. I have seen it happen before, but not to this extent of damage, so I think that is a given.
Now, adjustable rate mortgages and 100% loans? Again, it depends on where you want to be in 5 years. If that is the only way you can buy a home, I would have to say you should probably wait. If you have a rapidly rising appreciation in your area and don't plan on living there over 5 years, by all means look into it. Is it a gamble? maybe, but do your homework first. Talk to a professional that is interrested in having you for a long time investor or client, not just a sale today. I do take my own advice, btw, I bought a home on a golf course, (backs to a green) and in 6 months has gone up in value over 80K. (appraisal value) I don't plan on keeping this home another 3 years, so unless something drastic happens, the interest only loans make sense in this case. My rate is locked for 5 years, so depending on what happens, I can either refinance or sell. Is it a perfect world? No, but it is the one we live in.
I need more coffee. :2purples:
WHAT! 56% of AZ buyers are from CA looking to buy and relocate or invest. Take away their equity from where their selling and Phoenix's market will retract also. At that time demand will deminish. Listings are up from what i've seen and price reductions are starting to happen, at least in scottsdale where i'm looking.

[Boatjob26]

We already owned a boat, we just scrimped a little, or spend more wisely may be a better term, for a bigger boat.
Honestly, I don't think you realize how much money some people make. My kids both have college funds that we and their grandparents contribute to every year. To answer your question, we'd rather have the boat we have now than eat out every night or go out drinking every weekend or have every movie channel on DirecTV. We find the time we spend boating at the river with our friends is something we're not willing to put a price tag on. Our family has grown into needing a bigger boat and that's what we bought.
I agree with you. The lake is a great place for the family to come together. I also understand that income is relative. Some people might think that $100K/year is liveable, while some think that $500k/year is liveable. But from my experiences, maybe my thoughts come from talking to certain groups of people. Such as county/city workers. This certain group, who only are scheduled 10days/month, like to spend big bucks. They by no means earn anything close to $500k/year. Yet they have $150-200K boats. Hmm.

[cdog]

So I'm thinknig of selling my place in dec. I've been here two years and would like to take the money I've made here and use it to step up. Sometimes I think I would be better off selling now while I can get the most out of it, rent and wait for house prices to fall. Maybe find a foreclosure??? I have quite a big chunk I'm sitting on right now and would make a healthy downpayment on my next home. I'm just looking for some opinions, thanx.
The best advice I can give it to buy a home that you can see yourself in for a while. Take your equity, put 20% down on the new home with a reasonable loan. At the least i'd do a 10 year I/O, now they have a 30 year fixed that's intrest only for the first 15 years. Your young, you'll be moving up eventually. Hopefull you'll have some cash left over and put it in a safe place for a rainy day if you need it. Be sure to wait untill the capital gains are clear, but be agressive when you sell. The sooner may be better. I 'd list your home about a month before your Cap. Gains are up. If you recall, we talked about this last year and discussed some of your options. PM me when your ready.

[totenhosen]

WHAT! 56% of AZ buyers are from CA looking to buy and relocate or invest. Take away their equity from where their selling and Phoenix's market will retract also. At that time demand will deminish.
I agree with this statement. Everyone of my friends is looking to invest in property in AZ or Vegas. The sad thing is that they don't understand the basic fundamentals about R/E investing, like one's cash flow should be at a minimum breakeven and not negative.

[NoCal NoBoat]

I'm not a realtor, and I'd defer to the forum members who are.
I'm reading/hearing that here in the East Bay, Nor Cal, sales are still strong,
but the inventory is as high as its ever been. Realtors are saying "levelling off" and "buyers market" in the local paper. My wife and I are noticing the number of homes for sale, and the ones that sell are taking longer to do so.
I'm curious, and a little concerned. Where are all these people going ? I don't think they're all trading up locally. In the Bay Area, it used to be people would take their equity and move up north or east. The Central Valley is no longer "the country", its now a bedroom community for people willing to endure a two hour commute to the Bay Area or Sacramento. Reno is growing fast, and it's no longer the bargain it once was. Moving east may soon mean
"east of Nevada".
I'm going to play the hand I've got. Get the daughter through college, and put a couple of bucks into the Sanger when possible.
I don't want to find myself "on the edge". BK is no longer the haven, or "shelter of last resort" it once was. I'm going to live comfortably, and carry as little debt as possible...

[FREIND OF AA AND TA]

So I'm thinknig of selling my place in dec. I've been here two years and would like to take the money I've made here and use it to step up. Sometimes I think I would be better off selling now while I can get the most out of it, rent and wait for house prices to fall. Maybe find a foreclosure??? I have quite a big chunk I'm sitting on right now and would make a healthy downpayment on my next home. I'm just looking for some opinions, thanx.
Hey bud, give me a call. I help people on this site every day. I started selling houses in 1990 and have seen it all. I have no problem taking the time to give you the run-down. It doesn't matter if you are far away from me. I can give you some great advise. I sell over 100 homes a year and have answered this question many times. I just can't type that much.
661-284-5424
Mike Bjorkman

[al cole'holic]

I agree with this statement. Everyone of my friends is looking to invest in property in AZ or Vegas. The sad thing is that they don't understand the basic fundamentals about R/E investing, like one's cash flow should be at a minimum breakeven and not negative.
..I don't agree, you do not have to break even or be positive to make a wise investment...

[al cole'holic]

This topic will never get old to talk about....we'll be here next year with another dozen threads that have gone by with people still waiting for the market to drop so they can move out of that apartment they rent :D

[callbob4homes]

partly right. listings are coming up and the drastically over inflated priced homes are coming back to earth. scottsdale has always been a little bit different price wise, kind of like California, but it is what it is. You want to buy in the "next Scottsdale"? Go look out East in Gold Canyon, especially around the gated, golf course at Superstition Mountain. Big doings slated for there. Del Webb building another 4000 homes, another Anthem out in the far East Valley past Queen Creek towards Coolidge. Already started dirtwork. Another 2 to 4K homes in 2 or 3 other new subdivions slated for start in this area as well. Far west side doing the same thing. The town of Surprise, Peoria going north, Estrella Mountain Ranch out in Goodyear? Don't see any slowing down out there. Ok some of the Cal investors that are in for the short haul, finding the rental market is oversaturated, have slowed. To be expected. Stopping? Don't see that happening and apparently the movers and shakers don't either. They are not buying up massive amounts of land at unheard of prices just to watch it go down. I would have to think they feel the market will continue to be strong IN THIS AREA, for awhile. and as real estate is cyclable, it is most certainly regionable, not nationwide as far as trends.
The above statement is purely the authors opinion, and should not be confused with any other assholes opinions! :D

[al cole'holic]

partly right. listings are coming up and the drastically over inflated priced homes are coming back to earth. scottsdale has always been a little bit different price wise, kind of like California, but it is what it is. You want to buy in the "next Scottsdale"? Go look out East in Gold Canyon, especially around the gated, golf course at Superstition Mountain. Big doings slated for there. Del Webb building another 4000 homes, another Anthem out in the far East Valley past Queen Creek towards Coolidge. Already started dirtwork. Another 2 to 4K homes in 2 or 3 other new subdivions slated for start in this area as well. Far west side doing the same thing. The town of Surprise, Peoria going north, Estrella Mountain Ranch out in Goodyear? Don't see any slowing down out there. Ok some of the Cal investors that are in for the short haul, finding the rental market is oversaturated, have slowed. To be expected. Stopping? Don't see that happening and apparently the movers and shakers don't either. They are not buying up massive amounts of land at unheard of prices just to watch it go down. I would have to think they feel the market will continue to be strong IN THIS AREA, for awhile. and as real estate is cyclable, it is most certainly regionable, not nationwide as far as trends.
The above statement is purely the authors opinion, and should not be confused with any other assholes opinions! :D
...I am thinking about the next property and I would love to talk to you about some of these developments. Get in on the ground floor, first phaser :)

[callbob4homes]

This topic will never get old to talk about....we'll be here next year with another dozen threads that have gone by with people still waiting for the market to drop so they can move out of that apartment they rent :D
now here is something worth quoting! The elevator goes all the way to the top regardless of which floor you get on. The key is knowing which floor is the top! :hammer2:

[totenhosen]

..I don't agree, you do not have to break even or be positive to make a wise investment...
Depends if you are expecting 40% returns let alone 10% in appreciation continuing than I think you have another thing coming.

[C-2]

Many things have changed since the 90’s, for the worse.
People are carrying historical amounts of debt.
100% Financing, leaving a zero or negative equity position.
And the biggest overhaul to the bankruptcy code in history.
It’s the last one which will hurt a lot of people. Let’s face it; people are doing refi after refi, taking cash out to pay off accumulated debt. They cash out, pay the credit cards off – but then are not disciplined enough to have learned about fiscal responsibility, and they charge them up again. No problem, just do another refi for more cash.
When the market flattens and the lenders tighten their LTV requirements – that cash is no longer going to be an option. They will have to tough out their new bills, plus their coming due ARM.
In the past, they could file for a chapter 7 bankruptcy and eliminate the credit card debt. Now they will be forced into a Chapter 13 – which requires you pay back the debt over a period of up to 5 years. And the myth about only repaying .10 on the dollar is jut that – most Chapter 13’s require 100% repayment. The first thing the bankruptcy trustee will do is analyze their debts, and most likely conclude they are paying way to much on their mortgages – they’ll be told they have to sell and rent a home for the BK plan to work. They’ll have to sell to free up more money to disburse to their creditors. As it was, only about 15-25% of Chapter 13’s were completed from start to finish – the plans are too overbearing since, again, most people fail to correct their irresponsible spending habits. With the new reforms, people will have to repay all that astronomical unsecured debt, and it’s not gonna happen. They will fail to meet their plan requirements and their cases will be dismissed; leaving them an easy target for creditors, judgments and the subsequent levies and wage garnishments.
When the equity dries up (the well runs dry), people will have no choice but to walk away from their mortgages, like they did in the 90’s. Then the lawsuits will start to fly – in fact they are already coming in. Remember, a foreclosure on the First wipes out any seconds or thirds – and those note holders get pissed and question why the loan was made in the first place.
Initially the foreclosure market will not be saturated with good buys – lenders will kick and paw to sell the homes for at least the remaining loan balance owed against the property. But remember, the property is probably upside down since there was no repayment on principal, and legal/late fess will send it into the red. They will maintain the inventory for years, also hoping the market will come back.
For people like my sister in-law – it’s mathematically impossible for them to afford this loan. Even if they could, if one of them goes out on disability; gets into a car accident that takes them out for two months; or encounter any of the other curve balls thrown at us in the course of our lifetime – they are fawked (and I’m glad cuz I can’t stand the biatch).
It’s so gonna happen. Didn’t think so before, but sure of it now. Just a question of when – which is why we’re selling now. 2006 or 2007, shiat is gonna hit the fan.

[totenhosen]

C-2, I agree with your scenario but now imagine if people are forced into BK and try to sell their home but the home is worth less than what they paid for it or at a minimum worth the same as what they paid for it. So now to sell their home they will need to show up to escrow with a check to pay for escrow, title, closing costs and realtors commissions.
I foresee good opportunities ahead for those people that have some cash put aside. We actually might see cap rates going up and it might make sense to buy rental proeprties again.

[cdog]

partly right. listings are coming up and the drastically over inflated priced homes are coming back to earth. scottsdale has always been a little bit different price wise, kind of like California, but it is what it is. You want to buy in the "next Scottsdale"? Go look out East in Gold Canyon, especially around the gated, golf course at Superstition Mountain. Big doings slated for there. Del Webb building another 4000 homes, another Anthem out in the far East Valley past Queen Creek towards Coolidge. Already started dirtwork. Another 2 to 4K homes in 2 or 3 other new subdivions slated for start in this area as well. Far west side doing the same thing. The town of Surprise, Peoria going north, Estrella Mountain Ranch out in Goodyear? Don't see any slowing down out there. Ok some of the Cal investors that are in for the short haul, finding the rental market is oversaturated, have slowed. To be expected. Stopping? Don't see that happening and apparently the movers and shakers don't either. They are not buying up massive amounts of land at unheard of prices just to watch it go down. I would have to think they feel the market will continue to be strong IN THIS AREA, for awhile. and as real estate is cyclable, it is most certainly regionable, not nationwide as far as trends.
The above statement is purely the authors opinion, and should not be confused with any other assholes opinions! :D
Well put. I'm 3rd generation in the real estate biz in my family. My grandfather helped develop Palos Verdes back in the 60's and 70's. My mom sold new sale in the early 90's in Corona. If there is one thing that is for sure it's that real estate is allways a good long term investment. New home builders build regaurdless of current prices. Infact the high price times give them the capital to get thru the slower times. Historicly builders build more during slower markets. The one thing that no body knows or can judge is demand. The consumers control that. I'd say that the builders indicate growth vrs. home appreciation at this time. It may continue to go up in price for a while. I feel that the phoenix market is due for quite a reality shock once the CA market trips. Who knows, but i'd say that the fact's all point in that direction.

[cdog]

C-2, I agree with your scenario but now imagine if people are forced into BK and try to sell their home but the home is worth less than what they paid for it or at a minimum worth the same as what they paid for it. So now to sell their home they will need to show up to escrow with a check to pay for escrow, title, closing costs and realtors commissions.
I foresee good opportunities ahead for those people that have some cash put aside. We actually might see cap rates going up and it might make sense to buy rental proeprties again.
I've been to a couple workshops that forecast rents sky rocketing in socal over the next year or two. Right now rental properties are way to negitive and require too much $$$ down to make sense. at least in OC. It seems that alot of realtors that have them are selling them. Makes you think!!!

[totenhosen]

I've been to a couple workshops that forecast rents sky rocketing in socal over the next year or two. Right now rental properties are way to negitive and require too much $$$ down to make sense. at least in OC. It seems that alot of realtors that have them are selling them. Makes you think!!!
Yeah, I was thinking down the line in a couple of years. I jsut redid my HELOC and have savings as well as that all ready to go. Even if I took out the entire HELOC on my place I could still rent it out and be cash flow positive and yet I would have picked up another property or two+.

[cdog]

I would sell your property now and instead of buying up I would buy down. Reason: if your home is worth $1 million and you sell it and realize a nice profit. Take some of the money and buy a 300k home. If the market goes down just 20% you will lose 60k on your 300k home but on your 1,000,000 home you would lose 200k. Now is not the time to buy up.
Where can you buy a home in socal for 300k?

[C-2]

C-2, I agree with your scenario but now imagine if people are forced into BK and try to sell their home but the home is worth less than what they paid for it or at a minimum worth the same as what they paid for it. So now to sell their home they will need to show up to escrow with a check to pay for escrow, title, closing costs and realtors commissions.
I foresee good opportunities ahead for those people that have some cash put aside. We actually might see cap rates going up and it might make sense to buy rental proeprties again.
That's my point. In a 7 you could always save your home. In a new 13, trustees and the court look down on huge amounts of credit card debt. They see it for what it is; living beyond your "means."
That's what's wrong with lending - they know all this crap, but wanna make the money now since everybdoy gets a slice of the pie. With 3 mortgages not being uncommon and no defficiency laws in the state, why wouldn't people walk away from their first if it wipes out the second and third with no recourse?
People are gonna walk, just like they did in the 90's. it makes sound financial sense for them to so if their equity disappears. Two years post foreclosure and you can qualify for a Fannie Mae loan.
it's not a question of market trends - it's a question of affordability. Two or three foreclosures in a neighborhood and your comps just got trashed for several, if not many, years. Underwriters can't get around comps.

[Ivan Dan]

Where can you buy a home in socal for 300k?
You beat me to this one....Ha Ha I think the only place left is the High Desert which is even getting tougher to find. I was on the MLS for up there last night and you are looking at 1200-1400 sq/ft up there to stay under $300k. It sure isn't much of a house thats for sure.

[cdog]

You beat me to this one....Ha Ha I think the only place left is the High Desert which is even getting tougher to find. I was on the MLS for up there last night and you are looking at 1200-1400 sq/ft up there to stay under $300k. It sure isn't much of a house thats for sure.
Dan. How's it hanging? Things have been real crazy lately. I can't believe how busy i've been this year.

[Ivan Dan]

Dan. How's it hanging? Things have been real crazy lately. I can't believe how busy i've been this year.
Same here....crazy busy actually and I love it. You and the wife still thinking about moving?

[NashvilleBound]

If you are going to move up I would think you would have to move east.
I think thats about right.... WTT...if TN is of any interest let me know and I will send you some listings. Just need your want list.....Good Luck.

[CA Stu]

And I'm no longer buying the "the market won't crash, only adjust itself" bullshi t anymore. When the market crashes, it WILL be a repeat of the early 90's..
Afraid not.
When the aerospace industry in So Cal went tits up in the late 80's, 500,000+ high paying jobs evaporated overnight, leading to the early 90's crash.
I don't see that kind of huge job loss happening today, does anyone?
However, ARM's, interest only loans, "creative financing", etc., have allowed today's housing prices to be ridiculous, and I foresee an 18.75% decrease in the average per sq. ft. sale price in the 951 area code from Sept 20 2005 to Mar 20 2006.
Thanks
CA Stu

[totenhosen]

Afraid not.
When the aerospace industry in So Cal went tits up in the late 80's, 500,000+ high paying jobs evaporated overnight, leading to the early 90's crash.
I don't see that kind of huge job loss happening today, does anyone?
However, ARM's, interest only loans, "creative financing", etc., have allowed today's housing prices to be ridiculous, and I foresee an 18.75% decrease in the average per sq. ft. sale price in the 951 area code from Sept 20 2005 to Mar 20 2006.
Thanks
CA Stu
What about all those people in the mortgage/real estate industry? Don't the economy is in part doing so well because people ahve been able to use their home as an ATM which fueled consumer spending. Stop that or even slow it down and the job losses will be across all industries.

[CA Stu]

What about all those people in the mortgage/real estate industry? Don't the economy is in part doing so well because people ahve been able to use their home as an ATM which fueled consumer spending. Stop that or even slow it down and the job losses will be across all industries.
That's a valid point.
Picture this:
20 homes in a tract, sell for $500k.
One guy loses his job, sells his house for the $400k he owes on it.
Another guy that owns the EXACT SAME house and owes $500k on it (thanks to his "Interest Only" loan), says "Screw this!" and walks away from his house and buys the neighbor's house for $400k.
Adios to everyone's "equity" (which was never real in the first place)!
Cheers
CA Stu

[Ivan Dan]

Afraid not.
When the aerospace industry in So Cal went tits up in the late 80's, 500,000+ high paying jobs evaporated overnight, leading to the early 90's crash.
I don't see that kind of huge job loss happening today, does anyone?
However, ARM's, interest only loans, "creative financing", etc., have allowed today's housing prices to be ridiculous, and I foresee an 18.75% decrease in the average per sq. ft. sale price in the 951 area code from Sept 20 2005 to Mar 20 2006.
Thanks
CA Stu
18.75% huh?!?!? Not 17.5% or 20%? :) :hammerhea :crossx: :D
I really don't see the market dropping almost 20% in only 6 months. I don't see the market dropping 20% at all but I could realistically see 5-10% decreases in So Cal not just 951.

[haulina29]

I find the topic of interest only interesting if you live in a home for ten years with a 30 year fully amortized loan how much principal will you pay ? Not much , Interest only loans will have very little negative affect on the economy as long as the notes are 5 years or longer. Interest only loans as well as neg am are nothing new they have been used for the last 50 years or so in the investment arena . One thing to remeber is replacement cost demand and the red tape involved with building will keep prices up and it isnt going to return to the levels of the 90s . H29

[totenhosen]

18.75% huh?!?!? Not 17.5% or 20%? :) :hammerhea :crossx: :D
I really don't see the market dropping almost 20% in only 6 months. I don't see the market dropping 20% at all but I could realistically see 5-10% decreases in So Cal not just 951.
Correct me if I am wrong but isn't San Diego already experience YOY decreases?

[totenhosen]

I find the topic of interest only interesting if you live in a home for ten years with a 30 year fully amortized loan how much principal will you pay ? Not much , Interest only loans will have very little negative affect on the economy as long as the notes are 5 years or longer. Interest only loans as well as neg am are nothing new they have been used for the last 50 years or so in the investment arena . One thing to remeber is replacement cost demand and the red tape involved with building will keep prices up and it isnt going to return to the levels of the 90s . H29
But they have never accounted for 60% of new loan originations in CA.

[CA Stu]

18.75% huh?!?!? Not 17.5% or 20%? :) :hammerhea :crossx: :D
I really don't see the market dropping almost 20% in only 6 months. I don't see the market dropping 20% at all but I could realistically see 5-10% decreases in So Cal not just 951.
I was being facetious (http://dictionary.reference.com/search?q=facetious).
I think it'll be damn near 20% across the board. I mean, my house is worth exactly one buttload more than I paid for it in 1996.
It was a repo then, and I paid substantially less than what the previous owner owed on it.
There has to be some kind of significant drop on the horizon, I reckon.
Keep betting on the come, man. Double up to catch up!
Sheesh
CA Stu

[Ivan Dan]

Correct me if I am wrong but isn't San Diego already experience YOY decreases?
To be honest I'm not that familiar with the SD market. I mainly do RE in Orange, LA, San Bernardino and Riverside Counties.

[Ivan Dan]

I was being facetious (http://dictionary.reference.com/search?q=facetious).
I think it'll be damn near 20% across the board. I mean, my house is worth exactly one buttload more than I paid for it in 1996.
It was a repo then, and I paid substantially less than what the previous owner owed on it.
There has to be some kind of significant drop on the horizon, I reckon.
Keep betting on the come, man. Double up to catch up!
Sheesh
CA Stu
Gotcha.....the internet doesn't show tone or emotion so hard to read when someone is being facetious or a "smart ass" :p :D

[totenhosen]

To be honest I'm not that familiar with the SD market. I mainly do RE in Orange, LA, San Bernardino and Riverside Counties.
Well SD is a part of CA and they are currently in the midst of YOY decreases. How long until it reaches Orange and LA counties?

[Ivan Dan]

There should be a ShockwaveBob smilie for just such occasions. :D
Yup...I agree! ha ha ha

[Debbolas]

Remember the real estate market crash in the early 90's?
We lived in Fontana, lost $30,000 on our house in a year, that we never recovered. Everyone that bought homes there with interest only loans, no $ down...either short selled and left the state or let their home fall into foreclosure and took off for the high desert. Many of our neighbors had to file a homestead claim and bankruptcy.
No one thought THIS would ever happen. The real estate market in California had NEVER gone down.
so..............all these high real estate prices, kinda makes me nervous.

[al cole'holic]

Remember the real estate market crash in the early 90's?
We lived in Fontana, lost $30,000 on our house in a year, that we never recovered. Everyone that bought homes there with interest only loans, no $ down...either short selled and left the state or let their home fall into foreclosure and took off for the high desert. Many of our neighbors had to file a homestead claim and bankruptcy.
No one thought THIS would ever happen. The real estate market in California had NEVER gone down.
so..............all these high real estate prices, kinda makes me nervous.
..what's that house worth now :)

[That Guy]

the market will crash-- it has to in CA almost no1 can afford the prices. Selling and renting is not really a good idea ether since rent is basicly gone onces you write the check.
I would say that most ppl buying homes in ca right now are 1 month away form losing every thing.
This is voodoo economics....I say a simple test for this statement is to check one month from today and see if those of us in CA have lost everything....lol

[Ivan Dan]

Remember the real estate market crash in the early 90's?
We lived in Fontana, lost $30,000 on our house in a year, that we never recovered. Everyone that bought homes there with interest only loans, no $ down...either short selled and left the state or let their home fall into foreclosure and took off for the high desert. Many of our neighbors had to file a homestead claim and bankruptcy.
No one thought THIS would ever happen. The real estate market in California had NEVER gone down.
so..............all these high real estate prices, kinda makes me nervous.
You only lose money when you sell durring those times. If it happens again you just have to be able to ride out the wave. Thats why I recommended making sure you are in a home that you could see yourself living in for 5+ years if you needed to. Eventually the market will come back up and you will be even more positive on your equity.
Besides that I GUARANTEE your home is now worth well over what it was before that crash in the early 90's. Probably somewhere in the neighborhood of 3 times that amount if I had to guess.

[haulina29]

DEBOLAS what does intrest only have to do with BK there are many types of interest only loans GPM is where most get in trouble not IO . Also what is the house worth today that you sold for 30k below market ? . In five years you wouldnt even pay 5k in principal on a 30 year note so whats the worry ? If you plan on staying forever a IO is not the way to go . ;)

[cdog]

Same here....crazy busy actually and I love it. You and the wife still thinking about moving?
It's looking like we're going to Phoenix. I sold the house a couple of weeks ago and we're renting back untill Jan- Feb. It's kinda tough thinking about starting over again but it will be worth it in the long run. I'm getting my brokers both here and in AZ before I go. Take care.

[MBlaster]

Money has a mind of it's own.
Money likes to be rewarded.
Money goes where it is rewarded.
Regardess of anything we say or do that is the fact.
Right now real estate offers money the best reward.
When Money has a better place to go, Money will leave RE and prices will drop.
The trick is getting where Money wants to go before It does.

[haulina29]

Totenhosen you are correct on the atm and the false economy that has been provided by cheap interest rates and the refi boom , but a IO will not affect the economy if its 1 percent or 60 percent as long as people continue to move every 2 thru 5 years as has been the trend for the last 20 years . In 2 to 5 years how much principal is payed do the math . I have watched people stand around waiting for real estate to tank and it hasnt until replacement costs decrease they arent coming down . I have never seen a market where houses were sold for less than replacement value notice I said market not a fire sale .

[life's a river]

Hey Ivan Dan, I heard that there are aprox. 500,000 people that move to California every year. What have you heard? If this is the case, housing should not drop off any time soon. Maybe level off a little.
I also heard that aprox. 75% of new home buyers are going with interest only loans. Scary. :skull: Time will only tell what will hapen. Lets just hope for nothing too crazy.
LAR

[al cole'holic]

Hey Ivan Dan, I heard that there are aprox. 500,000 people that move to California every year. What have you heard? If this is the case, housing should not drop off any time soon. Maybe level off a little.
I also heard that aprox. 75% of new home buyers are going with interest only loans. Scary. :skull: Time will only tell what will hapen. Lets just hope for nothing too crazy.
LAR
..the projection is 10 million people within the next 10-15 years. Think the market is going anywhere...?? :D

[totenhosen]

Totenhosen you are correct on the atm and the false economy that has been provided by cheap interest rates and the refi boom , but a IO will not affect the economy if its 1 percent or 60 percent as long as people continue to move every 2 thru 5 years as has been the trend for the last 20 years . In 2 to 5 years how much principal is payed do the math . I have watched people stand around waiting for real estate to tank and it hasnt until replacement costs decrease they arent coming down . I have never seen a market where houses were sold for less than replacement value notice I said market not a fire sale .
Do you think people will continue to move every 2-5 years into a home they financed if it requires them to come up with $20k jsut to get out of their current home? Considering so many people don't even have $20k for a down payment.
What do you think will happen to consumer spending and our economy if equity dries up, incomes are level, house payment increased from a rate of 4% to 6%? Do you still think people will buy plasma screen tv, new trucks/boats etc? And what do auto makers like Ford and GM do? They have already given us employee pricing and 0% interest.

[life's a river]

..the projection is 10 million people within the next 10-15 years. Think the market is going anywhere...?? :D
No! And traffic will not be going anywhere either. LOL! I see you are from Simi but do you know of the area between Norco and Chino hills? "The Dairy lands" I heard that they are removing all of the farms (some are already gone) and building 65,000+ homes. Holy crap! Traffic is only going to get worse by the day.

[totenhosen]

Hey Ivan Dan, I heard that there are aprox. 500,000 people that move to California every year. What have you heard? If this is the case, housing should not drop off any time soon. Maybe level off a little.
I also heard that aprox. 75% of new home buyers are going with interest only loans. Scary. :skull: Time will only tell what will hapen. Lets just hope for nothing too crazy.
LAR
I thought CA actually had a net outflow??? Well at least legal citizens.

[al cole'holic]

No! And traffic will not be going anywhere either. LOL! I see you are from Simi but do you know of the area between Norco and Chino hills? "The Dairy lands" I heard that they are removing all of the farms (some are already gone) and building 65,000+ homes. Holy crap! Traffic is only going to get worse by the day.
...traffic will be worse but new roads and freeways etc will come to with all the developments and tax $$. Lot of homes going up everywhere and it'll still not be enough. Take a look for example the next time you're on the 210, when that finally opened how many homes went up..??...looks like 65,000 plus right there!! All this bear land is gonna be developed at some point :D

[haulina29]

Totenhosen I think I agreed on the false econmy and no I do not beleive the real estate market is coming to a end it may slow down and yes people will continue to move every two to five years . 20 k is nothing today one thing that has not been brought up is there are alot of people in California that have made some serious money in the last 15 years from the market and housing both . The state of California may be broke but the people are not . The beauty of this 10 year run is if it was done right it was tax free .

[totenhosen]

Totenhosen I think I agreed on the false econmy and no I do not beleive the real estate market is coming to a end it may slow down and yes people will continue to move every two to five years . 20 k is nothing today one thing that has not been brought up is there are alot of people in California that have made some serious money in the last 15 years from the market and housing both . The state of California may be broke but the people are not . The beauty of this 10 year run is if it was done right it was tax free .
If that is the case what are your thoughts on the growing divide between rent and carrying costs for a property? As you may know the cap rate in CA is in the toilet. Do you see any correspondence between rent vs. owning?

[haulina29]

Totenhosen It is very dificult to get a piece of property to pencil out in the state of California I see a huge need for affodrable housing in California this will force those who can not afford to rent or purchase out of the State .More than likely the government will step in with social housing or they will purchase and rent back for a fraction of the cost. I can tell you that I had a house in Lomita California that I purchased 2 years ago and as long as its value was increasing at a greater rate than I could rent it for and no it would not pencil I left it vacant and used it as a second home for tax reasons , and just recently flipped it for over twice what I payed for it . Even with capital gains taxes due it was a money maker with no rental headaches .

[callbob4homes]

I absolutely love the way this is playing out. All sides and opinions on what that particular person feels this market will do. Keep in mind though, just because something happened in Cal. doesn't necessarily mean it will happen in Az. (or any other state for that matter) Talking about the dairies leaving and all the houses being built? Same thing over here now. So if you follow that line of thinking, the Phoenix area is growing as well, but on the heels of California. The huge difference is the price of homes. I still believe this area over here is still at least 2 years away from settling down. I can't believe people still talk about the way things were 10 or 15 years ago. I don't think anything has ever reverted back to something that happened that long ago. At least if all factors were equal. Financing and home buying will always be a matter of personal preference. I do believe there is going to be some problems with "some" folks that have overextended and burning the candle at both ends, with a doob in the middle. A wholesale of repo's and turnbacks? I wouldn't wait for that to happen, and I wouldn't get in that line to wait either, because there are quite a few that have been standing in that line for quite some time now. You have to understand that with the market the way it is right now, (and I am talking Phoenix area only) there is no reason to walk away from a mortgage you can't pay. Unless you are one of those Mensa types that took advantage of 120% financing, but that speaks for itself.
If anyone wants to check prices or areas here, log on to my website and follow the link to MLS. If you want to leave your name and email addy fine, if not please put something in the name part so I will know not to reply. Thanks
www.callbob4homes.com

[totenhosen]

Totenhosen It is very dificult to get a piece of property to pencil out in the state of California I see a huge need for affodrable housing in California this will force those who can not afford to rent or purchase out of the State .More than likely the government will step in with social housing or they will purchase and rent back for a fraction of the cost. I can tell you that I had a house in Lomita California that I purchased 2 years ago and as long as its value was increasing at a greater rate than I could rent it for and no it would not pencil I left it vacant and used it as a second home for tax reasons , and just recently flipped it for over twice what I payed for it . Even with capital gains taxes due it was a money maker with no rental headaches .
Thats exactly part of the reason why I can see CA becoming more and more like Mexico. basically have a two tiered social/economic group. Have vs. have nots.

[totenhosen]

bob, from what you have seen what percentage of homes being purchased are by R/E investors?

[Ivan Dan]

1990 2000 Numeric Percent
Population Population Change Change
Riverside County 1,170,413 1,545,387 374,974 32.0
Orange County 2,410,556 2,846,289 435,733 18.1
San Bernardino 1,418,380 1,709,434 291,054 20.5
San Diego County 2,498,016 2,813,833 315,817 12.6
Los Angeles 8,863,164 9,519,338 656,174 7.4
California 29,760,021 33,871,648 4,111,627 13.8
SACRAMENTO— California's population exceeded 36.8 million persons as of January 1, 2005, according to new city population estimates released today by the state Department of Finance. Californians now represent 12.5 percent of the United States population – one out of every eight persons – according to the report. The state added 539,000 residents in 2004 – a 1.5-percent growth rate – continuing the pattern since 2001 of a slowing rate of growth.

[haulina29]

Totenhosen Yes there is a huge divide between the haves and nots , alot of the less fortunate are getting creative also with group purchases . 3 familys living in a house etc. More power to them .

[life's a river]

Callbob, things have gone back to the way they were 10 years prior here in Cali. I purchased my 1st condo in Tustin back in July of 88 for $115,000 and sold it almost 10 years later in Feb. of 98 for $109,000. In 1990 I had it appraised for $156,000 and thought I was doing great and then the whole Gullf War thing hit. It has happened but I do not think we will see that again. (I hope)
LAR

[callbob4homes]

bob, from what you have seen what percentage of homes being purchased are by R/E investors?
I would have to guess it was at 50 to 60%, maybe more. I think the investor buying has slowed somewhat because of the rental market saturation. However there are still some buying and lease to own investors playing the resales. With the home sales going for more than appraisal value, the homes aren't as attractive financially to investors any more. Most do not want to buy down to appraisal value, whereas someone looking for a home, might consider that to get their dream house. This pertains to resales only, as new home sales have virtually shut out investors for quite awhile. Which is another interesting topic altogether. Most new home builders, (keep in mind, these are tract homes, not customs on large parcels) will make the buyer sign a statement that it is for primary residence. There are different penalties for early sales and what not. NOW...........the interesting part is, this has never (to my knowledge anyway) been challenged in court. Some RE legal types say it will never fly if in fact challenged. Could be interesting.
Investors are still palying the game, but if you want to look at RE investments, I would have to say Casa Grande looks interesting to me for cheap and growth potential. I have other favorites as well, but my fingers are tired and I need a beer. :D

[callbob4homes]

Callbob, things have gone back to the way they were 10 years prior here in Cali. I purchased my 1st condo in Tustin back in July of 88 for $115,000 and sold it almost 10 years later in Feb. of 98 for $109,000. In 1990 I had it appraised for $156,000 and thought I was doing great and then the whole Gullf War thing hit. It has happened but I do not think we will see that again. (I hope)
LAR
but if you would have weathered the rough spot, what is it worth now.?

[BoatPI]

Purchaswed residental income property close to employment base. I like Long Beach. Mass transit, Blue Line to LA, good streets, employment, and high rents. Add in multi culture area and it works. If I have a vacancy it lasts just a week.

[Debbolas]

We bought the house for 159,000 and sold it for............I believe 150,000. We lived there almost 10years. That house is worth between 300-350 now.
(yes we lost $30,000 on that house, but we paid down enough to walk away from that area)
But
Before you feel bad for us (or laugh at us) Scream decided we needed to move and we did 6 years ago. The house we bought for $350,00 is now valued at $700,000 and up.
so I'm thinking COOL, we can sell this house, buy a river house for $200,000 and a regular house for $200,000. Then I look in the paper and can't find ANYTHING in this area for that price?!?!
We love our house, and would never move. (I HATE moving) and we have our white trash trailer at the lake :p
It was just sad what happened in our area in Fontana. It was my understanding that the over inflated house prices along with the no money down intrest only loans helped to create the large amount of folks that renegged on their loans and filed bankruptcy and short selled.
We had like two per block of forclosures and at least half our block filed bankruptcy.
That is why all this "over-inflated" real estate priced homes make me nervous.
It doesn't affect us, as we don't plan on leaving. It makes it really difficult for people buying their first house......

[al cole'holic]

We bought the house for 159,000 and sold it for............I believe 150,000. We lived there almost 10years. That house is worth between 300-350 now.
(yes we lost $30,000 on that house, but we paid down enough to walk away from that area)
But
Before you feel bad for us (or laugh at us) Scream decided we needed to move and we did 6 years ago. The house we bought for $350,00 is now valued at $700,000 and up.
so I'm thinking COOL, we can sell this house, buy a river house for $200,000 and a regular house for $200,000. Then I look in the paper and can't find ANYTHING in this area for that price?!?!
We love our house, and would never move. (I HATE moving) and we have our white trash trailer at the lake :p
It was just sad what happened in our area in Fontana. It was my understanding that the over inflated house prices along with the no money down intrest only loans helped to create the large amount of folks that renegged on their loans and filed bankruptcy and short selled.
We had like two per block of forclosures and at least half our block filed bankruptcy.
That is why all this "over-inflated" real estate priced homes make me nervous.
It doesn't affect us, as we don't plan on leaving. It makes it really difficult for people buying their first house......
..is Fontana considered a subdivision of the 'Valley of the Dirt People'??

[Debbolas]

..is Fontana considered a subdivision of the 'Valley of the Dirt People'??
?
I liked my house and my neighborhood in Fontana. Scream just had a different idea for us.

[WILDERTHANU]

These are all some very good points being made. I've been reading it all, thanx for the input. Well the deal is right now that my brother is in process of building a brand new home and I plan to purchase his home he is in right now. Of course he only owes a very minimal amount and wants to reinvest all the equity in his new home. How can I get in his house without being hit with the property tax. That extra tax money saved would sit well with my savings acct, not to mention the river house park rent :D .
It seems stupid to buy it from him and let the state get wind of it, being family and all. I'm staying away from an IO loan, just becuse I might keep the home for quite a few years, most likely as a rental later on down the road. I would rather rest easy knowing I dont HAVE to worry about a refi. I went with a Var. rate with the house I own now beacuse I knew I would be flipping it in two years $$$$. Now I'm looking for a home to stay in for a while, his place is turn key as hell. Thanx for any help!!

[HOSS]

I`ll sell ya my house. No water! :cool:

[simple]

Many good points throughout this thread. The strongest theme that comes across is that the Real Estate (RE) market is at a 'too high' eb and a correction is in order.
I totally agree on the comments about the bad sides of this financing 100% stuff. These people who are living on the edge will fall off sooner than later.
Every 10 years the RE market has a cycle. For 1-3 years it ramps up, for 1-3 years it tapers off & goes down. For 4-6 years it does not move up or down. This was the past history but with financing so slick & down payments so small, something has to give.
What are all of these people doing for a living? There are only so many CEOs, VPs & executive positions paying over 100k out there.
My predicitions are when the interest rate go back over 7%, the RE market will slow down to a crawl and the non-equity people will walk away. Foreclosures will increase and a domino effect throughout the complete financial, building, selling and other tethered fields will be hit hard.
What many smart (that does not include me) investors are doing is selling now, taking the cash & banking it. They are renting for about 2 years & sitting back and waiting for reality to resurface.
This most likely will happen and when it does, many nice 100-200k boats will be available at 50 cents on the dollar as well.
My.02

[Debbolas]

I`ll sell ya my house. No water! :cool:
Hoss!!!
:D :D

[Nord]

Many good points throughout this thread. The strongest theme that comes across is that the Real Estate (RE) market is at a 'too high' eb and a correction is in order.
I totally agree on the comments about the bad sides of this financing 100% stuff. These people who are living on the edge will fall off sooner than later.
Every 10 years the RE market has a cycle. For 1-3 years it ramps up, for 1-3 years it tapers off & goes down. For 4-6 years it does not move up or down. This was the past history but with financing so slick & down payments so small, something has to give.
What are all of these people doing for a living? There are only so many CEOs, VPs & executive positions paying over 100k out there.
My predicitions are when the interest rate go back over 7%, the RE market will slow down to a crawl and the non-equity people will walk away. Foreclosures will increase and a domino effect throughout the complete financial, building, selling and other tethered fields will be hit hard.
What many smart (that does not include me) investors are doing is selling now, taking the cash & banking it. They are renting for about 2 years & sitting back and waiting for reality to resurface.
This most likely will happen and when it does, many nice 100-200k boats will be available at 50 cents on the dollar as well.
My.02
This is very true, however.....
Because of Katrina, the rate will remain low for a while
as far as the cycle, well, I don't see homes dropping 100,000 in value,
maybe 50,000 at most.
I bought my house 4 years ago for 309 and its worth about 685 now.
If the market comes down, I forsee my house gong down to about 625 at very worst (could be wrong of course)
What will happen though is the availability of homes when the rate does go up because everyone with a a.r.m. rate won't be able to afford morgage so they will sell.

[CA Stu]

I bought my house 4 years ago for 309 and its worth about 685 now.
$5 says you can't sell it for that.
You might be able to refinance it for 80% of that, but no way in hell can you sell it for that amount.
Thanks
CA Stu

[callbob4homes]

if you have lived in the house for 2 years, the capital gain is on what you sell it for. there is no gain if you sell it for what you paid for it. the basis only comes into play when you sell before living in it for 2 years, and the way I understand it, the 2 years have to be consecutive, but not when you sell it if that makes sense to you. always check with your tax guy ( or girl to be pc here)

[haulina29]

Anybody who is "smart" would never rent a house to wait for a market decline the money you would payout in income tax would kill any cash saved buy renting . On another note 100k a year is nothing there are people in all areas making double and triple that figure and they are not CEOs or executives . As I stated above there are alot of people who have made a killing in the last 15 years . Not everybody in the state is broke . If you sold a house you owned for 10 years and paid 150 and sold it for 159 that is not a 30 k hit but even if you did take a 30k hit I bet you at least broke even with your income tax savings based on interest ?

[haulina29]

DILLIGAF its based of original purchase price if it was based of mortgages that would be killer max it out !!!

[haulina29]

Notice the quote " smart" read above that wasnt my verbage

[Nord]

$5 says you can't sell it for that.
You might be able to refinance it for 80% of that, but no way in hell can you sell it for that amount.
Thanks
CA Stu
6 houses down just sold for 640 no pool and smaller lot!
Doesn't matter, I don't want to sell anyhow! :wink:
5 bucks is a little hefty for me anyhow :p :)

[haulina29]

DILLIGAF Good for you sounds like you are in the the catagory of those who have made a killing . In the last 10 years I built houses for kids in there twentys using stock options that have made millions in real estate buy selling every two years one dude just bought a 100 acre ranch in the sea of Cortez for cash hes 30 now .

[callbob4homes]

DILLIGAF its based of original purchase price if it was based of mortgages that would be killer max it out !!!
Better check on that................If you sell your home for 300K, and you paid 100K for it 20 years ago, the capital gains are what you sell it for. 200k profit is yours. I have never paid capital gains on any property I have sold as long as I lived in that property for at least 2 years. 250k for single 500k for married. The mortgage has nothing to do with it, it is the selling price.

[haulina29]

CBH thats what I said its based on what you paid for it

[Nord]

Better check on that................If you sell your home for 300K, and you paid 100K for it 20 years ago, the capital gains are what you sell it for. 200k profit is yours. I have never paid capital gains on any property I have sold as long as I lived in that property for at least 2 years. 250k for single 500k for married. The mortgage has nothing to do with it, it is the selling price.
I'm single and have been in the house for over 2 years.
I'm not sure what you mean by 250 and 500???
I know I don't have to pay capital gains, but can you explain this part???

[haulina29]

Dilligaf sounds like you did the right thing I give Doug a hard time about the Mexico property all the time his wife works for social services and now he surfs and works the ranch lol

[callbob4homes]

you are right, I was reading too fast. the capital gains are based on what you paid versus what you sold for. In the Cal market where 100K homes are selling for 5 or 6 times the original price, you will pay a capital gains tax after the 250K ded. but it is still better than a cd or savings account. check into doing a 1031 exchange if you are wanting to sell. the only drawback here is you cannot do that on owner occupied, it has to be investment property

[haulina29]

Nord you can make 250 k tax free as a single man and if you are married you can make 500k tax free in gains

[haulina29]

Keeping the single man down lol!

[callbob4homes]

under 2 years it would not apply, but is prorated. and like I said when appreciation goes up as fast as it is now, you may be past the 250 or 500 anyway, if you were to sell for appraised value anyway. Also, if you can show hardship like job transfer, or the like, you can also beat the capital gains, but ALWAYS check with your tax professional first.

[haulina29]

It should be 500k per household but the the tax law is so un american who can complain. Where else can you make between 250 and 500ktax free ?

[Nord]

under 2 years it would not apply, but is prorated. and like I said when appreciation goes up as fast as it is now, you may be past the 250 or 500 anyway, if you were to sell for appraised value anyway. Also, if you can show hardship like job transfer, or the like, you can also beat the capital gains, but ALWAYS check with your tax professional first.
Thats what I heard, there is a loophole within the 2 years if the house is like 30 miles away from your place of work or something, don't know the specifics.

[haulina29]

Nord you are correct work hardship= distance or loss of job college medical etc

[haulina29]

DILLIGAF 15 miles you could walk that far !!

[haulina29]

DILLIGAF For the last 12 years I have built within 5 miles of my house I dont know what I would do if I had to commute again .

[callbob4homes]

I was told 50 miles, but is it checked that closely? I tried to do the hardship thing recently when the gas priced got so high and my wife drives 35 miles to work. My situation doesn't count because I am all over the place anyway showing and selling homes, but my tax guy didn't think I could get away with it. I have been audited once and don't care to go through that again. Do you feel lucky?
and dilligaf, disclaimers are a way of life anymore aren't they? :hammerhea lol

[Ivan Dan]

$5 says you can't sell it for that.
You might be able to refinance it for 80% of that, but no way in hell can you sell it for that amount.
Thanks
CA Stu
I'll bet you $100 that says I could DEFINITELY sell Nords place (I know exactly where he lives as I live only about 1/2 mile from him) if he was in the market to do so.

[Charley]

685k for 1500 feet in anahiem?? wow... I should sell!

[Ivan Dan]

685k for 1500 feet in anahiem?? wow... I should sell!
No he is in Corona off of Green River. But thats not too far off in Anaheim nowadays either though.

[Up 4 River]

Single=You don't have to pay taxes on the first $250K profit. Anything over that you have to pay your capital gains. If I understand it correctly.
Married=Same scenario but it increases to $500K
If you are there for less than two years you don't get the exemption, correct?
And the capital gains tax is 15% Nord.

[bigq]

Use the numbers:
Riverside Inventory and price (http://www.benengebreth.org/housingtracker/location/California/Riverside)
San diego (http://www.benengebreth.org/housingtracker/location/California/SanDiego)

[totenhosen]

And the capital gains tax is 15% Nord.
There is a loophole with that as well depending on how much income you make.
And if you sell a investment property before one year w/o doing a 1031 exchange be prepared to have the gain treated as regular income. (Got to double check this one as I haven't done it.)