patrick.net

all renters = shadow buyers

Hell if/when mortgage rates hit 2% even some of the perma bear renters will buy if they can do a low down payment.

This is happening now a huge way at 3% rates.

I mean at some point, you can calculate that '2 years of squatting for free' will for sure allow you to 'get your down payment back' so if you put down 26k on a 750k starter home that is a 40 year old shack (CA of course!) then it will only take maybe one year of squatting to get that back in the event of a large down spike in pricing. Add in the 2nd year of free squatting that will cover any loan fees, repairs, maintance, etc.

So you put down 26k but get 50k 'free rent for 2 years' in the event of a buy/default real soon scenario. Looks pretty smart to me. Really the zero down bubble buyers are NOT STUPID i feel sorry for the paid cash/put large dp down bubble buyers (stupid!).

PockyClipsNow says

i feel sorry for the paid cash/put large dp down bubble buyers (stupid!).

Well, a speculator on my street bought her duplex for $720k in 2005. She put $360k down and financed $360k. My brother bought an identical duplex for $325k in 2009. I bought two identical ones for $330k and $360k in 2009 as well. Talking about timing.

Those identical duplexes were selling for $375k last year. They're fetching for $400-$425k this year. The realtor that helped me acquire these duplexes has been asking if I want to sell them. He has investors that want to buy.

I will sell them, but not now.

I'm just one person, and have been paid to think all my life, and was a licensed Real Estate agent for one year. I have noticed distinct patterns in the available housing inventory for sale under 325k in the Los Angeles area for over 3 years now.

1.) Yes, prices are rising, multiple bids are happening, the inventory is extremely low, this is basic economics. But if there is such a shortage of housing, why haven't the house builders heard the siren? Don't investors tear down buildings in New York City? where there is no land and build to make a profit?

2.) A high HOA Fee, over $400 and $500 a month.

3.) No Stove

4.) 1 bathroom no matter how many bedrooms. (In the late 1990's this was undesirable and a small percentage of the market, not 1/3rd.)

5.) 1st and 2nd floor units with no view, usually looking onto other units or stucco. Top floor units available for sale are rare.

6.) Investor flips from cash court house steps purchases.

7.) Fannie Mae sales and short sales.

8.) Just like the movie: "I see empty houses and condos"

I want to buy because I can have contract opportunities all over the world and would prefer another base other than the Texas one I already have.

After 3 years of this pattern, 'whoever' can take this crap for sale and shove it up their ass.

According to this definition, I am a shadow buyer too, because I am waiting for prices to drop another 65%.

David9 says

I want to buy because I can have contract opportunities all over the world and would prefer another base other than the Texas one I already have.

You are in a pretty good spot there in Dallas. No state taxes. Low cost of housing. Nice and friendly folk.

People waiting for that inheritance.

RE is for investors, those with good steady jobs, income growth, good credit, and renters tired of renting who now plan on staying put.

As I stated before, I'm seeing lots of rentals going up, and I'm seeing larger expensive homes going up, not as much for the middle class, except in low income neighborhoods where the government is subsidizing the building of some single parent homes that are very small.

You would think with rates this low the market would be juiced to high heaven like it did before.

robertoaribas says

Because you know, it makes perfectly good sense to pay taxes, maintenance, suffer theft, pay someone to cut the yard and clean the pool on an empty home that creates no income...

You bet it does, because, the alternative is to show your losses, which would result in an immediate closure by the FDIC. The exact same thing was done in Japan for decades, and it is still being done over there. It's called - extend and pretend.

dunnross says

robertoaribas says

Because you know, it makes perfectly good sense to pay taxes, maintenance, suffer theft, pay someone to cut the yard and clean the pool on an empty home that creates no income...

You bet it does, because, the alternative is to show your losses, which would result in an immediate closure by the FDIC. The exact same thing was done in Japan for decades, and it is still being done over there. It's called - extend and pretend.

And guess who is picking up the tab for all the empty house expenses? Yup, the taxpayer. It is only paper btw. Worthless paper for worthless wood and nails. Whatever makes you happy.

Hi rent and low mortgage rate did spur building. I see new construction of rental developments; I see new houses being build. In next few months we’ll see statistics. With so many houses built in the past we don’t need that much to have market stabilized. Sluggish new household creation, slow population growth and low interest between immigrants to come to US (maybe not so for Haiti). Tenants fly from rentals; join bidding war for houses, scared of rising rent. My friendly manager (yes I have rental properties but I am also a tenant – convenience) suggested to not renew rent for one year but only 6-months as he see rent reduction on horizon. Expensive rentals start to see more vacancy now. New developments offer first month free.

REpro says

Hi rent and low mortgage rate did spur building. I see new construction of rental developments; I see new houses being build. In next few months we’ll see statistics. With so many houses built in the past we don’t need that much to have market stabilized. Sluggish new household creation, slow population growth and low interest between immigrants to come to US (maybe not so for Haiti). Tenants fly from rentals; join bidding war for houses, scared of rising rent. My friendly manager (yes I have rental properties but I am also a tenant – convenience) suggested to not renew rent for one year but only 6-months as he see rent reduction on horizon. Expensive rentals start to see more vacancy now. New developments offer first month free.

REpro,

Is this observation for San Jose, or the Bay Area? Interesting development indeed.

REpro says

Expensive rentals start to see more vacancy now. New developments offer first month free.

High end investors are loosing steam?

I think shadow buyers are people who simply can't afford to buy, which is why you are seeing investors buy and not able to sell for profit these days. Happens a lot around here.

There are certain price points people won't go past simply. And it's not like people are dumb, everyone expects interest rates to climb and prices to drop. It's inevitable.

Shadow buyers? Most of the so-called offers do not exist. I know a Realtor who got sick from lying for a living---he told me that. This Realtor specialized in REO's. Some of these REO's were listed and relisted for years as the banks chased the prices down. Initially, they almost always list much higher than the real market is willing to pay. Here is the story. He told me that he would frequently receive telephone calls from buyers who wanted to know what happened to their written offers. He would look in the file and fine NO OFFERS in the case file. One reason is that Realtors are trying to keep the prices and their commissions as high as possible. Another reason is that banks track the performance of the Realtors who get their assignments. If a Realtor starts bringing in offers ( even from buyers agents) lower than asking, or if they want the house to be repaired or painted...spending more money) , they will pull all listings and only use agents that get the highest dollar on sales. I have even seen a bank form used to evaluate these scum suckers. Some banks even require realtors to buy books, videos and pay "training fees" to learn how the bank wants them to sell. Realtors are "fired" if they make low offers or don't cut the mustard with the fraud. Banks blame the Realtors for not getting the prices they want....!

I think shadow buyers are the ones already in their graves...

Roberto, I think that you have a good point. In fact, it is something that I have thought about casually, but never really put into words. The reality is that all of the would-be buyers on here that are renting and saving for houses right now, myself included, are actually enemies. We feel camaraderie because we are irritated with the market and whatnot, but in the end, at least in the SFBA, we are all in direct competition for whatever inventory there is. I bet that at least two people on here have bid against each other for a house, unknowingly. It's sort of funny to me.

Well, here is one example of a sad, little, low end one bedroom that that has 'sold' and re-listed 13 times since 2008, might be what the Beverly Hills guy is talking about.

http://www.redfin.com/CA/Tarzana/18530-Hatteras-St-91356/unit-228/home/4061000?utm_medium=email&utm_source=myredfin&utm_campaign=listings_update