[.OrgOwner]

Has the real estate market reached the bottom? Properties are foreclosing all over the place and it's tragic for the people who find themselves in this situation. The flip side of the coin is investing in property when the market is depressed, if you have the resources then does it make sense to start buying now? Have we reached the bottom? The answer is probably not but you don't always need to pick the bottom of the cycle to turn a profit on a real estate deal. If you kick enough tyres sooner or later an outstanding deal is going to jump off the page at you, you can be the savvy players are out there right now thinking 5 years ahead of the curve.

MLS

[jkobflys]

I just purchased a home, had been looking around the San Fernando valley area for about 3 months.
Saw allot of foreclosures any ware between $240k up to $390k some Short sales that where approved, and almost no straight up sales, the only sale that was not a foreclosure or a short sale that i know of was in Sylmar CA. for $300k.
Theres a good opportunity for investment properties out now, if you are in the position to buy and not have to move in right away and have means to do some fixing and remodeling you are going to get a great deal in the long run, if you are looking for a house that is ready to move in and doesn't need much get ready for a bidding war, theres allot of people looking at this time. Also its not that is harder to get approved for a home loan now, its the underwriting that is allot stricter, you have to have a clean financial record and the means to prove where all your income is coming from and be confident it will be coming for a while.
I ended up in a great area in Northridge, CA. I found my self bidding against two other people before my offer got accepted.
This is what my opinion is as far as looking for real estate in todays So. Cal. Market.
If you are looking for your primary residence look hard and fast, be ready to offer about $50k over asking price, depending in the area and condition, why $50k? that the average that i saw the homes selling for that i placed bids on, allot of people want that nice home as well.
If you are looking for a fixer upper to sit on or make a rental property out of then you have a huge inventory to look from, take your time and don't give in to pushy agents, almost all foreclosures are fixer uppers and need allot of work, the Short sales are not as bad because most, people are still living there.
But with that said it will be harder for you to get approved for a second home the banks will want to know where the money for that second mortgage will be coming from, specially in the hard times we are going thru.
Has the market hit bottom? I don't think so but I also don't think that the nice homes will not drop much more, i can see allot of the foreclosures that have been in the market for a long time plummeting, but they will be major fixers by then.

[.OrgOwner]

Nice post JKOB! What do you mean exactly by "nice homes will not drop by much more" - Are you talking absolute high end?

[ldavis]

we may not be at absolute bottom but i do believe we are close to swinging the other direction.. now is a good time to buy.

[FB1000inPA]

But only if you invest for the long-term. Short-term is a no-no for real estate.

[dr256]

Here in the UK if you've capital and a long term view then yes its a good time to invest. Although I think the market will continue to drop until summer 2009.

Our problem is going to be the bottom of the market stagnating due to perceived negative equity. I already know a few people who have decided to sit tight for at least a year or two until they feel they get back what this recession has taken off their house price. And this is despite not actually being in negative equity, more so, not being able to achieve the price they would have got only a year ago.

For example I have a friend who bought for £160,000 three years ago. A year ago he would have been able to sell quite easily for £210 - £220,000. Now he'll be lucky to get £170,000 based on similar sales in his street recently. He's going to sit tight because he feels he needs to have more capital to move further up the ladder.

When I asked him about it and pointed out that despite selling for less now he'd also be buying for less now - in the long term, say over the 20 years left of his mortgage life, it would make very little difference - he said that he'd looked at moving regardless, but found everyone further up the ladder was sitting tight so there weren't the deals he was expecting. I guess he decided its a case of if you can't beat them join them.

The question is whether these house price drops are semi permanent or just a blip and before you know it we'll all be back to building bubbles!

[.OrgOwner]

Buying and selling in the same market is ok but if you did manage to sell now it may not be wise to sit on the fence for too long. I think if you look around there is plenty of inventory on the market and the deals are there to be had. Is the UK that different?

[jkobflys]

Check it out guys,
A home that i had put an offer on 2 months ago for $348,900.00 in Reseda just whent back on the market for $299,900.00. My offer was asking price and there was someone that out bid me, they must of fallen out of escrow or something, $49,000.00 dip in under 3 months WOW!....

[nedro]

Originally Posted by .OrgOwner

Nice post JKOB! What do you mean exactly by "nice homes will not drop by much more" - Are you talking absolute high end?

I'm not JKOB, but I did stay at a....never mind.
Anyhow, here in the bay area, the home needs to be perfect. No repairs of any kind needed, and in a good neighborhood with good schools. But certainly not the, "absolute high end". High end in the bay area starts at somewhere in the 7 million dollar range and goes up from there. Decent houses in the best neighborhoods start at about 2.5 million. I am in a working class city next to a high end city but with the best schools. 2440 sq ft of living space, 2 1/2 car garage (I still haven't found a 1/2 car BTW), and a 60' by 140' lot was worth 1 mill last year and it is worth 1.1 today. So go figure.
It's still location, location, location.

[.OrgOwner]

You have to feel for the owners in that case, if they need to sell and have been forced to tear up the best part of 50k on their asking price that's gotta hurt. Is that part of the overall trend in the area?

[jkobflys]

Originally Posted by nedro

I'm not JKOB, but I did stay at a....never mind.
Anyhow, here in the bay area, the home needs to be perfect. No repairs of any kind needed, and in a good neighborhood with good schools. But certainly not the, "absolute high end". High end in the bay area starts at somewhere in the 7 million dollar range and goes up from there. Decent houses in the best neighborhoods start at about 2.5 million. I am in a working class city next to a high end city but with the best schools. 2440 sq ft of living space, 2 1/2 car garage (I still haven't found a 1/2 car BTW), and a 60' by 140' lot was worth 1 mill last year and it is worth 1.1 today. So go figure.
It's still location, location, location.

I agree,
altho it's nowhere near as expensive as the Bay Area the absolute high end homes in the Northridge area start about 1.5 mill and go up from there.
I couldn't say it better than nedro already has, it's the schools, area, and no repairs needed that will hold the property value.
I'm within a jog distance from Cal state Northrige, the asking price for the house across the street is $680,000.00 and theres a foreclosure about 3 blocks down the street asking $324,000.00 so how realistic is the price across the street? I know the diferences...

$680,000.00
4 bed, 3 baths, pool, 2 car garage, 1700sqft. home, 7900 sqft. lot. excellent condition still occupied and cared for.

$324,000.00
3 bed, 2 baths, 2 car garage, 1500sqft. home, 7500 sqft. lot. fixer upper has been empty for who knows how long.

[jkobflys]

Originally Posted by .OrgOwner

You have to feel for the owners in that case, if they need to sell and have been forced to tear up the best part of 50k on their asking price that's gotta hurt. Is that part of the overall trend in the area?

I don't think its the area, it seems this is happening all across the country, in some places more than others.

[dr256]

Originally Posted by .OrgOwner

Is the UK that different?

Probably not. But I am seeing that at the first time buyer end of the market there are obviously less buyers which is slowing down the market further. Those that are sitting in those first time buys are also the people most likely to be repossessed due to the very high prices they payed a year or so ago.
So here in the UK there is already some stagnation at the bottom end.
Personally I think its going to be a longer rather than shorter dip...

[Surffrog]

As the old saying goes, "Don't try to catch a falling knife!"

Wait until the prices begin to show strong signs of recovery, then buy. Probably not going to see that for at least another year and a half.

[nedro]

Originally Posted by .OrgOwner

You have to feel for the owners in that case, if they need to sell and have been forced to tear up the best part of 50k on their asking price that's gotta hurt. Is that part of the overall trend in the area?

50K is nothing.
We have an area that was price bloated for over two decades. It is the Amaden area. Open grassy hills, perfect for having horses. The problem is that it turns into a wind tunnel most afternoons and the scenery is nothing to speak of. Homes were going for 3 and 4 million dollars when you could get houses in Los Alsos Hills starting at 2 mill. The houses in Amaden are now literally unsellable as people holding mortgages are upside down by multiple millions. True value should've been in the high $800,000, not 3 to 4 million.

[Surffrog]

Originally Posted by nedro

50K is nothing.
We have an area that was price bloated for over two decades. It is the Amaden area. Open grassy hills, perfect for having horses. The problem is that it turns into a wind tunnel most afternoons and the scenery is nothing to speak of. Homes were going for 3 and 4 million dollars when you could get houses in Los Alsos Hills starting at 2 mill. The houses in Amaden are now literally unsellable as people holding mortgages are upside down by multiple millions. True value should've been in the high $800,000, not 3 to 4 million.

And that's just one reason why we are seeing this massive price correction today in just about every sector. Greedy people charging too much and stupid people paying the asking price.

[.OrgOwner]

So the message is this, the "buying" window is set to remain open for a while to come and don't expect to see decent returns any time soon. Expect more pain when unemployment starts to skyrocket...

[Surffrog]

I would have said; let the prices continue to drop (especially as unemployment skyrockets) and don't buy into anything until it has not only found the bottom but begins to track upwards in a healthy manner.

As Gerald Forte once said when asked how he made his money, "I always buy late and sell early."

This basically means he doesn't try to buy at the absolute bottom because there's no guarantee where that is and, to top it off, he always set in his mind a happy profit margin point at which to sell. He never guesses where the top is going to be, either.

Try to think of it this way, the higher the price you pay for a property the longer it's going to take to realise a profit. If you buy a property at $800,000 today but its value continues to drop for another year, you'll have to hope the market not only picks up that difference but also make more in order for you to get anything out of it. Now, if it only drops another $50k before making a turnaround - okay. But, and this is more likely in the current market, if it drops by a further $200,000, then you'd be praying for a massive turnaround that's not likely to happen for more than two, three or five years - maybe more...

[Bigdaddy75]

And the fun and games has not even started yet in Australia. It's going to hit us pretty hard as well, our real estate is wayyyyy over valued and most people have their heads in the sand.

[Surffrog]

Hey BigDaddy, long time no read. We've got the same problem here with the Thais. They really don't think this is going to affect them even though it's high-season here and there's nearly no tourists around. They can't see beyond the recent political issue.

[Bigdaddy75]

Originally Posted by Surffrog

Hey BigDaddy, long time no read. We've got the same problem here with the Thais. They really don't think this is going to affect them even though it's high-season here and there's nearly no tourists around. They can't see beyond the recent political issue.

The writing has been on the wall for a while now, it makes me laugh when I hear the local real estate agents talking up the market even still. You know what they say: "The only time a real estate agent ever tells the truth is when they call another real estate agent a liar"

It's comical. I look at the headlines every week in the paper, "Seller Demands Sale" "Owner Desperate" "Property Reduced By $$$$" "Vendor Giving Away Kidney To Sell Home" "Buy My House And You Can Sleep With My Trophy Wife" And so it goes.

People have only just begun to hurt here in Australia.

[jkobflys]

ppl have been hurting for a while now here in the states, the one thing i liked about my agent was her being honest about the market, she never pushed us or tryed to pretend it was a sellers market, she even recomended lowballing all the offers to see if the sellers would bite, and affcourse the ....

[slickwill]

My brother recently bought a 5 bedroom, 3000 sq/ft home in Idaho for $160K, it sold new 6 months before for $250K, and was only lived in for two months. Percentage wise that's a huge drop. There were rooms that had never even had a piece of furniture in them.

Then he put an ad in the paper and promptly rented it for $400 a month more than the mortgage payment on it. A lot of people can't get the credit to buy right now so if you can afford to buy rentals now is a great time.


Edit: The market has gone down even more since then. That was last April so he probably could get it cheaper now but he's locked in at a low payment and the renters are locked in at a high one so he has no reason to panic about his reduced value. He'll probably still have it, and others, twenty years from now.

[bettingpython]

We payed 89,500 for a 3 bedroom 2 bath 1430sq ft ranch built in 1969 on an 8740 sq ft lot in 2006. It appraised at 98K when we bought it when we refinanced this past summer the new appraisal came in at 102K and based on current market trends in my area it has gone up since June's appraisal. We haven't been hit as badly as the rest of the country.

The house next to us is setting empty the owners bought it with the assistance of daddy and then didn't make their mortgage payments so dad who lives out of state has an empty house. I really hope he puts it on the market to sell, we bought where we did because there was not a high percentage of rental property in our neighborhood, I am going to be pissed if he turns it into a rent house.

[LoopyLee]

Originally Posted by bettingpython

The house next to us is setting empty the owners bought it with the assistance of daddy and then didn't make their mortgage payments so dad who lives out of state has an empty house. I really hope he puts it on the market to sell, we bought where we did because there was not a high percentage of rental property in our neighborhood, I am going to be pissed if he turns it into a rent house.

Tell ya what BP.. I'll rent it and me and SSB and the kids, the dog, the cats and the bikes will all move in next door

[bettingpython]

Yerrrr you coming to this side of the pond? No nonsense now I like my neighborhood quite.
My neighbor across the street has relatives that are moving to Tulsa and he has been trying to get them to decide what to do with the house.
Either way they want it whether it's a rental or they buy it. My neighbor says his family is like him so I really hope they do get the house.

[slickwill]

Tulsa is in my top 3 choices for residency programs so I may be looking for a place to live. I'll need recommendations then. I don't start until May '10 though so I've got awhile.

[nedro]

Originally Posted by LoopyLee

Tell ya what BP.. I'll rent it and me and SSB and the kids, the dog, the cats and the bikes will all move in next door

Uh, you really need to do some research before making a move like that. Oklahoma / Sahara . The only difference is weather.

[jkobflys]

what do you guys do over in OK?
$98,000.00 for a home?
damm!
were im' at is $350,000.00 for the same home....

[bettingpython]

How do you equate Oklahoma to the Sahara? We actually have tall buildings, electricity and indoor plumbing. We also have an economy that has not been hurt as badly as the rest of the country. Our housing market was not grossly over inflated either. The rest of the country has a funny impression of OKlahoma.