No taper

[spdrun]

For example, demand for housing is increasing now so you see boulders getting back to work, even in hard hit markets like Las Vegas. More construction will lead to a better economic outlook.

More construction while distressed properties sit vacant (LV’s vacancy rate for rentals is 14-15%, apparently) or in bank limbo is retardedly stupid. Not to mention extremely environmentally wasteful.

Especially in a place with a horrid climate where no sane human would want to live, other than because of certain historical legal differences between Nevada and the rest of the country (which are shrinking by the day).

Overbuilding was one of the causes of the 2008 collapse, and is not the solution. As a friend from Phoenix said half-jokingly, the major industry of Phoenix before 2008 was expanding itself.

[FlyerInHi]

Sod, the Fed is acting based on what they know for sure today vs what could happen in the future. In that context they are deciding wisely

I personally believe that inflation will be contained thanks to “the rise of the rest” and all the unused capacity.

I see a lot of energy saving technology, and energy sources that will put a lid on energy prices.

Perhaps food prices will rise but that’s not bad for our waist lines and still well within historical share of income.

[SK in CV]

[quote=spdrun]
Overbuilding was one of the causes of the 2008 collapse, and is not the solution. As a friend from Phoenix said half-jokingly, the major industry of Phoenix before 2008 was expanding itself.[/quote]

He’s certainly right on that, it’s no joke. Growth was the largest industry. And it might be again. I’ve been living in Phoenix for a little over 2 years, and while it’s certainly not San Diego, it is a whole lot better than Minneapolis where my girlfriend grew up. Or Orlando where she lives half-time now. Even though you may not want to live here, an awful lot of people do.

And builders are building again. A lot. And the market is absorbing what they’re building, and the distressed inventory on the market has shrunk to less than 20%. (It was over 50% a little over a year ago.) And that’s after large investors have pretty much exited the market as buyers.

[spdrun]

Perhaps food prices will rise but that’s not bad for our waist lines and still well within historical share of income.

Wrong. Cheap food is actually more likely to cause obesity — witness the fact that more of the poor are obese than the wealthy. Higher food prices will just mean that people are pushed towards less healthy/cheaper food choices.

[spdrun]

And builders are building again. A lot. And the market is absorbing what they’re building, and the distressed inventory on the market has shrunk to less than 20%. (It was over 50% a little over a year ago.) And that’s after large investors have pretty much exited the market as buyers.

Apparently, Phoenix’s rental vacancy rate is close on 20%, so the vacant foreclosures were just replaced with vacant rentals. How is it efficient to be building outward when a lot of housing closer to job centers sits vacant?

[FlyerInHi]

Spd, you’re a little too stubborn for your own good. You’re missing opportunities.

Vegas and Phoenix were the 2 highest appreciating markets for the last 2 years. And yes, they are building, not negotiating and selling. Deliveries on new houses are 6 months out and people are buying. You could have made an easy $100k by investing in either those 2 markets.

As SK said, you might not want to live there but plenty do. Huge growing Hispanic population too.

San Diego is supposed to add 1 million residents in the next 20 years. I expect Vegas and Phoenix to do double whatever San Diego does. I’m bullish on big cities that have affordable housing such as Dallas, Houston, Phoenix, Las Vegas.

San Diego is cool for the upper middle and above. But not great for young working families.

[spdrun]

FlyerinHI, I have no desire to ever spend an extended amount of time in either Vegas or Phoenix. I do not handle heat well and I dislike both of those so-called “cities” intensely. Jury is still out on Texas; I haven’t been there enough. Maybe also Tucson.

And why bother when there are FNMA foreclosures in NJ/PA (including near a nice college town where I went to school) that rent at 8-10% cap in acceptable areas?

Also still 1/1 condos that do 7-8% cap in San Diego, and rent very quickly to single people or students.

To be clear, the ONLY way Phoenix would interest me would be if an especially good deal came along that I could flip for 1.25-1.5x purchase price with minimal work. I could deal with spending a month in Hell if it netted me a quick return and I didn’t have to deal with coming back to rent the thing and deal /w tenant issues.

NYC vacancy rate: under 2%
SD vacancy rate: 5%
Vacancy rate in areas of NJ/PA where I’m looking: 5-10%
Vegas vacancy rate: 13%
Phoenix vacancy rate: 20%

More vacancy means more chance of finding tenants who are “jumpers” — exploit the property for all it’s worth for the 3 months it takes to evict, then move on to the next sucker landlord.

[SK in CV]

[quote=spdrun]
Apparently, Phoenix’s rental vacancy rate is close on 20%, so the vacant foreclosures were just replaced with vacant rentals. How is it efficient to be building outward when a lot of housing closer to job centers sits vacant?[/quote]

It’s funny, because I’ve heard the same things. A lot of the building is NOT a log way from job centers. A developer out of Chicago just finished the first building in this development:

http://www.optimaweb.com/Homes/SonoranVillage/

They recently sold out another development just a few blocks away with probably more than 1,000 units in like 13 buildings. The development in the link is currently all rentals, the 1st building is complete, with 4 more to go. First building went from breaking ground to occupancy in less than 15 months. In less than 3 months on the market, it was 60% leased and more than 50% occupied. I viewed the units about a month ago. I thought rents were very high, more than $2,000 for under 1000 sq ft units. They haven’t announced yet whether the 2nd building (currently under construction) will be sold or leased. There are at least 3 other large condo developments that I’m aware of along the E. Camelback corridor.

I strongly suspect the high vacancy is on the much lower priced west side of the valley. In my more than 2 years here, I’ve never been to the west side.

[spdrun]

^^^

Boutique developments like that are unusual, even if there are a few going up in a given area, and have a limited market. You and I both know that they’re not the norm for new construction in Phoenix or Vegas.

[earlyretirement]

[quote=FlyerInHi]If you are smart, you can do well regardless.

Remember that other people doing shitty doesn’t make you do better.

.[/quote]

Wise words. I really enjoy your posts FlyerinHI. I’m a bit late to this thread but I think the key take away is that there are so many people that I hear almost wish for another financial collapse. This is just foolish to me.

All perhaps in the likelihood that ‘this time’ they will try to take advantage and make money. People do NOT realize how disastrous things could have turned out for us. Most people don’t truly understand how dire of a situation we were in.

To wish in ANY way, shape or form to anything close to that is reckless, IMHO.

I’m NO fan of endless printing of money. It typically never ends well over the long run for ANY country. I’ve lived abroad in countries where governments have printed endless amounts of money. Trust me, it doesn’t end well.

Still, I’m also of the opinion of “Do NOT fight the Fed”. No amount of complaining is going to change things. The way I look at it is that it is what it is. I have investor clients that started shorting the market against earlier this year and just gotten killed. You can’t fight the fed.

As FlyinHI mentioned, there are ways to do well regardless if you are smart. Things go up and things go down.

The only thing you can do is prepare for a possible scenario where things don’t end well with all of this printing of money. Eliminate ALL debt, build up assets, have a paid off place and preferably have another place or places that you own that generate cash flow.

In the ideal situation, you own another property abroad and even have dual citizenship or establish permanent residency in a second place. I don’t think it will come down to a situation where people need to worry about this but part of my game plan was thinking of a worst case scenario situation.

The USA is and probably always will be the greatest country in the world. I have more of an appreciation for it having lived abroad so many years and seeing first hand that our way of life, safety, efficiency, banking system is the best!

The situation with the Fed is what it is. No amount of complaining will help so people just need to take steps to do what they can to make the best returns they can without too much risk.

[SK in CV]

[quote=spdrun]^^^

Boutique developments like that are unusual, even if there are a few going up in a given area, and have a limited market. You and I both know that they’re not the norm for new construction in Phoenix or Vegas.[/quote]

I don’t know much about Vegas, haven’t been there in more than 30 years. It’s maybe not the norm, but it’s not unusual for Phoenix, at least in the NE quadrant of the valley. They’re being built and being leased/sold. And they are in direct competition to whatever you think is the norm. Snowbirds prefer these kinds of buildings, and snowbirds are buying again, big time.

[kev374]

I agree that we are re-inflating an even bigger bubble and the next bubble is going to be much more severe than the last one…perhaps leading to a Greece style crisis.

Well, nobody cares, times are good now so enjoy. My guess is that the good times will continue 4 or 5 more years.

If you are smart you will cash in your home at just the right time and walk away a rich man. Most don’t have that foresight however blinded by their greed they will be certain that their homes are going to reach a zenith so high that above it will only be outer space.

[flyer]

Along with San Diego, and a couple of other locations, we’ve been investing in AZ for quite a few years. It has been amazing to see the seemingly endless growth in the PHX area–especially the East Valley–Chandler, and Ocotillo–as many of you have mentioned. We have a place in Scottsdale, and enjoy it very much during “the season.”

[FlyerInHi]

ER, you are quite right about money printing in other countries. The difference is that foreign countries that endured financial crisis in the past borrowed in US Dollars and had to repay in US Dollars, not their own currencies.

[FlyerInHi]

This is pretty good analysis of the latest Fed action
http://charlierose.com/watch/60269186

The commentator from the financial times is a little disingenuous when saying that the Federal Reserve lost credibility. The truth is that policy makers will always project more optimism so as not to talk down the markets.

I believe Bernanke is just responding the disfunction in Congress. What we should be surprised about is the business community has not lobbied congress more strongly to resolve the fiscal gridlock. Without the sequester we could have had 3% growth instead of 2%. And with good fiscal policies, we could have had 4% growth.

[Author]

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