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R.E. Crash / F'Closure Bargains...Not Seeing It
Posted by Al on December 12, 2006 at 8:20 AM
Not trying to rock the boat, just another opinion, but in monitoring this x'int site it seems many are expectant of grt deals in the near future due to inflated prices, option ARM loans, etc, etc...I personally doubt it, though none of us has a crystal ball and it's wait and see who has it right.
Here in LA prices have NOT dropped across the board as many predicted they would have already, and I doubt they will drop by much (Riverside, S. Diego, Las Vegas - different story). This will play out differently in many areas.
I base my opinion on the following...
1.) The local market here is in a malaise - sales are WAY down - but not prices. Seller are taking homes off the market and buyers are playing wait and see.
2.) My contacts on Wall St tell me that as far as they are concerned the money markets feel the housing mkt has already bottomed out and there will be no across the board bubble bursting.
3.) The demand is HUGE locally - just be on the freeways at rush hour (all day is rush hour now it seems) and see how many people live here who need homes to live in - and thats not taking account of the ones coming.
4.) Rents are WAY up - and harder to find - capacity is tapped out - parlays into demand for homes.
5.) In comparision to other major worldwide metro cities - London, Paris, Tokyo, etc, LA real estate is still a bargain - even after the price run up.
6.) So prices practically doubled in 3 years and they go down say 20% - which I doubt - I'll take that return any day - you are still way ahead if you bought 3 or more yrs ago.
7.) It occurs to me that if you are keeping an eye on when to pounce on foreclosure deals, and looking to buy at 50% to 70% of current market value - you would have been better off buying and holding (renting) as much as possible 3 or more years ago, and then have enjoyed the run up of 100% gains instead of settling for a mere 50% gain buying at sales.
Last but not least, I'm reading a lot of negativity here about the pickings at trustees sales these days and the lack of profit to be made - I don't believe, or see, that either. It's true most that go to sale go back to the bene with little or no equity, however there is rarely a day goes by when usually several are sold that buyers will do well on, especially if turned over quickly.
There will always be people who, sadly, have hit a roadblock with finances due to divorce, job loss, or whatever, and can no longer make mortgage payments resulting in foreclosure and the requisite equity that are in many of these properties - that make up a decent amount of sales, not just those overencumbered that are taken back. That they get bid up to whittle down some of that equity, in many cases still makes them worthwhile, upside buys, just ask the pros who are there, or have representatives there, every day and buy, buy, buy.
Think about it - would smart people be spending millions of dollars and not making money?
The more pessemistic you are about trustees sales opportunities the less the competition, which works for us that do buy. And don't forget there are many ways to increase the value of real estate by rehabbing, adding square footage (espc in higher end areas that support any price).
Thanks to all who took the time to read my book of a posting and I welcome your comments - even if you don't agree with mine, and thanks to Ward for his insights and solid legal knowledge.
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