Real estate Speculators - Rental Market
- Thread starter GSCO
- Start date
theres definitely no shortage of people looking for rentals in NYC. at this point in my trading career, i wouldn't mind living with the family and saving all the cash for trading as i can. if thats an option available i would take it.
-m.o.
-m.o.
I figured that's what you meant...I was just clarifying....
Don
This condo runup is one of the last gasps IMO. On income alone, only 10% of wage earners can buy a house at these prices (and even those earners need a 3% ARM) Condos are the last remaining affordable way to buy RE (unless you're trading up).
It's hard to pick a top and we could carry a long ways, but this really feels like we're building up to Nasdaq Dec 1999.
The rental deals are great right now. No renters left.
It's hard to pick a top and we could carry a long ways, but this really feels like we're building up to Nasdaq Dec 1999.
The rental deals are great right now. No renters left.
flyers&divers
Guest
There is actually a way to buy RE cheap but you have to be patient. The builders will give it away for less than it cost them and the banks will give it away for less than the loan on the properties.
It happens every ten year or so in over developed markets. New York is somewhat different because there is rent control and there is no incentive to build rental housing.
The problem is that while you are holding for values to pick up they may be demographic changes.
The succesful operators improve their deals on many levels and they are somewhat protected:
buy wholesale sell retail,
upgrade to higher use,
buy under market sell higher still under market, etc
A little bit like trading. You spin your wheels and survive and the breaks do come.
Considering that a lot of residential housing is bought with hardly any money down these days and how cocky the brokers and owners are here in the North East we are ready for a slump.
Don't forget banks shovel money out the door when rates are low like now but they are reluctant to lend when rates are rising(some logic).
The minute rates tick up there will be more delinquencies and pressures on the market.
It happens every ten year or so in over developed markets. New York is somewhat different because there is rent control and there is no incentive to build rental housing.
The problem is that while you are holding for values to pick up they may be demographic changes.
The succesful operators improve their deals on many levels and they are somewhat protected:
buy wholesale sell retail,
upgrade to higher use,
buy under market sell higher still under market, etc
A little bit like trading. You spin your wheels and survive and the breaks do come.
Considering that a lot of residential housing is bought with hardly any money down these days and how cocky the brokers and owners are here in the North East we are ready for a slump.
Don't forget banks shovel money out the door when rates are low like now but they are reluctant to lend when rates are rising(some logic).
The minute rates tick up there will be more delinquencies and pressures on the market.
Bubble Signs:
> Everytime I open the paper 100 ads for new condos on the water fall out
> Builders are having buzz events where they invite atheletes and celebrities to kickoff their preconstruction sales
> Everyone I know has bought a preconstruction property with no intention of living or even closing on the deal.
> Heres a classic, people tell me that builders would never build the property if they were going to lose money.
> The MLS listings are starting to flood with new construction properties for sale or worse yet pre-construction properties (typically these are supposed to sell on their own so builders never invite realtors to share comission)
> More Reduced or "priced below market" properties are starting to pop-up
> Inventory is growing
> Every paper is shouting this will be a record year for real estate
> Everyone is telling me if I don't buy now I will be left behind
> I know more realtors and mortage brokers than doctors or lawyers
> Talking heads on CNBC and Bloomberg are giving up shorting the builders
> Mortage brokers tell me as long as I put 5% I can borrow whatever I want.
> Everyone tells me 5yr ARMs are the best deal out there.
> Cap rates on most properties are around 5%
Bubble no bubble here move along.
> Everytime I open the paper 100 ads for new condos on the water fall out
> Builders are having buzz events where they invite atheletes and celebrities to kickoff their preconstruction sales
> Everyone I know has bought a preconstruction property with no intention of living or even closing on the deal.
> Heres a classic, people tell me that builders would never build the property if they were going to lose money.
> The MLS listings are starting to flood with new construction properties for sale or worse yet pre-construction properties (typically these are supposed to sell on their own so builders never invite realtors to share comission)
> More Reduced or "priced below market" properties are starting to pop-up
> Inventory is growing
> Every paper is shouting this will be a record year for real estate
> Everyone is telling me if I don't buy now I will be left behind
> I know more realtors and mortage brokers than doctors or lawyers
> Talking heads on CNBC and Bloomberg are giving up shorting the builders
> Mortage brokers tell me as long as I put 5% I can borrow whatever I want.
> Everyone tells me 5yr ARMs are the best deal out there.
> Cap rates on most properties are around 5%
Bubble no bubble here move along.
It's like Chicken Man, "it's everywhere." Bought my condo 2.5 years ago and the neighbor sold his in ONE WEEK for the asking price for a $450k profit.
Gotta love it. Now, to time the exit strategy to get into another place for cash only while Rome burns. (I live in a beachside penthouse condo in Florida)
Albert
Gotta love it. Now, to time the exit strategy to get into another place for cash only while Rome burns. (I live in a beachside penthouse condo in Florida)
Albert
Actually, the real estate prices of single family is basically stagnant in most of the country. The areas that are "hot" are the ones that are mentioned on these post. NYC, Vegas, Ca. etc. Springfield MO and other areas like that are about the same as in the '70s adjusted for inflation. The median price of homes in Houston is about $135,000. We have a ton of buildable land so the market always has a "vent" to keep prices from getting too high.
But some locations have had tremendous appreciation in a short period of time.
One must separate "home ownership" from "investment" real estate. Something CNBC seems to not understand. Each person buying a new home from Lenar, KB etc is a single sale and is unrelated to all the other sales by that same company. No two pieces of real estate are alike. Not ever. Not anywhere.
There is a tremendous market of first time home buyers, especially from other countries where it is all but impossible for them to ever own their own home. Everyone has to go home someplace at nite.
The single greatest strength of America is the enormous amount of individual home ownership. No other country comes close to us in that regard.
I can always tell when someone does not understand the mortgage market as they warn about interest rates going up and causing foreclosures. Most mortgages are fixed for 30 years so an interest rate rise in two years has no effect on the existing loans.
steved
But some locations have had tremendous appreciation in a short period of time.
One must separate "home ownership" from "investment" real estate. Something CNBC seems to not understand. Each person buying a new home from Lenar, KB etc is a single sale and is unrelated to all the other sales by that same company. No two pieces of real estate are alike. Not ever. Not anywhere.
There is a tremendous market of first time home buyers, especially from other countries where it is all but impossible for them to ever own their own home. Everyone has to go home someplace at nite.
The single greatest strength of America is the enormous amount of individual home ownership. No other country comes close to us in that regard.
I can always tell when someone does not understand the mortgage market as they warn about interest rates going up and causing foreclosures. Most mortgages are fixed for 30 years so an interest rate rise in two years has no effect on the existing loans.
steved
here is 'white hot' market;
Camping Out for the Chance to Buy an Upscale Home
By David Cho and Sandra Fleishman
Washington Post Staff Writers
Sunday, March 7, 2004; Page A01
Camping out to get tickets for a Justin Timberlake concert or the first showing of "The Lord of the Rings" is old. Now people are queuing up for days in tents and under tarps for the chance to buy expensive new homes.
Louie Guimmule is among hundreds of people who want to buy into Chatham Square, Old Town Alexandria's newest townhouse development, where prices start at $560,000 and reach $1.1 million. When he stopped by the construction site last Saturday, dozens of prospective buyers, sleeping bags in hand, were lined up -- a full seven days before the developer was planning to accept contracts on the first, still-unbuilt units.
.....
No expert on real estate investment, however as far as I can tell, there are a few more factors that enter into the equation. Many have mentioned that the rental market is softening, as a result of major incentives to first time home buyers with minimal required downpayments and no income verification. Now, the owners/ landlord's of rental properties have growing supply, they are forced to make concessions they did not have to make 3-4 years ago. Maybe they include a free month of rent, perhaps they include gas and electric.
The problem, as I see it, is that while the landlord's are getting squeezed by the prospective tenant, they are also getting squeezed by the local government(in the form of higher assessed values=higher property taxes), higher insurance premiums, higher natural gas prices(maybe electricity prices as well). So not only does the P/E ratio for real estate diverge on a basic analysis of rental income/potential sales price, but the additional overhead continues to squeeze him indefinitely.
The problem, as I see it, is that while the landlord's are getting squeezed by the prospective tenant, they are also getting squeezed by the local government(in the form of higher assessed values=higher property taxes), higher insurance premiums, higher natural gas prices(maybe electricity prices as well). So not only does the P/E ratio for real estate diverge on a basic analysis of rental income/potential sales price, but the additional overhead continues to squeeze him indefinitely.