Is the Real Estate Boom Over?

[wallacehobbs]

Hello,

I hope everyone of you is doing well!

I wanted to ask all the wonderfull members of www.REICLUB.com your thoughts on the future Real Estate Market?  What with . . .

- High Gas prices

- Hurricane Katrina

- Iraq War

What effects has this had on the Real Estate Investing Market in your area?

As for me I just put my 2 bedroom condo in Kona Hawaii on the Market last month at only $367K and after a month I had to drop it to $363K?

There are 8 right now in the same complex for sale around the same price......$350K to $387K?  What happened to Hawaii?

Two months ago at that low price it would have sold in 7 days?

Whats going on in other parts of the country where you live   ???

Is the "B" word happening in your area?

Let us all know?

Thanks and Happy Investing!   8)

[niravmd]

yes the same thing is happening in California. i sold my condo for $350k whereas 4 months
earlier i could've gotten 375k for it. my friend is listing his in the same complex. there are
8 more listed for $339k.

[Bassntx]

In Texas we have not seen real estate prices increase as drastically as what some parts of the country have experienced.  The Ft. Worth Star-telegram reported several weeks ago that prices have increased "only" about 10% in the last year.  Still not a bad return.

IMO I think that some parts of the country are going to experience a bigger drop than we could have in Texas.  I believe the secret in this business is value investing - taking one's time and buy at 20-30% discounts to FMV.  That way if the bubble bursts, losses won't be as significant.

I don't know about your respective situations where you live.  I know a lot of people were buying at zero discount and assuming higher risks because they are counting on the bull market in real estate to continue going.

It reminds me of the Tech Stock Boom in the late 90's.
It's scary taking those kinds of risks when not necessary.

[jorcorde]

The prices are dropping drastically in the Sacramento and Folsom area. We have our house listed and we have dropped $50k and no buyers   :-[

Bummer!!!

[reoconsultants]

Robology 101 says

It is my honest belief that we as Americans are feeling the crunch everywhere. There are tons of items to take into respect when it comes to R.E.I. and these are just a few of them yes the natural disaster that just happened will take a toll on us and yes it will make people think twice about moving and or buying right now. I even am a tiny bit sceptical as to what is going on which is strange for me. On the other hand I put 3 more under contract this week so far with another 2 tomorrow. And right now I do not think I would sell a house right now. Unless I carried a portion of the note myself on the other hand I believe there is always laughter after pain and sunshine after rain it has always been the same so why worry now. (I am a poet) I predict that things will lighten up for us here really soon and things will be back to normal within 6 months. Kenny Rodgers put it best "You got to know when to hold em, know when to fold em, Know when to walk away and Know when to run"  That being said as for right now I am going to hold em!

[niravmd]

didn't know quoting Mark Knopfler was considered poetry

but other than that, i agree with you. there are seasons to life.
right now is the season to harvest my RE crop in Socal and plant
it elsewhere. for my people who are sowing in Socal right now, the
next season will be for crying.

[reoconsultants]

didn't know quoting Mark Knopfler was considered poetry

Is that who that was I thought about it all night all I could remember is Dire Straits..

Then it will be a time to rebuild! Then we all know New Orleans it will be a time to Dance!

Mardi Gras 2006!

[Dan732]

Every market has a cycle. Whether it is Stocks, Metals, Oil, Real Estate or Concentrated Orange Juice. Where there is a hill, you have a valley. As long as the property cash flows and rents easy, it should not bother you.

[carlittle]

It is nice to hear I am right.  I know a broker that tells his clients to pay full price because the market it NOT GOING TO GO DOWN.  Fool!  How fast it goes down is up for debate, but if you look a the market in California, it is on a fairly regular cycle. Up then down then up...

The on the street comments from a few posters confirms that the market IS softening as I excpected it would and that by 2008ish we will be talking about how they can't go any lower and that it has to turn around soon.  

[niravmd]

i agree that in 2008 we will have probably hit bottom, but after 2 yrs of constant drop in prices, most "investors" will throw in the towel and bail on their investments.
thats human psychology.

[L.A.Investor]

Great thread. I have also seen things beginning to cool in my area (North Los Angeles county).

Hey Nirav, it's good to see you again. I hope that everything is going well.

Though it has cooled, there are still deals out there. I have continued to focus on Utah and Texas in addition to Santa Clarita. I have made some offers on a few rehab properties, nothing solid yet.

I have befriended a few top realtors in the area and properties are still selling nicely here. Some are dropping prices but it seems that the real desirable areas in the lower price ranges ($500-$600k here!) are still moving. Especially the upgraded homes.

Take care,

Andy

[mm]

 watch rates. The Federal Funds rate... that the fed keeps pushing up, and the 10 year bond. The Fed certainly wants to take the steam out of this market. They do that by pushing up all of the adjustable rate mortgages. As rates go up, the public, in general, can afford less. So yes, I feel confident we are due for a correction. Most adjustables have a 5 year window. My bet is that you will see a correction within 3 years if the 30 year fixed stays low. Within 2 years if the 10 year accelerates (30 year goes up). also watch the number of foreclosures that come on the market. They will absolutely bring down prices. Good luck.

[Dell Investor]

Hello,

     Just a thought or two from a wannabe.  I have held off on buying into real estate due to this very topic.  A correction is long overdue and those areas that hyper inflated are going to hyper deflate!!!  

 
However, those who are INVESTORS should not feel the pinch too badly.  On the other hand those SPECULATORS who brought on the high side believing the market was going to keep on inflating are going to feel it the worse.  But with that comes oppurtunity to buy speculated property at investor prices.

[reoconsultants]

Whenever People ask if the boom is over I always think in what part of the country? There is a different market in every zone.. is Californias boom over? How about Las Vegas? This is another State to State county by County issue. Don't you think.

[niravmd]

REO, i completely agree with you. the party is over in SoCal.
i just sold my condo last month for 350k. there are currently
8 more listed in the same complex for 339k. in january, 2 sold for
375k. prices are trending down, DOM is trending up and inventory
is also up.
happy days are here again!!!! i can say that coz i'm renting my
condo back from the buyer!