the economy & real estate. what should we do?

[kaimera]

so its not news that we are definitely in a housing bubble and the question is just when will prices start coming down. How are you guys bracing yourself for this?

I've been attending a lot of RE panel discussions on this topic and it only makes sense for me to sell and dispose of my properties right now in other to have cash for any bubble coming up. No doubt, interest/mortgage rates are rising, but at what point would the rates start having a negative effect on housing prices?

Foreclosures - its also not news that almost 2 out of five new mortgages are ARMs or interest only. If we do the maths, most new homeowners are buying or refinancing on margins and any change in their expenses (lets say oil goes up to $60/barrell - which would definitely happen), or even tax reassments because of the already overpriced properties, would lead into foreclosure - also because their mortgage payments have gone up.

The only positives i see are an increase in rents (less homebuyers, more renters, better for investors),immigration (especially in NY, TX, CA, FL), and of course foreign buyers might help keep demand. But Im i missing something here?

Once again, what are u guys doing or thinking about? Im thinking by may, the next time the feds would increase rates, people are going to start panicking and trying to sell their properties then. What do you think?

This is why i only think it makes sense to count your profits now and get ready for the storm. It doesnt make sense for me to buy a house in 2003 for 299 and buyers are offering 420 now. Hey i'll take the profit. No problem.

Of course its a gamble, thats what business is all about, but if and when the bubble does burst and their are no banks to offer you any 90%LTV loans and you have tonnes of available properties in the market for cheaper prices, what will you do then?

These are just my thots. What do u guys think?

[RealLifeEstate]

Does this mean now is a bad time to get into real estate? I mean really, I dont want to go broke because I got in at the wrong time. I live in CA and prices are VERY high. I dont want to get stuck buying into a house for 400k and then having value drop to 150k or something. How big of a burst is this going to be?

[exec927]

Where is the FAITH.

If you are an educated investor you are not worried about these things.Their is no so called bubble.There is however a "Correction".Where prices will correct.If you are educated and you act with wisdom and a splash of or lets say a flood of FAITH then no need to worry.People that right stuff that says thier are bubbles this and that that Real estate will die,prices will go from a $200,000 house down to 5,000 are not educated.They get paid to write that stuff.In order for a bubble burst to occur or CRASH,everything would have to CRASH.Cars,food,candy that use to sell for pennies.Remember in the 1980's and 1970's when people wrote about a crash.It never happened...
Just be ready for a correction.
Godbless

[exec927]

Thier os no overall nationwide Crash or even Correction.Researched has it that Chico,Cal. is 43% over what they are suppose to be.Salt lake city,Utah -23% of what they should be...Again this is research....

[Dan Auito]

It's news that some parts of the country are approaching bubble status however many others are in a depressed market with opportunity ahead so know your market and what it is and will be doing based on what reasonable forecasts tell you.

If you feel your market is selling for top dollar then you may just choose to liquidate to get those prices if indeed the bubble is imminent in your area.

Start educating yourself on how to do short sales and take advantage of getting those foreclosures at reduced prices, use some of those cash reserves from the sales of your highly inflated home values that you are selling ahead of the bubble to buy at the fire sale.

Buy some multi-units in safe neighborhoods to house the displaced homeowners and the folks who can't afford to buy due to the higher interest rate markets.

That's my two cents and as Biker Jim would say: "Keep the change" :D

[kaimera]

Does this mean now is a bad time to get into real estate? I mean really, I dont want to go broke because I got in at the wrong time. I live in CA and prices are VERY high. I dont want to get stuck buying into a house for 400k and then having value drop to 150k or something. How big of a burst is this going to be?

No, its never a bad time to invest in RE especially if you know what you are doing. its just a matter of understanding your local market and determine whether people can still continue to afford the high prices. if not, when would do you see demand coming down which might affect prices?

I heard CA market is really overpriced and even has a higher rate of those buying ARM mortgages on margins. Then again, CA is too big of a market to generalize. You have to really understand your local market.

[kaimera]

Where is the FAITH.

If you are an educated investor you are not worried about these things.Their is no so called bubble.There is however a "Correction".Where prices will correct.If you are educated and you act with wisdom and a splash of or lets say a flood of FAITH then no need to worry.People that right stuff that says thier are bubbles this and that that Real estate will die,prices will go from a $200,000 house down to 5,000 are not educated.They get paid to write that stuff.In order for a bubble burst to occur or CRASH,everything would have to CRASH.Cars,food,candy that use to sell for pennies.Remember in the 1980's and 1970's when people wrote about a crash.It never happened...
Just be ready for a correction.
Godbless

You are right, you shouldnt be worried about this but you should definitely be aware of whats going on in other to plan accordingly for the future. Some call it a "bubble", some call it a "correction of prices", the fact is prices are definitely going to come down in lots of markets. I dont think anyone educated would forecast a reduction from 200k to 5k, but its a question of how far down would prices go or flatten out.

And also, researchers (and re professionals) do get paid to write stuff, but we all have to carefully sieve through it and try and make sense of some of the things mentioned.

I have faith in the market, but im just not sure how prices of around 400k can hold in a low income area.

just my thots. Please read with an open mind.