Home › Forums › Financial Markets/Economics › What’s next for global/local RE?
- This topic has 17 replies, 10 voices, and was last updated 7 years, 6 months ago by FlyerInHi.
October 26, 2015 at 10:05 PM #21751October 26, 2015 at 10:39 PM #790696spdrunParticipant
Good. Another crisis just means it’ll be a good time to buy.October 27, 2015 at 5:53 AM #790700
I would not want to own a strip mall.October 27, 2015 at 7:02 AM #790701XBoxBoyParticipant
[quote=phaster]personally I’ve been thinking things are not sustainable for a while and wonder how things are ever going back to “normal” and with the “smart money” sale reported in the WSJ and the YouTube interview of things changing in the neighborhood market, I have to wonder how things are going to play out….[/quote]
Phaster, share your doubts about the sustainability of today’s market. I have no real answers to how things play out, but clearly if interest rates start to rise things get ugly. But like most people, I doubt interest rates rise that much. If they do, housing starts to slow, the economy follows, and the fed lowers rates in response, maybe even more QE.
It will be real interesting to see Rich’s data in the next couple of months to see if real estate does slow or not.
XboxBoyOctober 27, 2015 at 9:15 AM #790705JazzmanParticipant
If buyers are becoming more savvy it’s about time, but I don’t think that in itself will effect prices much. I’d watch price reductions and if they comprise over 25% of listings, a buyers market may be emerging. Institutional investors probably need more evidence that the market has reached a peak and is about to turn. The risk they face for getting the timing wrong is a long term sentence in ‘cash’ jail. But once they do move it will signal a downturn. I still see quite a lot of investor activity in some areas. If the last few years are anything to go by, inventory is unlikely to increase significantly without some trigger, and for interest rates it’s the same story. I think the more likely scenario is that a combination of factors such a recession, small interest rate hikes, and perhaps a slowing China would trigger wholesale sell-offs and start a panic in residential RE. If we get a bigger correction than we’ve had recently in stocks, and bonds provide better fixed income alternatives, that might tempt some to switch out of RE. It’s very hard to see further than a few months down the road, but there certainly appears to be no shortage of wishful thinking in both directions. The collective will, however, is (naturally) stacked in favor of higher prices. So I see a recession as the biggest, surest threat and history shows they are an historical inevitability every six years or so.October 27, 2015 at 12:54 PM #790708raty4RParticipant
Funny – Starwood Capital Group was also in today’s Dallas news.
“Thousands of North Texas apartment renters will soon be getting a new landlord thanks to a $1.9 billion apartment deal.
Connecticut-based Starwood Capital Group and Milestone Apartment Real Estate Investment Trust are buying the properties from Landmark Apartment Trust in a transaction expected to close early next year.”
Maybe they know something we don’t…
http://bizbeatblog.dallasnews.com/2015/10/thousands-of-north-texas-apartments-selling-in-1-9-billion-deal.html/November 8, 2015 at 2:47 PM #791104phasterParticipant
[quote=Jazzman]If buyers are becoming more savvy it’s about time, but I don’t think that in itself will effect prices much. I’d watch price reductions and if they comprise over 25% of listings, a buyers market may be emerging. Institutional investors probably need more evidence that the market has reached a peak and is about to turn. The risk they face for getting the timing wrong is a long term sentence in ‘cash’ jail. But once they do move it will signal a downturn. I still see quite a lot of investor activity in some areas. If the last few years are anything to go by, inventory is unlikely to increase significantly without some trigger, and for interest rates it’s the same story. I think the more likely scenario is that a combination of factors such a recession, small interest rate hikes, and perhaps a slowing China would trigger wholesale sell-offs and start a panic in residential RE. If we get a bigger correction than we’ve had recently in stocks, and bonds provide better fixed income alternatives, that might tempt some to switch out of RE. It’s very hard to see further than a few months down the road, but there certainly appears to be no shortage of wishful thinking in both directions. The collective will, however, is (naturally) stacked in favor of higher prices. So I see a recession as the biggest, surest threat and history shows they are an historical inevitability every six years or so.[/quote]
I personally was surprised by the dramatic upturn in the economy after 2008 (for the “have’s” who had investments in stuff like RE and stocks)
my own thinking at the time was investments in RE and stocks were going to be flat and/or dip
I underestimated the affect that Fed and central banks around the would have by creating more “credit” money which was given to the banks (which mostly kept the “credit” money on their individual balance sheets), but did make loans to individuals/corporations with high credit ratings, who in turn borrowed money to bid up the value of credit worthy investment vehicles like certain bits of RE and stock
god bless soul-less capitalism
how this all plays out in the years ahead is going to be interesting given: growing global populations, an aging work force in the USA (who were promised stuff like social security and public employee pensions), global climate change (with droughts in areas like Calif), etc….
perhaps another???November 9, 2015 at 7:16 AM #791109
Move to a less interesting place,
Most of the US cities have NOT recovered from the RE slump and are still somewhat a bargain.
I was listening to NPR about some Syrian refugees who were relocated and giving housing and Jobs in Indiana (or someplace I forgot the exact local), but they were really Mad because they wanted to be relocated to California.
A large part of the reason SoCal RE is so expensive is due to overzealous zoning.November 9, 2015 at 8:08 AM #791110spdrunParticipant
Sooner live in the NJ burbs outside of NYC — still haven’t recovered either. Moving to Texas means that you have to live in fucking Texas.
I’m not surprised that the Syrians are angry about being stuck in Hayseed, Indiana. There are a few states with large Middle Eastern populations. NY, NJ, MI, IL(?), CA, and TX. Indiana ain’t one of ’em. Living as a recent immigrant with no support network plainly sucks.November 9, 2015 at 9:16 AM #791111
OK see your point on that, sure why not try NJ,
The point is a lot of people like to complain about the high cost of housing in CA, but few think of maybe relocating.
The issue is were not building enough to keep up with our growth (in SoCal) mainly due to zoning rules and worker shortages (even though our unemployment numbers are still fairly high).November 9, 2015 at 12:49 PM #791113FlyerInHiGuest
Vegas. It’s cool, sunny and breezy today. Perfect weather. Great for retirement.
Here, BLM auctions off land as growth occurs so there the suburbs can sprawl on forever.
I agree with shoveler that lack of building is causing price spikes. Long term that’s really bad for the economy.
American urban planning is just so boring…
Look at this gorgeous building. We should have stuff like this in California. Build up to provide housing to our growing population. We should be a the forefront of innovation.
http://www.cnn.com/2015/11/06/architecture/waf-world-architecture-festival-2015/index.htmlNovember 9, 2015 at 4:21 PM #791114flyerParticipant
Imo, places like CA will continue to be very expensive for many reasons, so people will simply have to decide if they can afford to live here or not.
In the age of “entitlement” it’s interesting that some people feel that things like particular jobs or housing, or–you name it–should be theirs for the asking.
I’ve seen this happen with friends–especially in my kids age group. In the
end–after college, many have had to leave for job opportunities/financial reasons–in the hope that they might get back someday.
It was that, or sit in their parents home waiting for the “perfect job” to come their way, and waste those very expensive degrees.November 11, 2015 at 5:34 PM #791207phasterParticipant
another interesting news bit is:
Homebuyers are hitting record credit scores
New mortgages for purchasing homes are churning out at a fast clip, with the borrowers getting those loans having some of the highest credit scores ever. Because credit is favoring a smaller segment of borrowers, the result is that loan performance is arguably the best in history.
Purchase mortgage originations in the second quarter of this year were up 15 percent from a year ago, according to Black Knight Financial Services. June, the height of the spring sales season, saw the largest purchase loan volume since 2007, due to a high volume of sales.
As cash-heavy investors move out, mortgage-dependent borrowers are moving in. Cash sales made up about 30 percent of total home sales in July, the latest reading, down from 34 percent in July 2014. It is at the lowest level in nine years.
High-credit borrowers, those with FICO scores above 700, are almost entirely behind the surge in purchase applications. Activity among borrowers with lower scores is flat to slightly lower from a year ago, according to Black Knight. In fact, just 20 percent of purchase originations over the past three months have come from borrowers with credit scores below 700, the lowest level in more than a decade. This as the average credit score for purchase mortgages hit a record high of about 755. The median credit score in the U.S. is about 720 according to FICO, and the average score is 695.
to me this news report is akin to what happens in stellar nucleosynthesis, or fusion of lighter elements into heavier ones (a star like our sun first fuses hydrogen into helium, and so on down the line till elements can fuse no-longer when things get to “lead”)
so in other words, those high up on the economic food chain have had their go by bidding up global equities and global RE, BUT it seems these investment vehicles are leveling off is price appreciation, so now it those below just below the 1% (who want to play the game) are finding out it in order to get in on the QE “credit” money scheme, requires historically ever higher creditworthiness!
I am not trying to predict when the next economic down turn will happen, but if the stellar nucleosynthesis model applies to forecasting what will happen to the economy, expect something to pop much sooner than much later and plan accordingly because ever higher creditworthiness (in order to qualify to buy RE) is another symptom telling us the global economy as it now exists is un-sustainable…
also of concern is a news report:
The former U.S. comptroller general says the real U.S. debt is closer to about $65 trillion than the oft-cited figure of $18 trillion.
Dave Walker, who headed the Government Accountability Office (GAO) under Presidents Bill Clinton and George W. Bush, said when you add up all of the nation’s unfunded liabilities, the national debt is more than three times the number generally advertised.
“If you end up adding to that $18.5 trillion the unfunded civilian and military pensions and retiree healthcare, the additional underfunding for Social Security, the additional underfunding for Medicare, various commitments and contingencies that the federal government has, the real number is about $65 trillion rather than $18 trillion, and it’s growing automatically absent reforms,”
Americans have “lost touch with reality” when it comes to spending.November 11, 2015 at 7:10 PM #791209BalboaParticipant
“High-credit borrowers, those with FICO scores above 700, are almost entirely behind the surge in purchase applications.”
“… to get in on the QE “credit” money scheme, requires historically ever higher creditworthiness!”
The article doesn’t provide the rate at which banks are rejecting sub-700 applicants — I think sellers may be doing some of the the rejecting for them. Lots of “buyer to cross-qualify” in the areas we are looking in. Even if a lower tier score passes the cross-qualification, sellers could be inclined to go with the higher FICO, all other things being equal. Fewer accepted offers made by lower credit-tier bidders would lead to fewer originations with those scores.
I’d also bet a high number of people in the lower tiers are self-selecting out of the buying market.November 11, 2015 at 8:18 PM #791211kev374Participant
I don’t give a flying F, tired of this nonsense. Staying out of real estate completely. Will continue to rent, works for me. Buying makes no sense whatsoever…it’s a game of musical chairs and I don’t want to be the one without a chair when the music stops.
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