Recovering Real Estate: Another Virtuous Circle?

[don]

Re: Recovering Real Estate: Another Virtuous Circle?

I keep reasonably good track of house prices in my own local area -- they too are closing at or above list for many of the houses.

In our era of rampant fraud due diligence is critical.

[jpatter666]

Re: Recovering Real Estate: Another Virtuous Circle?

In our era of rampant fraud due diligence is critical.

True -- but you are missing the basic point. The recession never hit the DC area. Seven of the ten wealthiest counties in the US are HERE.

http://www.slate.com/blogs/moneybox/..._suburbs_.html

They say people inside the Beltway live in their own little bubble -- this time it is literally true. The mentality change that came with the crash didn't really hit people here.

[littleshark]

Re: Recovering Real Estate: Another Virtuous Circle?

True -- but you are missing the basic point. The recession never hit the DC area. Seven of the ten wealthiest counties in the US are HERE.

http://www.slate.com/blogs/moneybox/..._suburbs_.html

They say people inside the Beltway live in their own little bubble -- this time it is literally true. The mentality change that came with the crash didn't really hit people here.

Govt has only grown since the recession so why wouldn't it be this way. I was in DC for a wedding a few weekends ago, in the area around the White House and the train station. I hadn't been to DC in prob 20 yrs. It looked beautiful, with brand new office buildings and ongoing construction everywhere. You need somewhere for all the lobbyists and PACs to work, right?

I live in NYC, and the recession never hit here either, even with the reliance on finance and real estate. But NYC is a global destination for capital. The Chinese are now buying up all of Queens as well, and the rental market is on fire everywhere.

Can there be a real recovery in real estate with unemployment high and no wage growth?
(Not the DC and NY fantasy lands.) I don't know that PE funds getting good deals from the govt and then flipping real
estate to eachother creates a sustainable recovery. Early invstors will make good money, but this gig will be up as returns move lower and the cost
of manitaining large tracs of single family homes wear and funds want out. But maybe this buys time for a few years until the economy turns. Seems like that's what Bernanke is hoping for. After all, flipping financial assets is what USA is best at.

[touchring]

Re: Recovering Real Estate: Another Virtuous Circle?

Can there be a real recovery in real estate with unemployment high and no wage growth?

Why not? Speculative funds can come from elsewhere. US real estate has more upside than China at this moment. There's a huge amount of speculative money that can flow in from emerging markets and also OECD money that flowed into emerging markets.

Money that Bernanke printed. Won't bernanke be proud?

lol

[aaron]

Re: Recovering Real Estate: Another Virtuous Circle?

I left the area before the crash... In talking to family there, yes... D.C. has no idea what the rest of the country faces. It is crazy how insulated that area is to reality. As far as they can tell, there was a mild recession that Obama fixed. La la la ...

[aaron]

Re: Recovering Real Estate: Another Virtuous Circle?

There is definitely a lot of Chinese money coming into my area. I suspect only immigration laws have kept things from going too crazy (so far). It is absolutely amazing how much money people are bringing with them. Uncle Ben's money IS coming home...

[touchring]

Re: Recovering Real Estate: Another Virtuous Circle?

There is definitely a lot of Chinese money coming into my area. I suspect only immigration laws have kept things from going too crazy (so far). It is absolutely amazing how much money people are bringing with them. Uncle Ben's money IS coming home...

I know Vancouver is a favorite investment destination. Seattle is close to Vancouver?

Even Vancouver is cheap as compared to Singapore or Hong Kong where you can only get a urine smell third world shit hole for the price of a house in Vancouver.

[lektrode]

Re: Recovering Real Estate: Another Virtuous Circle?

....D.C. has no idea what the rest of the country faces. It is crazy how insulated that area is to reality. As far as they can tell, there was a mild recession that Obama fixed. La la la ...

yep - and so it goes, the beltway 'wins' and The Rest of Us LOSE.

[DRumsfeld2000]

Re: Recovering Real Estate: Another Virtuous Circle?

You might be interested in this related aspect to it:-

http://www.zerohedge.com/news/2012-1...efaulting-bulk

[BK]

Re: Recovering Real Estate: Another Virtuous Circle?

A former President of Cornell, Andrew Dickson White, wrote a book about Inflation in France that was a result of Fiat Money. He observed that during France's post revolution Fiat-money inflation that economies of the country folks were devastated while centers of commerce and government thrived under fiat money.
http://mises.org/books/inflationinfrance.pdf - also available for free on the Kindle...... is a great topic for the cocktail party circuit.....

[touchring]

Re: Recovering Real Estate: Another Virtuous Circle?

A former President of Cornell, Andrew Dickson White, wrote a book about Inflation in France that was a result of Fiat Money. He observed that during France's post revolution Fiat-money inflation that economies of the country folks were devastated while centers of commerce and government thrived under fiat money.
http://mises.org/books/inflationinfrance.pdf - also available for free on the Kindle...... is a great topic for the cocktail party circuit.....

So, doesn't this contradict the iTulip stand?

[LorenS]

Re: Recovering Real Estate: Another Virtuous Circle?

do you think nominal prices > prices caused by inflation? i dont know like i said above once interest rates increase, then supply> demand and prices will fall especially as fewer people can afford a mortgage. i remember living in the San Francisco Bay area (pleasanton) between 1988-2000. Affordability was typically restricted to 10% of the population. Higher interest rates will amplify the difficulty in getting a mortgage. So yes inflation is a factor however there are significant opposing factors.

Housing normally tracks inflation, so it should not be too long before flat to modestly down house prices are caught by inflation. Are there other factors - yes, but over time inflation will wash out most affordability issues - how long - maybe a decade. Over the past 10 years my income is up by about 1/2 the total inflation rate, so it could be 20 years for this cycle to work out.

I think a lot of folks who were expecting a big bust in house prices will be disappointed. I know I am disappointed. I knew the Fed buying mortgages in bulk was possible, but I didn't expect it to be this blatant. It's pathetic really, but it's not like my personal ire is going to change things.

I sold my overpriced house in 2008, rented it back for a year and then bought an even more overpriced house in 2009. As far as I can tell I'm still better off having bought than having rented all this time. I just refinanced and my new mortgage payment (PITI) is $300/ month lower than my rent was on a house 1/2 the size. Tax breaks equal my maintenance costs.

I don't feel particularly bad being a home "ower", especially since my wife likes the house. We checked out rentals, they were all smaller, more expensive and in less desirable neighborhoods. Don't fight the fed? They're bozos, but powerful nonetheless.

[touchring]

Re: Recovering Real Estate: Another Virtuous Circle?

Housing normally tracks inflation, so it should not be too long before flat to modestly down house prices are caught by inflation. Are there other factors - yes, but over time inflation will wash out most affordability issues - how long - maybe a decade. Over the past 10 years my income is up by about 1/2 the total inflation rate, so it could be 20 years for this cycle to work out.

I think a lot of folks who were expecting a big bust in house prices will be disappointed. I know I am disappointed. I knew the Fed buying mortgages in bulk was possible, but I didn't expect it to be this blatant. It's pathetic really, but it's not like my personal ire is going to change things.

I sold my overpriced house in 2008, rented it back for a year and then bought an even more overpriced house in 2009. As far as I can tell I'm still better off having bought than having rented all this time. I just refinanced and my new mortgage payment (PITI) is $300/ month lower than my rent was on a house 1/2 the size. Tax breaks equal my maintenance costs.

I don't feel particularly bad being a home "ower", especially since my wife likes the house. We checked out rentals, they were all smaller, more expensive and in less desirable neighborhoods. Don't fight the fed? They're bozos, but powerful nonetheless.

I guess the rule is, if you're buying for own stay, now is definitely the time to BUY and with as much cash down as possible. Inflation or not, you'll be still be paying less on mortgage than if you were to rent. If inflation does come, rent will go even higher.

[thriftyandboringinohio]

Re: Recovering Real Estate: Another Virtuous Circle?

I am buying a rental property right now. It's a small single family home in a good school district.
I'm paying 100% cash for the house and the renovation.
I expect to net about 10% simple interest renting it.
The whole thing is inside a self-directed IRA.
My plan is to buy 2 or 3 others much the same.

Here's my thinking.

I'm not willing to be invested in stocks or bonds right now, so I'm earning essentially zero on my life savings.
I already have all the physical gold I want.

A few small rentals bought with cash earning ten percent now is good for me.
I expect further inflation in rents to make the return better in the future.

I find that here in Ohio the days are over when you could buy foreclosed homes for 25 cents on the dollar. Too bad, I missed it.
Still, I found this one at a fair price and expect to find a few more.
They will generate cash and I'll be at the fair going price after renovations so I should be able to sell them if I choose.
If they unexpectedly stand empty they cost me nothing but taxes.

[vinoveri]

Re: Recovering Real Estate: Another Virtuous Circle?

I am buying a rental property right now. It's a small single family home in a good school district.
I'm paying 100% cash for the house and the renovation.
I expect to net about 10% simple interest renting it.
The whole thing is inside a self-directed IRA.
My plan is to buy 2 or 3 others much the same.

Here's my thinking.

I'm not willing to be invested in stocks or bonds right now, so I'm earning essentially zero on my life savings.
I already have all the physical gold I want.

A few small rentals bought with cash earning ten percent now is good for me.
I expect further inflation in rents to make the return better in the future.

I find that here in Ohio the days are over when you could buy foreclosed homes for 25 cents on the dollar. Too bad, I missed it.
Still, I found this one at a fair price and expect to find a few more.
They will generate cash and I'll be at the fair going price after renovations so I should be able to sell them if I choose.
If they unexpectedly stand empty they cost me nothing but taxes.

Cool idea. Can you explain a bit of how you set up the self-directed IRA in order to do this? thanks