Cancelling my purchase contract on folsom ca home?
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Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
4y@Greg R., rates are below "normal". Who cares what they have been for the last 10-15 years when they were abnormally manipulated to be that low.
What you are experiencing is called "recency bias" believing what happened recently is somehow more important or more normal.
30 Replies
- 4yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Kevin Sobilo:
@Ramki D., appreciation is ALWAYS in doubt because you can speculate about it but have no control over market appreciation.
Cash-flow is better because you have more control over it AND because you get the money NOW.
Making $2k per year for 20 years is MUCH better than making $40k on appreciation 20 years from now because of the time value of money and also because inflation makes future money worth less than present day money.
Market appreciation looks sexy and sometimes it is when the market is hot but a lot of the time it's eyewash and not as good as it looks like on the surface.
keep in mind a west coast home in 20 years based on past appreciation rates will probably be worth double the 600k or pretty close to 1 mil in 20 years Not a mid west rust belt 40k rise in 20 yeasr. big difference in these markets cannot compare them.. the play on the west coast is very simple.. cash flow Eh who cares even if its a little negative your play is someone else is paying off your 600k asset for you and the tax breaks lots of depreciation on that house and I know I know appreciation gain ( is thought of as gambling) over time which has proven since the mid to late 70s to be spectacular and has made millions of people tons of money and I mean tons. completely different perspectives we have to deal with on buying west coast rentals.
- 4yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Greg R.:
Rates are not good... claiming that current rates are good tells a lot about your opinions on these matters. Who cares what rates were 20-30 years ago? Rates are at a 14-15 year high and climbing. Prices are also at an all time high. This market and economy are completely different from markets of the past - totally foolish to compare market variables from 90's or 2000's to now.Quote from @Kevin Sobilo:
@Ramki D., who cares about rate hikes if you can make good money!
I guess this is a rental and not a flip since you are worried about interest rates.
Despite what @Greg R. said interest rates are still good and below historical norms. If you can't find a fixed rate loan, can you find an adjustable rate loan that only adjusts every 3 or 5 years. That way you would be locked in with a good rate until you have paid down some principal. Then at that point if rates are high, you could refinance to stretch payments out again. In this way you can manage the payment and make sure the property keeps cash-flowing.
one of my shoulda woulda coulda ones that all sticks in my mind is my house in Palo Alto CA when I moved to the Napa Valley I did not need to sell my current home in Palo Alto that I paid 185k for in 82. a handsome sum then.. it had gone up to mid 400s and of course as a young guy raising a family i did cash out refi's to payoff other debt etc you know the drill.. so my choice was keep it and suffer the 250.00 a month negative or sell it and move on with not a huge amount of cash that I could lived without at the time. But who could do 250.00 a month I could afford the 250.00 a month I mean that was just a nice meal out in the Napa Valley with a nice bottle of wine LOL>. but i let that scare me.
well within 5 years rents would have been at least 1000 a month positive and the home today without touching it would sell for 2.5 million or more Lots re worth 2 mil. So I let a 2k a year negative scare me into selling a prime asset in one of the most prime cities markets literally in the world.. OH well you live and learn.. to have these irrational fears of tiny negatives as it relates to real estate I dont really get .. Unless of course you don't really make much money at your day job and this would be a financial hardship.
- Member since 2020 · 10 posts · 7 votes4y
Quote from @Ramki D.:
@Greg R. I signed this contract last year with an estimated completion date as feb, 2022. It was delayed multiple times and scheduled to deliver by the end of july. Now the market situation is completely different interest rates are increased, and the rental market is on a down trend. So I'm thinking of backing out and waiting.
In this market you only want fixed rate for long term hold. I am only using my HELOC for short term projects i.e. a year or less. The ajustables are what killed the industry in 08. I don't think you will see any price reduction in home value until 2023, and that is only if rates get up to 6 and 7%.
- Member since 2020 · 10 posts · 7 votes4y
Quote from @Joe Bertolino:
Quote from @Kevin Sobilo:
@Joe Bertolino, I'm sure 20+ years ago many people felt the same way about investing in Sears. Long term patterns do end. Nothing is forever.
Whether that happens soon or a long time from now who knows, but that pattern will change. So, an investor should be looking at more than that.
You are comparing the 5th largest economy on the planet with the best weather, most resources and largest population of highly educated and wealthy people with elite universities to Sears, a great company destroyed by a Goldman Sachs bean counter who overthought everything. Very few people outside of CA understand how things work here. As the kids are saying “if you get it, you get it.” It’s not for everybody but there are 40m people that want to be here.
I live here, in the exact area where this home is and I could sell that house for $600k ten times over in the next 30 days. That’s why I said the builder is thrilled. They will sell it for $650k+.
The other issue that no one is talking about is the demand. Inventory could go up 700% in this area and we would just be returning to a normal market. Also with in the last 2yrs you have had half the mortgages Refi into 2 and 3% rates. I don't think to many of those folks will be buying move up homes for awhile. So where will the first time buyer home be coming from. Less supply more demand.
- 4yRamki D.New to Real Estate · Member since 2019 · 120 posts · 26 votesOP
Thanks everyone for sharing your thoughts and suggestions. I have a good day job and taking 200$ - ve is not an issue at all. I will come back and update this post after 5 yrs and see how much it appreciated/depreciated this home.
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