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powayseller
ParticipantFor the novice, like me, can you explain the mathematical relationship between DOM and MOI? Do you expect DOM to be a certain factor of MOI? If so, why not drop DOM?
ParticipantGreat to see you here Jim. I love your blog, and I read it a lot. You are wise and honest and analytical, all traits I admire. I hope you will keep posting.
I have several friends who are realtors, and I respect their view, although different from mine, that if you find a house now that you really like that you can afford with a 30 year fixed, buy now. I personally will wait for the bottom.
Correct me if I am wrong, but I don’t think RE has a dead cat bounce; it is not liquid like stocks, and moves in one direction for many years, slowly turning once every 6-10 years. So I will wait for DOM to reverse, inventory to decline, and HAI to go back to its historical level, whatever that is. Is HAI 25% in SD?
July 24, 2006 at 8:09 PM in reply to: People are STILL investing in property as an investment #29510ParticipantThis is why I am such a skeptic of financial planners. What do they know anyway? Less than me, usually.
ParticipantI ordered the book after you recommended it, and it arrived today.
ParticipantLook through the real estate ads, and almost every builder is offering incentives and price reductions.
Partial copy of bubbleinfo.com posting about Bressi Ranch. So be aware of builders who sold at a disount, but left the home in pending status, so the real sale price does not show up on the MLS.
Bressi Ranch Update
“Today’s check of the MLS shows twelve pending listings in Bressi listed by the builder. Every one of them have already closed escrow, but they still show pending. Why? Do they have something to hide?Here’s how they turned out (add the 000s)
List Price/ Sold Price Date Closed
690 630 6/20
721 615 5/26
739 649 5/26.”
Go to his website to see more pricing.
My friend has several buyers who are sitting still until fall. They want to wait for the sellers to really crack. Look, last year we had 1 buyer for every seller, and today, 1 buyer for every 8 sellers. Who will blink first? The sellers. Be patient.
By the way, inventory started climbing in the summer of 04. In April 04, we had 3,000 homes, in summer 6000, and by fall, 12,000. Can someone correct me if I’m wrong. So the market started weakening in the summer of 04.
Participanthahaha, good one!
Thanks for all the responses so far. I will take these comments “off the air”.
ParticipantMy friend is having trouble logging on to piggington, and asked me to add:
“The AMT tax in many cases knocks down deductions on taxes tied to residences. That needs to be taken into account. It hit me for close the 20k last year alone in extra taxes.”July 24, 2006 at 6:41 PM in reply to: Sources Needed for “why commodities can’t sustain their bull run” #29498Participantjepsd – did I meet you at the meet-up the other day? Thanks for the information. What do you think about the commodities and oil pricing, and where it could head? My brother told me that China will keep producing even if the US stops buying altogether, because they are NOT getting paid now anyway! He is right! China is getting dollars, which they are recycling back into the US, so they are not getting paid at all! I think one reason they have bank problems is because of all the money they print to convert the dollars to yuan, so the yuan does not appreciate. Then the dollars go back to the US, and you have so much more yuan in circulation.
rseiser – thanks so much too. What do you think about long term prospects yourself? Do you agree with the writer?
ParticipantDoes she understand the housing bubble?
I think a savvy lady like your friend can make her own decision. My advice would be to give her all the information and graphs in the Bubble Primer and on the Resources link (above user forum link).
ParticipantHi FL Realtor. How did you find us? Welcome, and of course we are kind. We are very nice over here, unless someone tries to pull the wool over our eyes.
Why are we an indicator? I think of FL as an indicator. Why do analysts call San Diego the canary in the coal mine? I would choose FL for that designation. You are a few months ahead of us. You’ve got realtors who refuse listings, listings and open houses with nobody coming through for weeks, a realtor who wrote he had 36 listings and not a single showing in weeks. Why are you ahead of us? Did you start your price runups 6 months or a year before we did? Did you have more speculators? I believe we will follow you.
You’re not getting offers for your sellers because we have a glut of sellers. There is a seller/buyer imbalance. In SD, we have 8 sellers for every buyer. What is it for you? Think about it, if I am a seller in San Diego, the buyer that I want is looking at 7 other houses. Why would he pick mine? Hopefully I am not on a busy street or have some odd layout or other problem, because that would doom me. The price must be good. Why don’t your sellers undercut the competition? It always comes down to price. Every house will sell if the price is right. At some point, the price is so low, that investors will come back.
Our inventory is over 22,000, and exceeds the highest level of inventory of our last bubble. You can get local data by checking these sites by realtors Bob Casagrand and Jim Klinge, local realtors.
How many agents have left the profession?
Are you sure sellers here are getting 100% offers? Please tell us the details, because I find that hard to believe.
ParticipantThis article is worthy of its own thread. Until last week, I thought that I could help people by informing them of the option to refinance. I had an idea to distribute flyers to the high foreclosure areas in Poway (the cheaper smaller older homes), and explain ARMs and the benefits of changing to a fixed rate mortgage. Then it was explained to me that most of them won’t qualify, because they have HELOCed or refied out their equity, home prices have dropped and they lack sufficient equity even for a 100% loan, and, most important, their income hasn’t gone up enough to qualify them for an interest rate that is almost double what they got a few years ago. We need bank failings to get back to proper lending guidelines, we need foreclosures to cleanse the consumerism excess.
This article should have been written better to explain that most people won’t be able to refinance their way out of this. And they are not guaranteed to sell their way out either.
ParticipantYour argument uses an overpriced rental. This is an example of twisting numbers to make a point.
The landlords on this forum use a GRM of 8 to determine whether a home makes sense to purchase as a rental. If a unit can be rented for $2200/mo., then a reasonable price to pay for it is $211,200. (2200 * 12 * GRM of 8).
My rental is $2200/month, and it is worth $450K. The landlord’s PITI is $2658 *, and his repair/maintenance costs are $375/month. So he is underwater by $ 825/month.
He is also losing equity. The place was worth $575K in January, but now a similar unit listed at $500K has been sitting since February. He is losing 10% of purchase price annually, in addition to losing money on the cash flow.
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*Calculations. The landlord would be paying, at 6.75%, $2918 according to an online mortgage calculator. In the first year, the after-tax interest paid is $1670 (450K * 6.75% – 34% tax rate). Less than $400/month goes toward principal, according to the amortization table. So the after-tax interest and principal is $2070. Add HOA $180, property taxes of 1.25% (after taxes .825%) = 468, homeowners insurance = $ 100, total = $2658. Now add 1% for repair/maintenance = $375.ParticipantI love his quote that there “are not enough buyers to go around”, and that if you want to sell, you have to take a big discount because there’s so much inventory.
ParticipantThis refinance boom only works if you meet these conditions:
1) Your equity is high enough. For a 30 year fixed, don’t you need at least 10% equity? If your appraisal shows your home lost value, or you refinanced out all the equity, you won’t qualify for a refinance. Sorry.
2) You qualify for a loan at today’s interest rates. Just because you got a $500K loan at 3% in 2002, doesn’t mean you will get a $500K loan today at 6%. If your income didn’t double, then you won’t qualify.
So in summary, few people will qualify to refinance.
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