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Think twice before entering into bidding war in SFBA.


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2013 Apr 25, 2:26pm   9,060 views  22 comments

by REpro   ➕follow (0)   💰tip ($0.10 in tips)  

You will enter into a novel situation with uncertain outcome.

http://www.mercurynews.com/business/ci_22930687/bay-areas-average-homebuyers-shut-out-by-cash

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2   pkennedy   2013 Apr 25, 9:44pm  

Investors aren't paying these prices but cause they are bad deals. They are paying them because they make money after renting them. In other words people are being out bid because they are offering far too little even though they feel they are offering a good price based on the asking price, investors still see value in the prices the offering for the these places and it seems incredulous to those who have spent years waiting for the cheapest prices.

These aren't investors who are speculating on a 25% return a year. They want to rent and get a good return.

3   lostand confused   2013 Apr 25, 11:59pm  

Risk is gone. If you make gains , it is yours, if you don't, you still milk the property for rent and walk away from the mortgage after a few years.

4   C Boy   2013 Apr 26, 1:50am  

"The house had a rat infestation, there were holes in the walls, windows that leaked, mold around windows, water damage to floors. It needed $100,000 in work," she said.

Hahahaha!!

5   REpro   2013 Apr 26, 3:02am  

I’m sensing too much influence from Asian housing market. If there housing market collapses so the money stream from Asia.

6   REpro   2013 Apr 26, 3:20am  

Non-Asian investors are simply flippers. Flipping is making money on market momentum. Often is performed by people who don’t have other job and need to earn money for living.

7   Tenpoundbass   2013 Apr 26, 5:32am  

Why do every time I hear about California, I feel like I'm witnessing a Ship sinking off the coast, an impending doom and fate, as I sat gobsmacked that I don't see anyone manning the life boats. The ship is lisping, but still they sally-forth.

8   FortWayne   2013 Apr 26, 6:02am  

CaptainShuddup says

Why do every time I hear about California, I feel like I'm witnessing a Ship sinking off the coast, an impending doom and fate, as I sat gobsmacked that I don't see anyone manning the life boats. The ship is lisping, but still they sally-forth.

A lot of folks in CA feel the same way about it. Now I don't know if this article is right, I doubt there are that many people with that much cash in BA unless they are groups of investors or something. But we out here got a lot of bigger problems that are just sinking the ship.

9   FortWayne   2013 Apr 26, 6:05am  

REpro says

Non-Asian investors are simply flippers. Flipping is making money on market momentum. Often is performed by people who don’t have other job and need to earn money for living.

I've heard about it a lot in LA. We get lots of radio advertising to flip houses out here. It's sickening how unproductive this generation has become, we no longer produce anything, we just flip to each other in some pyramid scheme until the system collapses than complain to government for assistance.

10   swebb   2013 Apr 26, 7:05am  

Flipping doesn't seem non-productive to me. Most
People don't want to buy a house and update it. They either can't tolerate the risk, don't have the skills/desire to deal with the process, or can't afford to pay for it.

I'm doing a minor renovation on the house I bought, and I'm doing most of the work myself. It's obvious to me that most people couldn't do it. I have a pretty flexible work situation, so running over to meet the plumber or flooring guy isn't a big deal. Paying rent and a mortgage at the same time is tough, too...try getting a loan for that. Not to mention the $thousands in tools, endless nights and weekends spent working, and the time away from family...all of that is worth something, so if someone takes on the risk, work and financial burden and delivers the same thing, aren't they adding value?

11   REpro   2013 Apr 26, 7:36am  

Flipping is a value added, I have no problem with that. Hence, we have flippers and flippers. First do work within weeks, mostly window dressing, to put house back on market ASAP, effectively makes house look old again after 3 years.
Another lives in the house and do it for themselves in mind and enjoy what they are doing.

12   REpro   2013 Apr 26, 1:44pm  

donjumpsuit says

The reason flippers overbid cash is to outbid this style of 'sweat equity' part timer. Then without paying out too much in taxes or interest, the flipper can turn the house in 3 months with little carrying cost for a $250k profit.

Then we have houses with just window dressing, effectively makes house look old and dated again after 3 years.
Flippers:
-don’t raise ceilings
-don’t replace sheetrock with 30+ paint layers
-don’t update electrical wiring
-don’t hot wiring smoke detectors
-don’t update plumbing
-don’t install water line for refrigerator
-don’t replace molded subfloor
-don’t make termite treatment
-etc.

Because… it doesn’t pay.

13   bmwman91   2013 Apr 26, 2:13pm  

That is my problem with today's flippers. Anyone that has any clue about a quality house knows that they will have to spend $30k ripping out the Home Depot junk and repairing the DAMAGE that flippers are doing to the house. It is lipstick on a pig. But, most people have no idea about basic stuff like why water is the core enemy of a house or the difference between sheetrock and backer board, and they lap up flipper jobs like it is the greatest thing since indoor plumbing.

14   fedwatcher   2013 Apr 26, 3:12pm  

The San Francisco Bay Area is seeing prices higher than the bubble. Much of it is from foreign money from China and India seeking refuge in the U.S.

This new bubble will fade, however much of the export income coming into the U.S. passes through this area and the foreign buyers recognize the unique advantages of this local area.

Time to sell and not to buy in this market.

15   thomaswong.1986   2013 Apr 26, 6:10pm  

SFace says

The San Jose market will never be driven by average household income family. 523k gets a decent house in east San Jose and many areas. If you want more, you'll need to exceed average income or have wealth. That's just the way it is going to be and get worst.

This was not the case for decades past. History has proven this to be false. So incomes matters as it matters in any location. Why else do you see price corrections occur in early 90s and more recent. Be it SFBA, LA or San Diego.. all saw prices fall as income fell.

16   REpro   2013 Apr 27, 2:49am  

Here is just listed affordable house in San Jose.
How much prospective buyer have to bring to table?

http://www.zillow.com/homedetails/998-Katherine-Ct-San-Jose-CA-95126/19581689_zpid/

17   REpro   2013 Apr 27, 2:11pm  

I don’t take section 8 either (suddenly government is in control of your property). Anyway section 8 recipients create demand for rental in anyplace at any market condition. Without section 8 people will end up in shelter or move out from the area.

It’s cocaine of rental market.

18   evilmonkeyboy   2013 Apr 27, 3:44pm  

SFace says

The San Jose market will never be driven by average household income family. 523k gets a decent house in east San Jose and many areas. If you want more, you'll need to exceed average income or have wealth. That's just the way it is going to be and get worst.

As a household of two young professionals, I think this is funny. We make way more than double the average household income and would never consider buying at these prices. Why would we, when can simply rent and save a shitload of money. At this rate I will be able to buy a nice home cash in a non-California market in a couple years.

19   evilmonkeyboy   2013 Apr 27, 5:01pm  

So what part of my plan is bad? Not buying in CA or not having a mortgage? If I buy here i need to save 300k for a 20% down payment and then start paying a mortgage or I could move and just buy a house outright.

20   evilmonkeyboy   2013 Apr 28, 2:45am  

E-man says

Is your job in a non-California market? Everything is relative. You can make much money in California compared to the non-California markets. You have more opportunities here compared to the non-California markets. Everything in life has a price.

Also, it's not how much you make. It's how fast you can accumulate it. It typically costs to be a saver. Ironically, it pays to be a debtor sometimes. Occasionally, the pay-off is huge.

Yes, both of us have careers that we could find in any state. We would have a way higher standard of living and acquire much more wealth.

As for cost of being a saver; I am not against taking on debt especially at 3.5% interest rates. What I am against is speculating, the risk associated with the bay area market is to great.

21   Ceffer   2013 Apr 28, 12:27pm  

Section 8 rentals on that site are only the ones advertising, not the ones already occupied (which have a tendency to stay occupied).

In Santa Cruz, the closed Section 8 waiting list is nearly 15,000 applicants, which using a multiplier of 4 per family, means that in Santa Cruz, 60,000 MORE people are trying to horn in on Section 8 vouchers, yet that site shows only two Section 8 rentals in 95062 area code.

An apartment complex close to our place is HUD sn8nc, which means that the builder received special HUD loans preferentially to make Section 8 available. There was a gang related shotgun shooting there a week ago, in which a real estate agent was grabbed and held as a human shield and was shot in the face and may lose an eye.

22   New Renter   2013 Apr 28, 2:07pm  

Ceffer says

Section 8 rentals on that site are only the ones advertising, not the ones already occupied (which have a tendency to stay occupied).

Is there a resource which lists (or at least gives stats on) ALL section 8 housing units for a given area?

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