patrick.net

Bitcoin says

mell says

it's not worth for builders to build in many areas

California builds all over the place (at least what i see here in SoCal). Have been to TN and AZ this year and many, many new housing communities are popping up in great locations.

Maybe its different in flyover country like IL?

Lol. 15 years in the industry here. Was just in AZ, UT, TN, NV, FL (x3), WI, PR and ST in the last 6 months. Obviously IL. I've seen more than you. One market does not make a national market like Socal. Given the CA exodus occurring and coming, I'm not bullish on housing there outside of big tech areas. FL is probably the new hot market. Haven't been to TX in a year or so, but I see that cooling off as well.

Just because building is happening doesn't mean it's a profitable endeavor either. You stop building you don't have a job. That was our point in labor costs, materials and Mell's permit costs comments. Everyone is chasing the next $$. Margins are low right now in constructing new homes. Yes, homes will always get built. We're talking profit margins though. Builders will build because it is their work. They just make less. I know dozens of successful ones.

And yes, values will rise. A family of 4 that doesn't make much will get $5,600 and in a lot of places that will push them over the FHA 3.5% downpayment threshold. So houses will get sucked up quickly. Without more stimulus in 12-18 months, housing may not look so hot though. Not a collapse, but I'm not certain insane inflation is coming to help them out. There will be a small wave, but if there's no more stimulus housing is going sideways or a slight drop in most places in 12-24 months.

I'd call housing low risk but low margins right now. I wouldn't count on appreciation all that much now. This all assumes Biden stops the printing press from this Covid BS (Trump's fault too). If he keeps it going all bets are off the table.

Never have I seen a hotter real estate market than I see today... no matter what the media prints.

This is coming from someone that bought in 2007 too...

HunterTits says

BayArea says

Never have I seen a hotter real estate market than I see today... no mater what the media prints.

This is going from someone that bought in 2007 too...

All those trillions in unnecessary stimulus money created out of thin air has to go somewhere.

Ask Robinhood what they think of unnecessary stimulus money.

BayArea says

Never have I seen a hotter real estate market than I see today... no mater what the media prints.

This is coming from someone that bought in 2007 too...

I don't disagree. The stimulus is going to be a down payment for a lot of people and the inventory is low. That's been the case for a while. I don't see a crash. But I don't see the current decade long party continuing full steam ahead like it has been. More stimulus being the caveat.

It's going to hit a wall though at some point. This is the first time in a long time I'm getting bearish on housing. Again, not a crash, but sideways and slight dips in certain markets.

WookieMan says

BayArea says

Never have I seen a hotter real estate market than I see today... no mater what the media prints.

This is coming from someone that bought in 2007 too...

I don't disagree. The stimulus is going to be a down payment for a lot of people and the inventory is low

Quick reality check for ya. In places like California, your stimulus money doesnt get you far in terms of down payment. We are talking about housing, not a down payment on a beater car lol. I am well aware that in flyover country the stimulus might be enough to pay down enough to get yourself an average crap shack.....not in premium places like CA.

The buyer in California makes too much for a stimulus check. Low household income people (below 150k) cant afford houses in CA.

WookieMan says

Given the CA exodus occurring and coming

thanks. I needed that laugh! Every year the same story. Someone hasnt been in CA for a while....traffic is a bitch here close to the coast. Those arent tourists. Just people living in CA. Wake me up when that changes. Houses in SoCal sell like hot cakes (over asking price).

Bitcoin says

The buyer in California makes too much for a stimulus check. Low household income people (below 150k) cant afford houses in CA.

Yup... the house full of 12-15 illegals. $20k stimulus doesn't get you you heading in the right direction at all with an FHA loan? lol. Do you really live in CA? Not buying your BS. I've been to Socal enough to see what I saw and enough boots on the ground (family & friends) to hear the reality straight from people that live there. But keep putting lipstick on a pig and being happy to pay $800k for a shitty house because ya can't handle a little cold. Sad people are that weak.

Bitcoin says

Someone hasnt been in CA for a while....traffic is a bitch here close to the coast. Those arent tourists. Just people living in CA.

Who said they were tourists? I didn't. And who is they? Traffic is a geographical issue. It's no different in Chicago where you butt against a body of water. Same with San Diego or LA. There's only 3 ways to get in as the 4th is blocked off by water. Not sure your point. ATL and DAL have as bad, if not worse traffic than CA and they don't have the water issue.

People are leaving CA and will continue to do so. Locally it's probably been a story. It's national now. Why do you think Texas is so popular? AZ. Californians are moving in droves to places like Bozeman, MT or Boisie, ID where brrrrrrrrrrr, it gets a little cold.

Check out your Uhaul rates chief, math doesn't lie. That shreds your narrative. Housing is always delayed in reacting given the transaction timeline and nature of the business. CA is in trouble. More taxes, fines and fees are coming your way like a tsunami. That kills property value regardless of climate. I've lived it here in IL and CA is meeting the day of reckoning. Not if, it's when.

WookieMan says

Bitcoin says

The buyer in California makes too much for a stimulus check. Low household income people (below 150k) cant afford houses in CA.

Yup... the house full of 12-15 illegals. $20k stimulus doesn't get you you heading in the right direction at all with an FHA loan?

20k ROFL

Someone needs a reality check of what a decent house costs in CA. 20k!! Muahahahahahahahah, maybe try that in flyover country like IL

And besides that, those people that get their stimulus check dont save it is my guess. If those people are smart they invest it in the stock market or Bitcoin. But I doubt it....they will pay bills or credit card balances.....Dude, if you want to buy in places like CA, you need a lot of money. Thanks for the laugh though.....20k!

And regarding the exodus that we hear about every year for the last 10 years......yawn.....wake me up when traffic dies down.....i would love an exodus. Was at the gun store this morning and there was a freaking long line 30minutes before it opened. Stores, freeways, shopping malls.....packed. Keep dreamin of your CA exodus.

HunterTits says

Biden is lifting the floodgates of H1Bs for his Globalist masters. Soon another wave of Indians & Chinese with lots of cash will flood CA housing markets.

yep. Haters keep talking about a CA exodus for a decade if not longer.....for any person leaving CA we see 2 foreigners in line to get in.

Bitcoin says

for any person leaving CA we see 2 foreigners in line to get in.

And this is good? They send the money back to the homeland. Extracting wealth from your state and the nation. You shouldn't want this regardless of home values.

WookieMan says

Bitcoin says

for any person leaving CA we see 2 foreigners in line to get in.

And this is good?

Nobody is saying anything about good or bad. We are simply saying that your CA exodus story is a fairytale. Just because people want it to happen since a decade doesnt mean thats reality. sry

personally, I would love a CA exodus. I dont want to pay full price or over asking price for my next rental investment.

Bitcoin says

Nobody is saying anything about good or bad. We are simply saying that your CA exodus story is a fairytale. Just because people want it to happen since a decade doesnt mean thats reality. sry

Not wishing a CA exodus. Just noting what is happening. Not sure how else to explain it.

I don't know who is leaving California, but I recently met a few of them.
They have a lot of fuckin money and don't like being screwed for the privilege of being in California.
Most recently I met at the Palm Beach Boat Show.
$28 plus 20 bucks to park kept out the riff raff.
I went to visit an old friend who builds custom yachts in Maine.
They knew him and stopped by too. One had a place in Catalina Island, wow. The other sold a place in Palo Alto.
Funny that rich geezers buy yachts, they haven't the energy to actually use them very much.
I think some people just hate getting screwed and prefer to visit from out of state.
I heard of a guy in San Diego who became a Texas resident, and donated the Diego house to his college. He made an agreement that he lives there rent free.
Another guy I met in Texas has a house in San Rafael but he is a Texas resident.

I believe that until the foreclosures begin again, now is a tough time to buy a place at least where I like.

I think houses are a questionable investment to rent out, but everyone has his preference.

WookieMan says

Not sure how else to explain it.

Its just your talk, not a reality.

clambo says

I think houses are a questionable investment to rent out, but everyone has his preference.

long term housing goes up. dips are buying opportunities. Say you buy a rental for 600k and pay 200k down. your 5-10% appreciation for your 600k house needs to be compared to investing 200k in the stock market. in my example i am assuming I am breaking even (PITI - rent - maintenance - taxes) the first few years. After that I am making money.
Obviously, lots of variables here (interest rates, macro economics, etc)

Long term houses rise, and so do stocks.
Discussions of putting $200k down are strange because it assumes someone has let their 200k sit in the bank to be liquid.
Or, he sold something to get the money.
Few people get paid the bucks to save 200k in cash, but some do of course (like my father).
Anyway, you can get income and appreciate capital in real estate or investments.
Investments are taxed favorably, are liquid, and the entry fee is low to get started.
The broke people I know all wish someone would lend them the down payment.
It lands on my deaf ears : "rotsa ruck."
addendum
I'm happy I don't worry about wear and tear on my mutual funds, rising property taxes and fees, and the inability to evict deadbeats because the government prevents me.
My friend is bummed out, he owns a building in Hayward full of deadbeats.

clambo says

Long term houses rise, and so do stocks.
Discussions of putting $200k down are strange because it assumes someone has let their 200k sit in the bank to be liquid.
Or, he sold something to get the money.
Few people get paid the bucks to save 200k in cash, but some do of course (like my father).
Anyway, you can get income and appreciate capital in real estate or investments.
Investments are taxed favorably, are liquid, and the entry fee is low to get started.
The broke people I know all wish someone would lend them the down payment.
It lands on my deaf ears : "rotsa ruck."
addendum
I'm happy I don't worry about wear and tear on my mutual funds, rising property taxes and fees, and the inability to evict deadbeats because the government prevents me.
My friend is bummed out, he owns a building in Hayward full of deadbeats.

Around your midlife you should have enough liquid investments such as stocks and funds so that selling 10%-40% of those will give you a 200k down-payment. So you can buy a house if you want and keep investing.

clambo says

I'm happy I don't worry about wear and tear on my mutual funds, rising property taxes and fees, and the inability to evict deadbeats because the government prevents me.
My friend is bummed out, he owns a building in Hayward full of deadbeats.

Great point. Everyone dips their toes in the water of all types of investment. Real estate is a pain in the ass if that's not your profession as an investment. And I know we'll get the people that say it's smooth sailing, they haven't had to do anything in 10 years. That's pure bull shit.

If you're going to work, a business can pay you back exponentially more than stocks or real estate. It's not for everyone for sure, especially if you don't have a specific skill or niche you're interested in. It's worked for my family and allows me to dick around here a bunch and not worry about money. Valuations don't matter until you sell, but we can live extremely comfortably if we could sell today and retire. I'm 37.

I've been hesitant to get back into the real estate market, but we're thinking of getting a vacation rental in St. Thomas. St. John would be better, but more money. We'll see what's on the market in October, but we might pull the trigger when we're down there.

It's a perfect non-passport tropical place to go. I unfortunately don't think pandemics (and other bull shit) are going away and it's US territory. Cruises are still done for a while. Without them, people are traveling differently and I'm not certain cruise lines get back to their former glory even as an NCL shareholder. So I'm not seeing the island being packed with 4-10 cruise ships.

Puerto Rico is another consideration, but beaches just aren't that great. Inland rain forest and hiking are fun, but that gets boring quick. Vieques is cool, but the ferry system is pure trash. I'd have to get a private pilots license for that to make sense as well since it's so far from SJU by car and then ferry. That's a full ass travel day.

mell says

Around your midlife you should have enough liquid investments such as stocks and funds so that selling 10%-40% of those will give you a 200k down-payment. So you can buy a house if you want and keep investing.

Should. Tell that to over half the population that can't reach into their bank account for a $400 emergency.

Onvacation says

mell says

Around your midlife you should have enough liquid investments such as stocks and funds so that selling 10%-40% of those will give you a 200k down-payment. So you can buy a house if you want and keep investing.

yep, 100% agree.

WookieMan says

Everyone dips their toes in the water of all types of investment. Real estate is a pain in the ass if that's not your profession as an investment.

Some people actually have fun doing it! AND make money. Do we work hard for it? Sure....and you have to have skills. (knowing how to repair/fix things helps and knowing how to talk to people is a big factor too). Be good to your tenants.....in most cases they are good to you too. I rather charge less rent and have them long term then charge premium and have high turnover (with vacancy periods). Vetting tenants upfront is crucial. There is a looong checklist to go through before you accept someone as a tenant.

Bitcoin says

You put 20-30% down on the house but gain 5% annually in appreciation on the entire house value.

Leverage works both ways.

Your downpayment can be wiped out by a couple of bad years. And it does happen.

And consider that that house is draining your money for property taxes, insurance, and maintenance literally forever.

WookieMan says

And this is good? They send the money back to the homeland. Extracting wealth from your state and the nation. You shouldn't want this regardless of home values.

Not really. Just a small amount. Mostly they pay their rent/mortgage with it.

Patrick says

Your downpayment can be wiped out by a couple of bad years. And it does happen.

And consider that that house is draining your money for property taxes, insurance, and maintenance literally forever.

yep, lets say we have a downturn. if you arent strapped, you take this as an opportunity and buy another property. Nobody can time it....so having cash available is key to success.

i am always thinking long term.

yes, taxes, insurance and maintenance. still cheaper in the long run then renting? If i need cash, i can refi and push my PITI down. My mortgage is always fixed or will get lower. Rents always go up longterm. And its much more fun to own. I love being a landlord and i hated being a renter. Luckily, renting was short term in my life....never again.

Onvacation says

mell says

Around your midlife you should have enough liquid investments such as stocks and funds so that selling 10%-40% of those will give you a 200k down-payment. So you can buy a house if you want and keep investing.

Should. Tell that to over half the population that can't reach into their bank account for a $400 emergency.

That's an American thing though, esp. womyn are chronically bankrupt, almost no matter how much they make. It's the constant keeping up with the Joneses and expecting to go on vacation 4 times a year and using the Uber and Uber eats for everything instead of doing it yourself. Sure it's tougher these days for the youth fighting inflation but that problem has been around long before. In other countries families go on a long vacation once or twice a year into a cheap summer/winter cabin more as a family retreat, not spa vacations and celebrity bullshit. The amount of time people eat out or go out, even if they have zero monies is mind boggling. Live frugal and invest, you can still travel and have lots of fun, just go off the beaten path. Back in the bachelor days men who should have been investing and saving used to flash their bling and fancy cars and whatnot to get a shot at fucking a hot girl and it was always a fun competition to see if you can get her instead by pure virtue of game and take her home into your studio with your old beat up car. Once you discover game and the forces of nature it works quite often. One should save and invest at the minimum deep into ones 30s.

WookieMan says

I've been hesitant to get back into the real estate market, but we're thinking of getting a vacation rental in St. Thomas. St. John would be better, but more money. We'll see what's on the market in October, but we might pull the trigger when we're down there.

I look these up on the Treasury website the first of each month, when the interest is accrued/posted.

The I-bonds I spent $15k to get in Q3-Q4 of yr-2000 are worth $48.9k today. All interest accrual tax deferred, and when redeemed, exempt from state income tax. And I got a lot of derision for getting those, when dot.com, SP500, and Real Estate were all so Hip and Cool.

I could get a whole lot of timeshare or whatever days or whatever with that.

Patrick, your house in the hills just sold. You could have lived in this for the price of your monthly rental (taking into account a refi at 2003 rates).
Berkeley home sells for $1 million over asking price
A Berkeley home just sold for double its asking price, an unusual feat even in an ultra-competitive market like the Bay Area.
The mid-century house sold for $1 million over its asking price at $2.3 million and received 29 offers in 11 days, as first reported by CBS San Francisco.

It's history is interesting.
2000 Sold $749,000
2011 Sold $847,000
2021 Sold $2,300,000

https://www.realtor.com/realestateandhomes-detail/6-Harvard-Cir_Berkeley_CA_94708_M11774-36395

There would be no way in hell I would sell 200K of an IRA account and pay taxes, penalties, to buy a house.
A Roth allows it of course.
So, how about I sell a non retirement mutual fund? I would owe 2 capital gains taxes if I were in California.
I just put the Vanguard app on my phone.
It has a “news feed”, it says my investment return since April 2020 was 57.8%

clambo says

There would be no way in hell I would sell 200K of an IRA account and pay taxes, penalties, to buy a house.
A Roth allows it of course.
So, how about I sell a non retirement mutual fund? I would owe 2 capital gains taxes if I were in California.
I just put the Vanguard app on my phone.
It has a “news feed”, it says my investment return since April 2020 was 57.8%

Yeah preferably not an IRA but a (day)trading or savings account, or mutual fund, Roth may work too. You can also take a loan against your 401k, those are usually either interest free (cares act) or the interest goes back into your 401k to you. Plenty of options to get 100k or 200k together.

Michael Cooke says

A rich neighborhood is simply paying more to live a local "brand name" neighborhood. You get the same identical Polo shirt without the label. I can see very little difference between middle or upper middle class neighborhoods and "rich" neighborhoods here.

I could be wrong on this pt; feel free to correct me if you know, but these neighborhoods aren't necessarily tied to a specific public school

Michael Cooke says

Here it's about $200 maybe $300 per month.

80-100k euros take home in Germany is a ton of money; a person making minimum wage who is single makes 1100 which is 250 euro more than the average monthly cost of living

https://www.learngermanonline.org/salaries-and-living-costs-in-germany/

Bitcoin says

taxes, insurance and maintenance. still cheaper in the long run then renting?

Yes, for me in Silicon Valley, it has clearly been better to rent and put my "principal" payments into the stock market. But I admit that this area is strange that way. Houses around here never "pencil out" as they say. That is, you can never cover a mortgage by buying a house and renting it out in Silicon Valley, or San Francisco.

Patrick says

Bitcoin says

taxes, insurance and maintenance. still cheaper in the long run then renting?

Yes, for me in Silicon Valley, it has clearly been better to rent and put my "principal" payments into the stock market. But I admit that this area is strange that way. Houses around here never "pencil out" as they say. That is, you can never cover a mortgage by buying a house and renting it out in Silicon Valley, or San Francisco.

I’m sure you are getting a solid rental deal in Menlo (affluent areas typically have terrible rent:price ratios)

But boy have you missed out on a lot of equity upside. I don’t have to tell you that though.

Assuming a 20% DP, that 5x lever in real estate is pretty attractive compared to the 1x you see in the stock market. My two cents...

If you don't meet the income requirements for Roth IRA,

makes sense if you plan to be worth more at 59.5 yrs of age than when you open it (assuming you do this early in career)

https://www.investopedia.com/how-to-set-up-a-backdoor-roth-ira-4584775

https://www.daveramsey.com/blog/backdoor-roth-ira


mell says

There would be no way in hell I would sell 200K of an IRA account and pay taxes, penalties, to buy a house.
A Roth allows it of course.

mell says

Uber and Uber eats for everything instead of doing it yourse

fees and tips are routinely 30%+ of the entire bill. Almost makes you want to at least do takeout. Womyn notoriously, on average, do not cook. reason: because men......

BayArea says

Assuming a 20% DP, that 5x lever in real estate is pretty attractive compared to the 1x you see in the stock market. My two cents...

Bingo!

mell says

on vacation 4 times a year a

Ultra common in Manhattan. Its just difficult to live there and I'm sure people post their awesomeness on social media but they also usually are doing it to get a respite from living in high density quarters and always having people on your ass everywhere you go. Most single people making 150K or more are taking more than 2 vacations per year. 4 is a very popular number, a neat quarterly respite.

MMR says

usually are doing it to get a respite from living in high density quarters and always having people on your ass everywhere you go

exactly. If you live in a nice area with great weather you are less likely to feel the need to always go away. Kind of sad to think about living in a shitty place and always wanting to escape....problem is, you have always have to come back to your shitty place. I rather pay the sunshine tax and enjoy every day. I would even pay more for what I am getting here. Still fun to travel and you are thankful to be coming home.....

BayArea says

Assuming a 20% DP, that 5x lever in real estate is pretty attractive compared to the 1x you see in the stock market. My two cents...

It's a sunk cost until you sell. Then you won't have a place to live any more. And in the meanwhile, "house poor" because of too much going to the mortgage and property taxes.