the housing market....

[AR182]

i thought i would share some info about the housing market that i had read earlier today in the arizona republic....& maybe start a discussion.

yesterday the commerce dep't. reported that sales of new single family homes dropped 3.9% nationwide last month. this decline followed a 15.8% plunge in jan, the biggest one month decline in 13 years.

this weakness in sales was accompanied by a drop in prices with a median price of a new home falling to $250k in feb., down .3% from last year.

in the west, sales were up 24.6%, a rebound after a 25.8% plunge in jan.

in the ne sales fell by 26.8%

midwest sales were down 20%

sales were down 7% in the south.

the article stated that last week (i missed that article) existing home sales rose in feb....

the article also stated that the feds might cut interest rates if the economic slowdown threatened to get worse.

what this means imo is that we are entering into a buyers market (obviously)....& people should sit tight if they are looking to sell (like me)

i would like to see what others have to say on this...

 

[Franky Wright]

AL,
First off, congrats on number 9000! coming right up:SIB
I have alot to add to this, just not enough time right this minute. However I will add this right now, the real estate market is going to get worse before it gets better. With lenders tightening their belts, borrowers are going to find it tougher and tougher to find rates that make sense for some of the appreciation we have seen.
I have builders, developers, and owners who cant give stuff away,
Will be back later..........

Franky

 

[Totacious]

Blog discussing housing bubble, pro and con. Some interesting information, and updated regularly.

http://housingpanic.blogspot.com/

 

[AR182]

thanks franky...i didn't even realize that i just went over 9000 posts here....that's alot of posts...i guess i need to get out more...lol.

also thanks for your response about the real estate market.....looking forward to what you have to say....

btw...where are you an agent ?

 

[AR182]

Blog discussing housing bubble, pro and con. Some interesting information, and updated regularly.

http://housingpanic.blogspot.com/

thanks tot....will check it out when i get the chance...

 

[blgstocks]

I can only talk about So. California real estate market, since I have only worked in that market. But I can say that many people anticipated the major slowdown in our real estate, mainly because of the lenders doing anything they could to get people into homes that were way too much money for them to reasonably afford. So you have thousands of people with little or no money in the property and a mortgage payment that you already can't afford and the teaser rate that got you into the house is about to go up 2 points, well its an easy choice for many to go into forclosure, because they can't sell it for what they bought it for(after closing costs both on both transactions).

I now work in the home loan business and I can say first hand lenders are tightening up their lending requirements. You are correct al that with low interest rates and rising foreclosures or huge discounts for quick sales due to impending forclosures, that it is a buyers market. It will remain a buyers market until the affordability of homes goes up. I think you will find out west that even though the market has slowed down considerably, prices are not dropping it is just home sales that are dropping, which is only the first stage. So my prediction is that the forclosures (which are still increasing out here in So Cal) will keep putting pressure on this market and it will remain a buyers market for at least a 2 more years. I get the 2 year figure because the height of squeezing people into bad mortgages would be right around beginning of 06, and many of those mortgages(almost all that i saw) had the 2 year teaser rate and then would jump up considerably, so there will be many of those people defaulting when it comes time for the rate to adjust right up until beg to middle of 08. Assuming that forclosures will drastically reduce after that, it will still take a year or so for consumers to regain confidence and lenders to regain confidence to stretch their budgets to get themselves into a home(which is what happens in a sellers market).

Good post Al, definitely would like to hear other thoughts on the subject, especially in different parts of the country.

 

[Franky Wright]

thanks franky...i didn't even realize that i just went over 9000 posts here....that's alot of posts...i guess i need to get out more...lol.

also thanks for your response about the real estate market.....looking forward to what you have to say....

btw...where are you an agent ?

Real Estate Broker since 1983 :scared
Builder since 1989 :com:
Slum-lord since 1986 :mj16:

Lender since 2006 :SIB

Guess you could say I'm connected :mj07:

Will check out that blog and come back with more comments later.

Al,
Don't you have income properties also?....

Franky

 

[AR182]

Al,
Don't you have income properties also?....

Franky

yes...presently have 3 rentals...hope to sell 1 (tenants)refinance the other 2 next year.

where do you work ?

stocks...

thanks for your response...

 

[StevieD]

Do you guys think the 30 year fixed rate will go up or down. I have three more years before my rate will change.

 

[blgstocks]

Do you guys think the 30 year fixed rate will go up or down. I have three more years before my rate will change.

Stevie, one side of the argument for increasing int rates is that they are near historic lows, so odds are(but in no way a fact) that rates will retreat from their lows and go higher.

An argument for the decreasing or staying the same of int rates is that the fed will continue to keep rates low so that when it comes time for so many americans who are in those adjusting mortgages to refinance or have their rate adjust, they are able to refi at a reasonably similar rate (to the "teaser rate" they were given to get into the house)

So I know that didn't answer your question but if I had to guess, interest rates will stay low for the next year or so, maybe even go lower, but I think in 3 years it is likely that they will be higher than they are today.

 

[WhatsHisNuts]

I'm actually excited about the opportunities in the market right now. I'm planning on purchasing some investment properties in the next few months.

 

[AR182]

I'm actually excited about the opportunities in the market right now. I'm planning on purchasing some investment properties in the next few months.

gary..

if you don't mind me asking..where are you looking ?

what type of property will you be looking to purchase ?


good luck with it.

 

[flapjack]

I can only talk about So. California real estate market, since I have only worked in that market. But I can say that many people anticipated the major slowdown in our real estate, mainly because of the lenders doing anything they could to get people into homes that were way too much money for them to reasonably afford. So you have thousands of people with little or no money in the property and a mortgage payment that you already can't afford and the teaser rate that got you into the house is about to go up 2 points, well its an easy choice for many to go into forclosure, because they can't sell it for what they bought it for(after closing costs both on both transactions).

I now work in the home loan business and I can say first hand lenders are tightening up their lending requirements. You are correct al that with low interest rates and rising foreclosures or huge discounts for quick sales due to impending forclosures, that it is a buyers market. It will remain a buyers market until the affordability of homes goes up. I think you will find out west that even though the market has slowed down considerably, prices are not dropping it is just home sales that are dropping, which is only the first stage. So my prediction is that the forclosures (which are still increasing out here in So Cal) will keep putting pressure on this market and it will remain a buyers market for at least a 2 more years. I get the 2 year figure because the height of squeezing people into bad mortgages would be right around beginning of 06, and many of those mortgages(almost all that i saw) had the 2 year teaser rate and then would jump up considerably, so there will be many of those people defaulting when it comes time for the rate to adjust right up until beg to middle of 08. Assuming that forclosures will drastically reduce after that, it will still take a year or so for consumers to regain confidence and lenders to regain confidence to stretch their budgets to get themselves into a home(which is what happens in a sellers market).

Good post Al, definitely would like to hear other thoughts on the subject, especially in different parts of the country.

I can attest to the Los Angeles market prices that you mention. I've been renting in LA for the past 2 years waiting for the market to slow and have recently been looking for a property figuring it might be time. Not really seeing great deals or much panic. Sellers seem to be holding firm and prices look to be steady or continuing a slow increase. At least thats the case in the areas I'm looking for on the west side (miracle mile through culver city). Would love to see the market drop, but starting to think it might not and the current slowing may be the best I can hope for.

As for the other market I know, Austin, I own rentals there and the market seems to be going pretty strong. The fact Austin missed the whole housing boom due to the dot com bust and over building, means that it is still really cheap and home prices seem to be showing very nice gains this year and last.

At least that is my very unprofessional assesment of those 2 markets. Would love to hear other, differing opinions.

 

[Cie]

I just bought a rental property in New Orleans that flooded severely during Katrina. :scared :scared

If I don't have any problems renting both units, I will likely look to position myself with more units while property values are down.

 

[AR182]

I can attest to the Los Angeles market prices that you mention. I've been renting in LA for the past 2 years waiting for the market to slow and have recently been looking for a property figuring it might be time. Not really seeing great deals or much panic. Sellers seem to be holding firm and prices look to be steady or continuing a slow increase. At least thats the case in the areas I'm looking for on the west side (miracle mile through culver city). Would love to see the market drop, but starting to think it might not and the current slowing may be the best I can hope for.

As for the other market I know, Austin, I own rentals there and the market seems to be going pretty strong. The fact Austin missed the whole housing boom due to the dot com bust and over building, means that it is still really cheap and home prices seem to be showing very nice gains this year and last.

At least that is my very unprofessional assesment of those 2 markets. Would love to hear other, differing opinions.

flapjack...

based on the value of my properties, the real estate market in the valley also seems to be holding firm after our boom (largely influenced by calif. investors).i'm just hoping in doesn't take a dramatic dive since i intend to sell my rentals over the next 1-5 years.

 

[AR182]

I just bought a rental property in New Orleans that flooded severely during Katrina. :scared :scared

If I don't have any problems renting both units, I will likely look to position myself with more units while property values are down.

cie..

i don't know anything about the rental market in n.o.....but be careful. i tend to think that your area is more tenant friendly than landlord friendly. so put everything in writing...& make sure all concerned parties follow the lease to it's fullest.

good luck.

 

[blgstocks]

I can attest to the Los Angeles market prices that you mention. I've been renting in LA for the past 2 years waiting for the market to slow and have recently been looking for a property figuring it might be time. Not really seeing great deals or much panic. Sellers seem to be holding firm and prices look to be steady or continuing a slow increase. At least thats the case in the areas I'm looking for on the west side (miracle mile through culver city). Would love to see the market drop, but starting to think it might not and the current slowing may be the best I can hope for.

As for the other market I know, Austin, I own rentals there and the market seems to be going pretty strong. The fact Austin missed the whole housing boom due to the dot com bust and over building, means that it is still really cheap and home prices seem to be showing very nice gains this year and last.

At least that is my very unprofessional assesment of those 2 markets. Would love to hear other, differing opinions.

flapjack, you mind if I get your email from jack?

 

[WhatsHisNuts]

gary..

if you don't mind me asking..where are you looking ?

what type of property will you be looking to purchase ?


good luck with it.

No problem Al.

I'm looking to purchase single family homes here in Columbus, OH. I've been meeting with real estate investors this week to see if I can get any information from them and hopefully develop a mentor/mentee relationship. This is not going to be a side project, as I am looking to build a portfolio and pursue this full time. I'm tired of the corporate world and this is the route I'm taking.

 

[WhatsHisNuts]

I just bought a rental property in New Orleans that flooded severely during Katrina. :scared :scared

If I don't have any problems renting both units, I will likely look to position myself with more units while property values are down.

Cie: Since I'm just starting out in this business as well, feel free to get my email from Jack if you want to exchange thoughts and ideas. I just met with a guy yesterday that owns 40 properties and he gave me a lot of good information...I'm meeting two more investors Thurs & Friday to see if I can learn a little more before I make my first purchase.

-Gary

 

[MadJack]

Cie: Since I'm just starting out in this business as well, feel free to get my email from Jack if you want to exchange thoughts and ideas. I just met with a guy yesterday that owns 40 properties and he gave me a lot of good information...I'm meeting two more investors Thurs & Friday to see if I can learn a little more before I make my first purchase.

-Gary

have you checked out youngstown? properties there are going super cheap and it does look like they have a decent plan for rebuilding that town.

look at this house that sold on ebay. man, what a cheap price for that house. it would be triple or more in most places in the country.

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=300079752442#description

detriot might be a good place for picking up houses to rehab and flip or rent.

i'm not experienced in that biz but have done some reading and checking around.

for instance....youngstown, ohio

there are many properties you can snag for, say, 15k put 20k of work into them then get them appraised for 70k finance 50k put 15k in your pocket and rent them out to cover your mortgage. :shrug:

am i making it out to be easier than it really is?