Singapore prices have only dropped 11%…Don’t see the 50% senario in the BA
Small market blues in Singapore?..The BA will see fluctuations but the 2006-2009 phenomena was a once in a lifetime event caused by bad government loan policy…The opposite problem is occuring now…Millions are forced to rent, can’t get a loan…Builders are still building at recession levels in the US…We can’t overbuild in the BA, especially sfhs…Condos maybe and apts may have a temporary glut in the high end. But sfhs have no increase in supply and increasing demand, especially when millennials start having kids…
A 20% drop in rents can be planned for and could happen…Lower your debt exposure or sell…best defensive strategy. .
Recent Singaporean investors from 2009 are thinking like manch and are advising others to just invest in RE and use rent to fulfil income requirements. They opine that government won’t let prices to slide too much and Chinese are running out of China to buy in Singapore.
Singaporeans should diversify. .BA investors should too…The BA is probably more vulnerable to an earthquake than anything else…Stockton and Sacramento are not…don’t have to go far to spread out your risk…
Different people have different risk appetites. What works for me may not work for other folks. And “working for me” means more than just dollars and cents. It also means whether you can sleep well at night and whether you will argue with your spouse etc. So take a holistic view.
I don’t have issues selling assets at a loss. I have sold stocks at loss dozens of times this year alone. If Armageddon happened and half my renters bolted, I don’t have issue selling one or two houses to get thru tough time. I also have stocks, some small amounts of cash, un-maxed HELOC line and lots of credit cards. So I may not even need to sell. We will see. Preparing for 10-20% drawdown is prudent, but I think 50% is overkill.
I couldn’t judge whether 10-20% is correct or 50% is overkill. However, if Red fin’s data is correct i.e. most put only 10-20% downpayment (and not the common belief that many are paying full cash), then they are thinking like you, expecting decline of not more than 10%. So long future is as expected, everything is good. For me, after going through one long ( > 10 years) decline in Singapore and one short decline (less than 3 years) in USA (2008-11), I have become extra conservative . As the Chinese saying goes, “afraid of the darkness having seen the devil”. What will landlords and investors do once decline is approaching 10%/ more than 10%/ approaching 20%?
The outstanding loan of the rental in SV is about 25% of purchase price, 15% of current market price.
All Austin rentals are mortgage-free. Cashflow can withstand a 55% drop in rent.
Ok, I told sis in law about this Sunset home that would be a very worthy “competitor” to her soon to be listed family dwelling nearby with similar characteristics and so we go check it out today on first showing. MAD HOUSE. Folks, cars were double parked lining down the street. Make-up was primarily Asian and Caucasian with a lot of younger couples oozing high tech money. The staging was very nice and on point. I expect this to sell way over asking (despite that tiny refrigerator, no vent fan, orig bathroom, etc.).
SFBA population growth slows, San Mateo and Santa Clara counties net losing people. However, prices have jumped in response to surging stock market. So who are buying? My suspicion is more senior folks in mega cap companies like Apple, Facebook, and Google. My rationale is only these folks have accumulated enough RSUs to raise cash. If your tenure is too short, you don’t have many RSUs and most are unvested. I don’t think foreigners are buying.
Rents are falling in most SFBA cities except Petaluma, Alameda, Hayward, San Leandro, Livermore, Concord and Vallejo. Is it because of uncertainties relating to H1Bs and immigration? Or beginning of the end of RE appreciation?
Re: who are buying, I think your thinking is spot on. Many of my coworkers have been renting for the past 5 years (don’t ask me why…), hoping to get into PA, LA, Cup etc. They missed 2015, and they saw 2016 as an beginning of a collapse, and waited more. Then Trump and rate hikes happened, now they can’t wait any longer. Most folks at Facebook, Apple, Google who have been waiting till now have ~800k cash reserve. If they’re single income, they can’t take >1M mortgage, ergo 1.8M price target for sunnyvale. Believe or not, there just aren’t that many dual income FANG couples. If there were, we would see crazy demand in PA,LA,CU for 2M+ price range.
I just read a post in other forum (written in Korean). It said one of Eichler home in Homestead high area went pending with 2.6 million offer. I am not sure about the size but don’t expect huge sqft with Eichler home. In addition, it was mentioned that the location is quite close to Highway. Amazing…
So I may not even need to sell. We will see. Preparing for 10-20% drawdown is prudent, but I think 50% is overkill.
. As the Chinese saying goes, “afraid of the darkness having seen the devil”. What will landlords and investors do once decline is approaching 10%/ more than 10%/ approaching 20%?
