Home prices are falling, and they're going to keep falling for years.
So why would anyone buy a home today? Do they not know what's happening? Is the power of 'home ownership' marketing so powerful that people act against their own best interests? Or do they just enjoy losing money?
39 comments:
Here's a good one from SDCIA (San Diego Creative Investor's Association, billed as San Diego's Oldest Real Estate Investment Club):
http://www.sdcia.com/index.html
COMING UP NEXT - Wednesday, May 9th, 2007: Chief Denney
Let Your Gains ERODE in the San Diego Market
OR
Move to One of 20 Emerging Markets and Earn 15+% per year.
Get the FACTS and then choose!
If you attended last week’s Bruce Norris SDCIA presentation, you know that Bruce is forecasting a 30% and greater DROP in San Diego real estate prices AND… it’s already started! So, if not San Diego, where should you invest?
Enter Chief Denney, President of Purpose Built Investments™. Chief has been a favorite speaker at SDCIA for years, and an extremely active investor and hard-money lender since 1989. He’s done it all: lease options, subject-to, assignments, foreclosures, preconstruction, you name it. In the past 8 years alone, Chief has taken full advantage of out of state markets, made 8 figures, and early-retired twice. He was coaxed out of retirement last year by Dave Stech, CEO of PreConInvestor.com and GoZoneSource.com, and they now own or control over 2,000 units out of state. Why out of state, you ask?
Do you realize that TODAY, while San Diego prices are collapsing, there are 20 other U.S. markets whose housing prices have increased 14.4 to 21.4% in the last 12 months alone? So, if you had only ONE $570,000 rental property in San Diego and had two choices – either "ride out" the collapsing SD market for the next 4 years OR move that same money to an emerging market for the same 4 years – the wrong decision would actually cost you over $700,000! Hence, savvy investors are leading the gold rush OUT of California until the San Diego market bottoms out and shows signs of a turn-around. Bruce forecasts that that won’t happen until 2010-2011 at the earliest – yes, 4 years from now.
Chief will also be joined by Dave for what promises to be an eye-opening event for SERIOUS investors. They’ll review why, how, and where to invest out of state, including comprehensive housing market, economic, demographic and tax research on the markets that they are investing in themselves. Chief and Dave have been the top-attended speakers this year at the Global Real Estate Expo, National Real Estate Investors Association, and investment clubs from San Francisco to Boston.
Serious investors will not want to miss this!
Isn't that lovely? These fliptards have screwed up the San Diego market, so now will be coming to a town near you (IF it's been ID'ed as one with a "hot" market, e.g. Portland, Seattle, Austin, etc)!
Just wait until these Flippers learn that the era for Flappers was back in the Roaring Twenties, right before 1929's Great Depression.
People are ignorant and have no idea how bad its gonna get
I've been monitoring my local market (Jacksonville) since I sold my home almost exactly one year ago. What I find very interesting is that the homes that are selling right now are being bought by two groups of people.
The first group (the smaller of the two groups) is people who haved moved due to work and have sold their former homes. These people are usually being transfered in from the midwest or the deep-south. I have no idea why they are buying and not renting.
The second group is unbelievable. Most of the homes that I see being bought are by flippers. Yes, these idiots are still out there. I believe they are falling for the REIC's BS that this is the low point in the housing market and prices are going to go up later this year. Most of the homes I have seen sell over the last year are back on the market in three or four months for about 50k-100k more after a quick home depot cabinet and paint job. The crazy thing is that the flipper homes are just sitting on the market and not selling (as we know), but people are still trying to pull it off like it was 2005.
If I had the forethought I would have started a JAX F'ed Flipper page a year ago. The stupidity would have been a real laugh at this point.
Put that graph into a virtual roller coaster program!!!
"Isn't that lovely? These fliptards have screwed up the San Diego market, so now will be coming to a town near you"
God, I wish they would come to my area. That would be a dream come true. Sell my place for a sh#tload more money than its worth to a fliptard! Come on in guys!
People still want to buy homes as a place to live. Owning offers permanence and the ability to remodel to suit one's needs and preferences. Those are immediate and tangible benefits versus the possibilty of a real estate price collapse, which the MSM still dismisses. How long do you postpone your life, waiting for the RE market to finally take a significant dive?
Americans have been brainwashed all their lives that if you don't own you are low life scum. This comes unceasingly from family, friends, co-workers, community, etc. It’s going to have to get like Japan, where home OWNERSHIP takes on the social stigma, before attitudes change.
I have rented AND owned thru various stages of my life. Each has the pluses and minuses. If I had it to do all over again, I would be renting today. Too much b.s. is dumped on the property owner’s back, especially here in Taxsylvania.
Serious investors Keith, the man said s-e-r-i-o-u-s investors, clearly you lack the prosperity consciousness necessary to participate in this gathering.
Why would they buy? Because they let Greg Swann and Suzanne researchit!
Whisper it "The Horror,The Horror"
A very interesting day yesterday - I went to an open house in my neighborhood, and even the RE Agent said, "they say prices are at bottom, but I don't believe that either.". . .then I went to a furniture store, and the woman said, "my boyfriend is in the home insurance field, and he says a lot of people have cancelled their policies because they can't afford insurance. . .he thinks it is going to get REALLY bad.". . .Mark in SD - what is happening here in SD is that the "word on the street" has changed, and people are no longer in denial - they now expect a really slowdown for at least 5 years like 1991-1996.
I completely agree that there was a housing bubble and nationawide average HPA over the next 4 yrs will be stagnant to down.
BUT
There are still plenty of rationale reasons to buy now:
1. School districts -- if you want to move to an area that has a good school district, that area might not have many rental options. many upper middle class suburbs are all owned homes, so even if you wanted to rent a home, you can't. In that case, buying would be rationale, especially if you plan to live there 9, 10 years.
2. Most people age 25-40 years old (ie typical firsttime buyer ages) simply have never seen HPA decline. So faced with a longstanding cultural belief that real estate can only go up, a belief backed with their experience to date, compared to a hypothetical scenario of doom and gloom, it's not irrational to continue to think that housing will be an ok investment.
AHHH SOOO!
Anonymous said...
How long do you postpone your life, waiting for the RE market to finally take a significant dive?
Why do you condider renting "postponing your life?" I think of it more as "getting ahead in life" since I will now be able to buy my next home with cash and never worry about a mortgage again. I admit that I enjoyed my former home. But, I'm sure I will also enjoy the next one that I will buy in the near future. And, since prices in my area are crashing, renting for a couple of years and saving money is going to give me much more long term freedom and happiness than being able to remodel a kitchen or bathroom to exactly my style.
Also, please explain what these "immediate and tangible benefits" are. Having been a renter, then owner, and now renter again, I can't think of a single benefit to owning a home at this point in time. However, I do see lots of benefits to cashing out and saving during the crash.
>Do they just enjoy losing money?
There are two camps here.
The first camp is just clueless. They're dead asleep until the MSM tells them it's not a good time to buy. What's for dinner, Timmy has soccer practice tomorrow.
The second camp is infatuated with the home owner dream like some were with tech stocks 8 years ago. They view any dip as a buying opportunity because they want it SO MUCH. I can understand this, I was one of the tech stock fools.
California is so much like Japan in so many ways.
Let's not forget that the past several years have transformed home ownership from a needs-based thing to an egotistical status symbol.
Log into match.com and look at the women's ads in Phoenix and they all want a man who is a "homeowner" as if that really means anything nowadays.
It's about status, vanity, and ego now. The homedebtors love to feel superior to renters and are willing to lose money to feed their egos.
Just look at the bubble markets like Phoenix, Vegas, San Diego, etc., they're all full of people who are buried in credit to drive a BMW and wear a Rolex. A house is just another part of the status fantasy with them.
Scuttlebutt has it that secular bulls and bears last an average of seventeen years each, so perhaps holding dead money long term, that bleeds one, verses cash that bleeds in its loss of purchace power to inflation is a wash, but for the attempted flippers who drove prices way beyond the inflation rates, that as housing ownership and taxes are not calculated in the govt numbers leaves only confusions, yet the money changers will profit...........
my boyfriend is in the home insurance field, and he says a lot of people have cancelled their policies because they can't afford insurance.
That only works if they own their home outright.
The rest of the time doesn't the mortgage holder require insurance?
If they're cancelling insurance I'd guess that these are retired elderly who are being whacked by obscene medical costs.
Here in seattle luxury car sales are starting to tank, a mercdes dealer is even advertising 0% fianancing.
>Log into match.com and look at the women's ads in Phoenix and they all want a man who is a "homeowner".
Female nesting instincts still driving bad decisions.
"
>Log into match.com and look at the women's ads in Phoenix and they all want a man who is a "homeowner".
Female nesting instincts still driving bad decisions.
May 13, 2007 7:55 PM
"
CLASSIC!!!! And oh SO TRUE!
Anonymous said...
How long do you postpone your life, waiting for the RE market to finally take a significant dive?
Answer: As long as it takes. When I moved to Sacramento, the houses doubled in value the first 18 months! I knew right then and there that it was a bubble and that I needed to wait it out. Now that the market is already down 15% (probably higher unoffically), my waiting is seeming almost sagelike to the locals. These were the same locals who when, 4 years ago, I explained that we were in a bubble looked at me like I'd just taken a dump in the water cooler. The same locals who now say "Oh yeah, everyone saw the bubble coming". Well, they aren't safe on the road, either.
Reading assigment: Extraordinary Popular Delusions and the Madness of Crowds, by Charles Mackay
You have to have insurance if you have a mortgage. If you don't buy it, the lender will buy the insurance for you, at 200% market rates.
I'm bearish on American housing; however, it cannot be compared to Japan. Japan doesn't have so much immigration or birth growth like the US has. In fact, Japan is in trouble because of a lack of young people (including babies).
1. School districts -- if you want to move to an area that has a good school district, that area might not have many rental options. many upper middle class suburbs are all owned homes, so even if you wanted to rent a home, you can't.
That's a load of BS. You can rent a home for $500, $50,000 and everything in between. I rent a home. If I had high school kids they would be going to the high school ranked 4th best in the state.
My ex, at age 50, a few years ago developed extremely strong nesting instincts (never had a kid). She wanted to adopt, but being single, bias was against her. She married a guy and they now have 4 adopted kids. They are beginning to have money problems. They now face years of struggling into old age.
Log into match.com and look at the women's ads in Phoenix and they all want a man who is a "homeowner".
Female nesting instincts still driving bad decisions.
May 13, 2007 7:55 PM
"
CLASSIC!!!! And oh SO TRUE!
ditto
into match.com and look at the women's ads in Phoenix and they all want a man who is a "homeowner".
Female nesting instincts still driving bad decisions.
Most women have no clue on how to determine if a man is financially prudent. However, I am not going to change my habits and jeoprodize my financial security & retirement just to please a woman who financially uneducated.
"Just look at the bubble markets like Phoenix, Vegas, San Diego, etc., they're all full of people who are buried in credit to drive a BMW and wear a Rolex. A house is just another part of the status fantasy with them."
Oh yes, reminds me of the old yuppie joke of Police arrive at a RTA, and find the driver of a BMW ranting about how the other driver was an idiot and how he totaled his brand new beemer.
The cop turns to him and says "Sir calm down and sit over here until the para-medics arrive, as your left arm has been torn off at the elbow during the crash" to which the yuppie replies "Arghh, where's my rolex?".
Most women have no clue on how to determine if a man is financially prudent. However, I am not going to change my habits and jeoprodize my financial security & retirement just to please a woman who financially uneducated.
So what you're saying is that women tend to stay away from HP renting types who clip coupons, drive 15 year old Hondas and shop for clothes at the Goodwill store.
How shocking!!
Computer models that my investment firm have done say that the U.S. market will go down 45-50% in bubble areas like California, Arizona, Nevada, and Florida.
The chart was shocking when I graphed it. It look shockingly like the chart of Japan. If you are going to sell in the next 5 years, do it now! We are looking at another 8-10 years of down markets. The liquidity is drying up, and it is super hard to find finacing.
clearly you lack the prosperity consciousness necessary to participate in this gathering.
"Prosperity consciousness" is working hard, living below your means, and saving your money. It's not chasing after trendy investments hoping that you'll "strike it rich."
"School districts -- if you want to move to an area that has a good school district, that area might not have many rental options. many upper middle class suburbs are all owned homes, so even if you wanted to rent a home, you can't. In that case, buying would be rationale, especially if you plan to live there 9, 10 years."
This is just plain wrong. There's just as many rentals in good school areas as any other area. That number of rentals will only increase as the "get rich flippers" flop to bankruptcy court.
Budvar said...
"Just look at the bubble markets like Phoenix, Vegas, San Diego, etc., they're all full of people who are buried in credit to drive a BMW and wear a Rolex. A house is just another part of the status fantasy with them."
Why is it everyone who drives a nice car or lives in a nice home must automatially be buried in debt? I have driven BMWs for 15 years. I live in what is considered an expensive house. I don't have Rolex since I don't wear watches but my wife has $20K of diamond on her finger.
And gee wiz guess what...I have no CC debt and a mortgage that will be paid off in 5 years. Some people believe it or not make a good living and can afford the finer things in life without paying 20% interest. Get a grip on some reality man.
Computer models that my investment firm have done say that the U.S. market will go down 45-50% in bubble areas like California, Arizona, Nevada, and Florida.
Really? Wow. 50% eh??!?!?
Care to share these "models" from your "investment firm"?
Anonymous said...
Computer models that my investment firm have done say that the U.S. market will go down 45-50% in bubble areas like California, Arizona, Nevada, and Florida.
The chart was shocking when I graphed it. It look shockingly like the chart of Japan. If you are going to sell in the next 5 years, do it now! We are looking at another 8-10 years of down markets. The liquidity is drying up, and it is super hard to find finacing.
May 14, 2007 2:22 PM
Would you be willing to post or email me the chart? Thanks.
"And gee wiz guess what...I have no CC debt and a mortgage that will be paid off in 5 years. Some people believe it or not make a good living and can afford the finer things in life without paying 20% interest. Get a grip on some reality man. "
He didn't say everyone, dumb ass! For a guy who claims to be wealth, you sure have a low IQ.
"So what you're saying is that women tend to stay away from HP renting types who clip coupons, drive 15 year old Hondas and shop for clothes at the Goodwill store."
Ahhh... the stupid troll is back.
So tell us... you still claim that real estate is going up 20% a year? If you had a brain, you'd notice that the only thing that is 20% is your hero, George Bush's approval ratings.
See ya, dumb ass!
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