Hey Augie, actually no. Betting on rates to go back to 2% is probably not a good bet. What pushed rates down to the historic levels of 2% was a combination of factors that created a perfect storm. Trillions were pumped into the economy.The Fed making the decision to put mortgage assets on its balance sheet was the biggie. The Fed was buying every mortgage loan originated in America. So every lender knew that they could originate a loan and immediately sell it at profit with no risk. If you recall we were bombarded with mortgage ads all day and night. When the Fed stopped buying loans it sent rates spiraling up and threw housing into the slump it’s still in today.
In a normal market when rates go up prices start coming down as less buyers are able to afford to buy. As of now, rates have crushed sales volume and prices have cooled but not dropped.
My approach has been to buy when distressed sales are at a high. When foreclosures are ramped up and the Buyer has the negotiating advantage over the Seller. Where I can negotiate hard. Clearly that is not the case today. Or when banks are loaded with real estate owned that they need to unload. I ran a REO dept for Home Savings for a few years in the 90’s. The pressure to unload properties at discount prices is heavy at those places. Non performing loans kill a banks balance sheet.
My objective is to never pay more than 80% of the market value of a property. I need to have equity baked into the purchase on day one rather than betting on appreciation to make money. I walk away from 90% of the deals I’m offered. I’m a small volume guy , buying one property a year works fine for me.
If rates get back to just in the 5’s is good enough.
mine was pretty simple. work hard, live on half of what you make, buy companies you personally like and the rest in the S and P. Then you have fawk you money in your fifties. Anyone can do that. Now my dividend stuff alone makes a lot more than my bills.
Real Estate people are almost all SCUM. Notice there is never a bad time to buy? Imagine that. I did buy one of those machines that can make your house smell like Cinnabon or Tolehouse cookies they used to pump into airports. That is the only thing of value I learned from a real estate douche. sc
Humility, Shaka Bruddah Ballss. Nah, take the credit and compliments,. U R very good with investments and finance. I like reading your advice and admire your success in the financial world.
What's sad so many young, married couples are in a state where they can not come up with a big down payment for a nice, modest home in a decent and affordable neighborhood. That's where parents must Kokua (help/assist) their children with the down.
We and son in-law parents helped out our children with the down when they got married. 1993, they found a brand new listing, 4 BR, 2,600 sq ft house in Valencia, $425,000. They qualified for $350,000, both worked, good paying jobs. We, both sides parents came up with $110,000, daughter and husband came in with $20 K = $130 K for their down. With that big down, their monthly payment was lowered.
They would upgrade (sell and buy) upon realizing equity on (2 more times, homes). Finally, in 2005 they sold their home & bought a home in Brentwood, West Los Angeles, a 1,950 sq ft, 3 BR home, on a 12,000 sq ft lot = $1.25 mil (very good price). They renovated, redesigned the house (2 times), swimming pool, landscape into a 5,000 sq ft, 5 BR, 5 1/2 baths house with a beautiful Hawaiian lanai.
The 2 renovation costs came to around $625 K. using their own money. They put down $400 K from selling their last home in Valencia with a $850 K mortgage. 2005, their combine income = $480 K both had good paying jobs. Today, they make, combined about $650 K. They have about $180 K left on their 1st mortgage. I think their home is valued at $5.75 mil.
Bottom line, for young married couples wanting home ownership in Calif, they must have well paying jobs & get financial help from parents... Cheers.
Thank you Bruddah51, anyone can question my knowledge of football, and on this board they often do 😂, but my financial services resume is bullet proof.
Home prices are such that a young couple will find it very difficult to buy a home. There are loan programs out there that allow you to buy with as little as 3% down. But with such a low down payment there will be mortgage insurance, property taxes are high and now even a homeowners insurance policy is also very expensive. Then the wham of high mortgage rates! The monthly payment on just a regular house s going to hit $6000 a month. Wages aren’t keeping up with that. Curiously homeownership in America is over 65%. Close to the highest on record. Homeownership rates are highest among people in their early 70’s and lowest among people in their 20’s.
It warms my heart to hear how you guys banded together to help your kids buy a home. Kokua is a blessing. And guess what? When you help someone it boomerangs back. I lost both parents at a very young age, it was messed up, but the lessons they taught me, along with my business school experience carried me. Along with some great timing and complete dedication to hard work. I have been fortunate enough to be in a position to help my kids too.
When it comes to home prices people can have short memories. Price crashes do happen, just 10 years ago we were in a severe downturn. It will happen again, when is the question we can’t answer.
Good talk, on a board replete with conflict and hate, you manage to stay positive with everyone. Cheers!
Only way they go down to 3% again is if the fed decides to create hyper/ superinflation to refinance the national debt to make the payments manageable....
I'm all for deregulation. A couple of years back they changed the rules on investors buying properties at foreclosure auctions. The new rule is that before an investor can buy a foreclosed property it must be first offered to regular buyer for primary residence use. That type of business has never been my thing but I was not too fond of that rule. Hopefully it goes away.l heard it was.
Apparently you didn't hear what Trump told Bass and Newsome. about the Red Tape Homeowners and Contractors have to go through to build in California. I guess you missed how paying less for energy reduces cost to transport goods to America and effects many more parts of the economy. You do understand de-regulation impacts more than energy like farmers and ranchers Did you understand Trump's approach is multifaceted and not immediate
you bought THAT???????????? for 800 thousand?
no wonder you didn't get into SC. sc
Hey Augie, actually no. Betting on rates to go back to 2% is probably not a good bet. What pushed rates down to the historic levels of 2% was a combination of factors that created a perfect storm. Trillions were pumped into the economy.The Fed making the decision to put mortgage assets on its balance sheet was the biggie. The Fed was buying every mortgage loan originated in America. So every lender knew that they could originate a loan and immediately sell it at profit with no risk. If you recall we were bombarded with mortgage ads all day and night. When the Fed stopped buying loans it sent rates spiraling up and threw housing into the slump it’s still in today.
In a normal market when rates go up prices start coming down as less buyers are able to afford to buy. As of now, rates have crushed sales volume and prices have cooled but not dropped.
My approach has been to buy when distressed sales are at a high. When foreclosures are ramped up and the Buyer has the negotiating advantage over the Seller. Where I can negotiate hard. Clearly that is not the case today. Or when banks are loaded with real estate owned that they need to unload. I ran a REO dept for Home Savings for a few years in the 90’s. The pressure to unload properties at discount prices is heavy at those places. Non performing loans kill a banks balance sheet.
My objective is to never pay more than 80% of the market value of a property. I need to have equity baked into the purchase on day one rather than betting on appreciation to make money. I walk away from 90% of the deals I’m offered. I’m a small volume guy , buying one property a year works fine for me.
If rates get back to just in the 5’s is good enough.
Only way they go down to 3% again is if the fed decides to create hyper/ superinflation to refinance the national debt to make the payments manageable....