If the bottom is here why not buy now?

If the bottom is here why not buy now?

Colorado Springs, CO · Member since 2008 · 1 post · 0 votes

Right now could not be a better time to buy a home! The primary difference is right now in the state of Colorado we are not "down" we are just slower than the last 5 years that have been historically high! It’s really all the "bad press" that you hear daily which suggests things are bad. If I told you several times a day that you look sick - and I continued to tell you that day after day – eventually you would start to actually feel sick!

What's going on in Colorado real estate right now is just simply symptoms of the above. Most of the issues are not reality based for our regions true statistics. Based on 10 year averages we are just slightly behind the curve for average amounts of sales. With interest rates still at 30-40 year historic lows, buying a home right now is a great deal. You will be able to take advantage of the folks feeling "sick" and who will be happy to "sell with out much of a challenge to your offer – since they have accepted that things are bad! Investors should be scooping up all these cheap houses on the market.

The final and most important reason to buy now is – prices have been flat for several years in our area – if you buy now, you will be in a position to ride the real estate wave back up - instead of waiting until you read "good things" in the media reports again – by then it will be too late to capture a great equity position in the near future by purchasing a home right now!

I think real money is to be maid in buying houses cheap right now or investing with a smaller builder on a specific project.

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  • Member since 2008 · 1 post · 0 votes
    18y

    Buying a new one is not a great deal according to the current condition.

    Best of luck for your future.

  • Real Estate Consultant · Gaithersburg, MD · Member since 2008 · 10 posts · 0 votes
    18y

    We are not even close to the bottom due to the fact....the average income per capita has fallen (and commodity inflation) and the credit markets show no signs of any recovery which is extremely vital to the housing recovery. Inventory is steadily rising which is only causing banks to unload properties at extreme discounts to satisfy their liquidity crisis. I see 2 more years of slow steady declines. JMHO

  • Real Estate Consultant · new haven, CT · Member since 2008 · 26 posts · 0 votes
    18y

    All of us in the mortgage business know that were still giving "crappy"(2/28's, 100% with 600 scores etc.) loans 1-2 years ago. Allot of the people that bought were sold on sucking up the payments for 2 or 3 years and then they could refi and get back to normal life - lo and behold they cannot refi, most of them have payment increases by 10-25% so then they foreclose, values drop and their neighbor cannot refi, he forecloses, values drop again etc.... tumble tumble tumble.

    Short sales, rate freezing and some of the governments programs will help but they will not STOP it.

    Those loans will be coming to the end of their fixed period for a couple more years and I truly think that is when we will see bottom.

  • Real Estate Investor · Beijing, CA · Member since 2008 · 32 posts · 0 votes
    18y

    Lots of great posts on this topic. I've been overseas 14 years and only get snapshots of the housing market when I stop back home in CA. I've looked at nice houses in CA 10 years ago start at $325k go to $650k then to $940k at the peak. "Snapshots" Those same houses don't look any diferent then when I saw them 10 years ago and I wasn't exposed to any market euphoria and I'm a bit skeptical when I hear we've reached a bottom after the market droped about 30%. I was exposed to the S.E. Asian crises where my friends saw their house prices drop 350% in just 2 years. After the 1st year some of those friends "beleived" the bottom was reached and invested again and saw their investments drop another 150%. We compare it to catching a falling knife. Sometimes you time it right and look pretty cool when you catch the handle. Others just catch the blade.

    I look forward to learning a lot on these forums.

    Kurt

  • Real Estate Investor · CA · Member since 2008 · 30 posts · 1 vote
    18y

    So, having all this being said, would anyone like to steer this topic in another direction?

    What solutions are out there for all the SELLERS in these situations?

    I would be interested to see what some of you have to offer up to them.

  • Real Estate Investor · Beijing, CA · Member since 2008 · 32 posts · 0 votes
    18y

    I'm not sure that sellers want to hear about all this doom and gloom as the consensus seems to favor about halfway toward a trough. If you look at historical graphing of past bubbles, sorry, I beleive we have to call it that, then you see prices falling to the bottom and lingering for 3-4 years before beginning to climb again. Lots of different models for the different markets by State but I would look at my specific market with Case/Schiller graphs and decide how long you are capable of holding. Remember that inflation and sky high interest could really mess things up for that timeline you set.

  • Property Manager · Passaic, NJ · Member since 2008 · 369 posts · 83 votes
    18y

    I don't think we've hit bottom yet. I'm comparing the banks' resistance now to my cash offers compared to cash offers in 1995. When they have tons of inventory to unload (coming soon), the loss mitigation specialists will be instructed to reduce inventory, thus accepting lower offers. Everything seems to be in a holding pattern right now (maybe till election time?). I think you will see a lot of REO transfers occur in Dec. before the lenders close their books. When the sell-off begins full force because the banks are told to reduce inventory, then the supply/demand factor will adjust and we will begin recovery. Maybe I'm wrong - just going by how it went down 13 years ago.

  • Real Estate Investor · Colorado Springs, CO · Member since 2008 · 108 posts · 9 votes
    18y

    For no brainer cash flow. Pueblo, CO I have a friend buying properties between $10k - $50k and mostly getting min. $450-$550 a month in rent. Do the math on a $25k property that will rent at $450 a month.

    Find properties where owners with older mortgages (hint: marketing strategy) with lower payments will wait on their equity until you sell the property.

    I'd also look into options. Options turn into other types of deals.

  • Real Estate Investor · Member since 2008 · 340 posts · 34 votes
    18y

    One other thought. Whether it be the stock, bond, commodity or real estate markets, history has shown the recovery takes MUCH longer than the downfall. Bottom or no bottom, prices are going to be low for quite some time.

  • Real Estate Investor · StL, MO · Member since 2008 · 296 posts · 152 votes
    18y

    I'll put in my 2 cents, I think the recovery will be sometime around 2011-12. You have to remember how Average works, when you have 3-5 years above average, it doesn't fall back to the average mark-it goes below it. That's how the average is created.

    I disagree with those saying that we're going to be seeing high inflation so that it will be a great time to own real estate. I believe we are in a time of high Deflation and that real estate values are not a place to be long term right now (although this is a re website so everybody knows there are other reasons to buy that for future gradual increases in value.)

    Inflation is an increase in the supply of money (which can result in the common usage of the word 'inflation' to mean higher prices-although higher prices does not mean actual inflation-an increase in the supply of money). Deflation is a decrease in the supply of money. Anybody having a hard time getting a hold of money right now? With real estate being so expensive and virtually all buyers needing a loan, there is no way values can go up when loans (supply of money) are so hard to get right now (decreasing supply). Take a look at General Motors. How many times have they announced that they are going to raise prices to offset higher steel/rubber/oil/wages/healthcare in the last year? Where are they now? Offering their largest rebates and best financing terms ever.

  • Real Estate Investor · Beijing, CA · Member since 2008 · 32 posts · 0 votes
    18y

    It's a bit early to bring up deflation although I can see how it might look that way to the real estate market. Is anybody with good credit having a hard time getting money? I think the banks are just over reacting to the excesses of the last few years plus there is a real fear our neighbors will pull their cash out. If they did that, where would they put it? Surely not into their own real estate, if you want to see a really big bubble, look at China and Russia. I live on a block with 20 new luxury apartment buildings over 35 floors. None of them are 30% occupied. All owned by speculators each boosting the sales prices. The average monthly salary here is $720. You'll be hearing about those markets collapsing soon enough. I think most of our neighbors will be happy to keep their money in the U.S. now that the U.S. gov't just took over Fannie and Freddie.

  • FL · Member since 2008 · 40 posts · 2 votes
    18y
    Originally posted by Jeff Tumbarello:
    Originally posted by Mike Seluk:
    I'm with ya. ^^^ The hype around here lately is all about how sales are starting to pick up.

    I mean, I know things took a dump, but stuff is still pretty expensive. The median price for a SFH here is still 200k. Getting something to cashflow...no way. A lot of people are losing jobs, we're out of season, gas and food are getting more expensive everyday...I don't know if your average household around here can swing something like that right now.

    Bottom? Maybe. Recovery? I have a hard time believing that, though it IS a good time to buy if you're stable.

    Another thing I wonder about is who is buying the houses here. We're still a vacation/retirement destination, so there are eyes from all over the US and globe on this market. I suspect that SOMEWHERE, someone has money to spend, and while it still might be pricey for locals, others see a big sign that says, "30% OFF!!"


    Mike
    Go to www.leeclerk.org check the last 2 days of deeds. Open the deed and look at the address of the person taking title. Our market has levels in it. At a cetain price point they are local, above that they are north and west of PA .

    Sale volume drives prices down until the inventory declines( on this side of the cycle). Go to the www.swflreia.com homepage, I have some market studys there, that will shed some more light.

    Do not buy Neg. Cash flow right now. Starting to see Positive cash flow at my offering numbers.

    What is bottom? I do not have a clue. I think bottom is when the prices stop decling, most link that to appreciation.

    Locally, for ever 2 deeds we transfer at the courthouse steps, they sell one out of the MLS. Pending sales numbers while are up over last year, are trending down.............
    This is the time for the ditch within the valley.
    If you have some money take a shot in Sept


    Yeah it's really difficult(yet possible) to find a positive cash flow prop here now.
  • Real Estate Coach · Atlanta, GA · Member since 2008 · 80 posts · 5 votes
    18y

    Is the bottom here yet? That's a question for the talking heads to debate on cable TV shows -- and they will (regardless of whether they have a clue about what's actually happening in the real world. The reality is that if you're smart about the property you buy, it really doesn't matter if property values fall -- in the short term.

    The key is to do a good market analysis and make sure the property will give you positive cash flow. This is a critical point -- don't miss it -- unless dropping french fries into hot oil at McDonald's sounds like a good time.

    As long as your investment cash flows you've got income each month and then you can afford to wait for property values to turn around and ride the wave of appreciation up to the top.

  • Property Manager · Corolla, NC · Member since 2008 · 10 posts · 0 votes
    18y
    Originally posted by Tracy Harmon:
    I just did some research on median income vs median home prices. From 1968 til 1995, the median home price was about 2.7 times median income. In 2005, the median home price was 4.85 times median income. Using the historic data which are based on sound lending practices, the median home price right now should be about $135k. The actual median price right now is $206k. Given the fact that lenders have gotten back most of their sanity, prices will be falling for quite some time now. Thinking that "we've hit bottom" based on intuition, or ouija boards or what your Aunt Martha's cousin's realtor said is probably not a great idea.


    Tracy that is an excellent comparison. I am with you, I think we are in for a slide for at least next 12 months. Albeit if inflation continues to rise as fast as it has then I will not be shocked if home prices seem to fall less.
  • Residential Real Estate Broker · MA · Member since 2008 · 5 posts · 0 votes
    18y

    Hi,

    The MA market is still has a way to go. The Boston condo market is fairly solid, price wise, because most owners have the insurance of being able to rent the properties for high rents.

  • AL · Member since 2008 · 8 posts · 0 votes
    18y
    Originally posted by AlexK:
    I see double digit inflation in our futures. If that is the case, it makes sense to buy just about anything durable, especially real estate.


    I agree on the higher inflation ahead, however some assets will fare poorly even if the official inflation becomes 10%+. One of these assets is real estate, simply because it's still way overvalued.
  • Real Estate Investor · OR · Member since 2008 · 4 posts · 0 votes
    18y

    According to Case/schills it looks like Q2 of 2006 was a peak for much of the country.

  • Real Estate Consultant · St Petersburg, FL · Member since 2008 · 50 posts · 2 votes
    18y

    Why buy now? Even if prices have hit bottom in your area, you are not going to see an upswing in values for several years. So now you are holding, which is good as long as the property is cashflowing. However, if all you are getting is cashflow, why not use long-term leases to control the property? Buying has any number of downside risks which leasing will avoid. When the market starts to move again, you are in prime position to buy the property -- with owner financing -- from the owner that you have been faithfully paying on time.

    And for the record, we havent seen bottom yet. Strap yourselves in boys. Its going to be a wild ride.

    Barbara

  • Real Estate Investor · Beijing, CA · Member since 2008 · 32 posts · 0 votes
    18y

    Barbara,

    I've been really trying the leasing angle but I've run into too many landlords that haven't dropped their rents to a level that the property will earn my share. I've been looking at commercial retail property though. I'm not so sure any of these landlords will return my loyalty either. Any tricks for beating down landlords on prices when times are tough?

  • Manhattan, NY · Member since 2008 · 801 posts · 61 votes
    18y

    I don't know if we are at a bottom or not, no one does. There is no way to really tell if we are at the bottom, half way down or oscillating prior to an increase or further drop.

    But, we are reaching an interesting point where buyers aren't willing to pay more and sellers aren't willing to take less. It is of course an unstable point but it gives an artificial point of view to many who should know better.

    Rent demand is going up and as landlords can, they will raise rents to maximize their profits given the rising demand. Because of the tightening credit markets, rental demand will not decrease any time soon. What's more the anticipated increases are stronger in multifamily than in houses. This has happened before but usually they run close to parallel and often landlords holding houses are able to increase rents faster than apartment landlords. That is not the case now and will not be the case for the foreseeable future. Much of it has to do with the different demographics between apartment and house dwellers. But, that is for another discussion.

    As I said, earlier, I don't know if we are the bottom in relation to the residential housing market. It sure doesn't feel like it and that is the reason I am holding onto my SFH through quads even though I'd "like" to sell but not at the prices the current market demands. There is no pressure for me to sell and they all have positive cash flows. However, I am not adding to those holdings. I am adding to my multifamily holdings - aggressively.

    The lesson many in all markets have to learn over and over again is trying to call the bottom is foolish and dangerous, you will almost certainly call it wrong. I can guarantee you this, two years from now, I will be able to tell you to the day when the bottom happened. I can also guarantee that by buying based on cash flows anyone buying now will do fine. :cool:

  • Investor · Middletown, NJ · Member since 2008 · 2k+ posts · 1k+ votes
    18y
    Originally posted by Matthew Gil:

    All I know that I am going to buy and hold and buy and hold, while building cash flow. I'll change gears when it makes sense to do so, in due time.


    That's my plan as well. Moving on to rental property #2.
  • Real Estate Investor · Houston, TX · Member since 2008 · 7 posts · 0 votes
    18y
    Originally posted by Joshua Dorkin:
    We're not even close to seeing the bottom ANYWHERE!

    Here's some news to chew on:
    IndyMac Bank is Shut Down and Taken Over by Feds


    I agree. I don't think we'll see a bottom until the end of the 2009 fiscal year or beginning of the 2010 fiscal year. The recent bail out has pushed these predictions to further speculation considering the crunch tax payers will now have face.

    Someone here posted that he believes we'll post double digit inflation in our future and it goes without saying, this is the sad truth. Currently the dollar is dropping in value. Our currency is not backed by a standard, so the fact that our government is going to print more money in order to accommodate the bail out plans will push our inflation through the roof. This is without mentioning how much of an impact our current unemployment rates will have on the market. Unfortunately I see them rising to about 7-8%.

    I still think housing prices need to drop around 20-30% to get them into realistic value, but there are arguments for both sides.

    As I'm writing this, Wachovia's stock is now dropping. Belief of a buyout talk with Citigroup has begun and Citigroups stocks posted a 5% growth.

    I'm starting to ramble...

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