Patrick.net

The Secret is Out

By BayArea   Follow   Thu, 30 Aug 2012, 1:42pm   12,001 views   107 comments
In Oakland CA 94618   Watch (1)   Share   Quote   Permalink   Like (1)   Dislike (1)  

You could not find a better investment between mid 2010 through the end of 2011 than low end real estate. Relatively low prices, record low interest rates, and the fact that the mainstream had not yet been fully let in on the secret. For the smart ones (or lucky ones for that matter) that got in during that time, congrats on the move.

Fast forward to 2012, inventory has reached inexplicably low volumes, prices have surged, and the secret about real estate investment is out.

Case and point... I sit at the family table at dinner, and the topic is real estate investment. I go to lunch with co-workers, and the topic is how to become a slum-lord. I go bowling with some friends, and everyone is talking about buying up low end real estate to rent out. I cannot believe what I am experiencing. It's like everyone with a stable job is all of a sudden a real estate investor. It's not just for the upper class anymore. My secretary bought a damn rental property this year in the Bay Area for gawd's sake!

It will be interesting to see what happens after the election and how real estate responds.

Don't get me wrong, with the rental market also surging, real estate is still a good investment today, but it was a great investment 12-24 months ago.

Waiting patiently...

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1. 8675309 Jenny Follow Befriend 3 comments

   68   6:19am Mon 3 Sep 2012   Share   Quote   Permalink   Like   Dislike   I've been tracking the Chandler zip codes, and it is true that listing prices are up, but at the same time, sales have fallen off a cliff here

2. 8675309 Jenny Follow Befriend 3 comments

   69   6:29am Mon 3 Sep 2012   Share   Quote   Permalink   Like (4)   Dislike (1)   Yeah, but listing prices are up! Nobody is buying them, there are a glut of rentals, and dum-dum thinks he's a millionaire!

3. C Boy Follow Befriend 1 threads 207 comments Arlington, TX

   70   8:59am Mon 3 Sep 2012   Share   Quote   Permalink   Like (2)   Dislike   8675309 Jenny says I've been tracking the Chandler zip codes, and it is true that listing prices are up, but at the same time, sales have fallen off a cliff here I think banks are still with holding properties from the market.

4. Bigsby Follow Befriend 2,826 comments Monterey, CA

   71   9:01am Mon 3 Sep 2012   Share   Quote   Permalink   Like   Dislike   Darrell In Phoenix says Zacksmom says Anyone trash talking AZ should spend some time living, working, and paying the high price of CA (especially OC and LA) then you realize that you have very little left over to save or plan for the future. Here my entire life. And it's a ghetto. The fact remains that sales volume is cratering, prices are falling and entire neighborhoods are empty. So you say, but then you've had rather a lot of personas over the months, so who's to say where you are really from.

5. bgamall4 Follow Befriend (14) 747 threads 2,571 comments 63 male Las Vegas, NV bgamall4's website Premium

   72   9:03am Mon 3 Sep 2012   Share   Quote   Permalink   Like   Dislike   Protected   BayArea says I go bowling with some friends, and everyone is talking about buying up low end real estate to rent out. They want to securitize the rents. That will likely cause a massive housing bubble as the rich buy up everything in sight. Then it will crash, as high rents force more multigenerational housing, or tent cities. The rents will start out lower than current rents. But then they will have to go higher as investors squeeze the renters.

6. Bigsby Follow Befriend 2,826 comments Monterey, CA

   73   9:09am Mon 3 Sep 2012   Share   Quote   Permalink   Like   Dislike   Darrell In Phoenix says And you've backstopped a rather large number of misrepresentations of the truth about housing over the years. Is that directed at me? Care to give some examples?

7. errc Follow Befriend (7) 29 threads 1,203 comments 31 male Premium

   74   9:15am Mon 3 Sep 2012   Share   Quote   Permalink   Like   Dislike   Protected   PockyClipsNow says funny vid. unshaven clown!! hahahaha i can see this election coming down to abortion. its the only issue simple enough to get the dumb ass 'swing voters' to actually express an opinion. but i thought it was the holier then thou independent voters that decide elections? you know, the one's that are so much smarter then the partisans repubes and demtards, that objectively look at both platforms and pick the worst of their ideas to turn into laws.

8. bgamall4 Follow Befriend (14) 747 threads 2,571 comments 63 male Las Vegas, NV bgamall4's website Premium

   75   10:27am Mon 3 Sep 2012   Share   Quote   Permalink   Like   Dislike   Protected   Here is the link to the possible securitization of rents if anyone didn't see this article: http://www.businessinsider.com/well-now-we-know-the-next-wall-street-scam-with-real-estate-will-be-2012-6

9. Bigsby Follow Befriend 2,826 comments Monterey, CA

   76   10:31am Mon 3 Sep 2012   Share   Quote   Permalink   Like   Dislike   Darrell In Phoenix says That's directed at you Pimp. Now, now, Realtors are Liars, is there really any need for that? You forgot the examples by the way.

10. 37108605 Follow Befriend 1 threads 1,055 comments

    77   11:29am Mon 3 Sep 2012   Share   Quote   Permalink   Like   Dislike   BayArea says It will be interesting to see what happens after the election and how real estate responds. I'll give you the response after this election: CLOSE YOUR EYES AND WHAT DO YOU SEE? NOTHING. BANG

11. 37108605 Follow Befriend 1 threads 1,055 comments

    78   11:30am Mon 3 Sep 2012   Share   Quote   Permalink   Like (1)   Dislike   8675309 Jenny says Yeah, but listing prices are up! Nobody is buying them, there are a glut of rentals, and dum-dum thinks he's a millionaire! Of course, only a fool thinks their shite is worth Xamount more than it really is and there are plenty of FOOLS out there in real estate.

12. 37108605 Follow Befriend 1 threads 1,055 comments

    79   11:32am Mon 3 Sep 2012   Share   Quote   Permalink   Like (1)   Dislike   Darrell In Phoenix says Zacksmom says Anyone trash talking AZ should spend some time living, working, and paying the high price of CA (especially OC and LA) then you realize that you have very little left over to save or plan for the future. Here my entire life. And it's a ghetto. The fact remains that sales volume is cratering, prices are falling and entire neighborhoods are empty. As they should be in LA and OC most of it is uglier than it was 30 years ago and still grossly overpriced and OVERRATED.

13. 37108605 Follow Befriend 1 threads 1,055 comments

    80   11:33am Mon 3 Sep 2012   Share   Quote   Permalink   Like (1)   Dislike   bgamall4 says BayArea says I go bowling with some friends, and everyone is talking about buying up low end real estate to rent out. They want to securitize the rents. That will likely cause a massive housing bubble as the rich buy up everything in sight. Then it will crash, as high rents force more multigenerational housing, or tent cities. The rents will start out lower than current rents. But then they will have to go higher as investors squeeze the renters. Gary Anderson strategicdefaultbooks.com You are completely and utterly out of touch with economic reality IMHO if you believe that to be truth.

14. 37108605 Follow Befriend 1 threads 1,055 comments

    81   11:34am Mon 3 Sep 2012   Share   Quote   Permalink   Like (1)   Dislike   Zacksmom says I'm talking about traditional sales, not short sales, REO's that are receiving multiple offers and their prices are being bid up with multiple offers. Most traditional buyers don't want to risk buying a bank owned home with possible defects. Short sales take several months to close and with prices soaring why would a bank settle when they can sell it for more money in a few months? One comment to this lunacy: LMFAO

15. ELC Follow Befriend (3) 3 threads 657 comments Fort Lauderdale, FL

    82   11:11am Sat 15 Sep 2012   Share   Quote   Permalink   Like   Dislike   repo4sale says 1000 to 10,000% returns in vacant land. I bought and sold over 20,000 acres... IRR/MATH GENIUS! That guy doesn't look like a Republican to me! Heck, there's still water dripping off him.

16. Goran_K Follow Befriend (4) 25 threads 1,517 comments Laguna Beach, CA Premium

    83   11:13am Sat 15 Sep 2012   Share   Quote   Permalink   Like (1)   Dislike   Protected   Yes, the secret is out, even Robert Shiller commented on it. 48% of existing home sales went to investors in Phoenix so far in 2012. As for people who actually are buying homes to live in? I present exhibit A: Speculation nation baby!

17. robertoaribas Follow Befriend (23) 55 threads 3,762 comments Scottsdale, AZ robertoaribas's website

    84   11:20am Sat 15 Sep 2012   Share   Quote   Permalink   Like   Dislike   Wow, Goran that is great news! For example, one home I bought is now rented to a young couple who just short sold their home. They make a combined income of $200,000 a year, and wanted to rent my home for 3 years... Hmm, in three years, I guess they will be buyers again??? thanks for validating my investment theory! I mean, I thought I was right, but the lack of new home sales, coupled with the rest of this info, of declining foreclosures, should put this market in a perfect position for serious price growth over the next few years... I'm feeling so good, I'm going to put an extra dash of cinnamon in my coconut milk and coffee! [gotta keep eating all vegan so I can live a long time to enjoy all the cashola I'm going to make! i better go the gym and do a couple of hours of aerobics and yoga today too!]

18. Goran_K Follow Befriend (4) 25 threads 1,517 comments Laguna Beach, CA Premium

    85   11:29am Sat 15 Sep 2012   Share   Quote   Permalink   Like   Dislike   Protected   robertoaribas says For example, one home I bought is now rented to a young couple Your anecdotes aside Roberto, you can't be this aloof man. Seriously, I've read your post in other non-real estate threads, and I can see that you're an intelligent guy who is capable of critical thinking, and being able to analyze data. But when it comes to real estate you become this "IWOGian strawman creator" who disregards data to defend a position no matter how important the data is to consider. Tell me Roberto, how do you get rising home prices, decline in sales, with a plummeting mortgage application index? How the heck does that happen? If people aren't taking out loans to buy homes, there's only one other alternative. But hey, I'm just repeating the viewpoint and analysis of your hero Robert Shiller. You going to call him a nitwit? Or moron? Someone you could teach economics 101? Be careful my friend. I know you're a good guy, but sometimes I can't tell if you're just putting on a show or actually believe some of the NAR hype you've spewed.

19. Goran_K Follow Befriend (4) 25 threads 1,517 comments Laguna Beach, CA Premium

    86   11:34am Sat 15 Sep 2012   Share   Quote   Permalink   Like   Dislike   Protected   Darrell In Phoenix says Wow... housing demand is at 15 year lows? I didn't think demand was cratering that bad. I think the most damning thing about this is even with all the liquidity that the federal government injected into the system, the mortgage purchase application index has drifted to post-1990s bubble lows. So where did the liquidity go? It's investors and banks tossing hot potatoes back and forth to each other, the normal citizen is only nominally involved now days. Guess who has the hot potato now? Yup, guys like Roberto and Iwog.

20. robertoaribas Follow Befriend (23) 55 threads 3,762 comments Scottsdale, AZ robertoaribas's website

    87   11:48am Sat 15 Sep 2012   Share   Quote   Permalink   Like   Dislike   Goran_K says For example, one home I bought is now rented to a young couple Your anecdotes aside Roberto, you can't be this aloof man. Seriously, I've read your post in other non-real estate threads, and I can see that you're an intelligent guy who is capable of critical thinking, and being able to analyze data. thank you sir!. Goran_K says But when it comes to real estate you become this "IWOGian strawman creator" who disregards data to defend a position no matter how important the data is to consider. Not sure about that. Two years ago, I argued with IWOG all the time. I was convinced that housing was merely propped up by the $8000 credit, and would fall hard after it ended. It kind of did, but actually interest rates dropped even further, disguising some of the price fall. Goran_K says Tell me Roberto, how do you get rising home sales, with a plummeting mortgage application index? How the heck does that happen? If people aren't taking out loans to buy homes, there's only one other alternative. Granted. You need cash buying investors, like me, for that to happen. I am now completely out of cash, I'm not sure how deep the cash reserves are for other investors, time will tell. Goran_K says But hey, I'm just repeating the viewpoint and analysis of your hero Robert Shiller. You going to call him a nitwit? Or moron? Someone you could teach economics 101? Nope. Look, Dr. Shiller didn't predict this 30% rise in home prices either. Just one month ago, he predicted a 10% drop in prices over the forward looking home prices in Phoenix, which I would hazard will go down as a terrible call. here is why: 1. his index lags. the latency period is at least 3 months for his average data included, and the last 3 months here have been stellar. Guaranteed, around 10% up case-shiller over the next 3 or 4 months as these sales data get recorded into the case-shiller index. That would give him 8 or 9 more months to first REVERSE the additional 10% up, AND get the other 10% down he originally predicted. Ain't going to happen in a market with declining foreclosures, declining loan delinquencies, and only 2 months inventory... That is one hell of a long shot call, 20% drop in the remaining 8 months...I'm not sure where he pulled it out of... 2. Ancillary data. Bankruptcies in AZ and Phoenix? down 20% year over year... city sales tax receipts? up year over year... State govt. is running a freaking surplus. My belief is that the economic recovery in Phoenix is going stronger than almost anywhere else in the US right now.. Europe, the fiscal cliff could definitly throw cold water on it, but that would operate against a stronger starting point. Herd investors. Yes, I am seeing this. I get emails form people, even reading me here who want to "jump on the Phoenix investment train..." Are there get rich quick investors jumping in here, who may/will get burned? perhaps... If the market goes up another 20% (which keep in mind puts median price at a mere $180,000 here) that would white wash over even poor decisions and timing... I don't care if there are herd investors... A. If they keep on stampeding in, and drive prices up, I'll sell a few and take the profits... B. If they leave, and stagnate/tank the market later I still don't care. Give me a couple years to save a bunch of money, and I'll buy more homes if prices crashed again. I buy homes that are significantly below even our market price. I buy them in conditions that give others pause, as I have the connections and skills to remodel them much more cheaply. Looking back at my purchases, I have averaged 20% under current market value at all times counting up my remodeling expenses, (I don't really count my time working on them, but oh well, worst case I gave away some long days working with my friends) which gives me a good deal of cushion. If I buy a home 20% under what it should sell for today, in a market where I would estimate it's value will be 10% higher in six months based on current (lack) of inventory and demand, I've got a pretty good safety net built in from day one...

21. Goran_K Follow Befriend (4) 25 threads 1,517 comments Laguna Beach, CA Premium

    88   11:53am Sat 15 Sep 2012   Share   Quote   Permalink   Like (1)   Dislike   Protected   Roberto, you want to make real money being a RE investor/flipper? Lets pitch a show on HGTV or Bravo, get some funny co-stars, and bring that troll attitude with you. I'll volunteer to help script and "dramaticize" the episode story lines. Then we'll both get private islands.

22. E-man Follow Befriend (31) 34 threads 2,543 comments San Jose, CA Premium

    89   3:02pm Sat 15 Sep 2012   Share   Quote   Permalink   Like   Dislike   Protected   CrazyMan says Dan8267 says I'll be in my bunk pretending to be a Republican. Now I know why conservatives have a better sex life than liberals. :)

23. Dan8267 Follow Befriend (16) 761 threads 7,667 comments Boca Raton, FL Premium

    90   4:36pm Sat 15 Sep 2012   Share   Quote   Permalink   Like   Dislike   Protected   E-man says Now I know why conservatives have a better sex life than liberals. :) Yeah, because Kate Beckinsale would really have sex with a republican. Not since

24. bgamall4 Follow Befriend (14) 747 threads 2,571 comments 63 male Las Vegas, NV bgamall4's website Premium

    91   4:43pm Sat 15 Sep 2012   Share   Quote   Permalink   Like   Dislike   Protected   Reader says You are completely and utterly out of touch with economic reality IMHO if you believe that to be truth. And why? It is being pushed by the hedge funds. You little investors want to fight the hedge funds? They would own every single house in the US if they could. They will attempt to securitize the rents, and that will give them money to buy even more houses. You claim to know so much, but I suggest you read this. http://www.businessinsider.com/well-now-we-know-the-next-wall-street-scam-with-real-estate-will-be-2012-6 I wrote it, but I provide proof that they want to securitize rents. The concept made it to CNBC, meaning wealthy people want this.

25. Goran_K Follow Befriend (4) 25 threads 1,517 comments Laguna Beach, CA Premium

    92   4:44pm Sat 15 Sep 2012   Share   Quote   Permalink   Like (1)   Dislike   Protected   robertoaribas says Not sure about that. Two years ago, I argued with IWOG all the time. I was convinced that housing was merely propped up by the $8000 credit, and would fall hard after it ended. It kind of did, but actually interest rates dropped even further, disguising some of the price fall. The $8,000 credit is peanuts compared to the type of props the government has brought out since 2009-2010. In adjusted terms, ZIRP has hurt the U.S economy far more than the entirety of the tax credit, and the cost continue to climb.

26. bgamall4 Follow Befriend (14) 747 threads 2,571 comments 63 male Las Vegas, NV bgamall4's website Premium

    93   4:44pm Sat 15 Sep 2012   Share   Quote   Permalink   Like   Dislike   Protected   robertoaribas says Median sales price in Phoenix went up ANOTHER $2000 from july to august. Median list price did too. Inventory for the entire market is still under 2 months supply, and under $200K single family homes, there are 4400 available, and 4300 sold in August... 1 month's inventory means much more demand than supply, and continued price increases going forward... People need to watch phoenix. If it continues in an obvious bubble, then it will spread. If Phoenix tanks, real estate will crash like the Titanic. Watch it. It all depends upon if people have continued confidence in the Fed. If that is lost, real estate will crash massively. I don't know the outcome. I think the bubble could continue for awhile, but it could be far shorter in duration than the last one.

27. JodyChunder Follow Befriend (3) 16 threads 1,367 comments Victorville, CA Premium

    94   4:47pm Sat 15 Sep 2012   Share   Quote   Permalink   Like   Dislike   Protected   Goran_K says ZIRP has hurt the U.S economy far more than the entirety of the tax credit, and the cost continue to climb. Excellent observation that gets surprisingly little mention. This is a MASSIVE ongoing subsidy to you-know-who.

28. ELC Follow Befriend (3) 3 threads 657 comments Fort Lauderdale, FL

    95   5:30pm Sat 15 Sep 2012   Share   Quote   Permalink   Like   Dislike   bgamall4 says People need to watch phoenix. If it continues in an obvious bubble, then it will spread. If Phoenix tanks, real estate will crash like the Titanic. Watch it. I'm in Florida (which sucks) but I would think Phoenix is not a place anyone would like to move to. I would think whoever is there stays there because they have little choice. My impression of it was a hot dry waste land. Now Sedona was different world entirely. But that was 20 years ago.

29. rufita11 Follow Befriend (3) 10 threads 162 comments San Ramon, CA

    96   6:08pm Sat 15 Sep 2012   Share   Quote   Permalink   Like   Dislike   ELC says I'm in Florida (which sucks) but I would think Phoenix is not a place anyone would like to move to. I would think whoever is there stays there because they have little choice. My impression of it was a hot dry waste land. Now Sedona was different world entirely. But that was 20 years ago. The only place in AZ I could ever live is Flagstaff. Phoenix is just way too hot in the spring and summer and not very pretty to look at.

30. robertoaribas Follow Befriend (23) 55 threads 3,762 comments Scottsdale, AZ robertoaribas's website

    97   6:11pm Sat 15 Sep 2012   Share   Quote   Permalink   Like   Dislike   ELC says I'm in Florida (which sucks) but I would think Phoenix is not a place anyone would like to move to. I would think whoever is there stays there because they have little choice. My impression of it was a hot dry waste land. Now Sedona was different world entirely. But that was 20 years ago. Phoenix has been one of the fastest growing cities in the US for the past 40 years... So if "you would think nobody wants to move there", maybe thinking isn't really your thing?

31. ELC Follow Befriend (3) 3 threads 657 comments Fort Lauderdale, FL

    98   6:45pm Sat 15 Sep 2012   Share   Quote   Permalink   Like   Dislike   robertoaribas says Phoenix has been one of the fastest growing cities in the US for the past 40 years... So if "you would think nobody wants to move there", maybe thinking isn't really your thing? Starting shit with me now?

32. bgamall4 Follow Befriend (14) 747 threads 2,571 comments 63 male Las Vegas, NV bgamall4's website Premium

    99   7:16pm Sat 15 Sep 2012   Share   Quote   Permalink   Like   Dislike   Protected   ELC says Starting shit with me now? He is pointing out fact. As people get older and snow becomes too cold, places like Phoenix and Las Vegas look better and better. Much easier living than in cold climes and not too many bugs, or snakes or alligators like in Florida. But there are conflicting Zillow charts about Phoenix: http://www.zillow.com/local-info/AZ-Phoenix-home-value/r_40326/ and this one: http://patrick.net/forum/?p=1215683&c=866776#comment-866776

33. dunnross Follow Befriend 28 threads 1,489 comments San Jose, CA Premium

    100   9:04pm Sat 15 Sep 2012   Share   Quote   Permalink   Like (1)   Dislike   Protected   robertoaribas says Phoenix has been one of the fastest growing cities in the US for the past 40 years... That's because all the rednecks like roberto move out there. When you're driving a pick-up and have pea for brain, which eventually, after 2-3 years of living in Phoenix, starts to turn into pea puree, the hot phoenix wasteland starts to become very attractive to you. After all, where else can you ride your bike to work in 105 degree weather?

34. ELC Follow Befriend (3) 3 threads 657 comments Fort Lauderdale, FL

    101   4:06am Sun 16 Sep 2012   Share   Quote   Permalink   Like (1)   Dislike   dunnross says the hot phoenix wasteland starts to become very attractive to you. After all, where else can you ride your bike to work in 105 degree weather? My friend moved to Phoenix from Florida and hates the oppressive heat, can't find work, complains of scorpions, snakes all over, can't have a garden since nothing will grow. She had two cats die because she let them out of the house. Yet her daughter who moved with her loves it. They're renting a 5 bedroom Mc Mansion for $2500/mth and it's a total party house for them. All $2500 will get you in S. Florida is a 3/2 on a canal.

35. ELC Follow Befriend (3) 3 threads 657 comments Fort Lauderdale, FL

    102   4:30am Sun 16 Sep 2012   Share   Quote   Permalink   Like   Dislike   bgamall4 says He is pointing out fact. As people get older and snow becomes too cold, places like Phoenix and Las Vegas look better and better. Much easier living than in cold climes and not too many bugs, or snakes or alligators like in Florida. It was the, "maybe thinking isn't really your thing?" part that I felt was uncalled for. It's beyond me why people move to Florida, Phoenix or Vegas. How could anyone want to live in the desert or a swamp?

36. robertoaribas Follow Befriend (23) 55 threads 3,762 comments Scottsdale, AZ robertoaribas's website

    103   9:23am Sun 16 Sep 2012   Share   Quote   Permalink   Like   Dislike   dunnross says That's because all the rednecks like roberto move out there. Yeah, that's me! I'm one of those UC Berkeley mathematician liberal vegan rednecks, from Barcelona Spain!

37. cw Follow Befriend (1) 16 comments Windsor, CA

    104   10:28am Sun 16 Sep 2012   Share   Quote   Permalink   Like   Dislike   This such a timely story since my "ghetto rental" is in escrow to be sold for $65k . I bought it in late 2009 for $32k and rents for $950. However it is increasingly difficult to keep rented and is in great demand since the mainstreem seems to have found out how great this is- or was two years ago. It is just like 2004 again for me-that was when I sold my other rentals to "investors" who were not even homeowners themselves.

38. B.A.C.A.H. Follow Befriend (6) 5 threads 2,359 comments

    105   10:35am Sun 16 Sep 2012   Share   Quote   Permalink   Like   Dislike   I knew a decent mind-his-own-kinda-business guy who became one of those kinda "slumlords". It penciled out for him. Except that, since the tenants knew some personal information about him, he was intimidated by them. You can have the legal system behind you all you want, its not the same thing as you and your family being safe from methheads and gangsters and their anonymous cronies. A level-headed guy, had to sell it out from under them and was even nervous about that during the process.

39. B.A.C.A.H. Follow Befriend (6) 5 threads 2,359 comments

    106   11:10am Sun 16 Sep 2012   Share   Quote   Permalink   Like   Dislike   BayArea says Case and point... I sit at the family table at dinner, and the topic is real estate investment. What's not Cool and Hip right now? What will your oh-so-smart people laugh at you with derisive comments and derisive smirks about? That's probably the best investment/savings vehicle right now. I don't "know" what that is, but I "think" it may be cash.

40. ELC Follow Befriend (3) 3 threads 657 comments Fort Lauderdale, FL

    107   11:31am Sun 16 Sep 2012   Share   Quote   Permalink   Like (1)   Dislike   B.A.C.A.H. says I don't "know" what that is, but I "think" it may be cash. The rate of return reflects the amount of risk. Cash yields nothing because it is the best investment out there. "Waiting patiently" is the best investment right now and the interest rates reflect that.

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