Are we at the bottom yet?
 

Here in So. CA (orange county) I am thinking about buying a rental property with the idea of giving it to my college aged daughter at some point. From my research and instincts I dont believe we are at the bottom yet.

What are your thoughts? Late 2008? 2009? 2010, 2011?

Not even close.

http://forums.pelicanparts.com/uploa...1211926590.jpg
YEP

The market appears to have hit the top... I would give it a couple of years to see how far it will fall before leveling off.

22% slide in home values in So. Cal so far this year. Of course, some areas are immune, but you can find those guys on the Ferrari board...

In short, I'd wait.

And FWIW, I'd never buy in an election year, particularly with the two candidates we have now. I don't think the market (any market) likes Obama or McCain.

We just hit bottom here in Phoenix a month ago.

Two straight months of my houses value going back up in value, so things are finally heading in the right direction again.

Hey... where is my Ferrari?

As they say during the mid term elections:

"Four more years!"

Or in San Juan Capistrano.

Do you mean you forgot it in the garage before setting fire to your Bel Air mansion?

If they drop much further the damn forigners will start buying them. Can anyone recomend a good realestate agent.

Just talked to a young lady who bought a very nice 1,300 sq-ft condo in Pleasanton, CA for $318,000. The same condo sold for $600,000 5 years ago.

A foreigner bought our ex-mayor's ex-wife's $68 million 12,000+ square-foot Malibu estate. A Canadian at that. :D

Supposedly the biggest home sale in L.A. history...

See, my point exactly. The riff raff start moving in.

...and the shafted move to New Zealand...SmileWavy

Can see you have not spent much time in NZ. Would give my left nut to retire on the South Island of NZ. Its very nice there...

Some Canadian bought here in Coto, I believe $19 Million

My realtor's barometer:

As long as there are columns of forclosure notices in the legal section of the paper, the bottom isn't here yet. When it goes back the the normal two or three, things are back in sync.

South Island's nice but I'm too shafted to live there. Wellington for me at the bottom of the North Island. OK but windy as hell.

The cheap money (again) has promoted a slowing of the decline. IMHO, it's still declining. However, I think the better part of the adjustment has passed. You could do some projection charts to see what would happen to your tax picture when buying at various points in time at various interest rates.

I think one will still lose equity for the next 2-3 years, but we may be near the bottom of the Bell Curve which means not as quickly. So, only you can plug in your tax situation and see what the net loss will be using different scenarios. Wait too long and the net won't be as good.

I told my step daughter to not buy last year as a first time buyer. She would have lost a 100 large minimum. But, her joint tax return is getting clobbered not having the interest deduction. I've told her recently to start looking around. As I said, she will still loose some equity over the next score of months, but with the low int rates and the tax advantage she will have as a homeowner, the time is getting near. That's only for her, not for everyone.

That sector of the market is mostly unaffected. The mc mansions may get hit harder, but it's the within-reach homes that got out of reach that triggered the problem along with the easy money. Last recession I saw no significant problems with the ultra high end market. I mean they went down, but second homes in the mountains and such got hit much harder. The worst was in Laguna Niguel which lost about 40% in the first and most severe part of the decline. That would have been from '90 to 93 with the majority of the loss in the first half of the 3 year period. Those were the latest to be built and were sold at too high a price to begin with.

If you are buying a rental property, IMHO the return on your investment is more important that the absolute purchase price.

You need to look at income, the costs of occupancy, operating expenses, and debt service.... to decide if it a worthwhile investment.

Don't buy in Lancaster/Palmdale. Wait a good while in that neck of the woods. Prices fall more substantially the farther out you go from L.A.

This place was on the market for a couple of years for 24 million.
I bought in Coto at an auction in 11/90 it went down another 10%, I still timed it well.

I plan on paying a little more for a good location, besides I have spent some time in Lancaster (willow springs) and the best areas are crap.

SoCal is at least 2 years from any sort of bottom.

Sister and her hubby bought 8 months ago. POS flipped house in Highland Park area of LA near Pasadena. Zillow is saying they lost $80k in 8 months. The real story is probably worse. :(

Well you can, and here is some land five or ten minutes from probably the best salmon fishing in the world. Converted to US dollars it's probably only about $50k. It belongs to my GF and she doesn't use it or want it any more.

http://www.trademe.co.nz/Trade-Me-Property/Residential-Property/Sections-for-sale/auction-156876674.htm




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Bill,

How much does she want for it? Can a foreigner buy it free and clear? North or South Island?

Joe

Hi Joe.

NZ $65,000 which is about USD$49,500. It's in Otago which is South Island and it's near the Waitaki river. Huge salmon and it's a public river. Good boating on the river too.

LOL US people sure can buy land here. Half the country is owned by people from the US or Germany.

Did the link work?

Judging from prior housing busts in California, one of which I lived through, house prices do not do a V-bottom - i.e., do not hit bottom and then rapidly rise again. They decline for a long time and then stay low for years. At that point no-one cares about investing in houses, the conventional wisdom is that houses won't ever be a good investment, and no-one particularly wants to talk about house prices. That is when you'll know it is the bottom. You can also simply watch the OFHEO or Case-Schiller charts. Anyway, no need to rush. I think CA house prices will decline for another 2 years or so. In 1 year, it may be possible to buy and lose only another 5-10%.

Hey, get in line. I'll fight you for it!

JK - I, too, would love to retire in NZ. However, I believe their gun laws may be a bit restrictive. Bill, is that true?

Exactly. In the last So. Cal. bubble (which I lived through), prices peaked around 89, plummeted for 2 years, there was a dead cat false rally around late 91, then a gradual, constant decline until the middle/end of 1997.

This time will be no different. Right now, So. Cal. 2006 = So. Cal. 1989, and So. Cal. 2008 = So Cal. 1991.

Our gun laws are not much fun. We arn't allowed handguns. I have rather a facination for handguns so I go to a shooting range in Sydney, Australia where I get to blaze away with 6 different handguns for about USD$90.

However you can own riffles and shotguns, just no fully automatics. There is a .50 cal riffle for sale on the same auction site and I attached in the earlier post.

I forgot to mention our land title arrangements here are very good with it being held on a central government department system. I'ts very black and white as to the ownership of property, quite different from Europe and the UK.

You heard it here first boys - it's time to buy. Could prices go a little lower? Sure - but over the long haul (10+ years), now's the time to buy - while everyone else is still panicking! In the long run - the big picture - buy and hold - you'll do just fine!!!

Sorry, but we didn't hear it here first!

We heard it from snowman in 2007. And 2006. And 2005.

After all these very intelligent opinions I think I need to talk to my accountant/lawyer............not I am going to sit tight for a few. Remember, Real Estate has always risen over time. Its not like that paper bull crap....., you can walk on it, its tangible, you can borrow on it, you can live in it, you can rent it, you can depreciate it ( income property)

Be realistic about what you want and what you want to pay for it. Some folks seem to living under the delusion that nice SoCal homes in good areas are going to someday be affordable...

Affordable to whom? It's all relative. What I consider nice homes in areas I'd want to live in L.A. have never been affordable to the "average Joe", ie. middle class earners. Or at least not for a couple decades.

In the super high-end of the market, business is always good and declines are relative since the owners can either afford the "loss" or there is no loss because they bought before the latest run-up. The real high-end is a huge market in SoCal, thousands if not tens of thousands of homes in the $3-4M and up sector. My friend whose place I am working on this week is a RE agent, young guy who's new to the game and doing really well, believe it or not. He grew up here and is well-connected through family and friends so he knows people who are trading houses in the upper region. It doesn't take a lot of sales to keep him in potato chips when they are $10M+ houses.

The market for run-of-the-mill houses in CA. is totally in the crapper, though. The houses that snowjob is talking about are nothing special at all, dime a dozen. :cool:

This is my 3rd go around.

This time the bubble was bigger and the deflation will be on a corresponding scale. These things usually take 7 years or so to work out....we are in year 2 now.

Houses are not traditionally looked at as investment vehicles to make money. They are primarily places to live.

Something else is in the air on this one..let us just kall it the Bankrupting of the American Middle Class.

Has anybody checked fuel prices lately which is a reflection of the value of the $.

I am sorry but there will be no return to normal this time . A new normal is taking shape out there and I guarntee that you Boyz are not going to like it.

I'm trying to be somewhat optimistic about this and see a silver lining (I've been pretty harsh on housing for a while), but I think you're 100% correct on this tabs.

The housing crash (and it will be a crash, not a "correction" before this is over) is just indicative of the changes coming. The American way of life is changing permanently before our eyes and without sounding to terribly dour on the subject, I'll just say that the prediction that I always heard as a kid, "your generation will be the first in history to live less well than its parents" is absolutely coming true.

The coming generations will work harder, longer and earn less. They will not travel as much, see as much or experience as much as we all have. They will not be able to afford the types of housing our parents/grandparents took for granted. They will watch as the ROW (China and India, mostly) catch up to and then pass us, while our currency continues to erode.

I don't see much to be optimistic about looking forward, unfortunately. We've borrowed & spent ourselves into an irreversible problem.