Developer & Investor · São Paulo, SP · Member since 2014 · 5 posts · 2 votes
Investor Jim Rogers said "I would not be buying U.S. Real Estate" in a podcast two days ago. He then adds "The Chinese rush to buy U.S. Real Estate is probably a sign of a top in that market."
Jim Rogers is a respected macro investor, and he's known for his long term positions. He's right more often then wrong also.
I'd like to ask other BP members what do they think about his opinion, and how can small investors protect themselves against whatever may be around the corner?
I would not follow blanket advice about do not buy US real estate. There may be individual markets that are over priced and in danger of deflating rapidly, but there are many more markets that are pretty strong. I would look heavily to your local market. I think cheap energy prices and low interest rates will continue to push prices up a little, but areas where I live that depend on the high price of oil to generate jobs are much riskier. Real estate is local.
Did have any other rationalization other than the flood of Chinese money into the market? Is he just speaking about larger markets within the United States? Some context would help with the overall discussion.
Did have any other rationalization other than the flood of Chinese money into the market? Is he just speaking about larger markets within the United States? Some context would help with the overall discussion.
Unfortunately I can't find the full podcast, neither have the context. The only asset class he supports is productive farming land.
The Chinese money that has been flooding the market has been for homes priced above $500k and do not impact all locations. When you see cities like Vancouver B.C., Seattle, San Francisco, NYC, and a few others start rapidly tanking, then be worried.
I more worried about the hedge funds selling off their real estate.
all real estate is local; in my area, the market has not really jumped at all; some have been flat. when wages are only increasing by 2%, you're not going to get great appreciation.
Unfortunately, his statement is too broad, and productive Farm land in the United States, is a crap shoot, so how does he see this as a valuable asset class. It's too dependent on changing weather, government subsidies and the commodities market to be a good bet. However, we are due for correction, much like the stock market. It will have a much larger affect on markets that have been inundated with foreign money, and are now seeing reduced returns. I, personally, am not overly concerned about what Jim Rogers has to say, but, I have been wrong before. I was told that I should stick with solid fundamentals and have a stomach for the corrections as these will principles will make for positive long term returns. Cheers!
I would not follow blanket advice about do not buy US real estate. There may be individual markets that are over priced and in danger of deflating rapidly, but there are many more markets that are pretty strong. I would look heavily to your local market. I think cheap energy prices and low interest rates will continue to push prices up a little, but areas where I live that depend on the high price of oil to generate jobs are much riskier. Real estate is local.
Hahahaha,.....WOW....I want a telescope like he has. Can it see through things as well as to things 10's of 1000's of miles away too?
Real estate is LOCAL. Markets that are touching eachother can be 180 degrees different.
Also, REI comes in many sizes, shapes and colors. Commercial, NNN, SFH, multi-family, Notes, ...etc...and they are not all the same either.
I'm vaguely aware of who this guy is, but based on this statement, my assumption is he needed a topic to write about and couldn't come up with anything else.
I could see the productive farmland angle. Dropping AG commodity prices is taking the steam out of farmland prices now. Might want to position yourself to buy if that is your thing. I would not doubt they could go lower though as nothing pencils out very good on cash flow basis for any row crops right now. As long as China is in a slump cotton will be soft. Peanuts is the only thing that CF's in the south now, and that is due to the latest Farm Bill. The Great Plains is about corn, soy, or other grains. El Niño could throw a wrench in yields in all the different origins. Weather is always the wild card with AG commodities.
I think it's a generalization and like always generalizations just get people I I trouble. The area I invest in, in California has not recovered yet. It is a great market for the small town investor and there is no Chinese money ;)
As mentioned earlier money is still cheap and is forecasted to remain that way for the near future. Think about the amount of homeowners that lost their homes to foreclosure during The Recession that were forced to become renters, they will become home owners since they can now qualify for a mortgage( 3yrs for FHA fmon time of foreclosure and 7 yrs for conventional). With rental rates on the rise they will want to stop putting equity in someone else's pocket.
As some other members have indicated, real estate in the US is driven by local demand and supply so therefore for most markets should do well as long as the economy continues to produce jobs.
Certain markets such as NYC, SF and LA do see more international investors indeed. I can confirm that investors in Asia do plan to buy more US real estate than ever before. The US real estate market is seen to be much more stable than many Asian markets. As a result, the capital flow from Asia to US has been increasing rapidly and probably will continue to increase.
Investor Jim Rogers said "I would not be buying U.S. Real Estate" in a podcast two days ago. He then adds "The Chinese rush to buy U.S. Real Estate is probably a sign of a top in that market."
Jim Rogers is a respected macro investor, and he's known for his long term positions. He's right more often then wrong also.
I'd like to ask other BP members what do they think about his opinion, and how can small investors protect themselves against whatever may be around the corner?
What do you think?
I disagree with Mr. Rogers and so do millions of others who are voting with their wallets. Small investors should do what they always do - make sure the numbers add up and pull the trigger. If any of us hesitate on a deal because of one man's podcast, well, we aren't living up to expectations.
That is a very broad statement. I work hard to completely understand the real estate market within my farm area that can vary widely within 5 blocks... and this guy has a blanket opinion on an entire country. Pretty bold.
I have an extensive background in stocks and I know that Jim Rogers is a very well respected individual. His market calls are almost always correct.
The market might be at a top, however; real estate is a long term game especially for buy and hold investors. If you plan on holding a property for 10 years and it's cash flowing, then market conditions won't impact you as much. If you are breaking even and hoping for appreciation then market conditions will impact you so much more. Not sure why you would want to do that strategy in the first place!
I have also read that the real estate market is still recovering and yet to gain traction, so how can a market be at a top if it's still in the recovery stage?
The US is such a large country that has many different markets and I think it's difficult to predict exactly which markets will take a hit and which will stay intact or even do well while the rest of the country might suffer.
I am a small investor and my investments cash flow and I don't count on appreciation. I am not as concerned with market conditions as someone that owns 1000 units across the country.
Personally, I believe that the market is doing fine and will continue to do well. I believe the reason the Chinese are buying up real estate is because, well.....China is not doing so well and the US is probably a safe haven compared to the rest of the world right now. Then again, who am I to question the great Jim Rogers?
Jim Rogers has been wrong a lot Years ago who was screaming sugar sugar sugar look what happened. He has been against US stocks for years and has a strong bias for China He is raising his daughters to speak Mandarin and I believe lives in Singapore He is known as a contrarian investor
One thing I have not heard anyone mention is that he has $300MM to invest. As such, his world view is going to be a lot different than yours as he can only buy certain assets so its a different game.
Also, he has definitely been wrong at times (like now) on things like commodities (though also right at times since he made a lot of money in the run up). There are a fair number of stats that show the overall real estate market to be overvalued in many respects and I assume that is what he is looking at.
@James Park I know very little about Rogers. How does one couple median income with places like Cupertino or Beverly Hills? Where does that relationship begin or exist in these very expensive areas? Obviously, no one making median income can buy there already and average folks have not been close to buying there for a long time. I can understand median income folks buying in median income areas. Just trying to understand how this applies in reality, especially considering 1/3 of global gdp is tech and perhaps 1/3 of that is in Silicon Valley/Bay area.
@Sam Van Horebeek Hi Sam, I have heard of several cases where Chinese cash (a lot of it black money I assume) is flooding several RE markets here in US. Are you also seeing non-Chinese money coming into US RE from other Asian countries?
Another thing that confuses me is how does so much black money enter the US. I thought Switzerland was known for it, not US.
I guess I see the real estate market no different from company stocks. The way I see it, if it area is cheaper to rent than to own, the real estate is over valued. If the real estate is cheaper to own than to rent, then it is under valued. Median income and median home prices are just one metrics I use for valuation. If the spread is less than a three, the quality of life is good as homes are still easily affordable and sustainable. In the bay area instance, the average median income household cannot afford to buy a home. The housing market in the bay area will be negatively impacted if either of these two things happen: nasdaq crashes or China goes into recession.
the time to buy gold was when it was trading between 280-500 not when it is trading between 1700-1920. Originally posted by @Matt R.:
@James Park I know very little about Rogers. How does one couple median income with places like Cupertino or Beverly Hills? Where does that relationship begin or exist in these very expensive areas? Obviously, no one making median income can buy there already and average folks have not been close to buying there for a long time. I can understand median income folks buying in median income areas. Just trying to understand how this applies in reality, especially considering 1/3 of global gdp is tech and perhaps 1/3 of that is in Silicon Valley/Bay area.
The Chinese are buying US land, real estate and infastructure because they know they will never be repaid the false paper money we owe them. They are buying real US assets in order to own us that way.
@James Park I know you use Cupertino, CA as an example in terms of median income and the housing affordability.
I am not sure where you get your numbers but can you check the same numbers say 10 years ago, 20 years ago and so on. I want to know if really where we are is so different for 10, 20 or even 30 years ago. Cupertino and bay area real estate has been expensive even in the 1990' and 2000's. We really wanted to buy a property in the area in 2000 and again between 2005 and 2006 but did not buy because we thought the property then was expensive. we bought in early 2013 for almost double the price of what it was in 2005/2006. Even during the the market crash in 2009/2010 the market went down between 10 to 20% and it was one of the first markets to recover. The couple who sold our property tried selling the house for X amount in 2010 since they bought a bigger place but they did not get the price they wanted so then rented it and then sold in 2013 for X + 300K more. again I am not questioning your logic or reasoning. I am just interested to see if we are really so out of the place in terms of affordabilty compared to before.