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Major Sell-Off Coming - Business Insider


By bgamall4   Follow   Thu, 31 Jan 2013, 4:10pm PST   3,215 views   45 comments
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http://say-no-to-recourse-loans.blogspot.com/2013/02/byron-wien-major-sell-off-coming.html This could affect real estate as Byron works for Blackstone, up to its eyeballs in residential mortgages.

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E-man   Sat, 2 Feb 2013, 12:19am PST   Share   Quote   Permalink   Like   Dislike     Comment 6

Raw says

The article states:

"So, if investors flood into real estate, and households continue to boycott the same real estate, something has got to give. At some point, the late investors will be burned or there could be a mini housing bubble if the lenders ease a bit on loan requirements."

Households are not boycotting the same real estate. This is pathetic misinformation. They are desperate to buy, snapping up anything and everything that comes on the market.

Can we get real for a change?

Well said raw. There are a lot of ifs in his little article. Basically, too much a$$umption. So it goes back to what Roberto said.

Whenever you want to actually live in reality, you'll find it helps in making better long term decisions.

Raw   Sat, 2 Feb 2013, 1:37am PST   Share   Quote   Permalink   Like (1)   Dislike (1)     Comment 7

errc says

Lol @ raw

Maybe in your tiny californian bubble. This is not the united states of california, and while the 1% may be frothing at the opportunity to corner a monopolistic market, the majority of sane folk are still laughing their asses off at these ludicrous prices, and not falling prey to the low interest rate gimmicks. That is, unless, you are one of the poor rubes trapped in a mortgage and hoping to sell at some time in the near future.

Low inventory has affected virtually every corner of the United States. States like the "United States of California" were among the worst hit during the crash, and therefore can expect biggest jump in prices. Quality never goes out of fashion.
Besides, if it's just the investors who are buying and not the "average joe", won't it be fair to say it is the average joe that is making a serious mistake by not buying property at this time? Investors tend to be smarter than the average joe.

bgamall4   Sat, 2 Feb 2013, 1:45am PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 8

Raw says

Besides, if it's just the investors who are buying and not the "average joe", won't it be fair to say it is the average joe that is making a serious mistake by not buying property at this time? Investors tend to be smarter than the average joe.

But how long will it last this time? Why would the average Joe want to be kept holding the bag just like last bubble? Why Raw?

I will be out today but look forward to your comment.

Reality   Sat, 2 Feb 2013, 1:57am PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 9

bgamall4 says

But how long will it last this time? Why would the average Joe want to be kept holding the bag just like last bubble? Why Raw?

If the house price can be justified by rental income, it's not a bag but an asset.

Raw   Sat, 2 Feb 2013, 2:01am PST   Share   Quote   Permalink   Like (1)   Dislike (1)     Comment 10

bgamall4 says

Raw says

Besides, if it's just the investors who are buying and not the "average joe", won't it be fair to say it is the average joe that is making a serious mistake by not buying property at this time? Investors tend to be smarter than the average joe.

But how long will it last this time? Why would the average Joe want to be kept holding the bag just like last bubble? Why Raw?

I will be out today but look forward to your comment.

This present jump in prices is not a bubble. It is a real recovery supported by strong fundamentals like high down payments and cash. Cash buyers cannot default. In most cases it is actually cheaper to buy a home then to rent. How can the average joe be left holding the bag in such a scenario? Tell me how?
The greatest investor of all time - Warren Buffett, stated a year ago, if he could, he would buy 200,000 homes. Why second guess a person like that? The average joe like me should follow the examples of smart investors, not oppose them.

mikem   Sat, 2 Feb 2013, 2:56am PST   Share   Quote   Permalink   Like (3)   Dislike     Comment 11

out in my neck of the woods in central california there are always multiple offers on everything I looked at. everytime I went to look at a house there were several other people showing up at the same time to look as well. inventory is slim now. I don't see a so called "free market" at work. it is all manipulated by the powers that be. I just recently, got.... "won" a house at a good price. its no fun trying to buy out here. I am not worried about a second "crash" because it is obvious "they" will never let it happen. free market, what a laugh.

The Professor   Sat, 2 Feb 2013, 2:57am PST   Share   Quote   Permalink   Like (3)   Dislike     Comment 12

Raw says

if it's just the investors who are buying and not the "average joe", won't it be fair to say it is the average joe that is making a serious mistake by not buying property at this time? Investors tend to be smarter than the average joe.

Raw says

The average joe like me should follow the examples of smart investors, not oppose them.

The average joe cannot buy a home because the investers are buying them up.

If investors had something better to invest in they would. Who really wants to be a landlord?

Raw   Sat, 2 Feb 2013, 3:08am PST   Share   Quote   Permalink   Like (1)   Dislike (1)     Comment 13

The Professor says

The average joe like me should follow the examples of smart investors, not oppose them.

The average joe cannot buy a home because the investers are buying them up.

If investors had something better to invest in they would. Who really wants to be a landlord?

That is the point professor...Real Estate is so so so lucrative right now that every investor is scrambling to get a piece of the pie. Right now there is no investment like real estate investment.
It really is once in a lifetime opportunity.
Eventually, the investors will take profits and unload to the average joe at a high price. It's not really fair, but life was never meant to be fair.

Kevin   Sat, 2 Feb 2013, 3:41am PST   Share   Quote   Permalink   Like   Dislike     Comment 14

Lots of people want to be landlords. In the right place it can be a fantastic return with minimal effort.

Reality   Sat, 2 Feb 2013, 3:49am PST   Share   Quote   Permalink   Like (3)   Dislike     Comment 15

Raw says

That is the point professor...Real Estate is so so so lucrative right now that every investor is scrambling to get a piece of the pie. Right now there is no investment like real estate investment.

It really is once in a lifetime opportunity.

Eventually, the investors will take profits and unload to the average joe at a high price. It's not really fair, but life was never meant to be fair.

This process is actually more "fair" than it looks at first glance: the investors by buying and renovating homes are in effect bringing more housing units onto the market and driving down rent regardless what their subjective wishes are. That in turn benefit the renters who at the moment are not ready to take the risk of buying. Profit is a good thing, not in the bastardized form of someone having a Pinky-And-Brain fantasy, but a good thing in bringing forth more supply and driving down prices for those who need the services and goods. That's how rational allocation of capital works. At the early stages, the cash investors can take the most risk therefore they lay the solid foundation for a sound recovery.

Philistine   Sat, 2 Feb 2013, 6:32am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 16

Raw says

Investors tend to be smarter than the average joe

For every good investor, there's a bad investor. It's called speculation. Businesses go under every day.

mell   Sat, 2 Feb 2013, 7:22am PST   Share   Quote   Permalink   Like (4)   Dislike     Comment 17

Raw says

That is the point professor...Real Estate is so so so lucrative right now that every investor is scrambling to get a piece of the pie. Right now there is no investment like real estate investment.

It really is once in a lifetime opportunity.

Eventually, the investors will take profits and unload to the average joe at a high price. It's not really fair, but life was never meant to be fair.

Bet it's as "lucrative" as it was every year until 2008. Next round of bailouts in 201x. Keep pumping that shit.

Philistine says

Raw says

Investors tend to be smarter than the average joe

For every good investor, there's a bad investor. It's called speculation. Businesses go under every day.

Oh yeah, investors tend to be smarter like they were every year until 2008 - if I recall correctly it was not the average Joe who had a crisis - but he soon had a crisis because all his money was taken from him to bail out the "smart" investors. Right on, you can't make this shit up.

mell   Sat, 2 Feb 2013, 7:23am PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 18

Hopium and change, hopium and change.. ;)

Mark D   Sat, 2 Feb 2013, 8:36am PST   Share   Quote   Permalink   Like (1)   Dislike (5)     Comment 19

Average joes had the last six years to buy so they can't really blame anyone now.

mell   Sat, 2 Feb 2013, 8:44am PST   Share   Quote   Permalink   Like (3)   Dislike     Comment 20

Mark D says

Average joes had the last six years to buy so they can't really blame anyone now.

They don't have enough money for such a big financial undertaking, so they want to start by saving - say starting with $10K - for a couple of years instead of buying a house for 500K. Stocks are somewhat in between and better suited but still risky, maybe big dividend paying bellwethers. Still they shouldn't be forced into the stock market or RE.

coriacci1   Sat, 2 Feb 2013, 8:51am PST   Share   Quote   Permalink   Like   Dislike     Comment 21

like in a newly vacant apt in sf!

Kevin says

Lots of people want to be landlords. In the right place it can be a fantastic return with minimal effort.

bgamall4   Sat, 2 Feb 2013, 10:23am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 22

Reality says

If the house price can be justified by rental income, it's not a bag but an asset.

That may be, with the decline in wages, difficult to maintain. Over time, as people double up in rentals, there will be more empty units and even a competition to rent them. If the hedge funds wanted too, they could drop their rents and put you all out of business tomorrow. And how do you know that isn't their plan?

JodyChunder   Sat, 2 Feb 2013, 10:42am PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 23

Raw says

This present jump in prices is not a bubble. It is a real recovery supported by strong fundamentals like high down payments and cash.

Tongue, meet cheek.

JodyChunder   Sat, 2 Feb 2013, 10:42am PST   Share   Quote   Permalink   Like (7)   Dislike     Comment 24

Kevin says

Lots of people want to be landlords.

You have no idea what you are talking about.

Nobody WANTS to be a landlord. They want to be rich with minimal effort.

lostand confused   Sat, 2 Feb 2013, 11:00am PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 25

JodyChunder says

Raw says



This present jump in prices is not a bubble. It is a real recovery supported by strong fundamentals like high down payments and cash.


Tongue, meet cheek.

LOL!!

Reality   Sat, 2 Feb 2013, 12:15pm PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 26

bgamall4 says

That may be, with the decline in wages, difficult to maintain. Over time, as people double up in rentals, there will be more empty units and even a competition to rent them. If the hedge funds wanted too, they could drop their rents and put you all out of business tomorrow. And how do you know that isn't their plan?

My plan is actually to drive down rent over time, and make the cost of housing lower for the younger generation, so they can live a dignified life out side of their parents' basements and still be able to take flexible wages. A cash buyer with no debt can withstand a lot of price competition, especially one that is not primarily motivated by profit in the long run.

David Losh   Sat, 2 Feb 2013, 12:53pm PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 27

Raw says

Real Estate is so so so lucrative right now that every investor is scrambling to get a piece of the pie. Right now there is no investment like real estate investment.

You hit the nail on the head about investors.

The investor is buying all cash with a rental return. Even with prices increasing they continue to buy because the first properties are going up in price, and by averaging they are still holdinga very nice portfolio. They are also getting the rental income.

With the rental income investors can bundle the Real Estate holdings into a REIT, sell off the income, plus promises of equity, and continue to buy more all cash properties. The returns quoted are 6%, which is more stable, they will tell you, and much more than a bank will give you on a CD.

So, it's all good, and groovey, except for the retail buyer who is paying higher, and higher prices, with mortgages.

Those mortgages are debt of a certain amount no matter how low the payments are. It's like the home owner is out paying Mercedes prices for VolksWagens because they get those low monthly payments for thirty years.

What some one said about Warren Buffet is true. If he had 200,000 housing units he would be selling them by now for a profit. Profit is the name of the game for investors.

You take the rental income, add that to appreciation, and ba bam, you have profits.

Now how much higher can prices go before they are at a peak? I say we are past that time, but to each their own.

The investor doesn't need to care, because they are all in for cash. Once they hit a point in pricing that they would take a loss they will sell the housing units with "special" financing. That will be you 0 down coming back again, at a certain price.

The investors will sell, and dump for the very reasons anyone will tell you, residential housing units are a pain in the ass. You pay the theiving Property Managers, and they do nothing.

It makes much more sense to sell off your onesy twosies and build a mixed use building in down town New York, or Mumbai.

The home owners holding mortgages are stuck with underwater equity, and those go back to the bank, because what's the frigging use of paying off an underwater loan.

bgamall4   Sat, 2 Feb 2013, 3:17pm PST   Share   Quote   Permalink   Like   Dislike     Comment 28

David Losh says

The investor doesn't need to care, because they are all in for cash. Once they hit a point in pricing that they would take a loss they will sell the housing units with "special" financing. That will be you 0 down coming back again, at a certain price.

The investors will sell, and dump for the very reasons anyone will tell you, residential housing units are a pain in the ass. You pay the theiving Property Managers, and they do nothing.

It makes much more sense to sell off your onesy twosies and build a mixed use building in down town New York, or Mumbai.

The home owners holding mortgages are stuck with underwater equity, and those go back to the bank, because what's the frigging use of paying off an underwater loan.

Bypassing banks and financing themselves at 0 down is already happening in Las Vegas. Not many takers though. People are still waiting as there are a boatload of rentals in the city. But if a low interest rate was offered I suppose it could be a good deal, unless houses are overpriced by double.

Facebooksux   Sun, 3 Feb 2013, 10:10pm PST   Share   Quote   Permalink   Like (4)   Dislike     Comment 29

Raw says

This present jump in prices is not a bubble. It is a real recovery supported by strong fundamentals like high down payments and cash.

Riiight....

bgamall4   Mon, 4 Feb 2013, 6:52am PST   Share   Quote   Permalink   Like   Dislike     Comment 30

Reality says

If the house price can be justified by rental income, it's not a bag but an asset.

If you have a 30 year mortgage, rents could be lower than the mortgage payment if the world is getting poorer. Something to think about for the future.

mell   Mon, 4 Feb 2013, 7:38am PST   Share   Quote   Permalink   Like   Dislike     Comment 31

Facebooksux says

Raw says

This present jump in prices is not a bubble. It is a real recovery supported by strong fundamentals like high down payments and cash.

Riiight....

The poster-image of a sustained recovery ;)

FunTime   Mon, 4 Feb 2013, 7:48am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 32

David Losh says

because what's the frigging use of paying off an underwater loan.

How so many people decide to take loans of such amounts has gone beyond my understanding. I just don't get it. It just seems like a great sales job by the people who really have money.

everything   Mon, 4 Feb 2013, 9:13am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 33

All I know is I can't compete with 85 B MBS. I can't even compete with rising home prices if I had one, I'm renting for less than 3 thousand a year more than just the average property tax bill with all utilities included.

The big thing is not to have a wife/kids, the government can take care of them for you anyways, via the food stamps chart above. Not that guys can't get food stamps too, I know this guy never will though.

I don't know about the sell off, I'm seeing buy off. When flipping is back you know RE is a happening thing and prices are moving up rather quickly with the flow of easy money. It's kind of a repeat of what we had before but oh well, glad I know enough to stay out of it, RE market is way to competitive and expensive for my taste. Things are looking allot like 2001 right now, except with rock bottom interest rates, either total junk or really high priced. As long as investment money and low rates are available the party is on. Should go for another couple of years maybe, not sure where all the suckers/bag holders are going to come from next time around, because that's the way RE seem to be played these days.

ThreeBays   Mon, 4 Feb 2013, 12:37pm PST   Share   Quote   Permalink   Like (3)   Dislike     Comment 34

Bye bye stocks today. It's been a good 17% rise since August. I'm not happy holding stock when it's near all time highs, while we have falling GDP and rising unemployment.

Bubbabear   Thu, 7 Feb 2013, 2:11pm PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 35

ThreeBays says

Bye bye stocks today. It's been a good 17% rise since August. I'm not happy holding stock when it's near all time highs, while we have falling GDP and rising unemployment.

A housing & stock market simultaneously overheating under a falling GDP and rising unemployment ...

The writing is on the wall!

Bubbabear   Thu, 7 Feb 2013, 2:30pm PST   Share   Quote   Permalink   Like   Dislike     Comment 36

When looking at all things objectively , the source should always be cosidered...
http://market-ticker.org/akcs-www?post=216957

varmint   Thu, 7 Feb 2013, 5:23pm PST   Share   Quote   Permalink   Like (3)   Dislike     Comment 37

Billybigrig says

A housing & stock market simultaneously overheating under a falling GDP and rising unemployment ...

QE at work!

David Losh   Fri, 8 Feb 2013, 12:17am PST   Share   Quote   Permalink   Like   Dislike     Comment 38

robertoaribas says

today we got very solidly low numbers for new claims for unemployment

What most are talking about is construction jobs which are increasing, and what we have been shooting for.

Those are good paying jobs, but I would like to know what construction is really paying these days.

Vicente   Sat, 9 Feb 2013, 12:29am PST   Share   Quote   Permalink   Like   Dislike     Comment 39

lostand confused says

I am a fundamentals kinda guy and think we shouldn't be having this market rally and housing boom, when we have such long term structural issues.

You could have used this phrase any time since 2008. And missed out on 5 years of recovery.

David Losh   Sat, 9 Feb 2013, 2:33am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 40

Vicente says

5 years of recovery.

are you kidding?

Vicente   Sat, 9 Feb 2013, 3:00am PST   Share   Quote   Permalink   Like   Dislike     Comment 41

David Losh says

are you kidding?

Whoops I mean 2009, my bad.

Anyhow if I'd sat out the last 4 years on the stock market because I'd listened exclusively to permabears like say Denninger, I'd be really screwed. Vague prophecies about "structural problems" that will inevitably lead to calamity Real Soon Now, are BS. As things are, I've done OK.

David Losh   Sat, 9 Feb 2013, 5:35am PST   Share   Quote   Permalink   Like (4)   Dislike     Comment 42

Vicente says

As things are, I've done OK.

You've done great in the stock market, but the stock market doesn't make a recovery.

From my point of view the stock market has weakened the over all economy. Corporations have huge profits that have to do with speculation. The price of everything goes up, but our wages remain flat. We don't need no stinking wages to make corporate profits.

So, you could say recovery, I say we are in a deeper hole. The consumer is borrowing more just to stay even with a promised standard of living.

Vicente   Mon, 11 Feb 2013, 1:58pm PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 43

David Losh says

From my point of view the stock market has weakened the over all economy.

Agreed. FIRE players win on the upturns, and lose least in the downturns.

tr6   Mon, 11 Feb 2013, 2:01pm PST   Share   Quote   Permalink   Like   Dislike     Comment 44

David Losh says

So, you could say recovery, I say we are in a deeper hole. The consumer is borrowing more just to stay even with a promised standard of living.

Another way to think about corporate profits is described in one of my earlier posts: http://patrick.net/?p=1221189

FortWayne   Tue, 12 Feb 2013, 2:15am PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 45

That's why I don't invest in things I don't understand how they'll make money.

Housing/rental investment that they constantly parade over the radio is a sham. If it was such a great money making operation they'd be doing it themselves, not asking others for money to invest.

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