In the "inland empire" CA it appears that the buying depression is over,, I am making an offer on a 3/2 house in my hood and the first day it was listed (yesterday) the front of the house looks like the disneyland parking lot,,, houses are getting mulitiple offers on day one im kinda bumbed i was hoping to pick up a few more rentals this year but it looks like the competition is heavy now
my realtor told me that there are lots of " realestate investor seminar people jumping in and bidding things up way too much,
on a more positive note she said there is another huge wave of inventory comming so prices should stay dow for a while
how is it out there ? are "investors " jumping in like mad in your areas?? granted here things have fallen from $190 a sq ft at the peak to $60 a sq ft now so i think we have swung down too far.In 1999 prices were at $55 a square ft here so we are back 10 years here
So to build a 1,200 sq ft home you are starting at $39,700 minimum per lot.
If you build at under $29 sq ft and the land is free you can pretty much break even...... no wonder building has stopped and unemployment in the County is 16%+
No, I don't think so. $60 per sq/ft is about right. Don't forget the frenzy started about 1998-1999. Of course it may be low compare to a new construction, but that is everywhere including Texas. What is the rental going for, lets say for 3/2 about 2000 sq/ft in the IE, now, ?
this house i was actually buying for my family and plan to rent out my current house
but earlier this year and last i bought 2 houses 3/2 about 1300 and 1400 sq ft for $60k- 70k these were thrashed and i rehabbed them myself for about 10 k a piece basic 3/2 house in the High desert rents for 1100 - 1200 a month so that is right at 50 % rule
The 50% rule is another analysis, where the rent is divided by 2 to cover expenses, leaving one half the rent for loan principle and interest payment and cash flow or profit. Would need to have the interest rate to do that calculation; others on the BP site estimate that rate and then extrapolate the result based on that.
But a house that meets 2% rule is usually not a bad deal.
either way you want to look at it
if you have 75k into a house that will rent for 1100,,,,,, / 2 == $550expenses
75k 30 yrs at 6% = $449
= $101 a door
but like i said it is hard to do that here if all the goofs are going to jump in and bid these houses to 100k my party is over i think !
$60 in my opinion has swung down too low i watch this market (high desert )very close from 1990 to about 2000 prices here went nowhere then increased very slowley till about 2003 before it went to the moon
when things stablize here(2 years is my guess) things will settle at about 80 a sq ft would be reasonable
in my experience and in this area prices are usually around 100 % of the monthly rent $1200 a month = $120000 sales price
I think the market will settle down. The summer is over and the $8K government incentive for 1st time buyer will soon run out. I also believe that giving the employment situation here in Cali, more foreclosures are on the horizon unfortunately.
I hope the buying frenzy doesnt matter. I need the short sale period to last as long as possible being a newbie and not having a great deal of cash built up. I am a little worried when the abundance of foreclosures is no longer here...
Greg C, don't just stand there, get out and sell something before the frenzy burns itself out.
I'm in the St Louis market and it doesn’t seem to be a huge deal here in this market.
Brian Haskins
So to build a 1,200 sq ft home you are starting at $39,700 minimum per lot.
If you build at under $29 sq ft and the land is free you can pretty much break even...... no wonder building has stopped and unemployment in the County is 16%+
Eddie, there is a big difference between "hoping for other peoples misery" and "taking advantage of the situation". For instance, if you see a hundred dollar bill laying on the ground, do you sit there feeling sorry for the person who dropped it or do you pick it up quickly? Also, you don't really wish for anyone to lose a hundred dollar bill, but if they do, I bet you would like to be the one who finds it.
Eddie, Im not so much "hoping" people foreclose. Its going to happen regardless if I hope they do or not. And when they do foreclose and I get them out of their situation I will be more benefit to that person who is "hoping" everything ends and doesn't to anything to help anybody.
If we were all moral as could be and wanting to do what is right no one on this forum would make a single dollar because we are pricing things higher then what they truly are(or less depending on the situation).
Its just a way you have to look at it. Real estate investors do help people out of their foreclosure but you never see somebody jump in a deal and say boy this looks great ill help them out while spending $20,000 of my own cash, you only make a deal if you can make a buck.
Eddie, it is quite possible to want prices to go down further and also be moral. To some extent this depends on one's perspective.
My view is that the standard of living of a country improves when things are inexpensive relative to incomes. I would like to see a world where homes, cars, food and other things that we buy are cheap so that they are easily affordable and people have more money left for experiences such as vacations, etc. Studies done by behavioral economists show that people get more lasting satisfaction from experiences than from material possessions.
In addition to the reason given above above, I would like home prices to go down for one more reason: I think our society has created a "moral-hazard" favoring bubbles. Whenever there is a bubble, most people like it and the government and fed encourage it with cheap money. When the bubble collapses, the government (which has no surplus, btw) stimulates the economy further and the fed makes money even cheaper. This entire thing results in a situation where we will spend most of our lives with higher-than-normal asset and commodity prices and budget deficits.
And who pays for these budget deficits? It is the next generation. In the past, people left their savings to their children when they died. Our generation is going to do the opposite and our kids are going to be saddled with debt or inflation.
For these and other reasons, I morally want to see home prices go down.
There are some great resources of local I.E. investors and economists that are studying the market for you so you know what to expect. Recently at the Nixon Library there was a gala of top industry experts discussion the market and what they saw coming. These experts included David Kittle, Chairman of the mortgage bankers Association, Dr. Christopher Thornberg from Beacon Economics, Rick Sharga, Senior Vice President Realty-trac, Joseph Magdziarz, Vice President Appraisal Institute, Bruce Norris, Investor and hard money lender, and other experts. You can listen to this event on http://www.thenorrisgroup.com/radio_show/
Great information. But the bottom line is, don't worry about the competition right now. It is temporary. We have 3 inches of buyers fighting over 2 inches of property, with 3 feet of property behind the floodgate. I don't care to debate how and when and how slowly or quickly the properties will be released, but there is no way they can artificially hold this real estate market with the tsunami of foreclosures that are hitting every month.
You obviously don't know who the "distinguished gentlemen" I pointed out are. Those distinguished gentlemen (with the exception of David Kittle, I don't know what his stance was in early 2000's) were screaming as loud as they could that the market was heading for a severe crash. Please read Bruce Norris' "California Crash" that he published in January 2006. Dr. Thornberg published a number of article in 2005-2007 predicting one of the worst real estate crashed in history. Rick Sharga predicted that foreclosures would increase every month for the next 5 years in 2005 setting record breaking total foreclosure statistics. (He was right.)
So I refer to those men as individuals that have a track record of understanding the global and local economic picture and who have for the last 20 years provided accurate and valuable real estate economic predictions to keep little guys like me out of trouble. Which I why I didn't mention any economic predictions from C.A.R or N.A.R! They were the one's saying we would have a soft landing.
After listening to those gentlemen (And one Lady...), which by the way you can actually watch on video at:
http://www.isurvived2009.com/video/
I must say that I was impressed. Especially by Christopher Thornberg who very eloquently, explained the current situation and why we shouldn't be so complacent as we tend to be watching the stock market goes up, houses sale "stabilize", and the "Banks are making money again"
I agree. For the time being, it is all smoke and mirrors.
I think they will find their way out of this. I wish that was not the case. We had a major crash in the late 1980's. Another 20 years later we have another major crash this time worse. Expect a humdinger in another 20 years. Since we have not fixed the problem.