Real Estate in Secular Uptrend

Based on the comments in the article, it seems like its not corp buyers.

“No, corp buyers have backed out of the market; the major builders are paying more in costs and broker fees, but the buyers are mostly individuals. Corp. buyers are canceling contracts right and left.”

I am sure these individuals are trying to take advantage of 10-20% net discounts offered by most of the builders who are desperate to get rid of their inventory ahead of recession.
Never underestimate the willingness of financially irresponsible Americans to bury themselves in debt via mortgages, automobile loans, and credit cards.

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Why buy BA real estate at all next 3 years ? Factoring in property taxes, interest (on 80% of purchase price), maintenance costs, capital risk real estate doesn’t seem like a good buy at all even if you are in the 10% who can afford to buy. If argument is appreciation, it cannot happen without a tech rebound. And we seem to be on a tech reset after 21 years (dot com bust). It seems far away from a bottom right now

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Yes your arguments are valid. Financially it does not make much sense at this time to invest in RE in BA, even if you are doing fixer upper or flipping. BA prices must fall by 50% from May peak before it becomes attractive again. Prices have already fallen by 20% and with tech layoffs looming, it can easily hit 40% within next 2 quarters and then one can find 50% off deals.

Robots don’t understand that most people buy a home to raise a family in it.

Not true anymore. 40% of RE sales are by investors.

Wrong

It’s cool when you make up total BS on the fly. Do you really think anyone is going to believe it?

In Palo Alto and Los Altos investor share is 40%. All of Bay Area (which includes a ton of relatively low cost and crime ridden neighborhoods where investors don’t buy) average is 20%.

Where is it in that article it is mentioned that 40% of PA and LA are investor bought?

You would need to look into Reventure Consulting videos to see that data. I saw a video where he went over zip code by zip code. 94022 and 94301, north Los Altos and Old Palo Alto + Crescent Park, the two most prestigious zip codes had the highest investor purchase percentages, almost near 40-50%. I looked for it but lost patience. With enough patience you can get this data.
I live in 94301 and know the situation here very well. More than half of the homes are not owner occupied.

Most people on this forum seem like perma RE bull (as expected) and data denier if it doesn’t match their perma bull thesis. But they forget that RE bust actually provides the best opportunities to grow the portfolios.

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Please explain the difference between shit and Shinola

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They don’t even qualify the definition of investor.

Yes, lot of older investors holding on to these properties seeing great appreciation and ridiculously low property tax basis - many cases of grown up children renting their parents home who are now deceased. Renters are young families who have figured out that just the property tax on a $3M home will be equal to 6 months of rent ! Now add on high interest and capital risk, the home buyers really seem like fools right now. I would rather raise my children in a rental home right now and have enough to give them a great quality of life than be house poor and then sweating bullets seeing housing prices fall !

This forum will have no affect on the market. There is no incentive to sell in this market. In fact the only one on here that says sell is actually a buyer looking for steals. There are many reasons not to sell. Number one is cap gains taxes. 2 there are no replacement properties to buy. 3 low property taxes keep people from wanting to sell and trade to get a higher tax basis. So in this crazy market realtors are the big casualty, inventory is dropping fast. Look at Redfin and Zillions stock… both in the toilet. All this leads to a floor on how far prices will drop. In addition the lack on entitled land and high costs of development will keep sfhs at high prices. Only condos will be built in the future in the RBA. Unless you include tear downs, that doesn’t increase inventory… it in fact increases prices. So no matter what Reinv says prices will only fall a bit and only for desperate DDD sellers.

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Market in largest decline is where iBuyers (Z Redfin OfferPad) operate. Phoenix, Las Vegas, Atlanta. Sellers are DDD + iBuyers + developers.

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Isn’t this site a perma-bear – when I looked at this last, it did not look trustable? In 94022 I did see many investor purchases – most of these homes require lots of work and looks like someone is parking money / have future flips when market recovers (just like how you are looking for deals). Homes that are desirable, well located, are still going for a premium and don’t think they are investor purchases.

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The biggest perma bear of all is Shiller. Living in New Haven and never invests RE. It’s understandable because New Haven is shithole within many houses under $100k

https://www.zillow.com/homedetails/43-Adeline-St-New-Haven-CT-06519/58932929_zpid/?rtoken=e29d80cf-bb6a-4911-849b-e6445df9f333~X1-ZUz28bwog7p3ih_5rw5l&utm_campaign=emo-NfsHomeReport&utm_source=email&utm_term=urn:msg:20221125160011fd6649ee5e08fc1d&utm_medium=email&utm_content=recentlysoldimage

I have seen homes around 350k (25 years before), selling at 3M in cupertino, sunnyvale and Mountain view. Many big companies vanished, still this valley is growing.

Every recession is an opportunity to grab some good real estate/stocks and this one too.

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People the quote Shiller forget that his analysis that house prices can’t outstrip inflation doesn’t include land restricted areas like California… I live in a town that only allows the building of 20 new houses a year. Jackpot for RE investing.

On CNBC’s “How to Profit from the Real Estate Boom” in 2005, he noted that housing price rises could not outstrip inflation in the long term because, except for land restricted sites, house prices would tend toward building costs plus normal economic profit. Co‑panelist David Lereah

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This is extrapolation. You have to be confident that there are no fundamental change of structural nature.