PDA

View Full Version : How is the R/E market doing by you?



totenhosen
08-31-2006, 05:18 AM
Things are dead out my way. Inventory just keeps building, days on market increasing, pricers dropping.
Seems the infamous Gary Watts has reduced his 20% gain for OC in 2006.

cdog
08-31-2006, 05:36 AM
While thing's have slowed quite a bit compared to years past, homes are still selling if their priced right. I've cleared my entire SFR inventory this year and just picked up 2 more listings that will go into Mls on Monday. If your home is not selling it's over priced. The laws of supply and demand. Demand has faded creating a buyers market. If anyone was waiting to sell at the top, you missed it last year.
My company report:
For sellers, it is time for a “gut check”: price accordingly for a Fall and Holiday market, or DO NOT SELL. We are about to enter the Fall market, where demand for homes diminishes and more and more sellers pull their homes off of the market. At 16,006 homes, the Orange County inventory has nearly finished its gigantic 2006 growth spurt. There are 8,763 additional homes on the market today compared to January 1st of this year. In the past 2 weeks, the inventory grew by only 131 homes. But, it is surprising that homes are still coming on the market at a faster pace than they are coming off. The number of homes placed into escrow has risen from the incredibly slow July numbers. There were 2,357 homes placed into escrow within the prior 30 days; that’s 225 additional homes compared to July 13th. As the inventory has slowed its climb and more homes are placed into escrow, market time has dropped slightly from 7.2 months on July 13th to 6.79 months today. Over the past two weeks, market time only dropped from 6.81 months to 6.79 months. As more sellers recall that, cyclically, the Fall and Holiday market are not the best times to sell, the number of homes that are pulled off the market will reach numbers not seen in quite some time. All ranges above $750,000 are within the definition of a buyer’s market. All ranges above $1.5 million are above the 10 month mark. There is virtually NO difference in market time between attached homes (6.79 months for condominiums and townhomes) and detached homes (6.78 months). BUT, the market time for attached homes within the $500,000 to $750,000 range is 7.91 months. Above $750,000, the market time for attached homes is 11.3 months. Today’s market is not for the light hearted. For the best approach and strategy to capitalize on the market, buyers and sellers must turn to the expertise of their real estate agent. How should a seller approach the market? It is quite simple; a homeowner should not place their home on the market unless they are motivated to sell. Sellers that are currently on the market and do not have legitimate reasons to sell and are not motivated should pull their homes off the market IMMEDIATELY and enjoy the seasons, relaxing in their Southern California homes. After four to six months on the market, many sellers understand the big picture; it does not matter what price a seller would like to get for their home, they are only going to achieve a realistic market value. How should a Buyer approach the market? Great news, rates have fallen in recent weeks as the Federal Reserve paused its string of rate hikes. It is unclear whether Bernanke, the new Federal Reserve Board Chairman, and the rest of the board are going to raise rates again or continue to hold. If rates are increased, affordability drops. After eight years, it’s the buyer’s turn. There are so many homes to choose from and sellers are more realistic today than they were just a few months ago.

FREIND OF AA AND TA
08-31-2006, 05:40 AM
Things are dead out my way. Inventory just keeps building, days on market increasing, pricers dropping.
Seems the infamous Gary Watts has reduced his 20% gain for OC in 2006.
Same in SCV but they will sell if they are priced right. I have sold 6 houses this week. Yep they were all great deals for sure.

YeLLowBoaT
08-31-2006, 05:45 AM
Prices are droping droping a 2-5k a week here. I have not seen a home sale for its asking price in awhile. Just about every sign has "price reduced" or "new price". IMO they are still about asking about 15-25% more then they are worth. I have also heard form some ppl working in the "plan approval" office that almost no major remodel work is going on.( atleast no permits are geting pulled.)

HocusPocus
08-31-2006, 06:33 AM
im no real estate expert by any means, im just going by what im seeing around me :). seems a lot of the homeowners i personally know who are selling are still trying to get last years prices for their homes and then wondering why its staying on the market so long. Im seeing more and more "for sale" signs in front of homes, last year they were only up a short time before being sold. i also know people who paid top dollar for their homes last year using one of the "creative" financing deals and are now trying to get out of it, with no luck. i know some people are getting screwed but they really did it to themselves. :crossx:

cdog
08-31-2006, 06:49 AM
im no real estate expert by any means, im just going by what im seeing around me :). seems a lot of the homeowners i personally know who are selling are still trying to get last years prices for their homes and then wondering why its staying on the market so long. Im seeing more and more "for sale" signs in front of homes, last year they were only up a short time before being sold. i also know people who paid top dollar for their homes last year using one of the "creative" financing deals and are now trying to get out of it, with no luck. i know some people are getting screwed but they really did it to themselves. :crossx:
Yep!
Supply and Demand....... :boxed:

KREGER
08-31-2006, 07:17 AM
I have been fortunate to have been able to use a Refinancing program we have for my clients that goes to 100% on one loan with no MI. It has helped some folks that little or no equity get out of their 80/20 purchase loans that have a short term fixed rate. They mostly use the 40 year fixed with a 10 year interest only option. It gives them a long term fixed rate with a low payment option. It is not for eveyone but I have helped several.

OutCole'd
08-31-2006, 07:18 AM
Market in Vegas is real flat, no activity that I can see.

Partycattin
08-31-2006, 07:23 AM
Things have slowed down in Simi as well. There are 4 houses on my street that have been on the market for months. Neighbor just reduced theirs by 45k. (Still overpriced IMO).
I think the media scared a lot of people into putting their house up and cashing in. This created to much supply. It seems to me that the best thing people could do to keep prices up is pull their house off the market. Supply is reduced and demand increased.
Curious, anyone know the # of new listings YTD compared to last year? It seems that a lot of people I know that weren't even considering selling, suddenly listed their homes after hearing the media tell everyone that the market was going to take a hit this year.
So IMO, it's the medias fault.

phebus
08-31-2006, 07:25 AM
I am so thankfull to have sold our home and relocated when we did.

cdog
08-31-2006, 07:25 AM
Things have slowed down in Simi as well. There are 4 houses on my street that have been on the market for months. Neighbor just reduced theirs by 45k. (Still overpriced IMO).
I think the media scared a lot of people into putting their house up and cashing in. This created to much supply. It seems to me that the best thing people could do to keep prices up is pull their house off the market. Supply is reduced and demand increased.
Curious, anyone know the # of new listings YTD compared to last year? It seems that a lot of people I know that weren't even considering selling, suddenly listed their homes after hearing the media tell everyone that the market was going to take a hit this year.
So IMO, it's the medias fault.
You want to get freaked out .....Here ya go...
http://www.realestatedecline.com/#Inventory%20Tracker

KREGER
08-31-2006, 07:28 AM
So IMO, it's the medias fault.
Exactly. Over the the last few weeks the rates have stoped going up and come down a bit for once. The media probably will not comment since it is a positive thing. :mad:

SHOTKALLIN
08-31-2006, 07:44 AM
Right now is definitely not the time to sell. If I had to move today my house would become a rental. Hopefullly you have a 30 yr fixed @ 5. something. If you played the market right you do.
just my .02

cdog
08-31-2006, 07:44 AM
It's a big shit sandwich and we're all gonna have to take a bite. :boxed:

CBadDad
08-31-2006, 07:45 AM
Exactly. Over the the last few weeks the rates have stoped going up and come down a bit for once.
This won't last long.
I have been fortunate to have been able to use a Refinancing program we have for my clients that goes to 100% on one loan with no MI. It has helped some folks that little or no equity get out of their 80/20 purchase loans that have a short term fixed rate. They mostly use the 40 year fixed with a 10 year interest only option. It gives them a long term fixed rate with a low payment option. It is not for eveyone but I have helped several.
Interesting. Tell us more about how this works. The details please.

Jyruiz
08-31-2006, 07:48 AM
You want to get freaked out .....Here ya go...
http://www.realestatedecline.com/#Inventory%20Tracker
Wow, that should scare some people, and make others happy.

ChumpChange
08-31-2006, 07:55 AM
I have been fortunate to have been able to use a Refinancing program we have for my clients that goes to 100% on one loan with no MI.
No MI but a higher rate, right? :rolleyes:

HM
08-31-2006, 07:58 AM
Over all #'s are down. Inventory up, sales down, prices soft, but not negative.
But, there are still a few hot spots. I have a client and we did an appraisal in April of this year and it came in at $925,000 down in Chula Vista. We decided to wait a bit as he was self employed for just a tad under 2 years. We are doing his refi now, and his house appraised at $1,050,000 and we used the same appraiser. Over 10% increase in just a few months. I also did a home in Hemet and last year this time, the value was $280,000. We just refi'd it and the value came in at $320,000 - at 14% increase over last year. Granted, these are refi's and not sales. But, their values were based on recent sales - and the lenders had no problem with values.
I have not been having any trouble with values yet. Values are still bumping up, just not as aggresively as before for the rest of my business. I have not seen any cases where a value went down. The majority of my business is So Cal.
I have heard from other people where values have dropped, I just have not seen it in my office.

HM
08-31-2006, 08:00 AM
No MI but a higher rate, right? :rolleyes:
There is no free lunch in a 100% LTV single loan. :D
But, you can avoid MI with a combo, but still, the rate on those seconds can be shocking!

callbob4homes
08-31-2006, 08:07 AM
about the same scenario out my way..............lots of peeps still haven't figured out the runaway bus left a long time ago. Closed one sale yesterday and turned down 3 listings last week. (one even a family member). If you don't have to sell, don't put it on the market. RE is (or should be) an investment. It will be back, just more than likely not the 40 to 50 % increase of last year. :cry: :cool:

KREGER
08-31-2006, 08:10 AM
No MI but a higher rate, right? :rolleyes:
Actually it is for low to moderate income households. Two qualifications. If you make less than 80K a year with in the home or your home is located in a Low to moderate income census tract. The rates are lower than a 6.5% with no discount point and no origination fee.

KREGER
08-31-2006, 08:12 AM
There is no free lunch in a 100% LTV single loan. :D
You have not met me yet. It looks like you live right up the road from me I would be happy to explain it to you.

Havasu Cig
08-31-2006, 08:59 AM
And people said I was crazy to fix both my houses for 30 years at 5% a couple years ago...
The market is going to get worse according to all the experts. I have to laugh at all the people that told me it was going to last forever. I have lived through two crashes before, and this market is on the same course. The difference now though is a lot of people don't have any real money (other than payments) in these homes. A lot easier to walk away when you don't put 10-20% down.
One of the experts that I get a letter from said there are 12k condos waiting to come into the market in San Diego. He said that in a normal market 1k a year come in and that the added inventory is going to cause some serious problems. For those looking to pick up deals he advises not to buy for at least 6 month to a year because prices will continue to fall. He said that the amatuers that have been in the market the past few years are the ones that are now going to suffer, and the experts will then step in and clean up. Should get interesting.

jxr02
08-31-2006, 09:26 AM
After watching multiple "flip this house" type shows pop up on TV, I can't help but compare the equity bubble of the 90's when everyone was day trading in their spare time.
When school teachers and retirees without any experoiience start trying to buy, and flip real estate to make obscene money its time to run.

jxr02
08-31-2006, 09:29 AM
There is no free lunch in a 100% LTV single loan. :D
But, you can avoid MI with a combo, but still, the rate on those seconds can be shocking!
The lunch may not be free, but if you've got a really good credit score it may be inexpensive enough to make sense. Oppt'y cost of money (can you put it some where else) to make the incremental interest expense (which is tax deductable) low relative to other investment returns. Buying a new boat is not one of them BTW.

DCBDaytona
08-31-2006, 09:30 AM
And people said I was crazy to fix both my houses for 30 years at 5% a couple years ago...
The market is going to get worse according to all the experts. I have to laugh at all the people that told me it was going to last forever. I have lived through two crashes before, and this market is on the same course. The difference now though is a lot of people don't have any real money (other than payments) in these homes. A lot easier to walk away when you don't put 10-20% down.
One of the experts that I get a letter from said there are 12k condos waiting to come into the market in San Diego. He said that in a normal market 1k a year come in and that the added inventory is going to cause some serious problems. For those looking to pick up deals he advises not to buy for at least 6 month to a year because prices will continue to fall. He said that the amatuers that have been in the market the past few years are the ones that are now going to suffer, and the experts will then step in and clean up. Should get interesting.
Everybody told us months ago that the sky was not falling...It appears that those optimists are starting to side with us.

Todd969
08-31-2006, 09:34 AM
Actually it is for low to moderate income households. Two qualifications. If you make less than 80K a year with in the home or your home is located in a Low to moderate income census tract. The rates are lower than a 6.5% with no discount point and no origination fee.
Sounds like a Chafa or county bond program.

Dave C
08-31-2006, 09:46 AM
damn it.... I only wish I could short the R/E market :cry: :cry: ;)

SummitKarl
08-31-2006, 09:51 AM
New Home sales are slow to dead here in Havasu, although the upper end market still seems to be hanging on (3k sq ft Living and above). investors still are building Spec Homes keeping the labor pool going, I don't expect that to last more than 6 months tho. and I think those with more than 2 specs going at one time are in for a few more payments than they bargained for.
The addition market is going good, I seem to be getting more and more garage additions and remodels as people settle in for awhile.

Chipster27
08-31-2006, 09:54 AM
After watching multiple "flip this house" type shows pop up on TV, I can't help but compare the equity bubble of the 90's when everyone was day trading in their spare time.
When school teachers and retirees without any experoiience start trying to buy, and flip real estate to make obscene money its time to run.
Kind of like "flip this tech stock" of 2001-2002 :)
Anyone with an e-trade account and a limited knowledge of how to click a mouse on the buy/sell button could turn stocks for a profit. My how that all changed....

framer1
08-31-2006, 09:54 AM
All I know is in one day... I had framing crews come from Santa Maria... 60 miles from job, Salinas...110 miles from job, Bakerfield...100 miles from job all looking for work. That is not a good sign for real estate. I've been around long enough to smell a big slow down and it's coming. Sales are just to slow but it will come back...It's just when.

framer1
08-31-2006, 09:55 AM
damn it.... I only wish I could short the R/E market :cry: :cry: ;)
Reits and building co.

al cole'holic
08-31-2006, 09:59 AM
...opening escrow on a 4th property, 7 figures here in Simi...gonna rent my personal primary residence to someone waiting for burst...the sky is falling :cool:

cc239badlands
08-31-2006, 10:01 AM
Everyone has to remember that before this boom over the last five years the normal house would sit on the market for 3 to 6 months. It appears to be going that way again.

THOR
08-31-2006, 10:02 AM
Doing f'n great in HB

FREIND OF AA AND TA
08-31-2006, 10:03 AM
How are all of you lenders doing with re-fi's

Rexone
08-31-2006, 11:24 AM
I have not been having any trouble with values yet.
You don't work much in Pomona do you. :D

Rexone
08-31-2006, 11:32 AM
Everybody told us months ago that the sky was not falling...It appears that those optimists are starting to side with us.
I don't think the sky is falling but a serious and historically past due correction is in progess imo. I recall at least 4 threads on here over the past year where peeps just didn't wanna hear it. Prices will continue to fall for some time to come in most areas I think. Of course there always pockets of exceptions but that will be the big picture for awhile. Most properties were at least 25% over valued IMO.
The people that are gonna feel it are those that pulled out all the money in their over valued house for all the wrong reasons (toys, vacations, etc). Banking on low continued interest rates on their seconds and continued double digit appreciation annually.
Speaking of values falling anyone noticed the glut of used boats on the market in the past few months. Wonder what the statistics are there vs a year ago. And what that will look like in another 6 mo. I hear many builders are slow too. All signs of the above RE slowdown, high gas prices, etc. IMO.

mondorally
08-31-2006, 11:39 AM
Doing f'n great in HB
THOR,
Where you at?
-Justin

mondorally
08-31-2006, 11:43 AM
Reits and building co.
You beat me to it! I think most have already taken the hit (Builders shares are down 25-50%) and actually may be good buys if things settle down a bit.
-Justin

EmpirE231
08-31-2006, 11:53 AM
Should be signing my docs today or tomorrow!! put my offer in about 2 weeks ago!! :) def happy with my decision.... but the market sure is in alot of hurt!! this house I picked up has gone down around 60-70k since it was first listed in the begining of the year!! tons of houses dropping price left and right in riverside.... 20-50k drops since last month on the average home :220v:

Steamin' Rice
08-31-2006, 11:53 AM
I think that prices are coming down - Cdgo sold our house for us and it closed escrow a couple of weeks ago. Although we probably missed the peak in our neighborhood, we still are happy with what we ended up with.

Steamin' Rice
08-31-2006, 11:55 AM
There is a house two doors down from ours that sold back around April.. That house is probably worth at least $30k less now than it sold for in April, and the buyer of that house is still trying to sell his other house in Ladera Ranch...

MONEYFURNOTHIN
08-31-2006, 11:59 AM
So is the general consensis to wait. I have not bought yet, been waiting/praying for some kind of crash. I see house's being reduced every month. So what do you think, 1 more year to bottom?

Rexone
08-31-2006, 12:10 PM
If you're buying to invest I'd wait.
If you're buying to live in and selling another just do it. Everything's relevent on both ends, sale and purchase are both less $.

IndyEuphoria
08-31-2006, 12:18 PM
Thanks for the heads up everyone. I am looking to relocate to Vegas and can't imagine renting but might have to suck it up for a while to not get screwed!
and apparently the ex bought me out at the right time...for me anyway, can't imagine what kind of loan he had to get to keep that house.

mondorally
08-31-2006, 12:18 PM
If you're buying to invest I'd wait.
If you're buying to live in and selling another just do it. Everything's relevent on both ends, sale and purchase are both less $.
I bought a house a year ago at probably close to the peak...... but sold a condo at the same time. I figured if things went to sh!t at least I would have a driveway for my boats!
-Justin

Angry Inch
08-31-2006, 12:18 PM
For some that are looking for purchasing additional properties, look into commercial. In most areas nation wide, property is undervalued and in a "buyers market". In some cases, areas that have seen 30%+ increases in homes have only seen 7 or 8% in commercial. Plus, the fears of a bubble bursting in residential has slightly carried over.
It is in my own personal opinion that one might be able to score some sweet deals. The only drawback is that one needs up to a 50% down payment to make it into the black every month, which is roughly one million cash for a smaller property.

Wheeler
08-31-2006, 12:18 PM
If you're buying to invest I'd wait.
If you're buying to live in and selling another just do it. Everything's relevent on both ends, sale and purchase are both less $.
I sold my home in OC last year, closed escrow 9-16-05, moved to Parker.
Yes the timing was right, however, there is no place like Orange County. I am looking and waiting, and might pick up another home in Yorba Linda, when the time is right.

ChumpChange
08-31-2006, 12:20 PM
How are all of you lenders doing with re-fi's
Not too bad in the commercial realm. Refi's are still good in application volume due to many wanting to get out of the SBA adjustable loans.
Unfortunately, the market has not increased in some areas to get the proper 80% for the conventional loans seeing as they finance 90% in the first place. For the first time in many years, an appraisal did NOT come in high enough to support the loan.
I would not invest in residential but a sharp jump is still forecast in commercial buildings. That's where I'd put my spare cash these days.

Angry Inch
08-31-2006, 12:23 PM
Not too bad in the commercial realm. Refi's are still good in application volume due to many wanting to get out of the SBA adjustable loans.
Unfortunately, the market has not increased in some areas to get the proper 80% for the conventional loans seeing as they finance 90% in the first place. For the first time in many years, an appraisal did NOT come in high enough to support the loan.
I would not invest in residential but a sharp jump is still forecast in commercial buildings. That's where I'd put my spare cash these days.
Do you have any suggestions for leveraging equity into a down payment on a new loan?

ChumpChange
08-31-2006, 12:23 PM
It is in my own personal opinion that one might be able to score some sweet deals. The only drawback is that one needs up to a 50% down payment to make it into the black every month, which is roughly one million cash for a smaller property.
This is true in Sothern California where one must have a large 1031 just for a property to make sense. In some areas, I have seen properties sell for less than ten times gross rents which can be as little as thirty percent down.
I financed a property in Anaheim that sold for $2.25mil. The property rents only covered a $675,000 loan. The guy bought it as he had the 1031.

HocusPocus
08-31-2006, 12:25 PM
Speaking of values falling anyone noticed the glut of used boats on the market in the past few months. Wonder what the statistics are there vs a year ago. And what that will look like in another 6 mo. I hear many builders are slow too. All signs of the above RE slowdown, high gas prices, etc. IMO.
i am always checking out the traders and such for boats. a year ago it was rare to see many same year model boats for sale.. now there are a ton of 05's and 06's for sale. i have to admit some of the prices are already pretty tempting but im gonna hold off a little longer. :)

ChumpChange
08-31-2006, 12:28 PM
Do you have any suggestions for leveraging equity into a down payment on a new loan?
There are plenty of ways one can leverage themselves. It's a delicate balance though. Give me a call anytime if you want to go over some. Matt @ 626-914-7390.

FREIND OF AA AND TA
08-31-2006, 12:49 PM
i am always checking out the traders and such for boats. a year ago it was rare to see many same year model boats for sale.. now there are a ton of 05's and 06's for sale. i have to admit some of the prices are already pretty tempting but im gonna hold off a little longer. :)
I totaly agree! Some killer deals out there! It is so hard not to jump!

beaverretriever
08-31-2006, 01:17 PM
I totaly agree! Some killer deals out there! It is so hard not to jump!
RE couldnt be better for me. This is the best time to buy. We have a triplex that rents out for almost double our mortgage. I wouldnt buy to sell but I would buy to rent out. ;)

ChumpChange
08-31-2006, 02:46 PM
We have a triplex that rents out for almost double our mortgage.
Can I ask what mortgage plan you have this triplex on in order to get that positive cash flow? Did you just purchase it or is this a long term that has recently been good? Is it a stable program?
I was listening to a radio program this past weekend and they were telling people about a single family residence had positive cash flow if purchased with no money down. Can I buy five then? The kicker which they don't tell you is that IT ONLY HAS POSITIVE CASH FLOW ON A NEG AM PAYMENT!!!! and only for the first year until it adjusts. Come on!!!! Do the agents and mortgage brokers feel good about saying this stuff? If it's such a great deal, buy it yourself, don't take somebody else down in the fire.
Some ignorant person is going to hear this BS, buy the property and lose it within a year. I just get angry listening to this stuff.

77charger
08-31-2006, 03:18 PM
Might do me well actually.thinkin of selling here in overpriced ca i paid 190k going for a tad over 600k now and we might make a move to phx area within the next 6 months.

Tom Slick
08-31-2006, 04:20 PM
Lets face it folks, the RE market has never, ever seen the kind of growth that it has seen over the last 5-7 years. After 9/11, the feds went nuts and lowered interest rates to unheard of lows, which drove property values through the roof. Tons of people got in way over their heads with voodoo loans and are now getting screwed big time. Some got screwed by their lender, while all of them were just plain ignorant. Just because the loan offer said you could afford it, doesn’t mean you really can! People need to realize that the ride is over and it's time to pay up. Like that old saying goes, if it sounds too good to be true, it usually is.
I think it's safe to say that most of the newer boats that are now up for sale are because people got house rich and are now way behind the eight ball. Neg.Ams. ARM's, etc. are adjusting like wild fire and people are realizing that they can't afford there house payment, let alone the shiny new boat.
Take a minute to think about what Havasu looked like 5 years ago. A guy with a $80K, 30' boat was on the upper end of the spectrum when it came to baller status, but today that guy is just an also ran. Hell, 5 years ago a 25ft Daytona was the shizznizzle! Now everyone out there is rolling around in their new $100K to $400K boat like they just won the lotto. Funny how the average household income has actually gone down over the last few years, but suddenly every one has new boats, RV's, buggies, river homes, etc. Looks like the party's over and there's going to be a bunch of cool toys for sale for some great prices pretty soon.
The face of Havasu has changed a ton over the last few years, but with changes in the economy, new laws and all the other bull that is going on, I see Havasu changing once again. People are unloading their boats and most likely there vacation homes out there, so the economy and RE market in Havi is sure to take a huge hit. The real ballers will survive, but the want to be house rich folks are doomed.
Boat builders have to be crapping in their pants about now, knowing that the train has left the station. I would look for builders to be lowering prices and offering much better incentive pretty soon as well, as the used market is becoming flooded and interest rates are going up. The builders that banked on the economy continuing to thrive and didn’t plan for a slow down will be heading to BK court in the near future.
On a happier note, every thing is cyclical, so it’s bound to come back around someday (7-10 years), but for now it’s time to batten down the hatches and hope you aren’t one of the unfortunate people that didn’t make wise financial decisions over that last few years.
Sorry for the rant, this is just a subject that I pay close attention too. :rollside:

KREGER
08-31-2006, 05:08 PM
Sounds like a Chafa or county bond program.
Neither. It is called ACORN. It is onlt available through the B of A Retail Channel. For people who qualify, B of A buys the rate down 2 points on the discount or 3/4% on the Rate. The money comes from their community reinvestment Budget. It exists because of the Community Reinvestment Act. It is great for the ones who can use it. It also alows 100% on a Refi / purchase with no mortgage insurance. If you have a household income less than $81K. Your in. Otherwise it pertains to certain areas.

HocusPocus
08-31-2006, 05:11 PM
Lets face it folks, the RE market has never, ever seen the kind of growth that it has seen over the last 5-7 years. After 9/11, the feds went nuts and lowered interest rates to unheard of lows, which drove property values through the roof. Tons of people got in way over their heads with voodoo loans and are now getting screwed big time. Some got screwed by their lender, while all of them were just plain ignorant. Just because the loan offer said you could afford it, doesn’t mean you really can! People need to realize that the ride is over and it's time to pay up. Like that old saying goes, if it sounds too good to be true, it usually is.
I think it's safe to say that most of the newer boats that are now up for sale are because people got house rich and are now way behind the eight ball. Neg.Ams. ARM's, etc. are adjusting like wild fire and people are realizing that they can't afford there house payment, let alone the shiny new boat.
Take a minute to think about what Havasu looked like 5 years ago. A guy with a $80K, 30' boat was on the upper end of the spectrum when it came to baller status, but today that guy is just an also ran. Hell, 5 years ago a 25ft Daytona was the shizznizzle! Now everyone out there is rolling around in their new $100K to $400K boat like they just won the lotto. Funny how the average household income has actually gone down over the last few years, but suddenly every one has new boats, RV's, buggies, river homes, etc. Looks like the party's over and there's going to be a bunch of cool toys for sale for some great prices pretty soon.
The face of Havasu has changed a ton over the last few years, but with changes in the economy, new laws and all the other bull that is going on, I see Havasu changing once again. People are unloading their boats and most likely there vacation homes out there, so the economy and RE market in Havi is sure to take a huge hit. The real ballers will survive, but the want to be house rich folks are doomed.
Boat builders have to be crapping in their pants about now, knowing that the train has left the station. I would look for builders to be lowering prices and offering much better incentive pretty soon as well, as the used market is becoming flooded and interest rates are going up. The builders that banked on the economy continuing to thrive and didn’t plan for a slow down will be heading to BK court in the near future.
On a happier note, every thing is cyclical, so it’s bound to come back around someday (7-10 years), but for now it’s time to batten down the hatches and hope you aren’t one of the unfortunate people that didn’t make wise financial decisions over that last few years.
Sorry for the rant, this is just a subject that I pay close attention too. :rollside:
that about sums it up. :)

out of bounds
08-31-2006, 05:19 PM
Ok, here is the deal. In nor cal we have out priced our first time buyers and that hurts the whole market ...... I am a title rep and have been at the top of the game for awhile. Most of my top producers are just waiting for all the newbees to get out and get back to a normal market. I flip houses up here in nor cal and the lower end market is still very strong along with the 700K and above. I have also lost over 20 agents and close to 15 loan officers, it is very scary. Give it a year we will be back and running. Once people realize that they don't have to sell and just sit tight, we will be okay. If it keeps going and real estate agents keep listing homes too high we will continue to see an increase in short sales and foreclosures. So my back up plan of opening a ultra or another custom boat builder in sac area should wait????? In order to get service on anything up here it takes 3 weeks at best right now. But that is for another forum......

HM
08-31-2006, 05:27 PM
Funny how the average household income has actually gone down over the last few years..
WSJ just ran an article on Wedsnday that says income is up over inflation for last year. But, it was down for 5 years in a row prior to that.

THOR
08-31-2006, 06:12 PM
THOR,
Where you at?
-Justin
Goldenwest and Heil

totenhosen
08-31-2006, 07:28 PM
It is in my own personal opinion that one might be able to score some sweet deals. The only drawback is that one needs up to a 50% down payment to make it into the black every month, which is roughly one million cash for a smaller property.
If you need 50% down that isn't a very good investment. Do you know what kind of crappy ROE or cap rate that is. I would hardly call that a buyers market.

Angry Inch
08-31-2006, 08:01 PM
If you need 50% down that isn't a very good investment. Do you know what kind of crappy ROE or cap rate that is. I would hardly call that a buyers market.
example:
2 million sale, 180k a year income, 30k expenses, 7.5% cap rate.
Now, correct me if I'm wrong here, but I think rates are ~7%. So, let's say it's 8% on 2 million, with 50% down. That's 8g a month in loan payments. Your net income is 12.5g. You pocket 4.5g a month for an hours worth of work a week. That is not a bad invesment.

Havasu Cig
09-01-2006, 08:18 AM
Can I ask what mortgage plan you have this triplex on in order to get that positive cash flow? Did you just purchase it or is this a long term that has recently been good? Is it a stable program?
I was listening to a radio program this past weekend and they were telling people about a single family residence had positive cash flow if purchased with no money down. Can I buy five then? The kicker which they don't tell you is that IT ONLY HAS POSITIVE CASH FLOW ON A NEG AM PAYMENT!!!! and only for the first year until it adjusts. Come on!!!! Do the agents and mortgage brokers feel good about saying this stuff? If it's such a great deal, buy it yourself, don't take somebody else down in the fire.
Some ignorant person is going to hear this BS, buy the property and lose it within a year. I just get angry listening to this stuff.
I feel the same way. Listening to these jackasses on these shows leading people down the wrong path is too much for me. To get positive cash flow out of a rental (in most areas) you are going to need to put a lot of cash down or like you said go with a neg am loan and then it is temporary.
I can get positive cash flow out my Havasu house, but that is because I bought it six year ago with 30% down. It would be very hard today to get positive cash flow out of the same house now unless you put 300k down because the house has appraised at over 400k and long term rentals out there are pretty soft. You need to factor in all your cost on a rental as well to figure out if your cash flow is going to be positive.

Havasu Cig
09-01-2006, 08:23 AM
Lets face it folks, the RE market has never, ever seen the kind of growth that it has seen over the last 5-7 years. After 9/11, the feds went nuts and lowered interest rates to unheard of lows, which drove property values through the roof. Tons of people got in way over their heads with voodoo loans and are now getting screwed big time. Some got screwed by their lender, while all of them were just plain ignorant. Just because the loan offer said you could afford it, doesn’t mean you really can! People need to realize that the ride is over and it's time to pay up. Like that old saying goes, if it sounds too good to be true, it usually is.
I think it's safe to say that most of the newer boats that are now up for sale are because people got house rich and are now way behind the eight ball. Neg.Ams. ARM's, etc. are adjusting like wild fire and people are realizing that they can't afford there house payment, let alone the shiny new boat.
Take a minute to think about what Havasu looked like 5 years ago. A guy with a $80K, 30' boat was on the upper end of the spectrum when it came to baller status, but today that guy is just an also ran. Hell, 5 years ago a 25ft Daytona was the shizznizzle! Now everyone out there is rolling around in their new $100K to $400K boat like they just won the lotto. Funny how the average household income has actually gone down over the last few years, but suddenly every one has new boats, RV's, buggies, river homes, etc. Looks like the party's over and there's going to be a bunch of cool toys for sale for some great prices pretty soon.
The face of Havasu has changed a ton over the last few years, but with changes in the economy, new laws and all the other bull that is going on, I see Havasu changing once again. People are unloading their boats and most likely there vacation homes out there, so the economy and RE market in Havi is sure to take a huge hit. The real ballers will survive, but the want to be house rich folks are doomed.
Boat builders have to be crapping in their pants about now, knowing that the train has left the station. I would look for builders to be lowering prices and offering much better incentive pretty soon as well, as the used market is becoming flooded and interest rates are going up. The builders that banked on the economy continuing to thrive and didn’t plan for a slow down will be heading to BK court in the near future.
On a happier note, every thing is cyclical, so it’s bound to come back around someday (7-10 years), but for now it’s time to batten down the hatches and hope you aren’t one of the unfortunate people that didn’t make wise financial decisions over that last few years.
Sorry for the rant, this is just a subject that I pay close attention too. :rollside:
I could not have said it better myself. Six years ago (almost 7 now) we had a 100k Mach 26 and a house in Havasu and like you said we were not the norm. Now you roll in the same boat and you don't stand out at all. You stop and talk to people at the Sand Bar, Channel etc...and everyone owns a house out there now. I think it is great because I can roll incognito in the pontoon (even in the Skater when I had it) and don't have to answer questions from jackasses all day. It will be interesting to see what happens the next few years.

Freak
09-01-2006, 09:12 AM
Lets face it folks, the RE market has never, ever seen the kind of growth that it has seen over the last 5-7 years. After 9/11, the feds went nuts and lowered interest rates to unheard of lows, which drove property values through the roof. Tons of people got in way over their heads with voodoo loans and are now getting screwed big time. Some got screwed by their lender, while all of them were just plain ignorant. Just because the loan offer said you could afford it, doesn’t mean you really can! People need to realize that the ride is over and it's time to pay up. Like that old saying goes, if it sounds too good to be true, it usually is.
I think it's safe to say that most of the newer boats that are now up for sale are because people got house rich and are now way behind the eight ball. Neg.Ams. ARM's, etc. are adjusting like wild fire and people are realizing that they can't afford there house payment, let alone the shiny new boat.
Take a minute to think about what Havasu looked like 5 years ago. A guy with a $80K, 30' boat was on the upper end of the spectrum when it came to baller status, but today that guy is just an also ran. Hell, 5 years ago a 25ft Daytona was the shizznizzle! Now everyone out there is rolling around in their new $100K to $400K boat like they just won the lotto. Funny how the average household income has actually gone down over the last few years, but suddenly every one has new boats, RV's, buggies, river homes, etc. Looks like the party's over and there's going to be a bunch of cool toys for sale for some great prices pretty soon.
The face of Havasu has changed a ton over the last few years, but with changes in the economy, new laws and all the other bull that is going on, I see Havasu changing once again. People are unloading their boats and most likely there vacation homes out there, so the economy and RE market in Havi is sure to take a huge hit. The real ballers will survive, but the want to be house rich folks are doomed.
Boat builders have to be crapping in their pants about now, knowing that the train has left the station. I would look for builders to be lowering prices and offering much better incentive pretty soon as well, as the used market is becoming flooded and interest rates are going up. The builders that banked on the economy continuing to thrive and didn’t plan for a slow down will be heading to BK court in the near future.
On a happier note, every thing is cyclical, so it’s bound to come back around someday (7-10 years), but for now it’s time to batten down the hatches and hope you aren’t one of the unfortunate people that didn’t make wise financial decisions over that last few years.
Sorry for the rant, this is just a subject that I pay close attention too. :rollside:
I'm with you. This boom was an anomoly not the norm. People are used to the boom now and getting back to normal growth is going to be painful. Anyone considered what is going to happen when all those people in the housing industry are laid off? SC gave it 6 months. NO WAY. It's gonna take longer that that just to weed out the speculators and waiters that own four houses for "investments". 7-10 years if ever is my guess. Energy will never be cheap again. The cost of living is rising and income is not keeping up. Stagflation.

mondorally
09-01-2006, 09:35 AM
Goldenwest and Heil
We're practically neighbors. I'm at Goldenwest & Lydia (across from Murdy Park) on Marie.
-Justin

CBadDad
09-01-2006, 09:37 AM
example:
2 million sale, 180k a year income, 30k expenses, 7.5% cap rate.
Now, correct me if I'm wrong here, but I think rates are ~7%. So, let's say it's 8% on 2 million, with 50% down. That's 8g a month in loan payments. Your net income is 12.5g. You pocket 4.5g a month for an hours worth of work a week. That is not a bad invesment.
Whoa there Nelly...First off, dropping a $1M is big time investing, not anything the average smoe is got laying around. Second, if values correct 20%, you may not lose you down payment, but your equity has certainly dropped a ton. Third, since I'm not a slum lord, I may be off base, but an hour a week or a half a day a month doesn't seem reasonable. Dealing with maintenence and vacancies, it probably will be much more than that. Otherwise you hire a property management company and that eats into your profit (what do they get,10%?).
I'm not saying its a bad investment. If someone has an extra $1M laying around that you want to save for reirement (minimum 10 years) then, ya it's probably the best place to stash your money. But shortterm, No Way!

whiteworks
09-01-2006, 10:18 AM
I have been asking people to tell me there real estate story for years now, everyone has one be it we bought this place for $28,000 in 1972 and it took every penny we could beg borrow or steal to make it happen or i bought this place in 1985 for $250,000 and less than a year later it was worth 100k less and took ten years to return to 250k or my favorite one if I had only known I would have bought as many houses as often as possible and would be wealthy today. I guess what Ive noticed with all the storys is the cycle of ups and downs but over the long run the outcome has and always will be the same you will never get that 1972 deal again but it is all relavent to incomes cost of living and timing the market. This adjustment we are seeing is healthy and will help sustain the cycle. take my words with a grain of salt because they are my opinions based on questions that I have been asking people for quite some time. for you people that have not bought a primary residence yet I would start doing my homework and make a plan of attack that that is right for you and your cash flow situation buy up a little more than you are comfortable with at the time of purchase you will quickly adjust. also try and do it the old fashion way 20% down avoid the PMI. for you rockstar types that got wealthy and lived large the old equity piggy bank is not the bottomless pit it appeared to be shut it down now and batton down the hatches. for the conservative investor who has 80% equity Pull out a chunk and tie it up in some investment grade insurance this should preserve your gains while prices adjust and set you in a fine position to pick up some nice deals over the next few years. well those are some of my opinions. as far as boats go it looks like my little stoker is the honda prius of powerboats 7 gallons an hour at 3800 rpm. looking forward to a fine winter of waterskiing.

AirtimeLavey
09-01-2006, 11:01 AM
I have been asking people to tell me there real estate story for years now, everyone has one be it we bought this place for $28,000 in 1972 and it took every penny we could beg borrow or steal to make it happen or i bought this place in 1985 for $250,000 and less than a year later it was worth 100k less and took ten years to return to 250k or my favorite one if I had only known I would have bought as many houses as often as possible and would be wealthy today. I guess what Ive noticed with all the storys is the cycle of ups and downs but over the long run the outcome has and always will be the same you will never get that 1972 deal again but it is all relavent to incomes cost of living and timing the market. This adjustment we are seeing is healthy and will help sustain the cycle. take my words with a grain of salt because they are my opinions based on questions that I have been asking people for quite some time. for you people that have not bought a primary residence yet I would start doing my homework and make a plan of attack that that is right for you and your cash flow situation buy up a little more than you are comfortable with at the time of purchase you will quickly adjust. also try and do it the old fashion way 20% down avoid the PMI. for you rockstar types that got wealthy and lived large the old equity piggy bank is not the bottomless pit it appeared to be shut it down now and batton down the hatches. for the conservative investor who has 80% equity Pull out a chunk and tie it up in some investment grade insurance this should preserve your gains while prices adjust and set you in a fine position to pick up some nice deals over the next few years. well those are some of my opinions. as far as boats go it looks like my little stoker is the honda prius of powerboats 7 gallons an hour at 3800 rpm. looking forward to a fine winter of waterskiing.
Good post. :cool:
Will the market go down....yes. Will it come back up...yes. Will it go down again....yes. Will it.......yes. See this way, I can say I told you so, when all of those predictions come true. I guess that what's all the "sky is falling" peeps are trying to achieve....that moment they can say, "See, I told you so..." :rolleyes:

totenhosen
09-01-2006, 12:22 PM
example:
2 million sale, 180k a year income, 30k expenses, 7.5% cap rate.
Now, correct me if I'm wrong here, but I think rates are ~7%. So, let's say it's 8% on 2 million, with 50% down. That's 8g a month in loan payments. Your net income is 12.5g. You pocket 4.5g a month for an hours worth of work a week. That is not a bad invesment.
Very unrealistic scenario. I don't know too many commercial lenders that will give you an interest only loan let alone one that is amortized over 30 years. Second I don't see too many $2MM properties getting $180k a year in income. Third expenses on a $2MM property will run you more than $30k a year (except for maybe a triple net lease on an industrial property). Hell your property taxes alone are over $20k a year. What about building manager or management company fees? Couple hours worth a week? From your comments it seems as if you have to realistic experience with this.
Finally if you have $1MM in liquidity your money is spent better elsewhere currently.

Angry Inch
09-01-2006, 01:53 PM
Very unrealistic scenario. I don't know too many commercial lenders that will give you an interest only loan let alone one that is amortized over 30 years. Second I don't see too many $2MM properties getting $180k a year in income. Third expenses on a $2MM property will run you more than $30k a year (except for maybe a triple net lease on an industrial property). Hell your property taxes alone are over $20k a year. What about building manager or management company fees? Couple hours worth a week? From your comments it seems as if you have to realistic experience with this.
Finally if you have $1MM in liquidity your money is spent better elsewhere currently.
I'm not here to argue. I'm just letting some people know that they might want to look a commercial as an alternative to investing in real estate. It seems everyone these days is looking into investing in RE; and, most of the time, they make the mistake of looking at residential exclusively: flipping houses, etc…
I'm also not here to make a buck. I don't sell loans or properties. However, I am an owner in several commercial pieces; and, I manage them with the help of others. I do know a little about what I am talking about. I stress little.
I know of several situations similar to my example. My numbers are conservative, with an educated guess on the property value. It could be low by 500k.
A building just sold in Newport Beach, on the island, with two stores, one office and a loft for 2.2mil by a friend of mine at Sperry Van Ness. It was a very nice example: low vacancy, high dollar per square foot, high probable gain on equity, etc…
If you look at my original post, it states that the problem with the current market/situation is the fact that one needs such a large down payment to make it work.
Where do you get this interest only idea from? 1mil loan at 8% is roughly 8k a month. The tenants pay prop tax.

Excessive Force
09-01-2006, 02:25 PM
I just wanna buy a house to live in forever and a day, but sell my current house in order to get the newer one. Should i do it or not?????????????? Man i hate decisions in bad markets!!......EF

Angry Inch
09-01-2006, 02:27 PM
Whoa there Nelly...First off, dropping a $1M is big time investing, not anything the average smoe is got laying around. Second, if values correct 20%, you may not lose you down payment, but your equity has certainly dropped a ton. Third, since I'm not a slum lord, I may be off base, but an hour a week or a half a day a month doesn't seem reasonable. Dealing with maintenence and vacancies, it probably will be much more than that. Otherwise you hire a property management company and that eats into your profit (what do they get,10%?).
I'm not saying its a bad investment. If someone has an extra $1M laying around that you want to save for reirement (minimum 10 years) then, ya it's probably the best place to stash your money. But shortterm, No Way!
Here's a reply to totenhosen concerning the down payment issue:
If you look at my original post, it states that the problem with the current market/situation is the fact that one needs such a large down payment to make it work.
I charge 8% for management, since I am my own client. These are above prime properties, about as prime as it gets. No slum here.
Local small REITs might be a great way to get into this. They might let ten people in at 100k investment to make it a little easier on the wallet. It's not too hard to set up either.

DILLIGAF
09-01-2006, 02:46 PM
The ones that will get hurt are the greedy ones that thought they had it all figured out. Seen it before and it will happen again. If you are not in a positive cash flow position and used crazy financing while taking out equity....OUCH!

AirtimeLavey
09-01-2006, 03:09 PM
I just wanna buy a house to live in forever and a day, but sell my current house in order to get the newer one. Should i do it or not?????????????? Man i hate decisions in bad markets!!......EF
It's not a "bad" market, yet. Long term, you'll be fine. Where you buy will also play a part in it as well. People trying to time the market, are the ones with the most to worry about. As it's been said before, I know people who jumped 3 years ago, certain the sky was falling and they were at the top. They missed out big time on additional apprec. Not to say that will continue in the short term, but again some areas will continue to appreciate.
Good luck. :cool:

CBadDad
09-01-2006, 03:15 PM
I just wanna buy a house to live in forever and a day, but sell my current house in order to get the newer one. Should i do it or not?????????????? Man i hate decisions in bad markets!!......EF
Sell, most definiately. Then shop your ass off and low ball some schmuck so you can move up. It is do able.

Angry Inch
09-01-2006, 03:26 PM
It's not a "bad" market, yet. Long term, you'll be fine. Where you buy will also play a part in it as well. People trying to time the market, are the ones with the most to worry about. As it's been said before, I know people who jumped 3 years ago, certain the sky was falling and they were at the top. They missed out big time on additional apprec. Not to say that will continue in the short term, but again some areas will continue to appreciate.
Good luck. :cool:
Yup, it's impossible to time the market

beaverretriever
09-01-2006, 04:37 PM
Can I ask what mortgage plan you have this triplex on in order to get that positive cash flow? Did you just purchase it or is this a long term that has recently been good? Is it a stable program?
I was listening to a radio program this past weekend and they were telling people about a single family residence had positive cash flow if purchased with no money down. Can I buy five then? The kicker which they don't tell you is that IT ONLY HAS POSITIVE CASH FLOW ON A NEG AM PAYMENT!!!! and only for the first year until it adjusts. Come on!!!! Do the agents and mortgage brokers feel good about saying this stuff? If it's such a great deal, buy it yourself, don't take somebody else down in the fire.
Some ignorant person is going to hear this BS, buy the property and lose it within a year. I just get angry listening to this stuff.
I have to admit, not all my investments have been so good :( . We purchased a house at the end of last yr in Cedar City thinking we were going to make a killing. It took a dive here in the last 8 months and we barely broke even. I got scared and wanted to get out from under it. Unfortunately I purchased this property to turn and burn. Due to the ASSoc we couldnt rent it out. I basically sold it for the price I purchased for after all said and done (capital gains, realtor etc).
The triplex that we own was a great deal when we purchased it, I mean a GREAT deal. We lucked out getting this place. We have a 30yr fixed at 5.798 %. The renters that are in there, were there when we puchased, so we had guaranteed income right off the bat. We couldnt lose. :)

Chipster27
09-01-2006, 04:54 PM
Third, since I'm not a slum lord, I may be off base, but an hour a week or a half a day a month doesn't seem reasonable. Dealing with maintenence and vacancies, it probably will be much more than that. Otherwise you hire a property management company and that eats into your profit (what do they get,10%?).
Honestly it's not that bad. You have to do your homework up front. Keep your rent reasonable and you can be very selective on who you chose, don't panic and take the first applicant. I'll never use a management company simply because I don't trust them. Not that they will take the money and run, but that they won't put a quality renter in my property.
Honestly it takes me about 20 minutes a month to maintain the homes, and that is basically the time in line at the bank to cash the check. Sure when a renter moves out I may have 4-6 hours in to screening applicants, but it's no big deal.

totenhosen
09-01-2006, 05:50 PM
Where do you get this interest only idea from? 1mil loan at 8% is roughly 8k a month. The tenants pay prop tax.
Just nit picking
A fully amortizing loan (P&I) over 20 years (which majority of commercial lenders will do) at 8% would be monthly payments of $8364.40.

totenhosen
09-01-2006, 05:52 PM
If you look at my original post, it states that the problem with the current market/situation is the fact that one needs such a large down payment to make it work.
Thats what makes the market from a standpoint of R/e investing not so attractive. ROE blows.

totenhosen
09-01-2006, 05:57 PM
example:
2 million sale, 180k a year income, 30k expenses, 7.5% cap rate.
Now, correct me if I'm wrong here, but I think rates are ~7%. So, let's say it's 8% on 2 million, with 50% down. That's 8g a month in loan payments. Your net income is 12.5g. You pocket 4.5g a month for an hours worth of work a week. That is not a bad invesment.
That is a return on equity of less than 6% when you break it down. I can almost get that on a MMA with no risk.

Angry Inch
09-01-2006, 09:42 PM
Look. All I’m saying is, look at commercial; you might find something. It seems to me that so many people are concentrated on buying real estate, and the majority skip commercial all together.
We can debate investments all day. I’d rather build wealth. I’ve made a lot through real estate. Land is one of the primary human needs. We start wars over land and pussy.

locogringo
09-01-2006, 10:12 PM
And people said I was crazy to fix both my houses for 30 years at 5% a couple years ago...
The market is going to get worse according to all the experts. I have to laugh at all the people that told me it was going to last forever. I have lived through two crashes before, and this market is on the same course. The difference now though is a lot of people don't have any real money (other than payments) in these homes. A lot easier to walk away when you don't put 10-20% down.
One of the experts that I get a letter from said there are 12k condos waiting to come into the market in San Diego. He said that in a normal market 1k a year come in and that the added inventory is going to cause some serious problems. For those looking to pick up deals he advises not to buy for at least 6 month to a year because prices will continue to fall. He said that the amatuers that have been in the market the past few years are the ones that are now going to suffer, and the experts will then step in and clean up. Should get interesting.
I remember the same thing Cig. People saying no way in hell. I should pull up some of those threads... lol

locogringo
09-01-2006, 10:41 PM
Yup, it's impossible to time the market
not really if u understand the market conditions, trends and such.