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no_such_reality
Participant>>My wife tells me I do way to much work for free and in most cases I agree with her. My sister in law who works for Coldwell also says the same thing…<< No offense, but with median home price above $500,000. For a 6% commission $30,000. A lot of work should be done. Yes I realize the agent has to split it and the firms take the majority, but still, an expected commission is $30,000 for most Americans, that represents a year's worth of work.
ParticipantNot sure about long term, I know since 1971, the rates were significantly higher. Most of the 70s where low ~7.25% to 9%, then inflation and the oil embargo hit and rates went through the roof (can you say 18% in ’81) that was supply side inflation. Supply side inflation just like oil and gas price increases today. From 18% in 1981, it trickled down over the next seven years back to 10 percent. Spent most of the 90s in mid-high 8s. +/- 1%
see freddie mac. http://www.freddiemac.com/pmms/pmms30.htm
ParticipantTo rain on your parade for a minute, but with $200K liquid, IMHO, you don’t really have the money to be looking at large scale apartment investments in remote cities. For small scale, it’s in tune with the housing market.
Also, if you don’t have rental property investment experience, your first one being in a remote city pretty much makes it a suicide run.
ParticipantSadly Powayseller, foreclosures is what the housing market needs to correct the price imbalance. It’ll tighten the credit situation and that really has been the driver on overinflated housing prices.
In the next few years, don’t be surprise if that $650,000 house you’re looking at is $450,000 and you can still barely afford it. If mortgage rates head back to 8% range, the payment will still be in the $3000/month range.
That’s a drastic scenario, a 30% drop and rising rates, but they’ll fuel each other. At the same time, if rates climb towards 8% and pricing doesn’t drop significantly, affordability, which is already extremely low, falls further and the volume dries up and you become trapped in your home.
It’s a double whammy, flat or falling prices breaks the incentive to buy and rising interest rates break affordability for those that are still willing to buy,
When the foreclosures start and the lending tightens up, how many people are going to be coming up with $120,000 down? or even $60,000, plus closing cost, points, etc. to be able to do a 80/10/10. Let alone swing the payments on the first and the second.
ParticipantMost sellers are in denial. Sadly, so are their agents. Many of the agents are as clueless as many of the investor’s you see the house flipping shows on Tv. They’re just chasing easy money during the boom.
I spend most of my time in OC, and it’s pathetic to see people think they’re going to get $1.3 million for a home when their kid’s bedroom has extensive chew marks from the gerbil on the door frame and the whole house needs paint and new floors while the house down the street (same sub-division) is immaculate, same size, better floor plan and priced at $999,999.
What’s worse, 80% of the homes for sale seem to be in this kind of denial. They’re looking at the annual flat or slight appreciation and thinking they need to get out, but what they haven’t been watching is the homes that are moving, are clean, fixed, move in model ready and priced below where they were a year ago, the median sale has moved up, but housing hasn’t appreciated.
ParticipantThey don’t refi because they can’t. Many of the exotics and i-onlys are already at or near 100% on loan to value. Other lenders look at the situation and see bad risk.
Keep in mind that in 2005, teaser ARMs and exotics accounted for 2/3rds of the new mortgages. Those people don’t have 15-20% equity and are severely exposed.
Contrast that with the national average of about 25% and you can see why the SoCal market is going to act differently than the national market on the downside, just like it did on the upside.
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