Bubble rising/Bubble Poop
Charlotte NC · Member since 2015 · 37 posts · 12 votes
Prices are steady rising and rising, when can we expect this bubble to top and prices drop? I need to team up with some locals in Denver really making real estate moves/investments. I'm tired of feeling stuck in the mud with nowhere to go!
@Account Closed so does mine, wonder if we have the same barber?
Your barber is right. I sell a lot of 2-4 unit multifamily in Pensacola and Gulf Breeze and the buyers I've worked with or have purchased my listings this year were from: Virginia, California, Colorado, Military stationed overseas, Illinois, and 1 local. I'm working with several local investors as well and they are often outbid by out of the area investors because a low ROI here still looks really strong to someone from a high priced market.
I've been outbid on 3 straight offers on REO properties. I was already bidding at MAO. I don't see how the winning bidder is going to make any money on the deal. These were intended as flips.
I may change strategies to buy hold, perhaps I could bid more and still cashflow. But as of right now, people want too much money for the properties. Contractors want too much money to work on them. Lenders want too much money to finance them. However, ARV has not changed much in Pensacola.
I hope these credit unions know what they are doing because they appear to be helping to pump air into any bubble that might be forming:
(1) One local Pensacola credit union (Gulf Winds) is currently offering 100% financing on mortgage loans.
(2) One of the national credit unions (Alliant) is offering 0% down for "well qualified" first time home buyers and 3% down for non-first time home buyers. It also offers a "cash back rebate program" for buyers and sellers.
DISCLOSURE: I'm a member of both credit unions.
I assume those are both for owner occupied purchases?
We also have local programs in Escambia and Santa Rosa counties that provide a grant to first time homebuyers to cover their down payment. With the seller paying closing costs I've had several buyers get into houses for $500 or less out of pocket which seems crazy after what we saw a decade ago...
I didn't drill down into the details, but the low down payment is likely for owner occupied.
I joined several credit unions in Escambia County as a safe way to invest locally and the loan programs all differ. I've seen various types such as homeowner, HELOC, land, construction, vacation, reverse mortgage, and investment property loan programs, but I don't know how they compare to loan money from other sources.
https://www.locavesting.com/how-to-invest-local/bank-local/
I notice Pensacola Habitat for Humanity has a home purchase program for Escambia and Santa Rosa counties (with income minimums and maximums). Qualifying participants have to demonstrate the ability to pay $450-$650 a month for the mortgage and the mortgage interest rate is 0%. Part of the deal is a long-term partnering arrangement involving sweat equity and volunteer work to help other people buy a home.
I grew up in rural Upstate New York and my parents were members of the local milk producers cooperative (which as a kid I knew as the "milk station" and "feed store"). I'm used to the idea of neighbors helping neighbors (the fire department was all volunteer). To show support, I joined the Ever'man Cooperative Grocery & Cafe in Pensacola, although I don't shop there as often as I should.
None of us know how the bubble will poop or when it will poop. But it will be smelly.
Even owner occupied housing at $500 or 0 down is what can cause the great bubble. A mere 5% drop in value causes these homeowners to be wiped out.
Even better is when they see after a year, a 10-20% equity build up and they decide to take a HELOC for vacation. Now they have double whammy if prices falter by 5%.
The bubble will poop because everyone will get greedy. Speculators will pay more because they think they can sell even higher, banks will lend more because it will make their balance sheet look good and government will tax more because hey it's free money....
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Philadelphia’s City Council is weighing a proposed 1% tax on construction to raise millions of dollars for affordable-housing programs, marking the latest push by a U.S. city to address rising residential costs.
The council could pass the new tax this week, setting up a possible showdown with Democratic Mayor Jim Kenney, whose administration warns the levy would hurt the city’s competitiveness as it vies to land Amazon.com Inc.’s second headquarters.
Though Philadelphia has the highest poverty rate among the 10 largest U.S. cities, housing values have risen sharply in areas close to Center City, driven by an influx of professionals. For example, since 2014, the median home value in the once-gritty Fishtown neighborhood has jumped more than 50% to around $270,000, according to home-search website Zillow.
In Philadelphia, the proposed 1% tax emerged after another idea stalled that would have required property developers to set aside 10% of new projects as below-market units, or else pay into the city’s housing trust fund. Elements of that plan are part of the construction-tax package, though the set-asides allowing developers to build taller and denser buildings would be voluntary and the density bonuses enhanced.