Posted by Kenneth Hocking on May 08, 2008 at 12:10:14:
In Reply to: I only partially agree. posted by Rich-CA on May 08, 2008 at 11:39:31:
Rich,
Your live in a great location in a great neighborhood and have neighbors each of whom seems to get by with Great income. But i do think that in San Fransico's 776,000 people that you are in the median of that gropuing with what you discuss.
Each city has its nicer neighborhhods that will always be unaffected by the national or even local trends in economics and home pricing.
It is good to see that you were in a position to put 75% down on a house and finance it for 7 years..FANTASTIC but a much smaller number of your population in SF bay area could do that.
Back to reality is that even in your area census data shows that the average income would not support the base values in mortgages in yoiur city and that downward pressure is still present although your area is fairing much better than say OC and Inland Empire areas of SoCal.
But all that being said Incomes ir JOBS support rents and values even in your market but investors are becoming less likley to bury money in markets that are not cash-flowing well with 20% down becoming the Norm (without taking a lenders workshop and getting their traing) most investors will have to
1 put 40K into a 200K house
2 buy at much better than 70% ltv and fix it and refi to hold.So yiou either INVEST money in down payment or you INVEST equity in skills and knowledge.
It is just a plain and simple fact that the volume of purchases by high leveraged to ARV buyer are gone for likely as long as you and I will see in our lifetimes.
And those waiting for the fast run up again had better have cashflow to pay off their investments or other cash to pay off their investments.
CASH Flow even at break even will still build wealth over a long time but NEG cash flow means you better have deep pockets.
Rich i think your personal house and neighborhood and finaincial position is UNLIKE the averages in your city. maybe I am wrong but thee is always a lower and middle class that supports the workings of a city or the city won't exist.
good debate as usual.
SIMPLE re Investing ...Buy cash-flows or do not buy..
back into your numbers and the set your purchase price based upon rents.
one other thing to consider as some of these areas become affordable then rents in the local area will fall as compression is a less likely factor to support those rents.. Time will tell and no not everyone will Move in caravans all at once but many many many are moving to ecemonmically strong cities with affordable housing prices and rents.
3500 Sqft 4 year old house in katy texas just rented for $1800 after ebing bought as an REO for 105K so even in our market there are some GREAT deals becuas eof the subprime and rents will more than support purchasing even off of the MLS.
Cash will seek a return over time and the bulk of cash sought appreciation in the west and now that is not a viable expectation and so the money will begin to seek cashflow.. JMHO
- Further refinement of data Rich-CA 09:03:57 05/09/08 (2)
- 289,000 for a 2/1 WOW CHEAP! Kenneth Hocking 10:11:38 05/09/08 (1)
- I have an even lower price Rich-CA 13:29:22 05/09/08 (0)