Real Estate Crash thread

[RootSkier]

^^^^ Yeah, do that.

[MontuckyFried]

Stay away from condos and town homes.

For your own home or a rental, I completely disagree. However, for a flip trying to make easy money, you may be right. Depending on the market, they can be harder to sell, but that's prolly not the case for Benny in NYC where it's all condos and such.

Why? Sounds like it's easy, if it's rentable. Maintenance is just a monthly check.

Yup. It is easy. Don't sweat the maintenance fees if they're reasonable. Some places have outrageously high fees, though. Such as the ski-in/ski-out places by our mountain. Our condos are farther away from the mountain, and maintenance fees are less than 1/4 the price for similar units by the slopes.

Sure, but, again, you'll only be writing a check for a cost shared by others, instead of scurrying about and spending time either doing the work yourself on a house or managing that work. Sooner or later that house is gonna cost you a big chunk of change all at once...No muss, no fuss. Try owning a pool at that minimal expense with no work and time required. Socialism is good, sometimes.

That's right. If (keyword: If) you have a good condo association, they will hopefully do a good job negotiating a good price, then with the shared cost, necessary upkeep isn't bad at all. The condo complex we own at has new roofing, new facias, etc., and the assessments are usually minimal. My house costs WAY the hell more to maintain. I just had to foot the bill for some major septic work on my home, amongst other things. Often times, I miss the simplicity of living in a condo.

So you're buying a place with fixed monthly expenses of $580 that do not include your mortgage or utilities? That's a hefty chunk of change depending on how much the place costs. Like $100K+ worth of value amortized over a 30 year loan at current rates.

Includes heat and hot water.

And, I want a place I can just lock up and leave for three months.

That right there is exactly what cannot be undervalued. I've lived in a multitude of houses ranging from 100 year old homes to new builds, and a variety of condos and apartments. I love my house and all, but something that rocked about condo living was being able to leave the place for months at a time without having to worry about the lawn, the pool maintenance, the exterior maintenance, snow removal, etc. Try doing that with a house. Sure, you can do it. But have fun not only arranging for all those services, but paying for them. All those services will cost you a heck of a lot more than the shared costs of doing it at a condo.

Heck. Even if you're home, it's nice. Condo living was SO much easier. It's so nice to get home from work and not have to worry about mowing the lawn, or taking care of whichever task out of the millions of exterior projects that need to be done. If you're a busy guy on the go all the time, condos are a fantastic way to go.

I guess the main thing to take away from my experiences is to check in to the condo association. Many do plain suck and that can ruin your experience, but if they have their act together and have worked out all the kinks, then they can be a great thing. The HOA can totally make or break the place.

[mud]

For your own home or a rental, I completely disagree. However, for a flip trying to make easy money, you may be right. Depending on the market, they can be harder to sell, but that's prolly not the case for Benny in NYC where it's all condos and such.


Yup. It is easy. Don't sweat the maintenance fees if they're reasonable. Some places have outrageously high fees, though. Such as the ski-in/ski-out places by our mountain. Our condos are farther away from the mountain, and maintenance fees are less than 1/4 the price for similar units by the slopes.


That's right. If (keyword: If) you have a good condo association, they will hopefully do a good job negotiating a good price, then with the shared cost, necessary upkeep isn't bad at all. The condo complex we own at has new roofing, new facias, etc., and the assessments are usually minimal. My house costs WAY the hell more to maintain. I just had to foot the bill for some major septic work on my home, amongst other things. Often times, I miss the simplicity of living in a condo.

That right there is exactly what cannot be undervalued. I've lived in a multitude of houses ranging from 100 year old homes to new builds, and a variety of condos and apartments. I love my house and all, but something that rocked about condo living was being able to leave the place for months at a time without having to worry about the lawn, the pool maintenance, the exterior maintenance, snow removal, etc. Try doing that with a house. Sure, you can do it. But have fun not only arranging for all those services, but paying for them. All those services will cost you a heck of a lot more than the shared costs of doing it at a condo.

Heck. Even if you're home, it's nice. Condo living was SO much easier. It's so nice to get home from work and not have to worry about mowing the lawn, or taking care of whichever task out of the millions of exterior projects that need to be done. If you're a busy guy on the go all the time, condos are a fantastic way to go.

I guess the main thing to take away from my experiences is to check in to the condo association. Many do plain suck and that can ruin your experience, but if they have their act together and have worked out all the kinks, then they can be a great thing. The HOA can totally make or break the place.

Personally I would rather fix my yards, repair roofs and replace windows on my own dime. Buying condos and town homes for personal use is fine but when it comes down to brass tacks it's better to own land and not answer to anyone else with how it is maintained.

I have seen a ton of class action suits where condos fees spike higher just to maintain the place, hard to cash flow over the long term when the HOA is raising fees that never drop down.

With a house you pay for the repairs lick your woulds and can still make money over the long term. I keep my places topshelf, new paint and new carpet with each tenant change, most homes I've bought were dumps when I got them and I renovate them myself because I know how.

It's all about location, now that pot is legal in CO the flood of folks moving into the green state is insane. I had 52 inquires last month for my place in Nederland, my place in FL had 2. At this point buy in WA and CO, the kids are flowing in and the rents are practically guaranteed by their parents back east.

[Benny Profane]

I don't know. Banking on stoners? Well, if you do, I'd go for the older, retired stoners, not the kids.

[iceman]

...now that pot is legal in CO the flood of folks moving into the green state is insane. I had 52 inquires last month for my place in Nederland, my place in FL had 2. At this point buy in WA and CO, the kids are flowing in...

That's interesting, I hadn't thought about that. But you better move quickly, other states aren't going to want to see the tax revenue loss and it should help spur more legalization.

[Hugh Conway]

man, if that's true the US is even more fucked than before thought.

[Benny Profane]

That's interesting, I hadn't thought about that. But you better move quickly, other states aren't going to want to see the tax revenue loss and it should help spur more legalization.

I'm telling you, watch for skier visit results for this upcoming winter. If Co. Jumps 10-20%, the other mountain states are going to take notice. It's a zero sum game. There's only so many skiers and boarders.
Now that Holder has announced hands off, and, hopefully, the DEA plays along, we have a few more years for this to show a profit. Could be all shut down if America elects a prick to office in 16, though.

[rideit]

Don't count on Utah, Wy, or ID to legalize anytime soon.

[frorider]

Meanwhile, in China...

[cramer]

Hey, worked for our president.

Whatever. It's a 25% reduction from my present rent, which is going up, like all rents over the next decade or two, the place is bigger and nicer, location solid. I'm not speculating, I'm buying a home
But, it's a condo. I can always rent the place easily for more than my cost.

Thats a pretty big deal there that you can always rent it out for more than the cost. Can you stay in it youself for less than rent? That was kind of what took me off the sidelines. Either way, sounds like you dont care if you live there full time, so sounds like a good transaction to me if your renter pays all the bills and you collect the tax beni's and equity on it. Good luck!

I'm not sure i found the roof conversation. Is that contingent that you invest on the roof for you buying the place? I'm not sure thats a great investment. Your money should be going into your kitchen, bathroom and floors. If all of those are done, well fuck it, id say sure, new roof. New roof is excellent selling point. I know the first thing i looked at was the roof. Thats the last thing i want to fuck with pretty much my entire life. thus why we bought one with tile.

[BigDaddy]

Your "lender" is really your dad isn't it? There is no guaranteed money. Well, outside of treasury bonds but that is the whole idea. My advice is to get started by buying a house. For you. To live in. Pick one that needs some work and has all the characteristics of one you would invest in. Get a regular job like a grownup and work on the house every weekend for the next two two years and then sell. You will get the profit tax free and you can see how good you are at doing this thing. Reinvest that in another place. There is money to be made by working regular jobs and moving every 2-3 years and making smart choices. Worst case scenario is you have a house to live in. Doing this as an investor is a whole different ball game. There is no easy money and you will be competing with people who 1) have been doing this successfully for years 2) have more money than you and 3) work harder than you.

^^^^ Yeah, do that.

WRG- Could not agree more. Sounds like you've got the skilz, you're young and will benefit from your work while you live there, then when you sell. (And whoever said you can't do it in your 40's is full of it!... Did two houses and loved doing it.)

Mud- Not so sure it's the pot (unless your renters are telling you that?) I've had close to 50 inquiries in the last month, too, but for Vermont. Foliage season in CO?

[Kevo]

So what are things looking like now? Quantitative easing isn't easing up since the economy is bad, so are rates going anywhere?

It seems like prices are way high compared to incomes in CO. If rates go up, won't prices have to correct?

I'm kind of at a loss of what to do. We're renting a 1,200 sq ft apartment that we're getting tired of after 3 years. Rent was $900, now it is $1,200. We have to share a laundry room, our parking isn't covered, etc. After the recent floods, demand for housing is way up so rent is skyrocketing again.

We're both 27, I'm several years in my career. Mrs. Kevo is just starting her career and has a good job. We have no debt- no car payments or credit cards or student loans. We make well over twice the median household income in Boulder and more than 50% more than the average family income in Boulder, but I can't imagine buying here anytime soon since prices are so damn high.

Do we buy in Superior or Broomfield? That would make both our commutes under 20 minutes. Do we continue to rent in anticipation of a market correction? We'll likely have 20% down in the next year or year and a half for any place we'd be willing to buy.

[wooley12]

Bought my first house with a 6% fixed and sold for 2X the purchase 10 years later. Bought my 2nd with a 14% a.r.m. and sold for 2X the purchase in 25. The arm beat fixed every year I owned it. Enjoyed the whole ride. Find a place where nobody is now and everyone will want to be there in 10-15 years.

[cramer]

So what are things looking like now? Quantitative easing isn't easing up since the economy is bad, so are rates going anywhere?

It seems like prices are way high compared to incomes in CO. If rates go up, won't prices have to correct?

I'm kind of at a loss of what to do. We're renting a 1,200 sq ft apartment that we're getting tired of after 3 years. Rent was $900, now it is $1,200. We have to share a laundry room, our parking isn't covered, etc. After the recent floods, demand for housing is way up so rent is skyrocketing again.

We're both 27, I'm several years in my career. Mrs. Kevo is just starting her career and has a good job. We have no debt- no car payments or credit cards or student loans. We make well over twice the median household income in Boulder and more than 50% more than the average family income in Boulder, but I can't imagine buying here anytime soon since prices are so damn high.

Do we buy in Superior or Broomfield? That would make both our commutes under 20 minutes. Do we continue to rent in anticipation of a market correction? We'll likely have 20% down in the next year or year and a half for any place we'd be willing to buy.

My advice is don't throw all your money in for a down payment. Go FHA or FHA 203 and renovate a house. Yes you will be paying an extra 100 a month for PMI but you wont be heavily invested in anything if shit goes south again whether it be job market or housing market. With that said, if you are that financially stable, not worried about job loss what so ever, getting your dream house, then hey 20% might be the way to go. The only other advice i have is make sure and find a place that meets your "checklist". Ours hit 8 of 10. The one that i didnt get was a pool. The day i closed, a house came on the market hitting 10/10. FML....The other one was floors, which i knew would be affordable. A pool is not. With that said i joined a club with 4 pools, but its not the same as getting up and jumping in your own pool.

[mud]

So what are things looking like now? Quantitative easing isn't easing up since the economy is bad, so are rates going anywhere?

It seems like prices are way high compared to incomes in CO. If rates go up, won't prices have to correct?

I'm kind of at a loss of what to do. We're renting a 1,200 sq ft apartment that we're getting tired of after 3 years. Rent was $900, now it is $1,200. We have to share a laundry room, our parking isn't covered, etc. After the recent floods, demand for housing is way up so rent is skyrocketing again.

We're both 27, I'm several years in my career. Mrs. Kevo is just starting her career and has a good job. We have no debt- no car payments or credit cards or student loans. We make well over twice the median household income in Boulder and more than 50% more than the average family income in Boulder, but I can't imagine buying here anytime soon since prices are so damn high.

Do we buy in Superior or Broomfield? That would make both our commutes under 20 minutes. Do we continue to rent in anticipation of a market correction? We'll likely have 20% down in the next year or year and a half for any place we'd be willing to buy.

There is no correlation between home prices and interest rates, one is market dependent on location and square footage the other is based on investors purchasing mortgage bonds. Home prices in Boulder have not moved lower in the 20 years I've been out here. Even during the bust between '08 to '10 home prices held steady, some dumpy 1 bedroom condos east of CU moved lower but most of those were investors looking for a quick sale.

If you want to stay in Boulder and keep your total monthly payments near $1,200 your purchase price would be maxed out to $200K with a FHA loan and 3.5% down. Even with 20% down and no PMI your max price would be $230K. Not much inventory available in town at that price.

You can buy a lot more square footage in places like Superior or Broomfield but those towns have no soul and their idea of a downtown is Costco and Target. Louisville and Lafayette have a real downtown and are just as close to Boulder.

Rates are not going to jump higher anytime soon since inflation is low and the economy is still struggling but they are not going to move lower either. The Fed wants to get out of the Bond market and probably will start reducing their purchases next year. If you will have 20% down by next year I would wait until then, rates will still be low and the boom we saw this year will have died down with new homes being built and increasing inventory.

[mobygrape]

don't know much about boulder market.

Living outside the city has it's benefits. Quiet, privacy. more home for less money. I'm back in a neighborhood in a small town, but liked it a lot when I had a home on an acre, and could not see neighbors out any window. May or may not be your thing, though.

Do you need/want to have bars and food in walking distance? Or are you OK with getting in a car to go out?

20 minute commute is nothing. Do it on a bike in the summer and get an hour workout in.

[liv2ski]

There is no correlation between home prices and interest rates.

Rates may not jump higher anytime soon since inflation is low and the economy is still struggling but they are not going to move lower either. The Fed wants to get out of the Bond market and probably will start reducing their purchases next year. If you will have 20% down by next year I would wait until then, rates will still be low and the boom we saw this year will have died down with new homes being built and increasing inventory.

While I disagree with the first comment, I agree with the second. The true telling sign a market top is here, is that both Benny and I have been looking to buy. In my local market there are no good deals, prices have gone way up and I think it could be a good time to sell and buy in other areas where you can still get a property for 50% of its 2007 value.

To your situation, your young and have lots of time on your side to buy, have the value tank and then to have doubled from the original price 10-15 years later. I would wait and get the 20% down as pmi sucks. Prices in that time may soften a bit too. So be patient, keep saving and look to buy once you have the 20% down.

[4matic]

There is no correlation between home prices and interest rates.

Rates are not going to jump higher anytime soon since inflation is low and the economy is still struggling but they are not going to move lower either. The Fed wants to get out of the Bond market and probably will start reducing their purchases next year. If you will have 20% down by next year I would wait until then, rates will still be low and the boom we saw this year will have died down with new homes being built and increasing inventory.

You should manage money if you are that prescient.

Higher rates will affect home prices. Always has. I believe you are talking about a direct relationship to interest rates based on house prices?

The Fed does not control long term interest rates. The Ten Year bond rate could move to 4% in a week based strictly on market sentiment and nothing to do with growth. The market sets long term rates. If the stock market and/or the economy tank the Ten Year bond rate could EASILY go to 1%. 30 year bull markets don't die easy.

[Danno]

Kevo, ignore the advice of people who don't know this market. Boulder values never went down in 2008, and there is no bubble here either (well, the Boulder bubble but that is different). Surrounding communities, the really close ones, are also solid. I wouldn't wait, because prices aren't going to go down and inventory isn't going to increase. That said, inventory is absurdly low and has been all year. So start looking, figure out the markets and what your $ will get you, and be prepared to JUMP when you see what you want. Don't feel like you need to wait till you have 20%, I bought in 2005 with 5 down and I'm damn glad I did.

[4matic]

Prices in my Bay Area California barrio (94580) have definitely softened and there are a lot more listings.

[mud]

Kevo, ignore the advice of people who don't know this market. Boulder values never went down in 2008, and there is no bubble here either (well, the Boulder bubble but that is different). Surrounding communities, the really close ones, are also solid. I wouldn't wait, because prices aren't going to go down and inventory isn't going to increase. That said, inventory is absurdly low and has been all year. So start looking, figure out the markets and what your $ will get you, and be prepared to JUMP when you see what you want. Don't feel like you need to wait till you have 20%, I bought in 2005 with 5 down and I'm damn glad I did.

Go back and reread what I wrote.
I said values went down on crappy 1 BD condos between 2008 and 2010, not the whole city.
Inventory is going up on Jay Road and out in Gunbarrel and there are a few other projects lined up in south Boulder. Just trying to offer advice since I've been doing this for 20 years in Colorado. He is not going to be able to afford a SFR unless he is willing to pay $2K a month.

[Benny Profane]

Isn't the big issue with Boulder land use and building restrictions?

[H0G]

No sense in waiting for Boulder prices. You could always purchase a condo and rent it out eventually. You can do a 5% down conventional loan. Money is still cheap right now.

Some areas have softened, but the hot ones are still hot. You might try Louisville or Lafayette. I have a condo client in Denver closing in two weeks. Supply was so-so. If you have any questions, feel free to hit me up. I am licensed and dangerous.

[grrrr]

There is no correlation between home prices and interest rates.

Reading fantasy novels much?

[grrrr]

PS - Can't speak to Boulder, but the housing recovery in this part of the foothills lasted all of 4 months. Prices are now dropping again.