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Old 07-02-2022, 11:41 AM   #43
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I don't know the point of this thread.
I’m just trying to shed light on the flawed mentality.

https://en.m.wikipedia.org/wiki/Tulip_mania
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Old 07-02-2022, 11:56 AM   #44
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People have been saying that my entire life.
Well, as the data shows, that makes perfect sense. Unless you were born in the 1920’s, anyone since the 1960’s has seen homes appreciating. It would be impossible to continue indefinitely. That’s the point.
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Old 07-02-2022, 12:05 PM   #45
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Originally Posted by Captain Snooze View Post
Funny stuff, but correlation isn’t causation, yet in this case, wages and DTI is directly correlated and will ultimately be the causation for a market correction once the housing mania bursts.

I think there will either be a dramatic panic that crashes the housing market, or there will be a continuous rise in the interest rate to slow the appreciation rate, or the market will need a huge incentives to build at affordable rates instead of continuing to build towards the upper end of the market, or something I haven’t thought of. I don’t know when. Maybe later today I’ll calculate when it could happen.
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Old 07-02-2022, 12:15 PM   #46
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Not really true. I’ve bought two houses in the last 12 years, one for 70k and for 90k. I rented one and lived in the other. Remodeled and sold both and came out with significant amount of profit. All on an average single income. It can be done but is getting much much harder and the numbers are a lot bigger. I payed under market for my current house but it needs a ton of work. I imagine when I go to sell this one I will come out well ahead too.
I don't think this can happen for everybody. Chances are when you say you remodeled... you mean you remodeled. For someone like me who sits at a computer all day, the level of expertise needed to tackle a whole house remodel would mean paying retail for labor.

I hope the proceeds from your two sales put you in a place that you are mortgage-free on your newest home.

There was a family who moved into my development in 2006 at the top of the market. They got an 80/20 loan so no equity and two mortgage payments out of the gate. By 2010 they were divorced, underwater, and foreclosed. Their cars were repossessed as well but that's a different topic.
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Old 07-02-2022, 12:52 PM   #47
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Not really true. I’ve bought two houses in the last 12 years, one for 70k and for 90k. I rented one and lived in the other. Remodeled and sold both and came out with significant amount of profit. All on an average single income. It can be done but is getting much much harder and the numbers are a lot bigger. I payed under market for my current house but it needs a ton of work. I imagine when I go to sell this one I will come out well ahead too.




Since the 08’ recession rental agencies have been buying foreclosed houses. Companies with nothing to do with the rental or home market have opened investment property divisions. The problem is states like OR have maximum year increase caps, and as businesses do,
they are going to raise it the max they can every year and have been for years.
Gavin Newson put out something that homes will need to stay on the market for 45 days before a person who already owns a home or an investment firm can buy. I don’t know how that has played out.

The problem is that home owners and investors and governments don’t want to slow this down. They all profit off the appreciation and property taxes. The only real fix is dramatically increasing supply of affordable properties and increasing mortgage rates, while creating rental control and limiting investors like Newsom did.
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Old 07-02-2022, 01:06 PM   #48
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I don't think this can happen for everybody. Chances are when you say you remodeled... you mean you remodeled. For someone like me who sits at a computer all day, the level of expertise needed to tackle a whole house remodel would mean paying retail for labor.

I hope the proceeds from your two sales put you in a place that you are mortgage-free on your newest home.

There was a family who moved into my development in 2006 at the top of the market. They got an 80/20 loan so no equity and two mortgage payments out of the gate. By 2010 they were divorced, underwater, and foreclosed. Their cars were repossessed as well but that's a different topic.

Far enough point. The first house I did you probably could have gotten most of with basic homeowner level skills. The second was a gut. This one now is a partial gut. I came out of those two being able to pay off all debt and put a big chunk down on this one with some money to remodel it.
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Old 07-02-2022, 01:24 PM   #49
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The Housing Investment Paradox

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Originally Posted by Irace86.2.0 View Post
Gavin Newson put out something that homes will need to stay on the market for 45 days before a person who already owns a home or an investment firm can buy. I don’t know how that has played out.

The problem is that home owners and investors and governments don’t want to slow this down. They all profit off the appreciation and property taxes. The only real fix is dramatically increasing supply of affordable properties and increasing mortgage rates, while creating rental control and limiting investors like Newsom did.

That’s probably overall a good move and slows gentrification of areas. When investors start buying large amounts of property and raising rents they can artificially raise home values and the cycle just spirals, though I am sure you see it in your area.

I think overall it’s as much as a cultural issue as it is economic. The drive to have bigger and better is strong. I have a number of friends who max’d out on what they can afford so they are working to afford their homes. But at least they have a nice place, I guess of course they bought at the peak with the best interest rates so they likely can never refinance into a better payment.

I’m sure you guys will get over my head soon lol
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Old 07-02-2022, 02:39 PM   #50
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Originally Posted by NoHaveMSG View Post
Not really true. I’ve bought two houses in the last 12 years, one for 70k and for 90k. I rented one and lived in the other. Remodeled and sold both and came out with significant amount of profit.
You remodeled, so that changes things a little. Also, timing; It IS possible to come out ahead; long term, that is unstable; I am NOT saying that it can't happen, but that it is unsustainable.
It's probably a much better place to put money than a bank account, and should be much more stable than gambling...er, investing in the market. But, over the long term, if it does much beyond keeping up with inflation, we have problems.
And guess what... we have problems!
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Old 07-02-2022, 03:05 PM   #51
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The Housing Investment Paradox

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You remodeled, so that changes things a little. Also, timing; It IS possible to come out ahead; long term, that is unstable; I am NOT saying that it can't happen, but that it is unsustainable.
It's probably a much better place to put money than a bank account, and should be much more stable than gambling...er, investing in the market. But, over the long term, if it does much beyond keeping up with inflation, we have problems.
And guess what... we have problems!

Yes. Not saying you were wrong in your earlier post. Just pointing out it’s not necessary true in all instances unless you want to explicitly exclude remodeling. I think it’s becoming less and less feasible for the younger generation to have the option to buy a fixer upper.

2020 really exaggerated the issue in my area. Lots of transplants moving here with cash from CA homes and buying where it is much cheaper. The average house went up a crazy amount in a couple years. My buddy bought a rental for 110k 4 years ago and sold it last year for 270k. 750sqft no garage. All he did was replace the cabinets and floor in the living room and repaint it. My 90k house I sold in 2017 for 178k sold again for 220k in 2020, probably around 280-300k now at 855sqft and single car attached garage. It is wild here and affords housing is nowhere to be found.

Home values are exceedingly becoming artificial.
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Old 07-02-2022, 04:30 PM   #52
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In San Jose, we would often wonder who has the money to buy a 1600sqft 65 year old house on a 6000sqft lot for 1.3 million.

Every person/group of people that came to look at my house when I sold was Chinese or indian. Guy I sold to couldn't speak english.

Just a fun fact.

BTW, according to Zillow, my house in SJ is now worth over 700k more than I sold for 3 years ago. I don't see any brake lights.
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Old 07-02-2022, 05:00 PM   #53
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My cousin bought a 950sqft in San Jose for $1.35 million. That was an upgrade from the 830sqft place he had Bought for $860k with his first wife and from the $538k studio apartment he had while he was a bachelor.

Foreign investment in hot markets is very common, especially with the Chinese trying to shell money away from their government. Outside of a panic or government intervention, you are right that their will continue until the market flattens out. Tulip Mania won’t last forever.

The funny thing is people see Bitcoin or NFTs or Tesla stock as inflated and vacuous, not meaning much in real, tangible value, or close to the value it should be, but a million dollar studio in San Jose that would be a mansion anywhere else is just a solid investment that continues to be “worth” more. We all be gambling up in here. Gambling tends to favor the few and the wealthy the most.
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Old 07-02-2022, 05:12 PM   #54
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My cousin bought a 950sqft in San Jose for $1.35 million.
Nuts. My old next door neighbor sold his 1035sqft 3-1 for 1.75 about 6 months ago.

Foreign investment is huge. You get asked after selling a home in SJ, "Chinese or Indian?"
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Old 07-03-2022, 02:44 AM   #55
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There’s another fucked up phenomenon of the wealthy and WFH age. If you displace the service industry in rural areas and they (especially now) cannot afford to commute to work in these ski towns.

So my grandparents built a really nice home a mile or so from the Joshua Tree National park entrance in the 80s. My grandmother’s health required a move and their home sat for months and eventually accepted below their asking. My friends that stayed there after high school were able to purchase homes for <75k in mid aughts before the Great Recession. Effectively, there was little property appreciation in 30 years (1985-2015). The last 7 years, for reasons of Instagram influencers, Airbnb, or whatever the hell happened prices went nuts.

Is that a function of a certain space in time? It’s not a population issue. It’s not like there’s a burgeoning industry warranting immigration.
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Old 07-03-2022, 07:04 AM   #56
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There’s another fucked up phenomenon of the wealthy and WFH age. If you displace the service industry in rural areas and they (especially now) cannot afford to commute to work in these ski towns.

So my grandparents built a really nice home a mile or so from the Joshua Tree National park entrance in the 80s. My grandmother’s health required a move and their home sat for months and eventually accepted below their asking. My friends that stayed there were able to purchase homes for <75k in mid aughts before the Great Recession. Effectively, there was little property appreciation in 30 years (1985-2015). The last 7 years, for reasons of Instagram influencers, Airbnb, or whatever the hell happened prices went nuts.

Is that a function of a certain space in time? It’s not a population issue. It’s not like there’s a burgeoning industry warranting immigration.
It's the covid diaspora. All the renters realizing that renting inside a metropolitan area isn't so great when you are stuck at home.
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