jg, I am not a real estate investor, and am only learning about real estate from the realtors I met doing my research the last few months. In my opinion, you would buy a rental property when it is cash flow positive, but if that condition is met and prices are still falling, I would definitely wait. I am going to buy a home and/or rental property after the prices stop falling, which ought to take at least 5 years. The biggest drops are yet to come…. I expect the largest drops in 2008 and 2009. Poway lost 5% – 10% this year, it will lose 8 – 15% next year, and 12 – 25% in each of the next 3 years. That is just a wild guess, I have no data to back it up.
For advice on buying rental property, we ought to start a thread, and ask the landlords and realtors on this forum.
Calculated Risk has data, which I posted recently, about the percentage drop in CA in the last downturn; the biggest drops came in years 3-5, an dit was in the double digits in each of those years. We are in year 1.
What does Robert Campbell teach about timing the market? I know Chris Johnston speaks highly of him, so he must be a great resource.
PS, I agree that the biggest drops are yet to come. I agree that it will take a number of years for things to reach the bottom.
My father-in-law bought commercial San Diego properties in the early 80s, and still holds them. His counsel to me is 8X annual rent.
Robert Campbell, in his book, teaches folks to monitor 12 month moving averages of (1) existing home sales, (2) new home building permits, (3) notices of default, (4) foreclosure sales, and (5) 30 year mortgage interest rates. When the 12 month moving averages reach the right level, it’s time to (1) sell or (2) buy. The neat thing is that in his book he uses San Diego data.
Where do you buy his book? Does his book include data going back a couple cycles, to prove his method predicts changes in the real estate cycle?
Why does he use a 12 month moving average, instead of ” percent change compared to last year”, like Joseph Ellis does in Ahead of the Curve? A 1-year moving average takes out the seasonal fluctuation, but he could achieve the same result without sacricing recent trends, by using “% change vs. last year”.
NODs and foreclosure sales, like the median price are lagging indicators. Why and how does he use them?
What is the “right level” for moving average? He looks for a certain number, or a reversal of trend?
From what I’ve read here, it sounds interesting enough that I would study his book. Then I can compare my methods, which I’m going to chart soon, to his.
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