[quote=Eugene]You can rent the average $500k crap shack in SD for what, $2k max per month? That’s being generous of course. In 1 year you paid $24k for rent then. Say you buy it instead. IMO you will lose at least 10% in one year.
So you should wait till your expected 10% yearly drop is less than a year worth of rent, is that your position?
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If most buyers are only putting down 3%, and many are getting tax rebates, then what are they actually putting at risk, given the non-recourse law? They are gambling with the taxpayer’s money, not their own.
I wouldn’t be surprised if the bulk buyers paying “cash” turned out to be getting most of that cash by borrowing it. Despite all the claims to the contrary, money is cheap and easy to come by, thanks to the Fed and the FDIC (guaranteeing bank loans) etc. It’s a bit like those mislabeled “private equity” deals that we read about in the middle of the bubble: for most, the private equity was pennies on the dollar, and lenders were providing most of the money. So if home prices don’t fall very quickly, the bulk buyers will do well, and if prices fall quickly, they can leave those pennies on the table and watch as the lenders get bailed out by taxpayers for the rest. I am only speculating, but as they say, a leopard doesn’t change its spots.
