1 year outlook on real estate and economy?

[Jr]

Alright... Who has a crystal ball that is in good working condition?

Where will real estate and the economy be in one year? If you listen to the main stream media, real estate will be worse off then the crash a few years ago.

Opinions are welcome.

[GregWeld]

Originally Posted by Jr

Alright... Who has a crystal ball that is in good working condition?

Where will real estate and the economy be in one year? If you listen to the main stream media, real estate will be worse off then the crash a few years ago.

Opinions are welcome.

You should take a longer term approach.... nobody has a crystal ball... that's just guessing. Might as well toss dollars up in the air and follow them down the street.

If you want to be a home owner... and your primary residence IS NOT an investment... it is simply a place where you live... and I don't give a **** how long you live there or what the market does - you never make money on it. People say -- I bought for X and sold for X more. Yeah?? BFD..... you also paid INTEREST for "X" years... and property taxes... and up keep... and then you sold your inflated house and paid an inflated price for the next dump you bought to live in and repeat the process. Add up the COSTS -- you didn't make any money. Having said that... the GOAL of home ownership (primary residence) is to retire in a paid for house so that you don't have that cost to bear out of retirement income. If you use that goal... then you'll understand that was a smart decision.

Investment property is an entirely different discussion but I assume you're asking about whether or not you should buy a house for yourself. Then the answer is yes - and be quick about it - prices are rising and so are fixed interest rates. Lock in as long a term as you can at the lowest FIXED rate you can.

[Jr]

Greg,
Good point. We just sold our home, and we are looking to purchase another home. Southern California prices are high right now, but if another recession is close, I'll rent till then.

[Vegas69]

Every real estate market is unique. Find an expert and look at the data. Our market(Las Vegas Area) has progressively softened up this year. The median price has stayed level for 3 months. My active listings are sitting longer. Statistically, we are in a seller's market with 3.1 months of inventory. It's feeling more neutral than that.

With all that being said, affordability is still in the pocket. I ran an analysis not long ago on the median rent vs. median mortgage payment. Within $50. Those are important numbers.

Our market rose 35% plus in 2 short years. It was undervalued due to extreme hardship. My opinion is we have found the pocket where it belongs. The market could jog either way depending multiple variables. I wouldn't be afraid to buy, in fact I'm in the market. However, I'll be patient and wait for the right deal. There is no hurry. If rates rise, the market will soften up even more and I'll make up for it in purchase price.

[GregWeld]

Originally Posted by Jr

Greg,
Good point. We just sold our home, and we are looking to purchase another home. Southern California prices are high right now, but if another recession is close, I'll rent till then.

Once you sell - the clock is ticking on how long you have to reinvest the proceeds into a house of greater value. If you wait - The problem with that is that if interest rates rise you're going to be paying more per month every single month as long as you keep that mortgage. Since we don't know how much you're financing - it's hard to judge what that might look like.

I was being somewhat facetious about the house crystal ball.... but I was serious about looking longer term. One or two years is pretty short term compared to a 30 year mortgage.

I own a couple of apartment complexes -- I can tell you that we've jacked the rents WAY up.... like 50% UP.... I would not want to have to be a renter.

I also think it depends on what real estate market you're in. Seattle is on fire... Sun Valley is "improving".... Like Vegas just said -- that market jumped 35%... but it was also one of the most depressed. As the job market improves -- and people begin to see interest rates rising - you might see more buyers moving off the sidelines and jumping to buy before they're priced out... or it could have a damping effect... that's just pure guessing and we won't know that until it happens. Either way -- if you're going to live in the house for 10 years... today's price shouldn't really matter.... and the one prediction I would make - is that you'll likely NEVER see these interest rates in your lifetime.

[Track Junky]

All my eggs are in one basket which is real estate. If you would have bought awhile back you would have saved hundreds of thousands but prices have gone up quite a bit in the past couple years. The good thing is that money is still cheap. Personally I follow the ten year cycle. 2006 everything took a dump. I sold three properties at the end of 05 and made a killing. following the ten year cycle from 2006 to 2011 prices continued to decline leveling off late 2012 and then beginning to rise 2013. Peak should be late 2015 into 2016 then watch out cause it will happen all over again.
This is just my personal opinion and how I gauge the market.

Are you looking for a primary residence or an investment property?

[Flash68]

Originally Posted by Jr

Alright... Who has a crystal ball that is in good working condition?

Where will real estate and the economy be in one year? If you listen to the main stream media, real estate will be worse off then the crash a few years ago.

Opinions are welcome.

To start, I've pretty much nailed the timing on my 4 transactions on the buy and sell sides over the past 11 years. It wasn't lucky -- I research(ed) the hell out of RE and economic indicators (Econ degree here) and I enjoy it.

If wasn't a month away from our first child, I would have sold our primary residence and rented earlier this year. I actually had my wife talked into it. But we decided against it. Moving just isn't okay like I used to be with it in smaller properties. But from a pure analysis discussion, I'd take the money and run and fight another day if were more mobile.

I've been touring 4 plexes lately and there is a tremendous amount of ALL CASH still chasing RE. We still have a big supply constriction issue here in Norcal for most properties in the areas I follow (SF & Oakland/inner East Bay). I'd like to get into some rental property but I am not going to offer 120% of asking to get it. I'll wait.

I say RE will slow down it's acceleration rate and start flattening in about a year. RE moves like a big ship usually. It's fast on the way up and "stickier" on the way down.

Originally Posted by GregWeld

You should take a longer term approach.... nobody has a crystal ball... that's just guessing. Might as well toss dollars up in the air and follow them down the street.

Hey dude, this ain't your Investing 102 thread. This is a fun prognostication thread. Let it happen.

Originally Posted by Jr

Greg,
Good point. We just sold our home, and we are looking to purchase another home. Southern California prices are high right now, but if another recession is close, I'll rent till then.

I like your thinking. Look at the appreciation and bubblelicious valuations right now. We are right back to 2006-2007 again.... and it's rate & supply driven.

Originally Posted by Track Junky

All my eggs are in one basket which is real estate. If you would have bought awhile back you would have saved hundreds of thousands but prices have gone up quite a bit in the past couple years. The good thing is that money is still cheap. Personally I follow the ten year cycle. 2006 everything took a dump. I sold three properties at the end of 05 and made a killing. following the ten year cycle from 2006 to 2011 prices continued to decline leveling off late 2012 and then beginning to rise 2013. Peak should be late 2015 into 2016 then watch out cause it will happen all over again.
This is just my personal opinion and how I gauge the market.

Are you looking for a primary residence or an investment property?

I know it's not scientific, but your 10 year cycle reference isn't far off, although it isn't destined to continue on that trend forever.... we had the early 80's, and the early to mid 90's, then once dot com stabilized the mid 2000's... we are right back there now in the mid 2010's.... wow, G, you're pretty on top of it buddy.

[GregWeld]

Originally Posted by Flash68

I like your thinking. Look at the appreciation and bubblelicious valuations right now. We are right back to 2006-2007 again.... and it's rate & supply driven.

I think people have all too soon forgotten what the real estate bubblelicious was all about... and it's root cause.

The cause was the "easy money" -- no credit no problem -- no down no problem... That had people that had no business whatsoever buying houses - flipping houses... and doing just about anything else that was ridiculous in the name of housing.

Banks won't even look at a buyer if their credit isn't pristine... and you'd better bring a wheelbarrow of cash for the downstroke. This isn't the easy money buyers market.

I think the market is still tight on "nice" / "good" houses because there's still a large amount of America that can't sell their house yet. They're still underwater -- or perhaps they took out one of the magical Home Equity Lines of Credit... and they bought a PT car and haven't paid that back....

Good houses at the right prices are selling briskly in the big markets.... Secondary houses are beginning to pick up here locally -- and the market is starting the move up market (million plus) -- here. Our local agent publishes statistics each Friday and the high dollar sales are really becoming noticeable. We looked for weeks with our friends that wanted a condo here to use and rent... and it was real obvious when you saw a property on the market that had been on the market for a long time. Some you wouldn't buy at any price - and some where so stupid over the top asking prices and you knew the sellers were just dreaming or on drugs. My friends were all cash buyers having just sold another property they owned for years in Palm Springs. A condo came on the market one day - they weren't here - we are - we went to look at it and I told them if they didn't buy it I would. Done. They're owners. It was a nice condo - makes a great rental - and was priced right where it should have been. Put a sold sticker on it. The buyer is my buddy that is an agent in Seattle.

I have two best friends that are both agents in the Seattle market -- they're saying that over 50% of the "all cash" sales are all Asian buyers bringing in money from their countries. They don't care as much about the price today... they're investing their capital where they believe it should be safe. In the Seattle market you have a high employment rate with high salaries... with a HUGE hi tech community. I would think LA area is far more "diverse" for employers. So it may depend more on area by area....

[Flash68]

Agreed on the credit. REAL down payments are required, as well as solid FICO scores to even compete. But when listings are being taken down (bought) by all cash and over asking you gotta ask how long can it last and when will the music stop?

The foreign money deal is a hard one to peg as far as how long that will last.

Most of the people I am seeing at investment property tours are locals FWIW.

Rents have absolutely skyrocketed around here too.

[Vegas69]

I've seen both markets 5 days a week. (Then and Now)They are not very similar. Lending guidelines are tighter, appraisers aren't being bought, down payments are larger, more cash buyers, less speculation. Buyers are buying more economically on average, they are more focused on lifestyle not carnality. Your wife's, friends, brother's, cousin isn't very successful as an agent.

Short story, the fundamentals are in check.

Our market is 2/3rd's peak. CA seems to be a more dynamic and cyclical.
Look at the median rent vs. buy. Days on market trend, list price vs. sales price. It will lead you to an educated guess. It's important to look at each area and price range specifically.

I'm with Greg and Dave, I'm not going to play musical residences in hopes of timing the market. I don't have the time or ambition. I'll simply sell and buy in the same market eliminating most of the risk.