[PerryChase]

forsale_2007, you make it sound like Asians all live in million dollar homes. There’s some truth to what you’re saying but the people you’re talking about are a small minority. I happen to know some Taiwanese people whose parents bought expensive houses for them so they could go to UC Irvine. The parents would visit twice a year.

But the reality is much different. All you have to do it go to Monterey Park and Chinatown to see how the preponderance of Asians live — not very well.

A Taiwanese friend of mine is a doctor at a hospital in Chinatown, NYC. He tells me that many of the patients are illegals with no health coverage. Many of them have chronic disease but show up at hospital only when their health is so bad that they can’t take it anymore. In New York, poor Chinese are all over Chinatown and Flushing. In California you don’t see the concentration of poor people because we live spread out and far apart from one another.

Foreigners, just like American citizens and Resident Aliens have been buying properties because they saw RE as a good investment. The ones who don’t live here will be the earlier sellers, IMO.

[PerryChase]

I’m going to go out on a limb and make a controversial statement. I believe prices will be at 2000 levels by 2009/2010 and stay there for a couple years before going up slowly at the rate of inflation.

1997-2000 was a big run up already thanks the tech euphoria. Then you had Fed induced liquidity from Y2k; then you hadFed induced liquidity from 9/11; then you had the NINJA loans financed by foreigners and wall-street.

I don’t see anything out there that will save the market. Remember 2000 prices were unaffordable to a great majority of the population already.

100% financing and other exotics have been around a long time and will continue to be available to folks who have good professional jobs and good credit. Those loans will no longer be available to every breathing individual who walks in the door.

People will call me crazy and will want me to offer proof that prices will drop that much. Well, perhaps the more optimistic ones should offer proof that prices won’t drop to 2000 levels.

Others have posted much more pessimistic predictions. I think that mine is pretty fair and balanced.

[PerryChase]

Are you talking about a Real Estate Minute Man type organization?

[PerryChase]

I agree that immigrants who work and earn their money in America are NOT foreign money. They are part of the local economy. It’s wonderful that they are earning the wages that allow them to buy in this overpriced market.

The immigrants of today are of different races than the immigrants of 100 years ago but they have the same ethics that built this country. They are not afraid of hardship and they share costs and savings with their extended families.

One Asian person I know lived with is brother’s family for many years to save for a house. Now his niece and her husband live with his family as they save for a house.

Foreign money is money brought in from outside the country. Foreign money (Chinese, Japanese, Middle-Eastern, etc..) invested in MBS and treasuries was for sure propping up the market even as the Fed was raising interest rates. That’s what allowed us to have the liquidity and loose lending standards that led to the boom. For those of us who cashed out on real estate, we should be thanking our friends, the foreigners.

[PerryChase]

If he’s upside down, then he couldn’t have made a killing the past. To me, a killing means more then ending up in debt.

People get oftentimes get married for stupid reasons. I was happy to see my little brother get divorced. The wife was pretty and nice but she was very needy and not the brightest girl on the block. Now, he’s got a beautiful, rich, smart girlfriend who’s not needy or controlling. She’s confident enough to let him do his own things and he’s happier than ever.

Marriage should be like buying a house. You’re better off choosing carefully and buying at the right time. Otherwise, you’ll end up paying for it for a long, long time. Just like buying a house, people rationalize their marriage decisions to make themselves feel better.

I’m only kidding. 🙂 Love is truly about having fun together, building a connection, being close to one another and sharing our innermost feelings.

[PerryChase]

Surveyor, I’m not sure how you make the out-of-state property cash flow. With travel expenses and management fees, your profits would get eaten up very quickly. I could see if you have relatives in the low-cost states and visited there frequently.

I thought that you could get cash back of a max of 3% of the purchase price. But nothing prevents a refi and cash out later.

[PerryChase]

Very interesting topic.

Condos are relatively new. I wonder what will happen when to all the condos built in the 1970s. Eventually, their useful lives will expire and they’ll need to be torn down.

Will owners by faced with $25k to $100k assessments?

[PerryChase]

Like Bugs said, prices in the low to mid $200k aren’t beyond the real of possiblity. I would even go as far to say as that’s likely to happen.

Watch the market and wait until you clearly a bottom — RE prices are sticky so you’ll have plenty of time to buy. Then buy even if interest rates are relative high, compared to today. The when rates go back down again (as they invariably fluctuate), refinance at a low rate with a low loan balance.

If prices continue to drop then you could even buy that 5-bedroom house that your family needs. Sounds like you’re a family man. It’s better to buy a house and stick with it rather than buy and sell and incur all the transaction costs.

[PerryChase]

Survey said America’s “faith in home values persists.”
http://www.latimes.com/business/la-fi-housing11apr11,0,5209585.story?coll=la-home-headlines

I’d wait to see cracks in that confidence. That will determine how low housing will go.

Think about it, if it’s too good to be true, it probably is. Why is the landlord wanting to sell to you if he can get $100k more by selling to someone else (ok, $50k after selling costs)? The truth is that he can’t because the Temecula market is flooded with inventory.

Landlord are not in the business of “giving away” $50k just because you’ve been a good tenant.

[PerryChase]

sdjdguy, the foreigners who shop at Fashion Valley are mostly Mexicans. Many of them come on day trips from Mexico like we go to Tijuana. Unlike Americans who visit Tijuana, those upscale shoppers speak English quite well but choose to speak Spanish among themselves.

It’s well known that Mexicans contribute greatly to retail in San Diego. That has been documented by the San Diego Chamber of Commerce.

We benefit greatly from Mexicans investing in California. Well-to-do Mexicans all shelter some of their money in California. A great many do buy houses also. Mexicans who qualify have border passes to shop and visit America as tourists. They are free to buy houses and open financial accounts but that pass does not allow them to work here.

[PerryChase]

Actually if you compare San Diego prices to cities such as Paris, London, Hong Kong, Shanghai, Barcelona, etc…, our prices are comparatively low — even more so considering the weak dollar.

However, it’s very hard to get residency. Foreigners do buy house for their children near university campuses. If you can afford the out-of-state tuition, you can get a student visa.

Property taxes and HOA in America are very high so the holding costs add up.

Foreigners have their own deflating bubbles to worry about. The difference this time, is that the bubble is worldwide, not just in certain local markets. I worry about a global recession if housing prices around the world drop by 50%.

[PerryChase]

That’s why we need to let the market clean itself.

When lenders go bankrupt, they’ll learn not to make stupid loans in the future. When borrowers go bankrupt, they’ll know not to sign stupid loans in the future. They’ll tell their children and grand-children to beware of stupid loans.

[PerryChase]

I use Firefox and got a weird rendering of the webpage. You have to use IE to properly view that site.

If I had to buy that house, I’d ask for a discount to undo some of the decor.

[PerryChase]

It doesn’t look very nice — bad design, very Jerome’s Furniture like.

[PerryChase]

Here’s Mish excellent article on _The Change Business of Real Estate_. This is part 1 so it looks like he’ll write more articles.

http://globaleconomicanalysis.blogspot.com/2007/04/changing-business-of-real-estate-part-1.html

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