BiggerPockets

In the "inland empire" CA it appears that the buying depression is over,, I am making an offer on a 3/2 house in my hood and the first day it was listed (yesterday) the front of the house looks like the disneyland parking lot,,, houses are getting mulitiple offers on day one im kinda bumbed i was hoping to pick up a few more rentals this year but it looks like the competition is heavy now
my realtor told me that there are lots of " realestate investor seminar people jumping in and bidding things up way too much,
on a more positive note she said there is another huge wave of inventory comming so prices should stay dow for a while

how is it out there ? are "investors " jumping in like mad in your areas?? granted here things have fallen from $190 a sq ft at the peak to $60 a sq ft now so i think we have swung down too far.In 1999 prices were at $55 a square ft here so we are back 10 years here

this house i was actually buying for my family and plan to rent out my current house
but earlier this year and last i bought 2 houses 3/2 about 1300 and 1400 sq ft for $60k- 70k these were thrashed and i rehabbed them myself for about 10 k a piece basic 3/2 house in the High desert rents for 1100 - 1200 a month so that is right at 50 % rule

either way you want to look at it
if you have 75k into a house that will rent for 1100,,,,,, / 2 == $550expenses
75k 30 yrs at 6% = $449
= $101 a door
but like i said it is hard to do that here if all the goofs are going to jump in and bid these houses to 100k my party is over i think !

I think the market will settle down. The summer is over and the $8K government incentive for 1st time buyer will soon run out. I also believe that giving the employment situation here in Cali, more foreclosures are on the horizon unfortunately.

Greg, do you know what construction costs are like in your area for these homes that are selling for $75K? That is, how much per square foot would it cost to build one?

Greg C, don't just stand there, get out and sell something before the frenzy burns itself out.

I'm in the St Louis market and it doesn't seem to be a huge deal here in this market.

Brian Haskins

Originally posted by Vikram C.

Greg, do you know what construction costs are like in your area for these homes that are selling for $75K? That is, how much per square foot would it cost to build one?

Riverside County:
1. Developer Fees $17,000 per door.
2. School Fees $6 per foot.
3. Permit/Inspection/Plan Check Fees $4,000
4. Water Meter $5,000 (if you are lucky)
5. Gas - minimum $1,000
6. Electric $500 - $5,000
7. Septic or Lateral and Connect Fee - $5,000 either way

So to build a 1,200 sq ft home you are starting at $39,700 minimum per lot.

If you build at under $29 sq ft and the land is free you can pretty much break even...... no wonder building has stopped and unemployment in the County is 16%+

Originally posted by Mike M

Eddie, there is a big difference between "hoping for other peoples misery" and "taking advantage of the situation". For instance, if you see a hundred dollar bill laying on the ground, do you sit there feeling sorry for the person who dropped it or do you pick it up quickly? Also, you don't really wish for anyone to lose a hundred dollar bill, but if they do, I bet you would like to be the one who finds it.

Mike, I buy REOs all the time. The damage is done. There a difference between taking advantage of a situation you didn't created nor you have control over and hoping for more foreclosures or worrying that "God forbid" the stream of foreclosures will end. I'm not a religious person, but I consider myself a moral one. I think that it is immoral to hope for a situation where other people would suffer so you make a buck.

Eddie, it is quite possible to want prices to go down further and also be moral. To some extent this depends on one's perspective.

My view is that the standard of living of a country improves when things are inexpensive relative to incomes. I would like to see a world where homes, cars, food and other things that we buy are cheap so that they are easily affordable and people have more money left for experiences such as vacations, etc. Studies done by behavioral economists show that people get more lasting satisfaction from experiences than from material possessions.

In addition to the reason given above above, I would like home prices to go down for one more reason: I think our society has created a "moral-hazard" favoring bubbles. Whenever there is a bubble, most people like it and the government and fed encourage it with cheap money. When the bubble collapses, the government (which has no surplus, btw) stimulates the economy further and the fed makes money even cheaper. This entire thing results in a situation where we will spend most of our lives with higher-than-normal asset and commodity prices and budget deficits.

And who pays for these budget deficits? It is the next generation. In the past, people left their savings to their children when they died. Our generation is going to do the opposite and our kids are going to be saddled with debt or inflation.

For these and other reasons, I morally want to see home prices go down.