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Top of the RE Bubble?


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2021 May 31, 12:20pm   4,564 views  66 comments

by joshuatrio   ➕follow (4)   💰tip   ignore  

Not sure if it's just a fluke of a week or rush of spring sellers - but I'm all the sudden starting to see a good bit of land and homes for sale in the ATL area, that have been locked up for a long period of time.

I also have a few zip codes in Florida that I monitor, and I'm starting to see a lot of price reductions being posted as well.

Have we reached the top?

I think inflation is here for sure, but I'm wondering if we over shot with commodities and real estate and there is a good sized correction coming over the next year or so.

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35   B.A.C.A.H.   2021 Jun 1, 6:23pm  

Farmer,

How many local homeowners told you this?

farmer2021 says
Typical reason people don;t cell bay area real estate:
1) capital gains tax. Large number of families have $500k+ gains.
2) Fear of never been able to return to bay area if sell their house and priced out in future. So willing to get shitty yields.
3) House prices always go up and govt insures that they do.
If a $2M home have $72k rental and house appreciate 5% .. Rental yield becomes meaningless and it is happening for long time.
4) Prop 13 locks your property tax.
Bay area have the mix of all ingredients to keep house prices high.
36   EBGuy   2021 Jun 1, 7:43pm  

Booger says

Around 400,000 renters told to expect eviction notices

From the article:
The cost of boosting support to tackle rent arrears is a fraction of the cost of the stamp duty holiday.
We're not in Kansas any more. Help me Auntie Em.
37   Patrick   2021 Jun 1, 7:54pm  

farmer2021 says
NNN commercial property


Thanks @farmer2021 I didn't know this term.

https://www.investopedia.com/terms/t/triple-net-lease-nnn.asp
38   GreaterNYCDude   2021 Jun 1, 9:00pm  

Depends on what changes Biden can push through to make the RE market "fairer" to minorites as per today's announcement. If they lower lending standards prices will continue to climb. Clinton had the same MO and that ultimately led to the real estate bubble. Been almost 20 years since the hosuing market went haywire. How quickly people forget.
39   FarmersWon   2021 Jun 1, 11:41pm  

B.A.C.A.H. says
Farmer,

How many local homeowners told you this?

farmer2021 says
Typical reason people don;t cell bay area real estate:
1) capital gains tax. Large number of families have $500k+ gains.
2) Fear of never been able to return to bay area if sell their house and priced out in future. So willing to get shitty yields.
3) House prices always go up and govt insures that they do.
If a $2M home have $72k rental and house appreciate 5% .. Rental yield becomes meaningless and it is happening for long time.
4) Prop 13 locks your property tax.
Bay area have the mix of all ingredients to keep house prices high.


Many. Upper class(Not ultra wealthy) asians typically have this thinking.
40   zzyzzx   2021 Jun 2, 5:17am  

EBGuy says
From the article:
The cost of boosting support to tackle rent arrears is a fraction of the cost of the stamp duty holiday.
We're not in Kansas any more. Help me Auntie Em.


Article is for the UK, but the same conditions exist elsewhere.
41   Hircus   2021 Jun 2, 9:39am  

farmer2021 says
B.A.C.A.H. says
Farmer,

How many local homeowners told you this?

farmer2021 says
Typical reason people don;t cell bay area real estate:
1) capital gains tax. Large number of families have $500k+ gains.
2) Fear of never been able to return to bay area if sell their house and priced out in future. So willing to get shitty yields.
3) House prices always go up and govt insures that they do.
If a $2M home have $72k rental and house appreciate 5% .. Rental yield becomes meaningless and it is happening for long time.
4) Prop 13 locks your property tax.
Bay area have the mix of all ingredients to keep house prices high.


Many. Upper class(Not ultra wealthy) asians typically have this thinking.


I've also heard some of these sentiments from a few asian coworkers (both chinese and indian). Most of them bought bay area homes in the past few years.
42   clambo   2021 Jun 2, 9:55am  

There's no "top" probably.
There may be a dip soon when people start getting foreclosed on and evicted.
I'm probably going to buy something in the town which I like.
I'm thinking of it for intangible reasons, avoiding rules is a main reason.
Houses are not a great investment in states like California; they are a tax trap.
It's like marriage; guys will still do it although it makes no sense on several levels.
43   B.A.C.A.H.   2021 Jun 2, 12:39pm  

Hircus says
the past few years.


Yeah. Been here the past few years and know it all, already. Know-It-Alls.
44   SunnyvaleCA   2021 Jun 2, 1:40pm  

B.A.C.A.H. says
Farmer,

How many local homeowners told you this?

farmer2021 says
Typical reason people don;t cell bay area real estate:
1) capital gains tax. Large number of families have $500k+ gains.
2) Fear of never been able to return to bay area if sell their house and priced out in future. So willing to get shitty yields.
3) House prices always go up and govt insures that they do.
If a $2M home have $72k rental and house appreciate 5% .. Rental yield becomes meaningless and it is happening for long time.
4) Prop 13 locks your property tax.
Bay area have the mix of all ingredients to keep house prices high.

I'm in the exact same boat. I've also been wondering why homeowners turn their shacks into rental properties. When I flee I'll definitely be selling because I'd rather take the massive tax hit and be done with it. Maybe there will be lots of selling before the end of the tax year, since people are likely to believe federal long term capital gains tax rates will be going up.
45   SunnyvaleCA   2021 Jun 2, 1:46pm  

B.A.C.A.H. says
It's hilarious, they're signing up for a massive annual property tax bill. ... And because of the recent Republican authored changes to the income tax law, the entire amount of those property taxes can no longer be deducted from the (required) super high incomes to service the property tax bill.

My experience was that AMT effectively lowered my deductions to exactly 0 in years prior to 2019. Still, prospective shack buyers won't find this out until April 15 after the year they bought. Oops!

Turns out that for me the republican-led tax changes slightly improved my tax situation since I was able to take the $12k standard deduction and the AMT limits were less stringent. I typed all the year 2019 numbers into 2018 tax software and confirmed that, indeed, I saved some money using the 2019 rules.
46   EBGuy   2021 Jun 2, 1:50pm  

zzyzzx says
Article is for the UK, but the same conditions exist elsewhere.

Looks like Rentmageddon begins at the end of the month. Per the State of California:
Beginning July 1, 2021, landlords can take tenants to small claims court to recover unpaid rent debt regardless of how much the tenant owes... Also please understand that, no matter what, beginning July 1, 2021, you will have to pay the full amount of your rent to be protected from eviction.
Excess inventory has already put some downward pressure on rents (but they seem to leveling off). Will be interesting to see if new listings, once eviction season begins, put more downward pressure on the market. I know my municipality has a number of vacancies, but a lot will depend of whether that inventory gets sucked up once colleges go back to in person learning in the fall.
47   Misc   2021 Jun 2, 9:43pm  

What is going to be interesting is the shear amount of coin upfront that it is going to take for new renters.

Landlords just got fucked and they are not going to allow it again. I expect to see 6 months+ of rent up front. They will call it something else, but yes expect it. They will try to pin it as as racist, but economics will prevail.

Slime renters who gamed the system will get what is coming.
48   Blue   2021 Jun 3, 1:16am  

Misc says
I expect to see 6 months+ of rent up front.
that should bring inventory up.
49   Misc   2021 Jun 3, 1:51am  

If illegals are paying coyotes $8k to get into the country, there is not going to be much of an increase in inventory.
50   WookieMan   2021 Jun 3, 6:12am  

Misc says
Landlords just got fucked and they are not going to allow it again. I expect to see 6 months+ of rent up front. They will call it something else, but yes expect it. They will try to pin it as as racist, but economics will prevail.

I don't know CA rental laws and I'm sure they vary from city to city. You cannot ask for months of rent up front in Chicago. Security deposit (which is a fucking pain in the ass as a landlord) and your first months rent is it. You could market a lower rate for those that pay 6 months in advance, but cannot be a requirement to rent. You'll get yo ass in trouble here.

Chicago is probably one of the least landlord friendly cities in the country. I think groups send out people as well to catch landlords breaking rules. There are also informed jackass tenants that try to catch even the most minor slip up. Security deposits pay interest to the tenants and the landlord HAS to send it or else. You cannot do first and last month. Evictions take at least 60 days and personal property laws are onerous for the landlord.

Unless you get a deal on a building, it makes no sense to own a rental in Chicago with a declining population, high taxes and corrupt government. Part of the reason I left my previous job. Half of it was dealing with dumb ass regulations and accounting. I get there are slum landlords out there, but never understood some of the regulations in Chicago.
51   zzyzzx   2021 Jun 3, 7:39am  

WookieMan says
but never understood some of the regulations in Chicago.


Politicians pandering to their mostly deadbeat clientele. In Baltimore City there is even a regulation requiring that when you throw someone out, you have to put their stuff in a storage unit within one mile of their rental location.
52   porkchopXpress   2021 Jun 3, 7:41am  

Russia to exit from all Dollar assets in its Wealth Fund & to invest in Euros, Pound, Gold, Yuan instead - Russian Finance Minister Siluanov

"We can make this change rather quickly, within a month," Siluanov told reporters Thursday. The transfer will affect $119 of a total $186 billion in liquid assets.
53   Bitcoin   2021 Jun 3, 7:47am  

Absolutely no top of RE market in sight. This can go on for many years until it cools off.
Super low interest rates. No inventory. Multiple offers on houses. Relatively tight lending standards.
Unless interest rates increase significantly, prices will continue to go up. All my neighbors that bought recently are loaded. Good jobs and spend like there is no tomorrow. I dont believe its all on credit cards. Two professionals with high paying jobs and a down payment have no problem buying a 1M-1.5M dollar house in Socal.

Builders let the highest bidder secure a lot now. It used to be first come first serve to get on the list for depositing money in order to secure a lot. But with 14,000 people on the interest list for 200 homes I understand why they let the highest bidder to secure the first lots.

https://www.cbs8.com/article/news/local/new-home-construction-in-mira-mesa-sparks-massive-interest/509-9e7ffca2-f319-4a46-89e5-2720addbaafc

Same thing is happening where I live. They are building 75 new homes with no fixed prices. Bidding is the new way.
54   GNL   2021 Jun 3, 8:03am  

porkchopexpress says
Russia to exit from all Dollar assets in its Wealth Fund & to invest in Euros, Pound, Gold, Yuan instead - Russian Finance Minister Siluanov

"We can make this change rather quickly, within a month," Siluanov told reporters Thursday. The transfer will affect $119 of a total $186 billion in liquid assets.
site.
Isn't that chump change?
55   Eric Holder   2021 Jun 3, 8:09am  

WineHorror1 says
porkchopexpress says
Russia to exit from all Dollar assets in its Wealth Fund & to invest in Euros, Pound, Gold, Yuan instead - Russian Finance Minister Siluanov

"We can make this change rather quickly, within a month," Siluanov told reporters Thursday. The transfer will affect $119 of a total $186 billion in liquid assets.
site.
Isn't that chump change?


Peanuts. California spends more per year on booze and drugs for bums.
57   NDrLoR   2021 Jun 3, 9:02am  

Bitcoin says
Bidding is the new way.
Sell houses on eBay?
58   Bitcoin   2021 Jun 3, 9:38am  

NDrLoR says
Bitcoin says
Bidding is the new way.
Sell houses on eBay?


kind of. Highest offer gets to secure the lot. For all others, too bad so sad.
59   WookieMan   2021 Jun 3, 9:50am  

zzyzzx says
WookieMan says
but never understood some of the regulations in Chicago.


Politicians pandering to their mostly deadbeat clientele. In Baltimore City there is even a regulation requiring that when you throw someone out, you have to put their stuff in a storage unit within one mile of their rental location.

Ditto in Chicago. You're better off in the burbs here in IL around Chicago. Not in it.
60   Eric Holder   2021 Jun 3, 11:27am  

Top? Not so fast!

61   WookieMan   2021 Jun 3, 11:44am  

ThreeBays says
Houses going up 45% then?

Why wouldn't they? Vacant land values will skyrocket and builders still won't build. They're trying to inflate their way out of the covid mess and by they I mean the left. You'd have figured an NYC real estate mogul would have done that, but no, it's Biden. That's how much they hated Trump. Doing the things they thought he would.
62   Bitcoin   2021 Jun 3, 12:07pm  

WookieMan says
Vacant land values will skyrocket and builders still won't build.


In SoCal they are building everywhere they can and get a permit for.
64   Bitcoin   2021 Jun 3, 12:22pm  

Some people are not meant to own homes. They will never make it work, no matter how much government money you print and throw at them.
Successful people like us just have to play the game...and scoop up the foreclosures.
65   WookieMan   2021 Jun 3, 12:31pm  

Bitcoin says
WookieMan says
Vacant land values will skyrocket and builders still won't build.


In SoCal they are building everywhere they can and get a permit for.

Because of inflation. Land values will trail building for now and that's only temporarily. They'll jump and the spigot will be cut off margin wise for builders. Long term real estate is fine. I'd be cautious in the next 5 years if you're buying peak or at the floor. Location dependent. Won't be a crash, but I wouldn't buy anywhere right now or the next year or so if it's not a forever home or long term investment property.

There's no logic in the market when a fuck ton of people aren't working yet stocks and home values increase at epic levels. I don't know what it is, but something has to give at some point. We've seen this story in the 20's before, just none of us were alive.
66   Bitcoin   2021 Jun 3, 12:42pm  

WookieMan says
There's no logic in the market when a fuck ton of people aren't working yet stocks and home values increase at epic levels.


I'd argue that the people sitting at home collecting government money are not the type of people who own stocks or would buy RE. The vast majority of people not working are lazy. Everyone who wants to work can find a job right now. People who are working and getting a good salary buy homes and own stocks. And dying boomers means millennials inherit and buy homes/stocks.

The poor got even more poor and the wealthier people increased their wealth during covid. A stock or RE market can be over extended for years. I agree that long term investors are fine either way and I agree that at some point the bears will be right. And that's exactly how I approach it.....I keep investing in RE, stocks, crypto because i dont know when it crashes. And when it crashes its a massive buying opportunity.

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