Real estate - seriously thinking about buying up

[cantdrv55]

Prices of newer homes are crazy cheap nowadays. McMansions not too far from me were selling for >$1M a few years ago. Now they can be had for <$600k. I'm talking five year old, 4000 sq ft homes in our great school district with no HOA. With the rates being so low, I think I can get into one of them for just a few hundred more a month than what I'm paying for my 27 y/o pad that needs work. Might tempting.

Are there real estate bargains in your neck of the woods? I'm meeting with an agent this Thursday. I won't know until then if I should pass on this opportunity.

[Porsche-O-Phile]

There are some decent deals out there and money is stupid cheap these days.

That said, the "best" deals are still coming but if you don't care about timing the market perfectly for the bottom and have confidence in your future income and so-forth, why not?

Neither prices nor rates are going up anytime soon, so there's not a whole lot of pressure here. I'd say in the 1-3 year horizon things will probably start to eke back up and the "bottom" will be in the next 1-2 years as a result, but it's not going to be remarkably different from what we have today - maybe another 10% give or take in a given market for price and another 1/4 percentage point or so on rate at most.

The biggest issue I see with it right now is that you're gambling on steady income for the next 30-or-so years. Anybody's guess how much the conventional "rules of the game" have changed with respect to that and whether people are going to be able to count on reasonably continuous employment over such a long timeline going forward. I suspect things are reverting to normal and will continue to do so over the coming years (and obviously some sectors/career paths are more resilient/stable than others) but generally speaking, I'd say if someone doesn't have a good 12-to-18 month cash reserve sitting around, it'd be awfully stupid to buy on the basis of assumed future continuous employment, unless you don't care about maybe being foreclosed on if you end up out of work in the event of another downturn in the coming years...

I'd say it's not a bad time to start going out and kicking some tires. I plan on doing the same in the coming months. I'm still on the fence about exercising the purchase option I have on this place myself... It's a good deal but I have a feeling I can do even better.

Can't hurt if you've got the stomach for the risk right now.

[look 171]

Interest rates are cheap enough.

I think this is a great time to buy. Sounds llike you are buying to live in it and not a filper to make a buck. How much lower can they go? If they do, well, sit it out and they will go back up for sure. The bargains happened here two years ago. People that have money have bought em' up already, but bargains are still around. We just have to fight for them now with the rest of the rat race. I still think the 2 +1 entry homes that have been abused over the years in the older neighborhoods are making a come back. Especially near city centers like SF, LA or San Diego. Starter home for a professional couple with young family who do not want to sit in traffic for 2 hours a day are buying in or near town down here.

so, yes it is time.

Jeff

[djmcmath]

It's good to know I'm not the only one. I'm not looking to move, but rather for an investment. There are a couple of incredibly cheap pieces of land near here, and my father-in-law's neighbor has had his house on the market for 6 months or so. I know a number of people who have done well in RE for rental purposes, but I've also heard some horror stories. While it's a great hedge against inflation, and money is cheap right now, I'm hesitant to give up that much liquidity.

But you'd be living in it -- if I was in that case, I'd definitely move. Keep the old house as a rental, at least until the market recovers enough that you can get better money out of the sale?

Dan

[Paul T]

With big time inflation almost certainly in our future, real assets (ie real estate) should do well, as soon as the current glut of supply/foreclosures etc works it's way through the market in a couple of years.

[jhynesrockmtn]

I just bought and rented out the house I was living in. 4 1/8% loan with no points. Moved 10 minutes from work into a nice older residential neighborhood. I would be careful of any recently built McMansions. I'm not a big fan of newer construction. The materials, workmanship, etc. can leave a lot to be desired. If you buy a newer house, make sure you still do a thorough inspection.

It was a hard decision. I put a fair bit of my savings into this place and don't have enough cash left now to do much to it but it is livable for now. I'm keeping my fingers crossed the market does not dip much lower and will recover some over the next few years.

[sammyg2]

I would not be investing in real estate in California (if that's where you are), Seriously.
This place is gonna look like detroit in 10 years.

[notfarnow]

The dip in the market up here is more subtle, but I have a few clients taking advantage of it.

It can be tricky when the offer is contingent on the sale of a home... timing and pricing is key. I've had a couple people try to get top dollar for their place while lowballing their "upsized" home... usually doesn't end well.

The ones I've done well with are ones where we go out and find 2-3 homes they really like, and then put their house on the market at a really aggressive price to get an accepted offer in a couple weeks. Shoot for a longer (6+ week) closing and then go out shopping with straight offers.

[vash]

jumping up in property tax would be the deal breaker for me...

[Porsche-O-Phile]

Originally Posted by jhynesrockmtn

I just bought and rented out the house I was living in. 4 1/8% loan with no points. Moved 10 minutes from work into a nice older residential neighborhood. I would be careful of any recently built McMansions. I'm not a big fan of newer construction. The materials, workmanship, etc. can leave a lot to be desired. If you buy a newer house, make sure you still do a thorough inspection.

It was a hard decision. I put a fair bit of my savings into this place and don't have enough cash left now to do much to it but it is livable for now. I'm keeping my fingers crossed the market does not dip much lower and will recover some over the next few years.

Very astute - this is an observation I've made elsewhere in the past and agree with again here; it runs contrary to the prevailing mentality out there that "newer is better" and "bigger is better". Personally I wouldn't touch anything built during the "bubble" years of about 2004-2008. No way. I saw way too many shenannigans going on during that time. Shoddy workmanship, terrible quality control, poor materials availability and lots of substitutions, inspections glossed over or "paid off", lots of nonsense. Guys were stamping out garbage all over the landscape and most of it will be falling apart in 10 years if it isn't already. Pure throwaway junk - with a high price tag at the time ($500k+, $600k+, $700k+, etc.) I've even seen "high end" residential ($2M+) that had really questionable finishes and what I'd consider to be average-to-poor construction quality.

One potential benefit of newer construction is that it'll (theoretically) be more energy efficient and give you good operating cost performance - assuming it was built to code and that the undersized, low-bid, Made-in-China HVAC systems don't crap out after five years...

Personally I'd look for something built in the 90s. Or an old home with some character. But that's just me.

[nineball]

it's a great time to buy. i just put an offer on what could be my 6th house of the year. i love buying low-cost houses and turning them into cash-cow rentals. with everything on a 15 year loan (at under 4%) when i am ready to retire (38 now) i should have a nice stable of income producing properties.

bottom line, if you have the available funds and can qualify for a loan, do it.

[Moses]

Originally Posted by sammyg2

I would not be investing in real estate in California (if that's where you are), Seriously.
This place is gonna look like detroit in 10 years.

Not where you live, it won't.

There are two Californias. In desirable areas the real estate market is global. When prices slip. overseas buyers move in. The prices drop, but never really collapse. The central valley could indeed have a Detroit-like collapse.

[Rick Lee]

I got my ARM adjustment letter from HSBC for my VA condo a few weeks ago. The ink was so faded, that I almost threw it out, thinking it was junk mail. I just looked at it moments ago and realized it was important. ARM went from 3.5% to 3.0%, which drops my payment by $70 a month. Whoohoo!

[Sarc]

Originally Posted by Porsche-O-Phile

Or an old home with some character. But that's just me.

This.

[tabs]

This is the HERD MENTALITY. Sammy and Niner are the exceptions. Sammy being in the energy industry know what the failure of Prop 23 is going to do to CAli. Niner has a commercial RE plan, and as such the equity he risks is offset by income. So we shall see the veracity of his thinking in 10 years. For the rest I would suggest U stick to your day jobs..

Don't U fking get it the reason why RE prices are still not falling is that the Banks have a Shadow Inventory of homes that they have foreclosed on that ARE NOT UP FOR SALE apx 2,000,000 homes worth . Right now apx 25% of ALL HOME MORTGAGES ARE UNDERWATER..that means that people owe more than the home is worth. THIS IS A TIME BOMB WAITING TO GO OFF.

Secondly..OHHH YES interest rates are going to go up and the rates are about as cheap as they are going to get. what a fking joke this is..for someone to say now is the time because interest rates are low...Ahhhh what happens to prices WHEN and not if INTEREST RATES GO UP? It does make an already tough loan market even tougher and it will put pressure on prices.

This fking morning the 30 year Bond went from 4.2% to 4.3%....the biggest jump in the past year or so.

People really have to stop thinking about homes as an investment, but as a living EXPENSE. You have been conditioned by the past 30 years of one bubble economy after another. So most of you are not fking old enough to remember when a house was just a home and not a piggy bank.

And Cali being an International destination, NOT WHEN those foreigners get wind of CAlis CAP & TRADE policy and the ramifaications there of...Ohhhh yeah and the state of the budget in Cali...CALI IS FKING BROKE and in the next year or so is going to have to go to DC with hat in hand begging for a bailout (this is along with CT, NY, MI & IL) The Republicans are going to tell em to pound sand...to bust the Public Employee Unions...or go live in the shyte pile of the Liberal utopia Cali created.

BTW Don't U people get it...Corporations are spending money on Capital improvements in things that will replace having employees. So what America is doing is creating a large underclass of unemployed people. Not only that the estimable Tom Friedman of the NYT fame said that Ameircans are going tohave to be 10 times as productive as a Chinese employee, or 1 American is going tohave to be able to be as productive as 10 Chinese workers. This is in order to be worth being paid the wages Americans are used to making. Somehow I just don't think it is possible for 1 American Woker to be able to do the work of 10 Chinese, unless of course an American worker can work more than 24/7/365.

[ODDJOB UNO]

(4) stakes and DIRT! no roofs no plumbing no b.s. to deal with, has and will be my mantra. location location location.


now when i sell mine for MY PRICE since i A) didnt play dumbazz monopoly B) bought low before market peaked(remember buy low sell high)..............


i just may invest in a aircraft hanger.


once again supply and demand. and location of course. wayyy too many planes, not enough hangers.


but on the stock market side..............i would be interested very much on this GM IPO.


GM's nutz are against the wall. they either make a better badder product for cheaper or they are DEAD in the world market. i feel strong enough about GM, that i just bought a NEW 2011 silverado. and the fit and finish is EXCELLENT! my last one i got 226,551 miles out of with very few problems. thats 9 X around the earth plus THE HARD WAY from baja to colorado and all points in btwn with a lot of rugged ass 4wd roads in there for good measure.


right now as in land and houses...........car dealerships will CHEW BOTH ARMS AND LEGS OFF to sell you a new car. and i SCREAMED A DEAL!


on the other side................USED CARS are getting a PREMIUM for obvious reasons. peoples have NO CREDIT after foreclosures and cant afford a new car or even qualify. so hence used cars are getting top dollars.

[Jim Bremner]

Originally Posted by Moses

Not where you live, it won't.

There are two Californias. In desirable areas the real estate market is global. When prices slip. overseas buyers move in. The prices drop, but never really collapse. The central valley could indeed have a Detroit-like collapse.

Well, It depeends on the politcs and tax laws that will come in the next few years.

Yes, this is theland of dreams. I do fear that we do have a fair chance of a much larger decline in California's future.

The upper midle class to very rich simply can not support the masses of poor.

add in the rules and regulations of employment, CARB and other anti business trends the future of California isn't as rosie as it used to be.

There's plenty of nice parts of large cities that I do not want to live in such as Long Beach, Santa Anna & Anaheim due to the masses of poor vs middle class.
The Masses will win in politics. I drove by a house in Lakewood Village part of Long Beach that's up for sale and fits my needs ( Single story, Joanna's MS is getting worse and we're in a 2 story house) This house is very attractive from the curb. Craftsman style features, nice colors etc. I passed due to the city.

[nineball]

Originally Posted by tabs

This is the HERD MENTALITY. Sammy and Niner are the exceptions. Sammy being in the energy industry know what the failure of Prop 23 is going to do to CAli. Niner has a commercial RE plan, and as such the equity he risks is offset by income. So we shall see the veracity of his thinking in 10 years. For the rest I would suggest U stick to your day jobs..

i do have a bit of an advantage being that i am a re appraiser. i have picked up several under $25k houses (total cost - some were cheaper and needed some rehab, some didn't) this year and turned them all into rental properties. paid cash for the first one, refi'd enough out (based on tax values) to pay for the next one and continued that trend. i don't really make any money on a monthly basis, but i didn't buy them for that purpose. i research the rental market and only buy properties that can offset all of my monthly costs via the rent. all told if i clear $300 a month between the all of them i would be surprised, but it doesn't cost me a thing out of pocket each month. i do have a reserve fund equal to 4 months of total cost for everything should i have a hard time finding a tenant, but so far i have had no more than 2 months vacancy on any property i own thanks largely in part to the fact that while rates are low banks have the strictest lending policies ever.

get rich slow

[greglepore]

If you're buying as a residence, not as an investment, there are some amazing deals-I spend a large portion of my time helping my s/o do MLS searches for higher end horse farms, and I'm just floored. And our market wasn't a boom/bust situatiion.

Echo the comments about junk construction-I'd stay awayfrom anything built in a development in the last 5 yrs.

[HardDrive]

As many have said above, I would be VERY wary of buying a McMansion. So many of those places were thrown up a cheaply as possible.