Financial trend of current home buyers in SD

[SD Realtor]

Hi Rus –

Good idea or bad? Don’t know. By my estimate the place could easily use 50-75k to get into the respectable range which will take at least 8-10 weeks FULL TIME powering work. Also the back yard is TINY and the home is on a funky lot but it is in a cul-de-sac. I think the guy can turn a profit even in this crappy market for what he is getting it for. No it will not pencil out as a rental at 100% financing. Not even close.

Realtor

[SD Realtor]

Hi Rus –

Good idea or bad? Don’t know. By my estimate the place could easily use 50-75k to get into the respectable range which will take at least 8-10 weeks FULL TIME powering work. Also the back yard is TINY and the home is on a funky lot but it is in a cul-de-sac. I think the guy can turn a profit even in this crappy market for what he is getting it for. No it will not pencil out as a rental at 100% financing. Not even close.

Realtor

[SD Realtor]

Yes they have tightened the lending standards. Yet I still don’t think that means much these days.

SD Realtor

[SD Realtor]

Yes they have tightened the lending standards. Yet I still don’t think that means much these days.

SD Realtor

[sdrealtor]

I think the thing that the quality of buyers including radelow speaks to is that there are a fair amount of people on the sidelines with plenty of liquid assets. When/if prices drop substantially there will be competition for the better properties/deals. If you plan on getting one, you would be best served to make sure you are a strong buyer (i.e. 20%+ to put down, 700 plus FICO’s etc.).

[sdrealtor]

I think the thing that the quality of buyers including radelow speaks to is that there are a fair amount of people on the sidelines with plenty of liquid assets. When/if prices drop substantially there will be competition for the better properties/deals. If you plan on getting one, you would be best served to make sure you are a strong buyer (i.e. 20%+ to put down, 700 plus FICO’s etc.).

[NotCranky]

SDR,
My guess is he just shot himself in the foot.Loan costs are going eat him alive. Commission on the way out?I knew that puchase didn’t pencil out,all sweat no equity in lemon grove. There is no safety net at all. I have a client who wants to flip something. Even if he goes fsbo to sell it, which I recommend he try,in the end there just isn’t much I can do for him.I am telling him he has to have a decent rental scenario behind him so he can at least hold ground. Seems wise to scope out properties in summer/fall and buy in DEC./Jan then have it back on the market in Feb/March FSBO,for a flip attempt in a depreciating market.Not that I recommending doing it.

[NotCranky]

SDR,
My guess is he just shot himself in the foot.Loan costs are going eat him alive. Commission on the way out?I knew that puchase didn’t pencil out,all sweat no equity in lemon grove. There is no safety net at all. I have a client who wants to flip something. Even if he goes fsbo to sell it, which I recommend he try,in the end there just isn’t much I can do for him.I am telling him he has to have a decent rental scenario behind him so he can at least hold ground. Seems wise to scope out properties in summer/fall and buy in DEC./Jan then have it back on the market in Feb/March FSBO,for a flip attempt in a depreciating market.Not that I recommending doing it.

[blahblahblah]

That info from the realtors is very telling — basically there are few if any first time homebuyers using savings at all. Almost everyone has cash from a previous sale or another source; and it sounds like many are quite well-to-do. Based on this, I’ll estimate that things are going to deflate really slowly in the nicer neighborhoods. There will always be this sort of buyer that has a lot of cash from prior investments, inheritances, what have you. As they move around, trade up/down, they’ll be losing a little of their nest egg every time as the houses depreciate slightly year to year. There are probably enough of these sort of folks to buy a lot of the inventory in the good areas, but without first time homebuyers entering the market on the lower end, they’re not going to keep rising.

[blahblahblah]

That info from the realtors is very telling — basically there are few if any first time homebuyers using savings at all. Almost everyone has cash from a previous sale or another source; and it sounds like many are quite well-to-do. Based on this, I’ll estimate that things are going to deflate really slowly in the nicer neighborhoods. There will always be this sort of buyer that has a lot of cash from prior investments, inheritances, what have you. As they move around, trade up/down, they’ll be losing a little of their nest egg every time as the houses depreciate slightly year to year. There are probably enough of these sort of folks to buy a lot of the inventory in the good areas, but without first time homebuyers entering the market on the lower end, they’re not going to keep rising.

[sdrealtor]

While you are basing this on very anecdotal information, your interpretation is what I expect also.

[sdrealtor]

While you are basing this on very anecdotal information, your interpretation is what I expect also.

[Author]

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