Prediction: California Real Estate

[Sam]

Almost two years since Sam's original post. Time to follow up with some more SF resales. These all sold in 2008.
88 King # 414 sold 4/01 for $485,00 and resold 4/08 for $838,000 8.2% annual compounded appreciation.
601 4th #223 sold 12/03 $870,000 and resold 3/08 $1,320,000 9% ACA.
75 Folsom #1203 sold 9/04 $637,000 and resold 3/08 $819,000 8% ACA.

The above are all condos but I thought I'd take a look at a single family. 131 Mendosa sold 1/06 $1,162,000 and resold 26 months later in 3/08 for $1,400,000 9.2% ACA. They did take out a $2,000 permit to retile baths and kitchen so doesn't seem a flip!

Underwater? Bubble?

Somehow I missed this post. Wow it's already been more than 2 years since my original post.

I think I'm gonna ignore honobob's selective/imaginative data/comment.

I just came back from a three-week trip in Florida. The market there is just as horrible. I was in downtown Miami, where [-]uncountable[/-] lots of highrise condominiums stoods practically empty. I talk to a couple realtors there, and they said the occupancy rate is around 25%. It looked more like 5% to me, but I didn't argue.

 

[Sam]

Hey, Sam started this thread. Where has he been? Haven't seen him around for quite a while.

Martha, REW,

Sorry, I was a little tied up last year. I jumped in and out every now and then but didn't not have sufficient time to read everything.

Anyway, I bet I have missed a lot of interesting stuff, right?

Sam

 

[HornedToad10]

Los Altos/Palo Alto area has appreciated, but I think most of the rest of the Bay Area has generall dropped. Especially the less *ritzy* areas...

 

[Running_Man]

San Francisco real estate tips, trends and the local scoop: "Plug In" to SocketSite™


Well here is a site that shows actual homes and comments on whether or not significant upgrades were made to the properties. For instance several are listed as going up but you have to have the details to know if improvements were made to the properties or what the circumstances of the sales were.

Well normally I give you resales from the areas I've been looking in for my own investment purposes and every recent sale that has a prior sale within the last few years has appreciated!!

But nooooooooo, you still want to naysay till we're all unhappy. Well be that way, but if you want the good news I'll be happy to email you the report I just got that has 761 resales in San Francisco (18 pages total) that shows mostly double digit appreciation and quite alot of triple digit appreciation!! and not ONE decline in value. First sale in 05,06,& 07 and resold in 07 or 08. Yep, no bubble.

OK, I've found my happy spot.

4% appreciation my *ss!!
Today is a great day to buy real estate!

 

[REWahoo]

Anyway, I bet I have missed a lot of interesting stuff, right?

Maybe...

 

[Sam]

Maybe...

I see you have a new avatar. Does that have anything to do with the [-]evasive[/-] ambiguous answer? ;-)

 

[REWahoo]

I see you have a new avatar. Does that have anything to do with the [-]evasive[/-] ambiguous answer? ;-)

Perhaps. I'm a new man since discovering the true meaning of life - explained here.

 

[ScooterGuy]

I grew up in San Diego

... and, even now, I couldn't afford to buy a home or live there. My old home place, which Dad and Mom had custom-built for $17,000 in 1950 just went for $1.5 million. You can't even moor a houseboat in the harbor at the bottom of K street any more.

 

[honobob]

Somehow I missed this post. Wow it's already been more than 2 years since my original post.

I think I'm gonna ignore honobob's selective/imaginative data/comment.

I just came back from a three-week trip in Florida.

I'm not sure what comment you want to ignore. All I've posted is actual sales. I also didn't realize the thread had changed locations to Florida.

Running_man The problem I see with your site is that it compares a prior asking price to a current asking price or a prior sale and a current asking price. In CA most asking prices are the starting point for the bidding war. And even Honobob says stay away from new construction. Just because a builder starts out with a wished for price and lowers it when sales don't materialize does NOT mean the market value has dropped. Most of my PAIRED sales are condos that can't have alot done to them to increase sales price and the few single family sales I've provided have also included permit information.

 

[REWahoo]

Honobob, did you forget your promise to answer Martha's questions?

Martha, I answered you in a big long post that got ate. I'll duplicate it tomorrow.

 

[honobob]

Honobob, did you forget your promise to answer Martha's questions?

Martha, I answered you in a big long post that got ate. I'll duplicate it tomorrow.

REWahoo, not at all but if you read my entire post you'll see where I pretty much explained the need not to answer. I did a long post that actually helped me think through my plans and when I got to thinking how Martha incorrectly stated just about everything I've posted previously I thought maybe she just jumped in to diffuse a situation that was starting to become a little heated on another posters part.

You were the one that told me only a couple of people read my posts so I really didn't think there was interest. I had no problem posting but I got what I needed by writing it and I assumed Martha was satisified with her intervention. If you or anyone else is interested, let me know.

 

[tryan]

Hono,

No need to answer Martha for me ... I fully understand that the day-job is required to subsidize your tenants housing (been there, done that). The monthly negative cashflow cannot be serviced any other way; especially in the current credit mess we're in.

 

[Martha]

Hono, what did I saw that was incorrect? I think I was asking questions because I could not quite remember, though I do remember you talking about: (1) using your home equity to get into real estate and (2) that your properties did not cash flow and you were relying on appreciation. Because you have not posted in detail in some time how your investing in RE was accomplished, and because you continue to tout RE as a way to make buckets of money, it would be good to have more detail as to how your investments work out, especially regarding cash flow issues.

 

[ziggy29]

I fully understand that the day-job is required to subsidize your tenants housing (been there, done that). The monthly negative cashflow cannot be serviced any other way; especially in the current credit mess we're in.

I think so. There are two potential ways to make money in rental real estate investments: cash flow and price appreciation. The latter is a big fat zero now (or a negative number). Yes, maybe eventually it will recover, but those who are leveraged may get buried before it does.

And as for cash flow? The only way many new purchases of rental RE can cash flow positively and provide an income stream is with a pretty massive down payment.

 

[DangerMouse]

... and, even now, I couldn't afford to buy a home or live there. My old home place, which Dad and Mom had custom-built for $17,000 in 1950 just went for $1.5 million. You can't even moor a houseboat in the harbor at the bottom of K street any more.

You might be surprised at what you can afford to buy in San Diego as the real estate here has taken a severe beating over the past couple of years. Of course there remains a large pool of unrealistic sellers who want what they paid for their property during the tail end of the boom plus a bit more for good measure, but from what I can see prices have dropped significantly.

 

[honobob]

I think so. There are two potential ways to make money in rental real estate investments: cash flow and price appreciation. The latter is a big fat zero now (or a negative number). Yes, maybe eventually it will recover, but those who are leveraged may get buried before it does.

And as for cash flow? The only way many new purchases of rental RE can cash flow positively and provide an income stream is with a pretty massive down payment.

ziggy29 How do you explain Ft. Worth appreciation (Jacksboro Hwy/Lancaster Av) NBHD 18 years of average annual appreciation of 22.02%! or Dallas (Pearl Street/McKinnon St. NBHD) 18 years at 21.46% or Austin I think the NBHD was Beltran at 22.08% . The ten top appreciating cities in Texas over the last 18 years had annual rates of 24.5 for #1 and 14.9 for #10. DOUBLE DIGIT. And I didn't think anyone in Texas bought unless it cash flowed.

 

[REWahoo]

If you or anyone else is interested, let me know.

I'm interested in you providing point by point, specific, detailed answers to Martha's questions as you indicated you would. Her questions were:

Hono, for over 900 posts you have been touting real estate. I don't understand a few things. If real estate has done so well for you, why a full time professional career too? Or do you just live high?

So are you saying that your properties have appreciated between 10 million and 21 million dollars? If you have that kind of net worth, why not ditch it all and spend time on a beach? Or is this expected appreciation for the future?

IIRC, in other posts you mentioned that some of your properties do not cash flow and you are banking on appreciation. Am I remembering correctly? If so, how do you finance the losses? To do your deals you borrowed originally from equity in your home to put money down on others, yes?

Make your best case for real estate. Give us some details. Do your properties cash flow? How much is leverage, how much equity?

 

[tryan]

The only way many new purchases of rental RE can cash flow positively and provide an income stream is with a pretty massive down payment.

... or a massive write-off from the seller (think REO/OREO).

No one understands "upside-down" better than me. At the risk of repeating myself, I carried 9 units (2 3-families and 3 condos) for 12 years waiting for them to flip right side up. Had a partner, so monthly $$ strain was bearable. Also was single; not so for my partner (that added another level of strain ... for him). Wrote checks at my first 3 closing as a SELLER ... YIKES! That's the school of hard knocks!

So, FWIW, my advice to anyone with a negative monthly cashflow is pretty simple:

If you can sell at a profit, do it. Capitol gain rates will never be lower.

If you're upside-down (can't sell or re-fi) ... look hard at the costs of getting out. If you still can't sell buckle down for the long haul (it'll be a decade or more).

Frankly, I'ld rather be DCA into a no load mutual fund than subsidizing a tenants housing.

 

[honobob]

I'm interested in you providing point by point, specific, detailed answers to Martha's questions as you indicated you would. Her questions were:

I'll start a new thread for you and Martha. By the way, the multi-quote function appears not to be working for me so please don't get upset with me if I "make do". If only someone could fix it........

 

[REWahoo]

By the way, the multi-quote function appears not to be working for me...

I just tried it and it worked for me. Are you following the process outlined here? I frequently forget you have to go back to the first post and click on "Quote" to make it work.

 

[ProspectiveBum]

I'm interested in you providing point by point, specific, detailed answers to Martha's questions as you indicated you would. Her questions were:

I'll start a new thread for you and Martha. By the way, the multi-quote function appears not to be working for me so please don't get upset with me if I "make do". If only someone could fix it........

Seems to work OK for me. First you click the

button on the post(s) you want to quote. The button will turn orange. On the last post you wish to multi-quote, click the

button at the bottom of the post. I don't know if it works across multiple pages.

Real estate here in my neck of SoCal is still down 10-15% from the highs a few years ago. Foreclosures and bank-owned properties are up, too, so I expect we'll see more downward price pressure for a while.

DW and I really like Palm Springs, so we periodically research real estate opportunities there. Prices there are in a free fall, with many properties selling for 30% less than was paid for them just 3 or 4 years ago. Not a huge surprise, as I expect there's a much higher than average percentage of vacation or weekend homes there.

 

[tryan]

How do you explain Ft. Worth appreciation (Jacksboro Hwy/Lancaster Av) NBHD 18 years of average annual appreciation of 22.02%! or Dallas (Pearl Street/McKinnon St. NBHD) 18 years at 21.46%

Hono, got'a call you on this one .... noway Dallas/Ft Worth has had anywhere near 20% annual appreciation for 18 years. Doesn't pass the sniff test. Where's the data?

 

[ziggy29]

Hono, got'a call you on this one .... noway Dallas/Ft Worth has had anywhere near 20% annual appreciation for 18 years. Doesn't pass the sniff test. Where's the data?

I suspect he's cherrypicking very specific small neighborhoods -- needles in a haystack, basically.

 

[honobob]

Neighborhoodscout .com ziggy29 ferchristsakes you're only buying a few properties. ya don't have to buy the whole town. Leave them people on the wrong side of the tracks where they is!

 

[Urchina]

Running_man The problem I see with your site is that it compares a prior asking price to a current asking price or a prior sale and a current asking price. In CA most asking prices are the starting point for the bidding war.

While this may have been true six years ago, it no longer is. Even in desirable areas properties that would have sold in a day six years ago (or a year and a half ago) are sitting on the market for months with no offers. A lot of this is due to inflated sellers' expectations, but it also reflects a shift in buyers' attitudes as well.