Dallas, TX · Member since 2008 · 73 posts · 0 votes
I was reading USA today and I read that there was a 70% drop in first time buyers. They said that less people are buying and more people are moving in with friends and family. According to this statistic, prices are going to appreciate alot slower. What do you guys think about this?
Real Estate Investor · Las Vegas, NV · Member since 2008 · 1k+ posts · 447 votes
19y
Many areas of the country are going to see price drops and some of them could be substantial. The days of buying anything and waiting for appreciation are long gone. It’s time to do your homework and make your money when you buy.
Loveland, CO · Member since 2008 · 1k+ posts · 123 votes
19y
Time to sit on the sidelines. Actually I've always been kind of an "opportunistic" buyer. I'm constantly looking but I'm always writing lowball offers.
I just hope that the areas we're considering moving to (Oregon) are nice enough to experience a price drop.
Real Estate Investor · Las Vegas, NV · Member since 2008 · 1k+ posts · 447 votes
19y
Down cycles in the market typically last 3-5 years. We are in year 2. What you should do is watch for real opportunities and not do deals just for the sake of doing a deal. Savvy investors will tell you that they can actually make more money in a down market.
every market is different. the national news takes the numbers as a whole. Our market is very strong here in Austin but I know some places are hurting, so you have to look at the individual market, not so much the national. Part of that statistic could be contributed to the fallout in the sub-prime lending market. When lenders were competing for business and constantly lowering their requirements to get a home loan, almost anyone could buy a home. Now that is no longer the case and people these loans were tailored to were mainly first time home buyers. The result.....a drastic drop in the amount of first time home buyers. One way to capitalize on this is to purchase homes that would fit this catergory. Homes that would be in the price range of first time buyers will now be more plentiful since less people can qualify for them. At the same time many of these homes might be in foreclosure of or pre-foreclosure for the same reason. Now there is a large market share that would have to rent instead of purchase making rental property more scarce and driving up rental prices. BUT as was said above you make your money when you BUY and each situation is different so you still have to do your research. Don't let the national news alarm you too much (unless you live in Florida :lol: ) Take a look at your individual market to decide where the demand is and what the best play is.
Being in one of the best markets in Ohio (more conservative, less bubble), I think we've still not seen the worst of it. I think we've still got 1/3 of the way to go before prices bottom out. Maybe another year before things start climbing out. Lots of rehab in very degenerated neighborhoods going on.
QA Engineer · Sunnyvale, CA · Member since 2008 · 32 posts · 2 votes
19y
This is definitely the time to make money when you buy, whether you're flipping or taking a longer view and renting properties out. The people who weren't paying attention to their deals are getting burned now; I've seen some deals even among REIA members where the numbers didn't work at all and/or had unrealistic rehab estimations (I saw one listed as needing $1K of repair work, and there was only a $15K spread on a $110K house to begin with!).
The school of fish has more wounded than usual and it's time for the sharks to come in and clean up. The poker craze came and a bunch of TV shows shuttled hundreds of thousands of people to the poker sites to get fleeced by the already-experienced players. I see the latest trend of house-flipping shows as being the same, drawing in lots of inexperienced people with the promise of easy riches. When the reality of hard work and education hits them, it's already too late and the sharks have their money if they rushed in blindly.
I was reading USA today and I read that there was a 70% drop in first time buyers. They said that less people are buying and more people are moving in with friends and family. According to this statistic, prices are going to appreciate alot slower. What do you guys think about this?
Do you see rents increasing on larger# bedroom properties, then?
QA Engineer · Sunnyvale, CA · Member since 2008 · 32 posts · 2 votes
19y
Direct links aren't allowed on this board if I read the rules right, so just go to usatoday.com and run a search for the article titled "First rung on property ladder gets harder to reach."
Direct links aren't allowed on this board if I read the rules right, so just go to usatoday.com and run a search for the article titled "First rung on property ladder gets harder to reach."
I did a search and saw that article but didn't click it, I didn't think it was the one being discussed. I'll go read it now, thanks.
The first sentence is scary......I translate it as "If they had a pulse I got a commission check!"
That is scary, especially with all of those ticking ARM bombs. I wonder if ARM commissions are like variable annuity commissions in the insurance world? Hmm.......
Real Estate Lender · Member since 2008 · 642 posts · 13 votes
19y
I'm sure I'll get tarred and feathered for this, but I'm just returning from a long extending vacation and what a better way to get back into the fray but a healthy debate...
I'd like to think that the posters on this forum "could see through the leaves for the trees" but given the media's love affair with bashing the lending industry, I can understand why...
Sure loose lending guidelines, predatory lending practices and opportunistic lenders/brokers have an investment in the problem, but so do appraisers who overinflated values, borrowers that misrepresented incomes or miscalculated future earning potential and realtors that pushed the affordability envelope with the upsell---This being said, the sum total of these issues still doesn't hold a candle to the core drivers that seems to be remise from this thread.
Cheap money (low interest rates) and an active buying market drove market values to historical heights earlier in this millenium and the absense of both are having the opposite effect today.
Real Estate Investor · OH · Member since 2008 · 4k+ posts · 1k+ votes
18y
There's a 10 1/.2 month inventory of unsold homes right now. This is BEFORE all the gimmick loans start resetting in 2008. It will be worse in 2008, which is fine with me!!! And none of this accounts for the fact that we're heading for a BIG recession.
Real Estate Investor · London · Member since 2008 · 3k+ posts · 74 votes
18y
Originally posted by "manana1":
do you guys think it will be significantly worse one year from now or will be turning around to positive again at that time?
In some markets things are just fine now. Maybe those markets will still be heading up, turning flat or heading down in a year. Other markets are down and could be further down in a year.
Focus on specific deals. A deal that is 30% below market is a lot less risky if prices correct 10% compared to paying retail and then having a correct.
Some strategies will work less well in a down market. Other strategies only work well in a down market.
Be a tree and bend when the wind blows. Look at your market and see what is taking place. Then do deals that are better than average as a way to reduce your risk.
Real Estate Investor · London · Member since 2008 · 3k+ posts · 74 votes
18y
Originally posted by "MikeOH":
And none of this accounts for the fact that we're heading for a BIG recession.
Mike
Mike,
What is a BIG recession in your mind? How much do you expect it to impact OH vs. other states or regions?
Assume that you are correct in your ability to predict. What are you doing to position yourself? Is it mostly defensive or are you positioning yourself for a buying opportunity that is greater than presently? Hunker down vs. ramp up?
Real Estate Investor · London · Member since 2008 · 3k+ posts · 74 votes
18y
Originally posted by "MikeOH":
John,
We are already in a great buying opportunity in my area. So, I'm continuing to buy rentals (at a max 50% of market value).
Mike
Mike, in your view are the values in your market significantly inflated from the boom or are the values more realistic?
My sense of OH is it largely missed the boom so values were never that out of line. Maybe even fair to say that OH values were mostly valued fairly based on personal incomes vs. values.
OH is no souther CA or FL when we talk about a housing boom.
Real Estate Consultant · Phoenix, AZ · Member since 2008 · 223 posts · 1 vote
18y
Originally posted by "invstr":
I was reading USA today and I read that there was a 70% drop in first time buyers. They said that less people are buying and more people are moving in with friends and family. According to this statistic, prices are going to appreciate alot slower. What do you guys think about this?
Supply and Demand, Surely the prices cant appreciate if there's no available mortgage program to spark demand.
But, with the imagration laws sweeping the country the builders have no one to work for 25 cent on the dollar anymore. Which means the new construction housing prices cant go anywere but up.
70% drop is about right. Most loan originators who started the mortgage business doing subprime would'nt know how to deal with a first time home buyer. When I got in the business of doing loan origination (which I nolonger do) I started with FHA and VA And HUD foreclosures. You had to have excellent credit to do Conventional loans so we steered away from them because the compitetion was to great. And they made the customers jump threw fire hoops just to get approved.
I dont think we will see any changes for a long time. If people are going to rent they better do it now. I witness on (CNN) the landlords are taking advantage of this mortgage melt down, buy almost doubling the rent in most area's. Pretty soon it will be too expensive to rent.
Buying and hold looks pretty good right now! :zzz: