For those of you dont believe downturn is here

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For those of you dont believe downturn is here

Diane G.
CA · Member since 2016 · 1k+ posts · 1k+ votes

For those of you don't believe that we ALREADY turned the corner, here is ONE OF several listing that I ran into that are listed below that 2015/2016 purchase price...In San Francisco....A location....

Removed by moderator due to it being wrong link. see post below

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Tim Youse
Rental Property Investor · Baltimore, MD · Member since 2016 · 153 posts · 158 votes
9y

1 listing? Not a big enough sample size to make any kind of conclusion.

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  • Ariel Smith
    Rental Property Investor · San Diego, CA · Member since 2016 · 306 posts · 205 votes
    9y

    @Diane G. I think you may have sent the wrong link. The condo you sent hasn't been sold since 2010 and is not on the market. You may be referring to unit 502 which is currently active? 

    2Reply
  • Diane G.
    OP
    CA · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    Ha, that is right..Thank you for the catch...

    http://www.berkshirehathawayhs.com/homes-for-sale/69-Clementina-Street-UNIT-502-San-Francisco-CA-94105-205230330

    3Reply
  • Ariel Smith
    Rental Property Investor · San Diego, CA · Member since 2016 · 306 posts · 205 votes
    9y

    Haha that's what I figured! It will be interesting to see what it sells for because list price doesn't tell us much. The market will dictate the price and especially at this time of year it is often a strategy to pull the price back well under the perceived value to drum up interest and give yourself more options for offers. 

    I'd definitely keep an eye on it to see how quickly and for how much it sells.

    6Reply
  • Tim Youse
    Rental Property Investor · Baltimore, MD · Member since 2016 · 153 posts · 158 votes
    9y

    1 listing? Not a big enough sample size to make any kind of conclusion.

    32Reply
  • Rogers Smith
    Developer · Covington, LA · Member since 2017 · 224 posts · 124 votes
    9y

    @Diane G. All US economic indicators are pointing upward. GDP growth, income, spending, unemployment, are all favorable for 2017. And with the planned decrease in federal regulatory and tax burden on businesses, most forecasters are predicting continued, steady growth. I don't know where your getting your economic information, but I would not bank on it. 

    10Reply
  • Account Closed
    Johnson City, TN · Member since 2014 · 586 posts · 705 votes
    9y

    There are two ticking time bombs in our economy that aren't being talked about but must be dealt with. Automobile and student loan debt.

    18Reply
  • Rogers Smith
    Developer · Covington, LA · Member since 2017 · 224 posts · 124 votes
    9y

    @Account Closed I would also count in Fannie and Freddie.

    0Reply
  • Chris Purcell
    Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes
    9y

    @Rogers Smith

    But @Diane G. said it was true on an online forum

    Fannie and Freddie already happened, in my opinion lightning doesn't strike twice in one place

    2Reply
  • Chris Purcell
    Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes
    9y
    Originally posted by @Account Closed:

    There are two ticking time bombs in our economy that aren't being talked about but must be dealt with. Automobile and student loan debt.

    What's your hypothesis?

    0Reply
  • Andy Rosenberger
    Collegeville, PA · Member since 2017 · 5 posts · 6 votes
    9y
    Rogers Smith Those are all "lagging" indicators and about where the economy was and don't say about where the economy is going. Google "leading economic indicators" for indicators that tend to predict. Tim Chapman Auto and student loans aren't new or systematically large enough...yet...they are a growing headwind but not a catalyst for a turn in the cycle.
    4Reply
  • Rogers Smith
    Developer · Covington, LA · Member since 2017 · 224 posts · 124 votes
    9y

    @Chris Purcell Freddie and Fannie still exist and are churning out their guarantees. My argument (and I think @Account Closed's) is that Freddie, Fannie, student loans, and for the most part, new car loans are all operated in artificial markets. I'm a strong believer in free markets. Accordingly, I believe the Federal government's influence in Freddie, Fannie, and student loans; and the auto manufacturers' influence in the new car loan space are not healthy things.

    So, yes, I think lightning can certainly strike twice. I think Freddie and Fannie should be privatized. Likewise, I think Chris' hypothesis was cogent. The debts are high and artificially influenced.

    0Reply
  • Chris Purcell
    Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes
    9y

    @Rogers Smith

    The issue in 2008 (correct me if I'm wrong) was that people were taking out loans left and right with 0% down and teaser rates that all blew up in their face when they couldn't pay them, causing a huge crisis in foreclosures, a huge depression, and loss of jobs.  I don't think the lending like that is out there, at least for Fannie and Freddie (I've bought 3 houses conventionally since 2008).

    For student loans - how would this cause a collapse?  If people don't pay student loans .. so what?  They aren't collateralized.  So college kids are either going to get jobs and pay them, or not get a job, not pay them, and their credit tanks.

    5Reply
  • Anthony Fernando
    oakland, CA · Member since 2017 · 1 post · 1 vote
    9y

    As someone looking at properties in the Bay Area, I find it hard to see an end to the crazy prices without some kind of external event. I agree with Tim, one property is not a large enough sample size to come to this conclusion. When you look at available inventory, jobs and economic forecasts in the Bay for the next few years it's tough to see where prices begin maxing out (at least for the Bay Area). 

    *Disclaimer, this is just my perceived notion. Would be curious to hear counterpoints

    1Reply
  • Mike R.
    Investor · Valley Glen, CA · Member since 2013 · 247 posts · 111 votes
    9y

    It's still an upturn all across Southern California. Here is hoping the downturn happens soon- but even in Big Bear prices are up $60k on homes that were under $200k a year ago. 

    1Reply
  • Mike R.
    Investor · Valley Glen, CA · Member since 2013 · 247 posts · 111 votes
    9y

    My understanding Trump wants to make it easy to get cheap loans again- when that happens- it will all collapse once those ARM loans come due. Til then, at least in LA- the housing shortage will assure prices and rents will keep going way up

    1Reply
  • Sebastien Hitier
    Rental Property Investor · Hong Kong, Hong Kong Island · Member since 2014 · 188 posts · 114 votes
    9y

    Here is the zillow forecast for Frisco: https://www.zillow.com/san-francisco-ca/home-value...

    Indeed, SF median is 4% up last year, just 1% up for next year. A crisis in SF market is unlikely given liquidities available to anyone. 

    This is just low/stagnating price, which sounds normal as affordability is low and rates do (and can) not go down much further.

    Note the corresponding national numbers are +7.3% and forecast +2.9%. SF is anticipating the trend.

    2Reply
  • Rogers Smith
    Developer · Covington, LA · Member since 2017 · 224 posts · 124 votes
    9y

    @Chris Purcell I'm no expert, but my understanding is Freddie's and Fannie's jobs are to add liquidity to the real estate mortgage markets by guaranteeing the mortgages which have been collateralized. Borrowers don't borrow directly from these entities (except in very rare cases). The entities simply buttress the mortgage market by providing guarantees to the bundled mortgage instruments.

    As it stands right now, this business can be very profitable. But it can also turn. As I said earlier, I'm a free markets guy. I would prefer the Fed jettison the businesses to the private market where the risk would be removed, and the entities would probably run more efficiently. I want my government to be limited to fighting wars and building roads. Otherwise, stay the hell out.

    On the subject of student loans, the aggregate balance guaranteed by the Fed is over $1 trillion. An obligation of this magnitude can exert a remarkable strain on the economy by reduced spending power of the student-borrowers, and by exerting a deleterious effect on the credit worthiness of the United States. It's not something we can simply brush off as an unsecured debt from the standpoint of the borrower and the guarantor due to its sheer mass. With no defaults it adds friction to economic growth and fractional points to bond rates. With massive defaults it adds scores of borrowers to the bankruptcy rolls and multiple points to borrowing costs.

    Thanks for giving me the opportunity to geek out on this stuff Chris. I've enjoyed the career switch from banking to real estate investing immensely. But it's nice to get back into the econ muck every now and again.

    5Reply
  • Account Closed
    Johnson City, TN · Member since 2014 · 586 posts · 705 votes
    9y

    Here is the problem with student loans. Many young people are leaving college owing 50k+. This debt debt cannot be included in any bankruptcy. These debts are impacting the ability of an entire generation to purchase a home. Student loans are easy to get and are often abused by using them for living expenses. College graduates entering lower paying careers, such as teaching, will face a real struggle to pay these loans off. In the automotive segment,  cars and trucks are becoming much more expensive each day. This is not merely because of inflation but because of lifestyle inflation. Millions of people are upside down in auto loans because of no down payment loans and rolling negative equity from previous loans into new loans. Lending standards are getting lax and the auto industry has "bought" a lot of business the last few years through low priced leasing. Guess what happens to many of these auto loans. They get packaged and sold to wall street. Just like subrime loans. It may not be as much as mortgage loans, but the combination of outstanding student loans auto loans is a staggering amount.

    6Reply
  • Malcolm Douglas
    Investor · Chicago, IL · Member since 2016 · 39 posts · 33 votes
    9y
    Originally posted by @Chris Purcell:

    @Rogers Smith

    For student loans - how would this cause a collapse?  If people don't pay student loans .. so what?  They aren't collateralized.  So college kids are either going to get jobs and pay them, or not get a job, not pay them, and their credit tanks.

    Collateralized with a physical asset or not money was still lent out for student loans, which in turn are being securitized like mortgages were(are), albeit a smaller scale.  If masses stopped paying their loans would there be a collapse? No idea, but definitely negative consequences in the form of investment losses.

    0Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    9y
    Originally posted by @Rogers Smith:

    @Chris Purcell Freddie and Fannie still exist and are churning out their guarantees. My argument (and I think @Account Closed's) is that Freddie, Fannie, student loans, and for the most part, new car loans are all operated in artificial markets. I'm a strong believer in free markets. Accordingly, I believe the Federal government's influence in Freddie, Fannie, and student loans; and the auto manufacturers' influence in the new car loan space are not healthy things.

    So, yes, I think lightning can certainly strike twice. I think Freddie and Fannie should be privatized. Likewise, I think Chris' hypothesis was cogent. The debts are high and artificially influenced.

     There's really no such thing as a "free market", at least in the sense that you're suggesting. Governments set the terms for all markets, or else anarchy does. The idea that there's this magical "free market" that exists in nature, wherein an unimpeded flow of goods and services exists, and that somehow government screws up this system, is a myth that's been imprinted on the minds of Americans for decades. Everything from property rights to adjudication to monopoly control is decided by government. Absent a government, the "free market" generally means whoever can control the market by force. Absent any government intervention save for preventing people from killing each other to control commerce, "free markets" generally devolve into monopolies. 

    I highly recommend reading Robert Reich's "Saving Capitalism". Whatever you think of his politics, he is a brilliant individual and accomplished writer. Many of these concepts are described in an easy-reading format in his book. 

    Privatizing Fannie & Freddie is impossible unless one wants to implode the US mortgage market. The only thing that makes mortgages work is the implicit backdrop of federal support to prevent massive default losses. Without that support, mortgage interest rates would be significantly higher to reflect the inherent risk in loaning out 6 figures+, severely limiting the buying pool. Before federal mortgage support, the rate of home ownership in the US hovered around 40%, and if you were able to exclude the massive land giveaways (Homestead Act et al) that occurred from the early 1800's until the late 1800's, the rate of ownership would have been far below that level. 

    Anyway, I digress. I agree to some extent with Account Closed in that the levels of student debt are really beginning to reach destabilizing levels. Auto loans, not so much, in that there's a relief mechanism (bankruptcy & default). Student loan debt is like herpes. 

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    19Reply
  • Account Closed
    Professional · Brooklyn, NY · Member since 2017 · 624 posts · 147 votes
    9y
    Originally posted by @Diane G.:

    For those of you don't believe that we ALREADY turned the corner, here is ONE OF several listing that I ran into that are listed below that 2015/2016 purchase price...In San Francisco....A location...

    You seriously aren't suggesting that the price of 1 condo in San Francisco is sufficient to determine where the economy or real estate market is heading are you?

    4Reply
  • Chris Purcell
    Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes
    9y

    @Rogers Smith

    I agree with the purchasing power and credit worthiness for sure

    However right now we are no doubt at a peak in our economy.  Market is all time high, home values are soaring, jobs are everywhere.

    I think the bubble is getting bigger as we speak. Nowhere close to a downturn

    2Reply
  • Rogers Smith
    Developer · Covington, LA · Member since 2017 · 224 posts · 124 votes
    9y

    @JD Martin I like your verve. Also I would suggest reading Adam Smith ...The Wealth of Nations. Difficult read, but it defines precisely the difference between Classical Economics (free markets) and the economic theory promulgated by John Maynard Keynes and today's left.

    6Reply
  • Chris Purcell
    Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes
    9y
    Originally posted by @Malcolm Douglas:
    Originally posted by @Chris Purcell:

    @Rogers Smith

    For student loans - how would this cause a collapse?  If people don't pay student loans .. so what?  They aren't collateralized.  So college kids are either going to get jobs and pay them, or not get a job, not pay them, and their credit tanks.

    Collateralized with a physical asset or not money was still lent out for student loans, which in turn are being securitized like mortgages were(are), albeit a smaller scale.  If masses stopped paying their loans would there be a collapse? No idea, but definitely negative consequences in the form of investment losses.

    Can you explain where these investment losses are coming from

    0Reply
  • Malcolm Douglas
    Investor · Chicago, IL · Member since 2016 · 39 posts · 33 votes
    9y

    If I lend a student money and they don't pay me back then I have lost my investment.

    If the gov't insures the student loan then taxpayers have to foot the bill.  Either way there is a loss of capital.

    1Reply
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