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SoCal Real Estate Question

Discussion in 'California (Southern)' started by Clax, Mar 29, 2005.

  1. JizJizJiz

    JizJizJiz Karting

    Nov 16, 2003
    98
    SoCal
    Full Name:
    Zack
    Yeah, I heard this as well. Too bad it's a bit too far from where I need to be :eek:.
     
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  3. TimsBlack16M

    TimsBlack16M Formula 3

    Jan 27, 2005
    1,357
    Agoura Hills, CA
    Full Name:
    Tim
    In the end, real estate prices can only climb as fast as wages increase. Recent years have demonstrated one of the very few exceptions to this fundamental economic rule. Interest rates hitting 47 year lows helped offset wage increases, and thus allowed property to appreciate faster than would normally be the case. The problem going foward is that the Fed has raised rates eight times and indicated that further increases are forthcoming. At some point, rates will hit the level at which they lose there positive economic effect. This will lead to lower real estate prices. The exact timing is anyones guess. Be very careful in this rising rate environment! Tim

    P.S. The old adage "buy low, sell high" is worth remembering. I think that it is silly to "buy high and hope for higher". A good point of reference would be the Nasdaq at the end of the 90's. Remember how that party ended!
     
  4. jbtrader23

    jbtrader23 Karting

    Apr 20, 2004
    174
    Los Angeles, Ca
    Bingo. This is something the die hard real estate bulls seem to forget. They often say things like, "it's different this time." Or, "people always need a place to live, therefor the market can't crash." Dangerous, dangerous stuff. The experts will miss this crash just as they missed the stock market crash of 2000.
     
  5. markymark360f1

    markymark360f1 Formula 3

    Dec 15, 2004
    1,260
    San Diego
    Full Name:
    Mark
    Should we run for the Hills! Sell now and move to Arkansas.
    When the Jobs leave and rates go beyond a reasonable threshold, say above 8 percent. Thats when I would worry.

    If we had more entry level housing I would be less concerned.
    A bubble is not something that will sneak up on us, unlike the stock market the real estate market is not manipulated by the Investment houses......whereas the public is the last to know.

    Mindset and perception will be the biggest enemy aside from interest rate increases.

    If jobs remain and rates do not get extreme the rest is keeping people from not panicking

    MM
     
  6. jlm348

    jlm348 Formula 3

    Nov 26, 2002
    1,094
    Scottsdale + LA
    Full Name:
    Jean-Louis
    It is my opinion even as interest rates rise we will not see a crash in the market. We might see a stabalization. However, We will see a correction in the market if all the lenders out there tighten their guidelines for the purchcase or refi of a home. Right now The lenders out there are giving loans to anyone that has a pulse. Once the lenders start getting scewed by a large amount of foreclosures then they will start terminating alot of these wonderful programs that are available. There are lenders out there that have programs where one with a 500 fico score can buy a property with 5 % down. There are others that with a 620 fico score and 5% down have a 2.95% minimum payment (Not interest Rate). All these programs that are so flexible are allowing people to afford houses that they would have not been able to afford in the past.
     
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  8. markymark360f1

    markymark360f1 Formula 3

    Dec 15, 2004
    1,260
    San Diego
    Full Name:
    Mark
    I agree,

    However, in our market in San Diego, very few properties ever go to default, this will increase for the reasons you mention.

    For right now, plenty of speculators and investors still see long term value here and do not let properties foreclose, they get creative and cure such situations.

    In the long term, these loans you mention are more geared to allow for appreciation. When appreciation decelerates below 10% a year, we will have more default activity. Alot of folks in 100% financing. Highpayments hoping for appreciation relief.

    You can go stated documentation to $1million, with 0 down.

    When in the History have we seen these programs!

    Fortunately as I mention before, Job growth, schools and location (i.e. OC and San Diego) are big factors in long term value.

    A buddy of mine bought a home for job relocation reasons 2 years ago in Ohio, he is delighted to see his 4% appreciation per year.......yeah right.

    I prefer a healthy 5-8% and things will stabilize

    MM
     
  9. franko

    franko Rookie

    Mar 23, 2004
    23
    San Diego, CA
    Full Name:
    Frank
    If you guys really want to make a ton of money, DMB development is doing a huge project in Kaui that VERY little people know about. If you want more info email me at franko9217@aol.com and i can set you up with the VP of sales to get your name on the interest list that is small now but is expected to grow into the thousands.

    As i mentioned in a prior post, they are finishing up www.santaluz.com which has been a huge sucess because DMB really is a great develper for higher end projects. Trust me on this!

    Frank
     
  10. darth550

    darth550 Five Time F1 World Champ
    Lifetime Rossa

    Jul 14, 2003
    58,931
    In front of you
    Full Name:
    BCHC
    WOW! What else have you got?
     
  11. franko

    franko Rookie

    Mar 23, 2004
    23
    San Diego, CA
    Full Name:
    Frank
    I just have that one project which is a big one for me and have other properties as well. I plan on cashing out in the next 12-18 months and keep the rest stashed away and see what happens. I'm not a wealthy guy and don't even own a Ferrari, yet.... heh.

    I'm in real estate and am fortunate to work around some of the most sucessful loan officers/agents in the country so i get lots of "tips".... Santaluz is one of them and has worked out great. Oh, and after this converts i already told the wife that the Viper SRT10 is out and a 360 is on it's way :)

    Like i said, i am not wealthy but the fact that i can get those 1.95% payment mortgages on my other properties allow me to have more cashflow to get into other projects so i can get to the next level financially. Some will say "if you only pay the 1.95% your balance is going to go up"....Thats true, my balance increased $3k last year but my house went up 303k in 18 months, big deal. If i was loaded and didn't care about an extra $1500 per month times 4 other properties then it wouldn't be an issue but saving $6000 per month is a big deal for me.

    I would imagine there are some wealthy people on this board, i'm not wealthy but on paper i've managed $5.5-6 mil in properties in the last 4 years without ever touching any of my savings. It's a beautiful thing, just don't want to get caught up like the stock market 5-7 years ago. I guess i wasn't happy when my portfolio was up 218%, just recouping it now...... duh!!

    Hope this helps.

    by the way....MarkyMark, you are absolutely correct, isn't it amazing how these banks just want to give away $???? Scary actually but thats why i'm going to sit back in the future and try to be as liquid as i can. I don't wish it upon anybody but defaulting might be a small issue in the future.
     
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  13. UroTrash

    UroTrash Three Time F1 World Champ
    Consultant Owner

    Jan 20, 2004
    33,778
    Purgatory
    Full Name:
    Internet Poseur

    Oh. OK! If you say so! Are you sure I can trust you? Yes? OK, that does it for me, I'm in!!!!!!
     

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