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January 21, 2008 at 8:22 PM in reply to: We are now within 5% of BOTTOM in for $600K and up SD RE market. #140554
sdduuuude
ParticipantI think it’s a good question, and the basic answer, as others point out, are rent/price ratios, price/income ratios, and payment/income ratios. Look at all of them.
When looking at payment/income – don’t compare the payment on a 20% down fixed loan in 2001 to the payment on a zero-down adjustable loan in 2005. Compare apples-to-apples in different years to see how the fundamentals ceased to support the price.
We always have and always will pay a premium for weather here. It is an underlying fundamental to support higher prices in So Cal than in other parts of the country.
However, as Rich pointed out many, many times, the weather didn’t suddenly improve here between 2000 and 2004. Thus, the premium had no fundamental reason to increase as it did.
Weather was simply fuel to the speculative ferver.
ParticipantI think it’s a good question, and the basic answer, as others point out, are rent/price ratios, price/income ratios, and payment/income ratios. Look at all of them.
When looking at payment/income – don’t compare the payment on a 20% down fixed loan in 2001 to the payment on a zero-down adjustable loan in 2005. Compare apples-to-apples in different years to see how the fundamentals ceased to support the price.
We always have and always will pay a premium for weather here. It is an underlying fundamental to support higher prices in So Cal than in other parts of the country.
However, as Rich pointed out many, many times, the weather didn’t suddenly improve here between 2000 and 2004. Thus, the premium had no fundamental reason to increase as it did.
Weather was simply fuel to the speculative ferver.
ParticipantI think it’s a good question, and the basic answer, as others point out, are rent/price ratios, price/income ratios, and payment/income ratios. Look at all of them.
When looking at payment/income – don’t compare the payment on a 20% down fixed loan in 2001 to the payment on a zero-down adjustable loan in 2005. Compare apples-to-apples in different years to see how the fundamentals ceased to support the price.
We always have and always will pay a premium for weather here. It is an underlying fundamental to support higher prices in So Cal than in other parts of the country.
However, as Rich pointed out many, many times, the weather didn’t suddenly improve here between 2000 and 2004. Thus, the premium had no fundamental reason to increase as it did.
Weather was simply fuel to the speculative ferver.
ParticipantI think it’s a good question, and the basic answer, as others point out, are rent/price ratios, price/income ratios, and payment/income ratios. Look at all of them.
When looking at payment/income – don’t compare the payment on a 20% down fixed loan in 2001 to the payment on a zero-down adjustable loan in 2005. Compare apples-to-apples in different years to see how the fundamentals ceased to support the price.
We always have and always will pay a premium for weather here. It is an underlying fundamental to support higher prices in So Cal than in other parts of the country.
However, as Rich pointed out many, many times, the weather didn’t suddenly improve here between 2000 and 2004. Thus, the premium had no fundamental reason to increase as it did.
Weather was simply fuel to the speculative ferver.
ParticipantI think it’s a good question, and the basic answer, as others point out, are rent/price ratios, price/income ratios, and payment/income ratios. Look at all of them.
When looking at payment/income – don’t compare the payment on a 20% down fixed loan in 2001 to the payment on a zero-down adjustable loan in 2005. Compare apples-to-apples in different years to see how the fundamentals ceased to support the price.
We always have and always will pay a premium for weather here. It is an underlying fundamental to support higher prices in So Cal than in other parts of the country.
However, as Rich pointed out many, many times, the weather didn’t suddenly improve here between 2000 and 2004. Thus, the premium had no fundamental reason to increase as it did.
Weather was simply fuel to the speculative ferver.
ParticipantIt will look like “water, water everywhere, but not a drop to drink.”
Prices will be low, but even though the extrememly tight credit markets of the last couple years have started to loosen up, you will have difficulty scraping together a down payment and qualifying for the loan you want.
People “in the know” will say sharp things like “cash is king, baby.”
P.S. Nice post, contrarian. #3 is a classic.
ParticipantIt will look like “water, water everywhere, but not a drop to drink.”
Prices will be low, but even though the extrememly tight credit markets of the last couple years have started to loosen up, you will have difficulty scraping together a down payment and qualifying for the loan you want.
People “in the know” will say sharp things like “cash is king, baby.”
P.S. Nice post, contrarian. #3 is a classic.
ParticipantIt will look like “water, water everywhere, but not a drop to drink.”
Prices will be low, but even though the extrememly tight credit markets of the last couple years have started to loosen up, you will have difficulty scraping together a down payment and qualifying for the loan you want.
People “in the know” will say sharp things like “cash is king, baby.”
P.S. Nice post, contrarian. #3 is a classic.
ParticipantIt will look like “water, water everywhere, but not a drop to drink.”
Prices will be low, but even though the extrememly tight credit markets of the last couple years have started to loosen up, you will have difficulty scraping together a down payment and qualifying for the loan you want.
People “in the know” will say sharp things like “cash is king, baby.”
P.S. Nice post, contrarian. #3 is a classic.
ParticipantIt will look like “water, water everywhere, but not a drop to drink.”
Prices will be low, but even though the extrememly tight credit markets of the last couple years have started to loosen up, you will have difficulty scraping together a down payment and qualifying for the loan you want.
People “in the know” will say sharp things like “cash is king, baby.”
P.S. Nice post, contrarian. #3 is a classic.
ParticipantBoth are completely reasonable, I think.
Splitting the diswasher cost seems fair. Or have the LL pay and raise the rent a bit. My only concern would be – is there space for it? If it is taking up the only cabinet space, then I’d say no.
I have had tenants paint before. The rule was – either I agree to the color up-front or they paint it when they leave.
If the place needed paint, I paid for the paint itself. If the place had good paint and they just wanted a color change, I wouldn’t pay for paint.
ParticipantBoth are completely reasonable, I think.
Splitting the diswasher cost seems fair. Or have the LL pay and raise the rent a bit. My only concern would be – is there space for it? If it is taking up the only cabinet space, then I’d say no.
I have had tenants paint before. The rule was – either I agree to the color up-front or they paint it when they leave.
If the place needed paint, I paid for the paint itself. If the place had good paint and they just wanted a color change, I wouldn’t pay for paint.
ParticipantBoth are completely reasonable, I think.
Splitting the diswasher cost seems fair. Or have the LL pay and raise the rent a bit. My only concern would be – is there space for it? If it is taking up the only cabinet space, then I’d say no.
I have had tenants paint before. The rule was – either I agree to the color up-front or they paint it when they leave.
If the place needed paint, I paid for the paint itself. If the place had good paint and they just wanted a color change, I wouldn’t pay for paint.
ParticipantBoth are completely reasonable, I think.
Splitting the diswasher cost seems fair. Or have the LL pay and raise the rent a bit. My only concern would be – is there space for it? If it is taking up the only cabinet space, then I’d say no.
I have had tenants paint before. The rule was – either I agree to the color up-front or they paint it when they leave.
If the place needed paint, I paid for the paint itself. If the place had good paint and they just wanted a color change, I wouldn’t pay for paint.
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