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bearishgurl.
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July 9, 2013 at 7:27 AM #763399July 9, 2013 at 7:29 AM #763400
ocrenter
Participant[quote=kev374]Unfortunately I am not seeing a rise in inventory in Orange County…perhaps the situation is different in San Diego. Interest rates have dipped again from 4.6 to 4.29% I believe so perhaps the rise in interest rates was just an overreaction to the Fed statement that they will taper but now they have made it clear they WILL NOT taper and will keep buying bonds indefinitely as needed.
from past experiences, SD is not different to OC. It is simply ahead of OC. Observing SD trend would be very helpful for OC buyers.
July 9, 2013 at 8:26 AM #763401SD Realtor
ParticipantReally now…
So the OP is saying that every active listing in Anaheim or in Fullerton under 400k is actually already sold… Even though they are active.
Yeah ummm…. right….
July 9, 2013 at 8:49 AM #763402HLS
Participant[quote=kev374]Interest rates have dipped again from 4.6 to 4.29%[/quote]
Kev, with no disrespect to you, it is RIDICULOUS to refer to an article like that about interest rates. It’s old, and it’s not even news.
It’s as silly as saying that Alaska Airlines stock
(ALK) is $52 (which it was last week)but it’s almost $57 today.You could link to an article from last week that says it’s $52, and you can stand on your head and hold your breath until you pass out;You aren’t going to get that stock for $52 today.
The FACT is that interest rates move day by day and many times INTRA day.
The FACT is that last Friday mortgage rates EXPLODED to their highest levels in several years.
The FACT is that there is no ‘one rate’ that applies to everyone but most people seem to think so and don’t want to bother understanding this.
The FACT is there is a difference between ‘average’ rates that are quoted in articles and what is actually going to apply.
the FACT is there is a difference between a ‘no cost’ rate & a low rate that comes with costs, which changes the APR.You did prove one of my points though in that intelligent people are all ‘trading’ on the same bad information.
There are simple facts that apply to many situations yet most people have opinions and make statements rather than understand that there are facts to override them.Most ‘news’ is not news…. It’s press releases, with a spin. It’s someone (who was paid) releasing a report with a spin on it to create an illusion and support THEIR position.
The govt constantly releases ‘reports’ with misleading statistics & numbers. BILLIONS of dollars get traded on this ‘news’ some people make small fortunes, others lose huge amounts of money on these reports. They were right or wrong…..
in many cases, a month or two later this original report ‘quietly’ gets revised, without nearly as much attention as the original report received.
It turns out that the people who lost money and thought they were wrong, were actually right, but their money has already been lost.July 9, 2013 at 8:56 AM #763403ParticipantLink to article from July 5th: http://www.fool.com/investing/general/2013/07/06/fridays-catastrophic-surge-in-mortgage-rates.aspx
and one from today:
http://finance.yahoo.com/news/housing-sentiment-sours-mortgage-rates-164209170.html;_ylt=A2KJNF9FKtxRDh8AmTCTmYlQAnother amazing thing about the media is how they take people’s OPINIONS and twist them into a headline, and then the headline gets repeated like it came from the bible.
Just because it’s on the internet, doesn’t make it true. BONJOUR.July 9, 2013 at 9:27 AM #763404lookingtobuy
ParticipantI enjoyed how the second article used May’s pending figures to explain everyone’s rush to buy homes on July’s interest rate increase.
July 9, 2013 at 9:47 AM #763406Participant[quote=lookingtobuy]I enjoyed how the second article used May’s pending figures to explain everyone’s rush to buy homes on July’s interest rate increase.[/quote]
Ya, they always have an explanation that defies logic…. But it sounds good to many, and I’m sure that it will be repeated many times, especially by agents who are desperate for a commission.
Kind of like CNBC explaining (at the end of they day) why the stock market went up or down that day.
IF they REALLY knew what they were talking about, they should have been able to tell you this in the morning!!Isn’t it about time for the NAR to come out with a new spin ?
LIKE: Potential buyers don’t want to suddenly be priced out of the market by both rising prices and rising rates.
*******
Haven’t we heard “buy now or be priced out forever” (at least) once before ??July 9, 2013 at 10:18 AM #763408kev374
Participant[quote=SD Realtor]Really now…
So the OP is saying that every active listing in Anaheim or in Fullerton under 400k is actually already sold… Even though they are active.
Yeah ummm…. right….[/quote]
SD Realtor, virtually ALL the listings I found on realtor.com are in “Backup Offer” status. The 1 house I found a week ago the realtor told me to come down only if I am making an offer otherwise not to bother since they already have 20 offers on it…do you know how ridiculous it sounds when realtors tell me to make an offer on something I haven’t even seen? And they will refuse to show me the property unless I make an offer…LOL!
July 9, 2013 at 10:32 AM #763410Participant[quote=HLS][quote=kev374]Interest rates have dipped again from 4.6 to 4.29%[/quote]
Kev, with no disrespect to you, it is RIDICULOUS to refer to an article like that about interest rates. [/quote]
HLS, I know interest rates move day to day but what I am trying to highlight is the trend. A statement was made here that interest rates are going to rise going forward. What I am saying is that the rise in interest rates was triggered by the Fed’s statement that they are going to taper by end of the year.
Now, the Fed has indicated that they will provide as much stimulus as needed to suppress interest rates if it affects the stock or housing markets.
If the Fed does taper and the housing market starts declining then the Fed will simply start buying bonds again sending interest rates down. What is preventing them from doing that infinitely?
July 9, 2013 at 12:10 PM #763414FlyerInHi
GuestNot ridiculous, Kev. In a rising market, the listing actually has a lot of power Ideally she wants to sell the property by herself and take all the commissions (put yourself in her shoes).
I bough several condos sight unseen. After the offer is accepted you can inspect. And it you don’t like it, you can find a reason to back out. The seller probably didn’t even cash your earnest deposit yet (when you submit an offer, you only send copy of the earnest deposit check with offer).
One place I bought, the listing agent gave me advance notice and got me to offer, even before putting on MLS. It was a Freddie foreclosure. Great deal at bottom price.
Your point of view on whether the market will keep rising is your own. It you think prices will drop, then wait. But if you want to buy now, contact listing agents and put in offers. Remember that if you use a buyer’s agent it’s one more layer to the seller/decision maker.
Think logically, not emotionally about what should or shouldn’t be. You may expect to view a house before offering, but they don’t have to show you.
July 9, 2013 at 12:23 PM #763415Participantyes, but the properties I am seeing are NOT cash flow positive so I am wondering HOW on earth are investors buying them. I am thinking they are just speculating on future price or rent increases that may not pan out. This is quite a big risk.
For instance, the rents in Orange, California for a 2bd, 950sqft condo with garage is around $1400/month. To be competitive this is what you need to expect…no more.
2bd condos with 1000sqft have asking prices north of $250,000 and some are even asking $300,000. Just do the math… $250,000 with 20% down, $200,000 financed at 4.6%, $1025 PI, $210 property taxes, $100 maintenance, $275 HOA = $1610 and that is in a perfect situation, what if the property remains vacant for a few months of the year? And HOAs and property taxes rise with inflation as well.
For investment it does not pan out at current prices.
July 9, 2013 at 12:35 PM #763416bearishgurl
Participantkev, if you don’t mind my saying so, I think you should stay out on the street in your favorite haunts in Brea, Buena Park, Yorba Linda and Fullterton (as you have mentioned here before) with a pen and offer form in your hand and/or your agent chained to your ankle with offer-forms in his/her hand. Keep a few counter-offer forms in your back pocket, too. And put your inspector’s and engineer’s number in your cell phone so you can possibly get an appointment with them BEFORE you make an offer or immediately upon acceptance. Then your offer will have less contingencies going forward. If done before, you might lose $250-$400 if you decide not to make an offer, but if you did get an accepted offer on the same property, you wasted both time and money. And your offer will be written WITHOUT an inspection contingency. That’s a HUGE PLUS in traditional sale offers.
You have ostensibly been “shopping” for a home for several months now (a year?) in very established areas all the while prices were ticking up. Don’t let all this interest-rate noise bother you. No one knows if prices will continue to tick up, and, in any case, the effect of higher MIRs all depends on the level of desirability of the micro markets you are shopping in. If you can no longer qualify to buy anything in some or all of your 4 fav markets (above) due to recent MIR hikes, then you need to begin making offers in adjacent areas/cities which you CAN afford OR shop properties with less square feet than you were previously looking at.
Based upon your previous threads and posts here, I just feel that if you were really serious, you could have bought a place by now.
If you continue to keep wishing and hoping prices will come down steeply or come down at all in areas which you are not currently qualified to buy in … or only marginally qualified to buy in where you have to compete with better-qualified buyers, you will find yourself a perpetual renter, IMHO.
My two cents. And I’m no pollyanna, just a realist. About as “real” as you can get … Based upon your prior posts I just see you being able to buy a place if you really wanted one. That’s a question only you can answer.
July 9, 2013 at 12:51 PM #763417Participant[quote=kev374]yes, but the properties I am seeing are NOT cash flow positive so I am wondering HOW on earth are investors buying them. I am thinking they are just speculating on future price or rent increases that may not pan out. This is quite a big risk.
For instance, the rents in Orange, California for a 2bd, 950sqft condo with garage is around $1400/month. To be competitive this is what you need to expect…no more.
2bd condos with 1000sqft have asking prices north of $250,000 and some are even asking $300,000. Just do the math… $250,000 with 20% down, $200,000 financed at 4.6%, $1025 PI, $210 property taxes, $100 maintenance, $275 HOA = $1610 and that is in a perfect situation, what if the property remains vacant for a few months of the year? And HOAs and property taxes rise with inflation as well.
For investment it does not pan out at current prices.[/quote]
Kev, it matters jack to these investors about “cash flow.” I just spoke to a very local banker this morning and they’ve been opening 10-12 CD’s and MM accounts per day (new $$) for all of 2013 in the middle of a (gasp!) “working class” neighborhood, just like the ones you are shopping in. Why?? Because they’re offering a 1% to 1.1% annual interest rate on $50K + deposits.
Dude … ANY reasonably priced property situated in a CA coastal county (read: having a “captive” rental audience) will yield FAR MORE than 1% … and, unlike the stock market lottery, the OWNER has the control of the asset!
There is a LOT of cash chasing yield right now and every day, another few thousand Californians withdraw a matured CD and/or turn 59.5 years old. They’re not necessarily “well-educated,” chasing school scores, or “rich,” but as we all know, money talks and BS walks. And they don’t mind at all investing in that 50+ yo house that you’ve been shunning. You are outnumbered so you shouldn’t waste another minute sitting on your hands trying to overthink your strategy, IMO.
Get out there, kev, and start making offers and keep the Piggs posted on your progress!
July 9, 2013 at 1:24 PM #763419GuestKev, my experience is that once the offer is accepted, before you even enter escrow (which takes a another few days to one week), the agent will show you the house. After you see the house, if you hate it, you can easily back out.
Don’t get hung up on making offers sight unseen.
Me, I only care about structure and location.
I don’t give a crap about cosmetics such as paint, carpet, granite counters.But if you are confident prices will drop and you’re happy renting, then wait.
BG makes a good point about cash offers and yield.
July 9, 2013 at 1:38 PM #763420Participant[quote=kev374]yes, but the properties I am seeing are NOT cash flow positive so I am wondering HOW on earth are investors buying them. I am thinking they are just speculating on future price or rent increases that may not pan out. This is quite a big risk.
For instance, the rents in Orange, California for a 2bd, 950sqft condo with garage is around $1400/month. To be competitive this is what you need to expect…no more.
2bd condos with 1000sqft have asking prices north of $250,000 and some are even asking $300,000. Just do the math… $250,000 with 20% down, $200,000 financed at 4.6%, $1025 PI, $210 property taxes, $100 maintenance, $275 HOA = $1610 and that is in a perfect situation, what if the property remains vacant for a few months of the year? And HOAs and property taxes rise with inflation as well.
For investment it does not pan out at current prices.[/quote]Kev, You are way too logical about this. I TOTALLY agree with you by the way…. BUT, you need to accept reality and that what something is selling for does not mean that it is ‘worth’ it.
Houses, shoes, meals, etc, etc.
BUT if you want to buy one, the price is the price, and if you aren’t going to buy it, perhaps someone else will. It doesn’t make them any smarter, richer, nicer or better looking than you.Without low down payments & low interest rates (backed by govt subsidies) prices would be nowhere near where they are today.
The value of a commercial building is based on its income/cash flow/cap rate. Someone might be foolish to buy a bldg with a 1% or 2% cap rate, and if they have the cash they could if they wanted to, but they might have a hard time getting financing. It’s based on reasonable rental income & expenses.
If the same metrics were applied to residential housing, values(& prices) would be considerably lower in many areas and higher in some others.Most people DO NOT know the value of a house in dollars, (it has a different value to them) but most know the price.
If you want a good ROI, look out of state. Lots of different areas to consider. Get a property manager & some cash flow & depreciation. When you travel to check on your investment you can write off the trip. *consult your tax advisor for details 😉 -
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