QE3 Away!: (EDIT: Now on the special unlimited nights and weekend spending plan)…

[bearishgurl]

[quote=CA renter]Call me crazy, BG, but I’d say that when interest rates are at their lowest point, it is time to SELL if you ever intend to sell/move.

Don’t project the price trends over the past ~50 years to continue. Asset owners have had the effects of baby boomers entering their peak purchasing years (they are going to be entering their peak selling years now), and continuously lower interest rates over the past ~30 years. I think there is a definite danger of a prolonged period of asset price declines if interest rates ever get away from the Fed, or even if they start rising in a “controlled” fashion.

I think this is a dangerous trap that many are getting into. Just my 2 cents…[/quote]

I understand your logic, CAR … however, if my mortgage interest rate happened to go thru the roof (>7.5%), I could retire the balance upon retirement. This would take at least two years, even if it began to rise today (due to my 2% annual cap).

Being a “soon-to-be `retiree'” ~2 years from now, I have a lot to think about.

I cannot qualify for a mortgage in the traditional way and I’m sure I’m not alone among my brethren in this regard. Even though I have GREAT credit, I would HAVE to go limited or no-doc in order take out even a small (~150K or so) mortgage. Not sure if the very favorable rates, terms and closing costs actually exist anymore on these types of programs.

If I sold and bought a “retirement home” in a same cost or lower cost area as ChulaV, I would likely have to pay cash.

I want to try out 1-2 (mountainous?) places that have four seasons for perhaps 1+ year each before I make a final decision to leave permanently. If I decided on one of these places, I’d like to buy a one-story log cabin with a deck. I have to see if I can hack dry cold air for the long haul and if living there will exacerbate my (minor) joint problems.

I’m currently paying <$1200 mo P&I for a 2200 sf SFR with a large yard. I'm afraid if I sell too soon, I won't be able to get back to SD County if I want to without buying something far inferior to what I have. I've seen this happen to too many "retirees" who thought the "grass was greener" elsewhere but didn't actually try it out first. And no ... a week in a motor lodge or timeshare doesn't qualify as "trying the place out." I still like Fleetridge/Roseville (92106) for "retirement" but I now believe I would need to buy a fixer over there with a co-buyer. Even if I could manage to purchase on my own over there, I couldn't manage the annual taxes or rehab/repair by myself. I just feel like SD County is built out and the Big Development party is over. If it begins to substantially grow again, even due to immigration (due to its coastal location and the best weather in the country), its RE prices will rise everywhere and inventory for the best homes in the best locales will remain very tight. The presence or lack of "professional" jobs in the older established communities of SD County really has nothing to do with how fast or for how much a property there will sell. There are too many buyers with cash coming from everywhere and too many people who want to retire here from more expensive locales (ex: LA/SF Bay area). I'm not so bullish on lizardland. The saleability and prices in those areas are dependent on many factors which it's buyers and owners can't control, since most are younger (growing?) families who depend on 1-3 steady W-2 income(s) to pay the monthly bills. These factors (among others) render these homeowners vulnerable to having to make quick decisions regarding disposition of their property (w/o regard to current mkt conditions) and having insufficient income down the road, no matter what their income was at the time of their purchase-money mortgage qualification. In other words, I've seen families with $250K+ annual income spiral into prolonged unemployment and watched their UI run out. This is just my .02.

[bearishgurl]

livinincali, Gen Y (the current and upcoming new homeowner generation) is populous as well, just like the boomers. I see them buying in droves, but they need so much more income to qualify for a mortgage than we did (I’m a “boomer”). HOWEVER, they have FAR more selection (in some locales) to choose from than we did.

Over the last year, I’ve read in several online articles and realty publications that Gen Y doesn’t want to commute to work. The majority of them prefer a convenient location over size and “newness.”

If this is actually true, it doesn’t bode too well for homeowners in lizardland. Retiring boomers relocating to SD with cash have no interest in lizardland. For example, they’re moving to Coronado or Pt Loma (to be near their boat which they’ve had slipped here for a decade-plus).

I don’t think the boom and bust cycles of Cali were affected solely by boomer behavior. I think they were affected primarily by monetary policy and cities and counties decisions to allow in Big Development.

[an]

[quote=bearishgurl]Over the last year, I’ve read in several online articles and realty publications that Gen Y doesn’t want to commute to work. The majority of them prefer a convenient location over size and “newness.”

If this is actually true, it doesn’t bode too well for homeowners in lizardland.[/quote]
This doesn’t make any sense to me. If the Gen Y doesn’t like to commute, wouldn’t that bode well for homeowners in lizardland? After all, you can look at traffic patter to see where the jobs are.

[paramount]

I’m certainly not an expert on QE, but this so-called QE3 seems more like a banker bailout than anything else since the feds are buying mortgages from the banksters as I understand.

[CA renter]

BG,

Why not rent in one of those retirement locations while renting out your current house? It sounds like you should be able to cover your PITI costs with rent, no? That way, you won’t have to make any hard decisions without knowing very well what you’re dealing with.

The “sell when rates are low” suggestion is made because I believe prices will be negatively affected by rising interest rates. The reason we’re seeing so many cash buyers now is because nothing else will give them a better return on their money. Everybody is crowding into RE which tells me it’s a better time to sell than buy (though prices could admittedly be run up for quite a while, just like any bubble).

[paramount]

[quote=CA renter]Everybody is crowding into RE which tells me it’s a better time to sell than buy (though prices could admittedly be run up for quite a while, just like any bubble).[/quote]

In other words Bernanke is trying to re-inflate the housing bubble….?

[CA renter]

Bernanke is trying to reinflate the credit/asset price bubble. He’s been quite successful, too.

[spdrun]

I don’t see that much “crowding”, except in places where supply has been artificially restricted. Also, unlike stocks, prices are driven by assessments, which change slowly.

Buy if the numbers make sense — if mortgage payments (i.e. principal + interest) are say 5,5% or 6% of the property value, you can lock a rate for 30 years, and the cash cap rate is 7%+, then by all means… If cash cap rate is 4% and you’re not paying cash, then forget it.

[Jazzman]

[quote=SD Realtor]Agreed FLU… I almost feel compelled to buy something just because the money is so damn cheap. Looking at another 4plex this weekend out of state.[/quote]
Out of state? Why, I thought CA was the place to buy. Just yankin’ ya chain 🙂

Begging your pardon sir, I mistook you for your lower case name’s sake.

[bearishgurl]

[quote=CA renter]BG,

Why not rent in one of those retirement locations while renting out your current house? It sounds like you should be able to cover your PITI costs with rent, no? That way, you won’t have to make any hard decisions without knowing very well what you’re dealing with.

The “sell when rates are low” suggestion is made because I believe prices will be negatively affected by rising interest rates. The reason we’re seeing so many cash buyers now is because nothing else will give them a better return on their money. Everybody is crowding into RE which tells me it’s a better time to sell than buy (though prices could admittedly be run up for quite a while, just like any bubble).[/quote]

Yes, CAR, I could easily get a 1-2 yr lease on my place and take off when the time comes 🙂

Likewise , I could also sign at least a six-month lease in my retirement places of choices to try them out and see if I will like them AND they will like me :=0 And even move around from one to another!

My PITI is just over $1500 and I could likely get at least $1900 rent from a qualified long-term tenant. So its a positive cash flow as long as my tenant is vetted properly and I get at least a one-year lease.

In my case, I would prefer keeping the rent at ~$1900 and getting a signed 1-2 yr lease.

[CA renter]

[quote=bearishgurl]Yes, CAR, I could easily get a 1-2 yr lease on my place and take off when the time comes 🙂

Likewise , I could also sign at least a six-month lease in my retirement places of choices to try them out and see if I will like them AND they will like me :=0 And even move around from one to another!

My PITI is just over $1500 and I could likely get at least $1900 rent from a qualified long-term tenant. So its a positive cash flow as long as my tenant is vetted properly and I get at least a one-year lease.

In my case, I would prefer keeping the rent at ~$1900 and getting a signed 1-2 yr lease.[/quote]

Sounds like a good plan, BG. 🙂

[CA renter]

[quote=spdrun]I don’t see that much “crowding”, except in places where supply has been artificially restricted. Also, unlike stocks, prices are driven by assessments, which change slowly.

Buy if the numbers make sense — if mortgage payments (i.e. principal + interest) are say 5,5% or 6% of the property value, you can lock a rate for 30 years, and the cash cap rate is 7%+, then by all means… If cash cap rate is 4% and you’re not paying cash, then forget it.[/quote]

Hearing stories from all across the country about multiple bids, over-bidding, etc. It’s not just in California or other “high demand” places. In some cases, we’re talking about very small towns in fly-over states. LOTS of investors crowding into RE.

This is from 2011, and it’s only gotten worse since then from what I’m hearing.

http://online.wsj.com/article/SB10001424052748704570104576124502975117950.html

———-

From 2012:

“The power of cash

First-time buyers are running into tough opponents in cash buyers. They accounted for almost a third of existing home sales in March and April, the National Association of Realtors says. Before the housing crash, cash buyers accounted for less than 10% of sales, NAR says.”

http://www.usatoday.com/money/economy/housing/story/2012-06-19/homes-for-sale-chart/55691072/1

Way too many “investors” chasing returns. Big red flags waving all around…this is a bubble (IMHO). The only question is what stage we are in. We will probably see this continue to inflate until interest rates get away from the Fed or some other “unexpected” shock comes our way.

Just my 2 cents.

[spdrun]

CA Renter: I’ll believe it’s R.E. Bubble 2.0 when people are buying for monthly payments that exceed rents for the same property. Right now, it’s just investors chasing dividends and making money off the backs of the bum-losers who got themselves foreclosed on.

[CA renter]

[quote=spdrun]CA Renter: I’ll believe it’s R.E. Bubble 2.0 when people are buying for monthly payments that exceed rents for the same property. Right now, it’s just investors chasing dividends and making money off the backs of the bum-losers who got themselves foreclosed on.[/quote]

What do you think will happen when rates rise? If wages don’t rise, the payments will rise beyond what people can afford (and many people can’t even afford what they’re paying now). Since rates are at such historic lows, it won’t take much to push monthly payments beyond what most of today’s (financed) buyers will be able to afford. Just going back to “normal” rates of 6-7% will make today’s prices totally unaffordable to those who are paying 30%+ of their monthly *gross* income on housing payments.

Not only that, but a 5% return on rentals won’t look so good if an investor can buy Treasuries paying 4%++ without all the hassles and expenses of managing a rental. All those cash-rich “investors” will flee the market if interest rates ever normalize, IMHO.

[paramount]

Does anyone know if Operation Twist is still operating?

[Author]

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