Thoughts on Real Estate- bubble burst or not?

[q6543]

Us inflation rate is 6.8% for the year.

Fed funds base is at the zero bound.

Real rate -6.8%

Say we were at .5% base with the same 6.8% IR,
That would put us at -6.3%

So if inflation falls into the 4s next year... totally plausible.. and the FED lifts off and commits to 3 hike...75bps.

We're still looking at -3% into next year or worse.
Ie...homes will go up still...just at a slower pace.

 

[Adower]

I watched a video last month on YouTube (sorry, can't find it right now) about investing. The video said that if people invested in a mix of stocks/funds from the composite indexes (S&P500, DJ, Nasdaq...) over the past 50 years and didn't try to time the market or mess with their portfolios, their average annual growth would be 10%-12%. However, in reality, since people like to **** around and time the market and they don't play the long game, actual realized growth was less than 4%.

In other words, whether we are talking about the hot real estate market, buying a car you don't need during a chip crisis, etc. it seems like the more you mess with things and try to "get rich quick," the more it will cost you (unless you are a professional who knows wtf he is doing). In times like these, keep the car you have if it is running, keep the house you are living in if it meets your needs (it may not be perfect but nothing in life is), etc.

That old saying, time in the market beats timing the market. I let that sucker rip and invest every month!

 

[Adower]

Buying a house in Los Angeles is borderline crazy right now. I know somebody who recently bought and they had to get an all cash bridge loan to even compete. The theory is you offer all cash just to close the property and then refinance into a traditional 30 yr loan. That bridge loan ain't cheap and has some hefty interest rates. This environment really sucks for first time buyers or people who just want to move up to a larger house. The CA housing market has been crazy for a few decades, nothing new here. It's been boom or bust with small windows of normalcy mixed in.

I agree with the above comment. Don't try to time the market with any of these asset classes. Buy and hold for the long term and you'll come out ahead no matter what.

I'm near the bay area and I am scared to buy another house. Not sure if i'll ever get the same kind of loan ever again. Bought our home for 545k and it got appraised for ~1M. We refinanced ~8 months ago and got a 2.4% interest rate.

 

[tistan]

10 days to cover the months expenses???

I “might” be able to do that during peak season for 3-4 months of the year. Rest of the year when nightly rates are lower….not a chance. I need those 5-6k months during peak season to cover the slow months.

Of course this is all region specific but thinking you’ll break even at a 30% occupancy rate “may” work in only the rarest of cases.

That’s also taking into account I bought in 2019 and am under contract to sell for @60% more than I paid.


Sent from my iPhone using the svtperformance.com mobile app

 

[coposrv]

If you sell and wait on another 2008 style crash you're going to in a worse situation 2-3 years down the line IMOP.

Taking out all the economic stuff that others have posted I don't seen another crash happening for one major reason that I am seeing in my area right now.

People are paying for houses in cash! My wife and I just lost out on a house that literally checked every box because of a cash offer. We have also received 2 letters from people wanting to buy our house for cash with one willing to waive inspections and 3 month rent back.

Our house is estimated at about 550k right now. The house we lost out on went for 600k, again cash!

What I am saying is there is no mortgage for people to default on if the economy tanks.

Sure house values would dip if the economy tanks but I doubt we'll ever see rock bottom prices again.

Again this all just my opinion as I am no economist nor due I fully understand the housing market or its trends. I am simply looking at it from what I believe to be a logical point of view.

Having that much cash and using it to buy a home when money is as cheap as it is right now is absolutely ****ing stupid.


Sent from my iPhone using the svtperformance.com mobile app

 

[tistan]

10 days to cover the months expenses???

I “might” be able to do that during peak season for 3-4 months of the year. Rest of the year when nightly rates are lower….not a chance. I need those 5-6k months during peak season to cover the slow months.

Of course this is all region specific but thinking you’ll break even at a 30% occupancy rate “may” work in only the rarest of cases.

That’s also taking into account I bought in 2019 and am under contract to sell for @60% more than I paid.


Sent from my iPhone using the svtperformance.com mobile app

Where did you buy? Mountain towns in Colorado are doing it all the time. That is why the real estate keeps booming.

 

[MG0h3]

Where did you buy? Mountain towns in Colorado are doing it all the time. That is why the real estate keeps booming.

South Padre Island, TX.

Opposing beach to the redneck riviera in Florida.


Sent from my iPhone using the svtperformance.com mobile app

 

[Blkkbgt]

Having that much cash and using it to buy a home when money is as cheap as it is right now is absolutely ****ing stupid.


Sent from my iPhone using the svtperformance.com mobile app

What's really insane to me is the bidding wars that have happened between two buyers both with cash.

I've heard of 600k homes going for 750k because of it. Again CASH!

 

[PhoenixM3]

Having that much cash and using it to buy a home when money is as cheap as it is right now is absolutely ****ing stupid.


Sent from my iPhone using the svtperformance.com mobile app

Depends if you need to tap that equity for the down on another property.....

 

[03cobra#694]

I'm old enough to remember when 6 or 7 percent was considered a reasonable rate.

Yep, we had 7.25% at one point way back.

 

[365 Saleen]

The wife works for a real estate firm in the Seattle area. They have just over 400 agents. She handles the paperwork that they all have to do to make sure it is completed correctly and on time and also handles the commission payouts. She said that 80+% of cash purchases are from people with a Chinese surname. Most of these cash purchases are made well above what the asking price is. Sometimes by well over $100K
I can't speak to how this is playing out in the rest of the Country, but it gives me pause to what is actually going on.

 

[VegasMichael]

Having that much cash and using it to buy a home when money is as cheap as it is right now is absolutely ****ing stupid.


Sent from my iPhone using the svtperformance.com mobile app

But cash offers frequently beat out non cash offers. And some people just love the idea of owning a home outright.

 

[thomas91169]

The wife works for a real estate firm in the Seattle area. They have just over 400 agents. She handles the paperwork that they all have to do to make sure it is completed correctly and on time and also handles the commission payouts. She said that 80+% of cash purchases are from people with a Chinese surname. Most of these cash purchases are made well above what the asking price is. Sometimes by well over $100K
I can't speak to how this is playing out in the rest of the Country, but it gives me pause to what is actually going on.

All part of the great American fire sale.

 

[Adower]

The wife works for a real estate firm in the Seattle area. They have just over 400 agents. She handles the paperwork that they all have to do to make sure it is completed correctly and on time and also handles the commission payouts. She said that 80+% of cash purchases are from people with a Chinese surname. Most of these cash purchases are made well above what the asking price is. Sometimes by well over $100K
I can't speak to how this is playing out in the rest of the Country, but it gives me pause to what is actually going on.

I believe it. My wife's sister went too college in Idaho ~ 5 years ago. She said that there were tons of chinese and arab kids there. Apparently, they send their kids to the US and have them buy a ton of houses. I guess in Idaho there is a lot of oil from what she said.

 

[365 Saleen]

It is getting more and more financially difficult for the "average" new home buyer to afford a home. That is the worst part of this whole thing. Good people being priced out of ownership and being stuck in the rent/lease hell hole.

 

[me32]

The wife works for a real estate firm in the Seattle area. They have just over 400 agents. She handles the paperwork that they all have to do to make sure it is completed correctly and on time and also handles the commission payouts. She said that 80+% of cash purchases are from people with a Chinese surname. Most of these cash purchases are made well above what the asking price is. Sometimes by well over $100K
I can't speak to how this is playing out in the rest of the Country, but it gives me pause to what is actually going on.

Alot are drug money. Been a big surge in grow houses in highend neighborhoods.

 

[Adower]

Alot are drug money. Been a big surge in grow houses in highend neighborhoods.

There isn't a lot of money in growing anymore unless you've got a connect in a state where its illegal and you're part of some big operation. Outdoor units were only going for $400 a pound wholesale when I stopped.

 

[olympic]

The wife works for a real estate firm in the Seattle area. They have just over 400 agents. She handles the paperwork that they all have to do to make sure it is completed correctly and on time and also handles the commission payouts. She said that 80+% of cash purchases are from people with a Chinese surname. Most of these cash purchases are made well above what the asking price is. Sometimes by well over $100K
I can't speak to how this is playing out in the rest of the Country, but it gives me pause to what is actually going on.

A few years back Vancouver started taxing the shit out of houses that no one lived in so the asians started buying in Seattle instead.

 

[me32]

There isn't a lot of money in growing anymore unless you've got a connect in a state where its illegal and you're part of some big operation. Outdoor units were only going for $400 a pound wholesale when I stopped.

You have no idea whats going on. Big Chinese mob is backing these cash deals on homes. Much bigger than you think.

 

[BrianSpilner]

The wife works for a real estate firm in the Seattle area. They have just over 400 agents. She handles the paperwork that they all have to do to make sure it is completed correctly and on time and also handles the commission payouts. She said that 80+% of cash purchases are from people with a Chinese surname. Most of these cash purchases are made well above what the asking price is. Sometimes by well over $100K
I can't speak to how this is playing out in the rest of the Country, but it gives me pause to what is actually going on.

& we also have the giant companies buying up homes as soon as they hit markets with their computer program auto bids going out immediately...