momopi
Well-known member
This depends on the investment property. Some are keepers, others are purchased during RE down cycle and sold in 6-7 years.
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Housing Analysis
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This depends on the investment property. Some are keepers, others are purchased during RE down cycle and sold in 6-7 years.
www.redfin.com
Not lowering prices. Just raised them instead. And as I said... Tay Mo is raising prices in our area and they are continuing to sell with the prices going up. Just like in 1981.... eventually those who wanted to buy realized that there are only so many homes and they sucked it up and bought smaller or farther out.
No crash is coming. Things are bottoming out in our area and I would expect the OC has no crash either. There are 3 million people in the OC and there just isn't that many homes that can be built.
Here is the median sales for Austin, TX. It shows peak to DEC 31, 2022 @ $600,000 to $484,000.
This is almost a 25% drop already in the books.
This brings us back to 2021 prices.
Do you think Austin will drop another 25% from here...which means it will go down to 367,000 or mid 2020 prices.
Add to that, the declining value of the property and this is an all-around terrible investment. It would have been better to sell, take advantage of the $250k cap gains exemption, and redeploy the capital elsewhere. Heck, Treasuries are a better yielding option at this point and with lower risk.
They need to sell because they need to equity to be able to purchase their move up home and/or don't want to be landlords.
The principal part of the mortgage should also be included in your return calc.
I'm looking at new homes. Resales are all over the map as evidenced by someone who sold in my old haunt for 28% under the peak. Wowee........... that drop would have been more than I paid for one of my houses........... the entire house.
Prices never even came down to where I bought. The one I sold can't be sold for what I sold for tho, so I'll give ya that. Good thing I got out.
Any paydown of principal is usually good, especially if Irvine rebounds quickly (as we've seen in the past).
You can get $24k of cashflow off of $1M from many, many places these days. Treasuries are tax free and if rates drop down as USC predicts, he would get capital appreciation as well.
Irvine has only rebounded quickly once in history and that was after a 28% crash!!
Doesn't matter... you've been more wrong about Irvine than right so no one really trusts you anymore.
This depends on the investment property. Some are keepers, others are purchased during RE down cycle and sold in 6-7 years.
Ready2Downsize
Well-known member
103 Wheat #146, Irvine, CA 92620 - 4 beds/3.5 baths
(CRMLS) For Sale: 4 beds, 3.5 baths ∙ 2389 sq. ft. ∙ 103 Wheat #146, Irvine, CA 92620 ∙ $2,161,291 ∙ MLS# NP22141057 ∙ This expansive floor plan is flexible for your lifestyle and perfect for your family, ...
Not lowering prices. Just raised them instead. And as I said... Tay Mo is raising prices in our area and they are continuing to sell with the prices going up. Just like in 1981.... eventually those who wanted to buy realized that there are only so many homes and they sucked it up and bought smaller or farther out.
No crash is coming. Things are bottoming out in our area and I would expect the OC has no crash either. There are 3 million people in the OC and there just isn't that many homes that can be built.
Liar Loan
Well-known member
I'm glad everyone on TI is confident that the bottom is in (despite failing to predict the decline in the first place), but for those whose job it is to predict mortgage delinquencies, things aren't looking so optimistic.
If San Diego has a 25% crash, there's no way Orange County (including Irvine) escapes with only a 10% decline. Likewise, if Phoenix has a 25% crash, there's no way R2D2's desert community is already bottoming out.
tic, tic, tic
nypost.com
These 4 cities will suffer a 2008 crash in home values: Goldman Sachs
If San Diego has a 25% crash, there's no way Orange County (including Irvine) escapes with only a 10% decline. Likewise, if Phoenix has a 25% crash, there's no way R2D2's desert community is already bottoming out.
tic, tic, tic
These 4 cities will suffer a 2008 crash in home values: Goldman Sachs
As interest rates have risen to combat inflation, the investment bank forecasted that four US cities should prepare for a seismic decline.
nypost.com
CalBears96
Well-known member
Liar gonna lie.
zubs
Well-known member
I'm glad everyone on TI is confident that the bottom is in (despite failing to predict the decline in the first place), but for those whose job it is to predict mortgage delinquencies, things aren't looking so optimistic.
These 4 cities will suffer a 2008 crash in home values: Goldman Sachs
If San Diego has a 25% crash, there's no way Orange County (including Irvine) escapes with only a 10% decline. Likewise, if Phoenix has a 25% crash, there's no way R2D2's desert community is already bottoming out.
tic, tic, tic
These 4 cities will suffer a 2008 crash in home values: Goldman Sachs
As interest rates have risen to combat inflation, the investment bank forecasted that four US cities should prepare for a seismic decline.
Here is the median sales for Austin, TX. It shows peak to DEC 31, 2022 @ $600,000 to $484,000.
This is almost a 25% drop already in the books.
This brings us back to 2021 prices.
Do you think Austin will drop another 25% from here...which means it will go down to 367,000 or mid 2020 prices.
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Liar Loan
Well-known member
He's getting $24,000 of cash flow annually so his ROE is a measly 2.4%. It doesn't make sense to borrow money at 2.375% for a 2.4% return.
Add to that, the declining value of the property and this is an all-around terrible investment. It would have been better to sell, take advantage of the $250k cap gains exemption, and redeploy the capital elsewhere. Heck, Treasuries are a better yielding option at this point and with lower risk.
usctrojancpa
Well-known member
They need to sell because they need to equity to be able to purchase their move up home and/or don't want to be landlords.
zubs
Well-known member
Isn't the $24,000 extra straight cash money per year?
The principal part of the mortgage should also be included in your return calc.
Liar Loan
Well-known member
The principal is being wiped out by declining home values. No return there.
Ready2Downsize
Well-known member
Read all the articles you want. Tay Mo NEVER dropped their prices 25% from the peak, not even close and they are selling even after they just raised. Gehan homes just raised their base prices in Phoenix area and now I see Lennar just raised great park homes.
I'm looking at new homes. Resales are all over the map as evidenced by someone who sold in my old haunt for 28% under the peak. Wowee........... that drop would have been more than I paid for one of my houses........... the entire house.
Prices never even came down to where I bought. The one I sold can't be sold for what I sold for tho, so I'll give ya that. Good thing I got out.
irvinehomeowner
Well-known member
You're being a little dishonest here.
Any paydown of principal is usually good, especially if Irvine rebounds quickly (as we've seen in the past).
Mawesome Sauce
Member
It better… the homes are half the price
Liar Loan
Well-known member
If an investor has to resort to looking at amortization as the source of return to make an investment pencil out, it's probably not a good deal to begin with. In Orange County, appreciation is always going to be the #1 source of return and right now that's showing -12% annualized!
You can get $24k of cashflow off of $1M from many, many places these days. Treasuries are tax free and if rates drop down as USC predicts, he would get capital appreciation as well.
Irvine has only rebounded quickly once in history and that was after a 28% crash!!
irvinehomeowner
Well-known member
I think Irvine rebounded quickly after the 80-90 crash but we know you like to mold the past to your perspective (like that GIGANTIC drop in 2018-2020 that was really just seasonal). 
Liar Loan
Well-known member
USC provided the data for 2018-2020 showing Irvine dropped while the rest of OC thrived. The onus is on you to show that 90's Irvine rebounded more quickly than the rest of OC.I think Irvine rebounded quickly after the 80-90 crash but we know you like to mold the past to your perspective (like that GIGANTIC drop in 2018-2020 that was really just seasonal).
irvinehomeowner
Well-known member
To which could have been seasonal which you seem to like to avoid nowadays because the drops are so small.
Doesn't matter... you've been more wrong about Irvine than right so no one really trusts you anymore.
Liar Loan
Well-known member
If it was seasonal it would have affected the other 33 cities in Orange County.
irvinehomeowner
Well-known member
What was the drop? Less than 5%? Isn't that margin of error?
And I vaguely remember other cities dropped too because you were touting how you saved people money by telling them not to buy in 2018 (big mistake). Isn't that why you bought in around 2019-20 but didn't really tell anyone the "dip" was in?
And... and... and... the prices in 2022 wiped out any small drop so that's irrelevant. USC has repeatedly told you that but you choose to ignore it because it doesn't fit your narrative.
So funny... your 2 pinnacles are 28% and 2020 MASSIVE 5% price drop.
And I vaguely remember other cities dropped too because you were touting how you saved people money by telling them not to buy in 2018 (big mistake). Isn't that why you bought in around 2019-20 but didn't really tell anyone the "dip" was in?
And... and... and... the prices in 2022 wiped out any small drop so that's irrelevant. USC has repeatedly told you that but you choose to ignore it because it doesn't fit your narrative.
So funny... your 2 pinnacles are 28% and 2020 MASSIVE 5% price drop.
Liar Loan
Well-known member
Please show the 90's data and stop changing the subject.