what do you guys think of the real estate market now?

Discussion in 'Community' started by Jdm_rsx, Feb 6, 2005.

  1. Jdm_rsx macrumors 6502

    Joined:
    Nov 26, 2004
    Location:
    Honolulu, Hawaii
    #1
    Now = 5% down
    1 -2 years = 15-20% down

    how do you guys foresee it? market trend wise..

    i know no one here can predict the future but i just want some smart, and well thought thru advice

    when prices go down, interest rates go up

    on the above statement, true or false?

    hence, the RE right now is at its peak, it could fall any minute

    but how soon ? can anyone here help me out?

    cheaper the better but if it doesnt make much of a difference, i plan to buy now..
     
  2. atari1356 macrumors 68000

    atari1356

    Joined:
    Feb 27, 2004
    #2
    Well, I don't know anything about the real estate market in Hawaii... but, if it's like most places in the US (at least the major metropolitan areas), then house prices are at their peak but interest rates are still low.

    From what I know, people expect interest rates to rise, and housing prices to fall a bit.... but, I'm guessing that the home prices won't fall that much. So, I'd say it's better to buy now if you can.

    ... but, that's just my opinion. :)
     
  3. Jdm_rsx thread starter macrumors 6502

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    Honolulu, Hawaii
    #3
    when would the market come down crashin?

    my guess would be 6 months from now...

    any ideas?
     
  4. Jdm_rsx thread starter macrumors 6502

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    Nov 26, 2004
    Location:
    Honolulu, Hawaii
    #4
    can anyone here provide me some info about the international RE market?

    is it just like the USA? its sky rocket?

    thanks in advance...
     
  5. Bigheadache macrumors 6502

    Joined:
    Mar 1, 2004
    #5
    Can't help you with that. International RE is very asynchronous and varies country to country, depends on demographics, eco cycle, structural issues etc. But in Australia we are on the tail end of a housing boom and property prices are very high. In the major cities they have peaked and now the boom has moved to regional centres. Boom in Australia has been driven by low interest rates, low unemployment, strong economic growth (Aust has been top 3 or 5 in the OECD for a few years in a row now for eco growth) and also some micro factors such as a more competitive mortgage lending and government assistance (first home owners grant). There is debate about whether we are heading for a soft landing or a hard landing. I think most likely a hard landing becuase Aussies are at an all time high in debt, there is a large number of people with investment properties that are up to the hilt in debt, and rental yields are near an all time low. Throw some interest rate rises in there - it won't be pretty. One of the scenarios (from ABN AMRO) I have read looks at Holland a few years back because it was in a similar situation to Australia now and similar size economy, population, etc. They had a very hard landing.
     
  6. stubeeef macrumors 68030

    stubeeef

    Joined:
    Aug 10, 2004
    #6
    MegaTrends 2000

    OK, my best buddy is a double digit millionaire from realestate. He always is quoting megatrends. Afterall, IN GENERAL, RE is a longterm investment and trends are important. Island nations, look at higher ground as sea levels rise. HI on the other hand is gaining ground via volcanic activity.

    As you are aware RE is local. While in the US there will always be good markets somewhere, the opposite is also true. Toll Brothers, a national builder has over 7000 homes on backorder right now! So the prediction of doom in the RE market may be premature. Also realize that in the US the population is aging, and shifting to a different type of living arangement.

    Commercial RE is hit and miss. My friend buys rundown cheap commercial properties, and using his own crews (he is the contractor) up fits inexpensively and quickly for tenants. He can turn an empty building to 80% occupied in as little as 6 months.

    I would say if you can PROVE to yourself that a property is priced well, and you can make it produce an income stream sufficent to pay the debt, go for it. Use as little of your own money down, max the return and min the risk.
    Good luck. And let us know what type of property you are looking at.

    edit: The most succesful people I know in RE have a good background in RE appraisal.
     
  7. Sun Baked macrumors G5

    Sun Baked

    Joined:
    May 19, 2002
    #7
    Commercial RE is definitely a hit and miss because it also depends on new business and such.

    But taking some rundown properties and fixing them up is generally a decent way to go.

    Taking on a manageable number of properties, and not getting in too deep.

    Quite a few try to leverage the money, and run competely on credit for the "big" reward.

    Those people won't survive a downturn, especially if they are walking into near the end of the boom because so-an-so made a killing in this market.
     
  8. stubeeef macrumors 68030

    stubeeef

    Joined:
    Aug 10, 2004
    #8
    Ya my buddy is very disciplined with his money. He also has his commercial appraisal license, and a law degree from WFU. he accrues for everything, and has survived the last down turn very well. But he doesn't bite off more than he can chew cause things "look good' this month. The lil sob is sharp, and a gold mine. He manages his own properties and crews, and stays lean. Meaning he handles alot of the headaces instead of hiring others to, ie low overhead. He has had a few properties with zero income and turned them positive in less than a year! (the jerk) But he grew up in RE, his father was a banker and mother was a top agent, then opened their own RE company. My buddy got a great education just hanging around that house. His parents didn't give him a lot, made him earn it, now he has surpassed them.

    Oh well. commercial RE is for those who know what they are doing and have deep pockets.
     
  9. Moxiemike macrumors 68020

    Moxiemike

    Joined:
    Jan 1, 2002
    Location:
    Pittsburgh, PA
    #9
    I'd look into places in South America. Belize and some spots on the Caribbean come to mind. Cheaper than what you'd think, taxes are LOW LOW LOW and labor (if you need to build/expand) is cheap too. So you can really bank big in an area like that. Especially if you could do some tailored resort.

    I'm looking seriously at some islands. Some in Brazil are a little out of my price range (don't ask. ;) ) but it looks doable.

    Also, some stuff on the italian riviera is going for a decent price-- 3 bedroom villas with a yard and such for ~80-120k USD. You could snatch something up there.

    I know in my region (pittsburgh) there's a decent amount of development happening in some areas, making those the bull markets, and you can get stuff cheap cheap cheap (i have a 3 bedroom with yard and 2 car garage, rowhouse, in the city about 5 minute drive from downtown cultural district) and I got it for ~55k. Did a *bit* of work, mostly updates that weren't needed but I wanted to do (new bathroom, new kitchen, electrical. etc) and in a year, the value has almost doubled in price. And interest rates are low.

    So pittsburgh is a decent investors market for real estate. And it's a city on the up and up it seems (our cultural district was rated #1 in the nation, some good underground art scenes are growing, etc) so i think it's a nice market.

    Plus, there's a trend by young people to want urban living, so city investments seem to be hot, as opposed to suburban McMansions. Which, IMHO, is a good thing.

    The main street concept is nicer than the shopping mall concept. More symbiotic growth of neighborhood businesses and chains in the main street model. Whereas the mall/suburb model fails in a lot of areas of interaction and local business growth/small business growth, so i'm glad the suburbs seem to be trending away. About time.

    So buy urban, buy low and fix up, or buy internationally and I think you're ok. Commercial is nice, but definitely not for a first timer (if you are one).

    Also, pay attention to closing costs. They can nail you big time. :)

    Good luck.
     
  10. sushi Moderator emeritus

    sushi

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    Jul 19, 2002
    Location:
    キャンプスワ&#
    #10
    All good points!

    I too have been lucky to have a close friend/mentor who has done very well in the RE market.

    I would add the following:

    1. The key is to know the market you are thinking of getting into. It varies by location and property type.

    2. Don't fall in love with your income producing property. It is a business and you must think of it as such.

    3. The first property is always the hardest to buy. It gets easier the more you do it.

    Good luck!

    Sushi
     
  11. jefhatfield Retired

    jefhatfield

    Joined:
    Jul 9, 2000
    #11
    and...he he...

    3A) ...easier but potentially much more dangerous
     
  12. sushi Moderator emeritus

    sushi

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    #12
    Wise words.

    My buddy does most of his investment with cash these days. He didn't start off that way. He just used his profits to pay down the principle over the years. In one year he was able to purchase over 30 homes with mostly cash. A year or two later, those he purchased on credit were free and clear.

    As for debt, you want the property to be either free and clear or totally indebted. Those in the middle are the ones the banks look to when considering forclosing. They can spin a profit off of them. A totally indebted property has no upside for them to forclose.

    When considering income producing properties, always think in terms of the worst case scenerio. What happens if the property is not rented for a few months? What happens if you have a tenant that will not pay the rent? (note, laws vary by state as to what can be done in situations like this.) What happens if you have a major construction issue such as termites, etc.

    BTW, I have a another friend who had to pay 45 grand to fix his house after the renters converted the home into a crack/concain lab. This was not a cheap home either. OSHA had a field day after the DEA did their thing. In my friend's case, he was lucky in that he got the home returned to him right away. All he had to do was clean it up. I've known some cases where the home is not returned to the owner's control for 6 months to a year.

    So not everything comes up roses with rental/income producing properties. You have to be careful and then you can still get the short end of the stick.

    Sushi
     
  13. sushi Moderator emeritus

    sushi

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    #13
    If you buy internationally, you had better really know what you are doing.

    The rules in other countries are not the same. And I am not talking about laws (which are different) but rather the way property valuation works.

    Again, it is always best to know the local market before investing.

    Sushi
     
  14. jefhatfield Retired

    jefhatfield

    Joined:
    Jul 9, 2000
    #14
    do research on economic trends and recent economic history

    but seriously, fortune magazine had a great article about why they thought it would crash in the usa

    the first major modern crash was the stock market due to all the factors being lined up for such a mishap

    the second major crash was dot.com because the factors involved, or lack of factors (laws, common sense, etc) was a recipe for disaster

    all economic indicators...the very foundations of what real estate is built on...people making money, people saving money, people having sound and diversified and long term investments are all not there and that is what some feel can cause the biggest downturn in real estate ever

    even though i was very young, i saw the stock market headed for disaster when i saw too many people who knew nothing throwing money into individual stocks

    being a techie, part of me saw the idiocy around dot.com and i remember fortune magazine talking about a bubble ready to pop...that image stayed in my head all the way up until the dot.com crash...and the crash was so hard that the naysayers of the dot.com era were so shocked themselves that even the worst predictions for high tech were mild compared to reality...nobody said, "i told you so"...that would have really rubbed salt in the wounds because here in northern california, everybody knew somebody in their family who got hurt by dot.bomb

    i am older and wiser now and when i see the same experts warn about the real estate crash on the way, i listen...before i listened to the cautious economists but hoped that we could avoid the big crash, and each time the crash came, i started to stop waiting for us to avoid disaster

    now, i just wait for the prediction, believe it, and do what i can to minimize the damage

    a major megatrend economic crash (like wall street in 89 and dot.com in 2000) is like a tidal wave coming for you...you cannot stop the wave but you can seek high ground

    i hope this helps and if i were you, i would talk to the real estate naysayers out there who are warning about a real estate crash in the usa and get the facts...as well as doing research on their predictions from the 1989 era and the spring and summer of 2000 when they called the dot.bomb crash down to the minute
     
  15. mactastic macrumors 68040

    mactastic

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    Location:
    Colly-fornia
    #15
    It varies from area to area. Some places around me here are growing like mad. Others are growing at an only slightly less frenzied pace. But we are predicted to need something like 140,000 new places county-wide over the next decade. Of course we won't see near that many. Thus demand for housing will remain high in this area. That's just how California is though. If I was in Iowa I might think differently about the effects of rising interest rates. Here it just means we sell houses for more than we otherwise would. Elsewhere it may mean less building of new homes and less demand among buyers resulting in a sagging market.

    My one caveat is that investing in housing that you intend to rent can be risky not only in the situations described above, but also if you do not know the factors influencing rental prices in the area. For example, the big town near me has a population of about 45,000 people, and a college campus that has approximately 20,000 students and staff. The college had not built new on-campus housing for some 15 or 20 years. That meant that a large portion of the student population lived in rental housing near campus. For many years that drove up rental prices. Lots of people bought houses in town and pulled $2,200 to $3,000 a month in rent so they could afford the mortgage payments they were making.

    But the college was under pressure from the city to start housing more students, and so they started planning. Last year about 1,800 beds opened on campus, and within the next 2 years 4,800 more beds will be available on campus. They also have planned for a faculty housing complex that will allow professors to afford to live here as well.

    Needless to say, the people with large mortgage payments on rentals are starting to worry...


    Hawaii I've heard is offering some tempting pieces of land to developers at the moment. My boss is actually looking into developing some 200 acres on the big island somewhere, he hasn't really gotten past the initial investigation yet. We'll see... it'd be a real shame if I had to make some *ahem* business trips to Hawaii over the next year to see what he wants designed for the land...
     
  16. combatcolin macrumors 68020

    combatcolin

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    Oct 24, 2004
    Location:
    Northants, UK
    #16
    Try the UK out for size, where the average house price is £170,000!

    The situation is so bad the Goverment have to help Teachers, Nurses, Firemen and Police - all essential workers, because otherwise they would not be able to live where they work!!
     
  17. oreomac macrumors member

    Joined:
    Jan 4, 2005
    #17
    So true!! I'm studying to be a nurse at the moment & am thinking about moving abroad where I will be able to find somewhere to buy. I'm renting at the moment & there is no way that I can buy somewhere unless the house market crashes in the UK. The problem with the keyworker system is that there are so many people going after the houses.
     
  18. strider42 macrumors 65816

    strider42

    Joined:
    Feb 1, 2002
    #18
    I wish I could find a house that cheap in an area that's half way decent here in the bay area. that comes out to, I think, roughly 320 thousand in US dollars. For 320 thousand I can get a crappy 1 bedroom in a bad part of oakland. I can't even buy a small condo for that much out here nowadays it seems like. I figure I'll have to save up about 80-100k just for a downpayment to be able to afford anything. I'm hoping the housing market collapses to some degree. Its out of control around here, and I don't think I will ever be able to afford a home here. I'll probably end up having to move out of state to do it. The situaiton is bad here, and the government doesn't really help anyone that much (there are some programs for teachers, that's about it, and even they aren't that generous). Not that I think the government necessarily should subsidize housing, but its absolutley impossible for most teachers around san francisco to afford to live in the communities where they work. That's why I decided against doing my teaching credential. I earn more just doing an office job, and even then, half the people I work with live over an hour away in a stockton and tracy (neither of whcih I'd want to live in).

    I think the current market is so overvalued its going to have to come back to earth. Which would be good for me (since I save well), but also bad because it scares me to invest in the stock market where I could make more money because a major housing downturn could really affect the economy.
     
  19. clayj macrumors 604

    clayj

    Joined:
    Jan 14, 2005
    Location:
    visiting from downstream
    #19
    Well, as with many things, the real estate market can fluctuate wildly from location to location, even in the same town.

    Here in downtown Charlotte, the market's booming... lots of new condos and condo towers being built, and the average price per square foot has climbed from $200/sqft (December 2000, when I moved in to my condo) to $280/sqft or more... one new building getting ready to be built just down the street from me has units that START at $300/sqft and go up as high as $350/sqft. Just in my building, an 813 sqft condo (1 bedroom + den) just sold for over $230K... $282/sqft. (Which makes me happy, since my condo's the largest in the building, 1450 sqft.)

    But I have heard that we may be riding on a real estate bubble at the moment... if you're thinking of INVESTING in real estate, be careful about how you do it. (If you live in it, it's not an investment unless you move out.)
     
  20. clayj macrumors 604

    clayj

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    visiting from downstream
    #20
    In Hawai'i, don't forget that you also have to worry about the whole issue of who owns the land that your house sits on... they have that "fee simple"/"lease hold" system. "Fee simple" means you own the land; "lease hold" means that the land is owned by someone else, such as the Bishop Estate, and you rent it from them, separately from your house payment. I've heard of folks who paid off their houses, and then lost them because they couldn't afford to make the land payments.
     
  21. Jdm_rsx thread starter macrumors 6502

    Joined:
    Nov 26, 2004
    Location:
    Honolulu, Hawaii
    #21
    wise words everyone
    thanks for the input
    never expected so many replies in such short amount of time!

    anyways, i am from oahu (hawaii) im sure your all aware of this = )

    im just trying to buy a home
    house or condo to live in
    i just dont want to be in a NEGATIVE EQUITY after 3-4 years of owning the house or condo

    not really investing as of now, just trying to own the first one and invest the 2nd later

    hawaii / oahu has already reached it peak and its never been so high / long in the past years, from what i have been told

    it could come down crashing any minute and when i mean crashing, it will COME DOWN CRASHING! not just steadily slowin down and steady drops..etc..

    what do you all think?

    i have decided to wait 6months to 1 year and then decide...take a look at the market slowly once again..
     
  22. jefhatfield Retired

    jefhatfield

    Joined:
    Jul 9, 2000
    #22
    a nationwide crash in real estate can result in a whopping 30% percent drop within one year...a major downturn in a few american metropolitan markets can reach into suburbia and the surrounding rural areas

    i would diversify your holdings right now and not dive into the real estate market right now, especially in hawaii the way you make it sound, and just ride out the crash...after that, you can find a great deal in real estate

    it sounds implausibe but so did the wall street crash and the dot.com crash
     
  23. Jdm_rsx thread starter macrumors 6502

    Joined:
    Nov 26, 2004
    Location:
    Honolulu, Hawaii
    #23
    do you guys think the market will crash when more and more ppl sell there property since the price is so high now?

    massive of sells = causing the RE market to be unstable and eventually crash?

    personally i really dont know what will happen but im just stating the facts or situation thats happenin on oahu now

    maybe i can more useful advice from you guys = )

    i hate to sound mean but i really hope the market will crash soon = )

    and it doesnt look too good now...

    = (
     
  24. ecche macrumors regular

    Joined:
    Dec 14, 2003
    Location:
    a very kiwi place
    #24
    the uk real estate market is really frightening me. last year i considered relocating to the uk, as i had some brilliant job offers there, but after travelling the country hi and low exploring the depths of the re market there, i soon thought otherwise. you couldn't even find a decent-priced house in places like sunderland, let alone the south and of course london. i feel pity for the poor guys that invest there now and i believe that many are lured into investing by building societies that will lend you 95% or even 100% of the amount required. not being an expert in these issues i will not be surprised when prices will come down dramatically when interest rates go up.
     
  25. Jdm_rsx thread starter macrumors 6502

    Joined:
    Nov 26, 2004
    Location:
    Honolulu, Hawaii
    #25
    interest rates in the US are slightly going up again..
     

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