My friend just bought a second house

[eagle488]

My friend just called me to say that he bought a second house in Arizona. His first house is in Southern California which he will rent out.

In one to two years, do you think my friend will be:

1) Underwater with both houses carrying two mortgages and wishing he had never done it. Pissed off at the renters who are always late with the money and tearing up his first house.

2) Indifferent about the situation. Not losing, nor making any cash.

3) Satisfied with the decision made and in the black on the balance sheet.

 

[Ripley]

This one is easy.

1) Underwater with both houses carrying two mortgages and wishing he had never done it. Pissed off at the renters who are always late with the money and tearing up his first house at the same time.

 

[kidrazor]

Well, southern california rents mean his mortgage in arizona is probably paid for plus ectra cash, but yeah, anyone who buys a house in the next couple years is crazy to expect and type of gains at all. Flat to negative, I live in LA and I'm watching listing prices (not actual prices) fall by 20 percent in the last 6 months.

 

[crackedback]

If he bought the SoCal home in the last 2 years he'll be underwater.

If the SoCal home was bought 5+ years ago, he'll likely be OK.

AZ real estate has stalled like Socal.

 

[hels02]

I read that Az was one of the worst hit markets in the US for real estate prices dropping, and that entire new subdivisions have tumbleweeds blowing thru...

Real Estate will recover, it eventually does after a decade or so. Hopefully he can rent it for his mortgage. If he can't, he's in trouble. I think prices are going to get a lot worse before they get better.

The builders in some areas can't carry spec homes, and the dumping is only beginning in those parts of the country (Az being one... not sure about So Ca.).