Buying property in the US right now
#1
Is it madness? Aiming for the NYC area, which will always rebound I imagine. Or is the worst still to come?
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#2
A lot of the sources I’ve read have been talking about a huge tank in prices early next year.
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#3
I would be particularly careful around NYC. I'm of the mindset that prices there will reset downwards and its unclear how far down, so it becomes like trying to catch a falling knife. Definitely don't think NYC will die, just don't think it will recover to pre-COVID highs for a long time.

Agreed with SC87 that there may still be a downswing coming in 2021 in other markets that have so far withstood. I don't anticipate necessarily a "crash" of the likes of 2008-2009, but for now the market is being propped up by a massive supply glut (very few people are moving right now largely due to govt protections from foreclosures) and cheap liquidity that's causing people to chase homes. As we all know, these types of trends don't last forever. I think inventory (homes actually on the market) right now is the lowest it has been in decades.

Looking forward to following this thread - will possibly be in the property mkt next year.
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#4
IIRC, it wasn't until 2012 that US home prices bottomed after the 2008 stock market crash.

My guess is it takes time for various stimuli to run out, including credit, before folks are unfortunately forced to sell into a crowded market.
If you haven't met anyone, I'll assume you're lying (h/t to Teedub from the old forum)
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#5
Don't forget that forbearance protections last for up to a year before being foreclosed.  The economy was humming right along before the whole COVID mess, so I wouldn't expect to see any deals until next summer at the earliest.

I seriously doubt you would be missing out on any amazing deals if you waited a year.  I could be wrong but I just don't see the housing market rebounding into all time highs anytime soon.
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#6
(10-07-2020, 03:33 PM)el_hefe Wrote: Don't forget that forbearance protections last for up to a year before being foreclosed.  The economy was humming right along before the whole COVID mess, so I wouldn't expect to see any deals until next summer at the earliest.

I seriously doubt you would be missing out on any amazing deals if you waited a year.  I could be wrong but I just don't see the housing market rebounding into all time highs anytime soon.

Mortgage companies are basically telling their borrowers "pays us what you can monthly...even if your payment is 2200 a month...400-500 per month will suffice for now."

There is also the issue that people wanting to sell are so scared of Covid that they're staying put regardless...and with this lack of inventory, they fear not having another place to land upon selling their primary residence.

Yes interest rates are lower than they've ever been...but we're not seeing as much activity in the comps meaning appraisals are coming in lower than ever....so get ready to pony up extra cash for money down if you win out on a bidding war of what inventory is left....
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#7
Why is inventory so low? Just because people are scared of covid?
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#8
I recently listed my condo to sell, I may have waited too long as there was a big housing sales boom in Canada recently with historically low interest rates at around 1.6-2.0% on a variable rate but my fingers are crossed that someone will scoop it up. It's a nice condo in a great location but it's in Edmonton, which has been in a downturn since oil crashed in 2015, I paid 270K for it in 2011 and will list for 260K, will likely get around 250K, I should've bought in Vancouver FML. My thoughts on real estate have changed over the years and I no longer totally buy into the middle class dream of home ownership, especially condos. When you factor in HOA fees, property taxes, etc one could argue that you're better off investing your money in the markets, plus you have the freedom to move around which in my case is important as my work takes me all over the country. A lot of people see renting as throwing your money away and they have a point but as someone who held onto a condo for nearly a decade, paid a $40K special assessment fee for repairs and is now selling it for less than I bought it for, home ownership isn't always what it's cracked up to be.

Another thing I've been reading about is that the work from home thing is a fad that won't last, especially after the US election and the release of a vaccine, things will likely go back to normal and the large majority of those office drones will be going back downtown and taking commuter trains. Many such folks sold their downtown condos and fled to the outer burbs or even different municipalities in rural areas, coupled with a complete crash in demand for Air BNB rentals, many owned as investments by speculators, and a general adversity to being stuck in condos with high rise elevators because of Covid-there's been a large drop in demand for inner city condos/apartments. Civil unrest in major US cities is also a factor but it appears to be cooling off. So the WFH types fled the cities but will eventually be going back once they realize they overpaid for a house in the country in a boring small town and they won't want to commute 2 hours each way so 2021 could present a short term buying opportunity for inner cities condos, if that's what you're looking for.
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#9
Yeah I'm also not sure work from home will become the new norm. Not saying it won't increase though.

Why? Years ago, I remember one of my former bosses or co-workers said something to the effect of, "If the executives pushed work from home, then why not outsource not only our jobs overseas, but there own jobs as well?"

The answer of course could be that they may not have the choice, if shareholders demand it.
If you haven't met anyone, I'll assume you're lying (h/t to Teedub from the old forum)
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#10
As someone who's made a killing over the years buying, renting out, and eventually selling properties over the years, I think buying property is crazy unless you are doing so for rental property purposes.

Being locked into a single residence because you "bought" it takes away the freedom of location independence and mobility which is important these days.

I always tell people to live in a rented a multi-million dollar home for pennies on the dollar, then save your home purchases for places other people pay you to live in.
Have you ever noticed it is your haters who obsessively read your every post, comment on them with the most emotion, and expend so much energy desperately trying to engage you?  It's because haters are your greatest, most loyal, and dedicated fans; they just have not come to terms with it yet.  Enjoy them because they are the surest sign that you're slaying it in life!  Big Grin
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#11
My experience rings true with a lot of what both Scotian and Contrarian Expat have both remarked on.

Home ownership comes with its advantages and disadvantages. 

Advantages: 
  • sense of ownership of both a hearth and sizable asset
  • property values going up in a lot of markets
  • tax write offs on mortgage interest (in USA if applicable)  
  • freedom to personalize and change out fixtures 
  • sense of being 'tethered' or 'rooted' somewhere.

Disadvantages: 
  • all the associated expenses from having mortgage debt (if applicable) 
  • paying ever-increasing taxes + HOA dues
  • maintenance costs and repairs fall completely on your shoulders and can be expensive (roof repair, plumbing, appliance repair/replacement) 
  • lawn care (if applicable) 
  • risk of property value declining and going underwater on mortgage
  • opportunity costs of foregoing other investments, often an overly large portion of net worth
  • hassle of sourcing quality tenants + accommodating them (if applicable).
  • much less flexibility in taking another better paying job in another city

I used to see housing as a great investment, but since becoming a homeowner, my perspective has changed even as my property as soared in value. 

I now see home ownership primarily as a consumption item, and the strongest considerations are lifestyle rather than monetary. If you come out ahead monetarily, then that's great, but I've found the primary benefit to be sentimental and intangible — a place to call my own, and in my case, the fact that my Mom's ashes are in the back yard and nearby lake.

Mere home ownership, for its own sake, with all its hassles would not be worth it for a less suitable property given the fact that I don't really like residing in the USA.

If I'm truly going to invest in real estate, I'd rather it be as an LP in commercial properties (i.e. multifamily, office, industrial, retail) with a competent general partner with property management ideally outsourced.
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#12
Main advantage of property ownership is the easy leveraging at low interest rates right now.

It will be interesting to see where commercial and office property in downtown US cities goes. Right now, ghost towns.

Greedy fucks in corporate management have figured out that they can save a big cost by having them work at home. Cut the offices by 50% just have some "co-working" spaces and conference rooms. Second order effects in lunch delis and after-work pubs are being felt.

In residential, I'd wait six months, let the full effect of bankruptcies and unemployment wash through
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#13
Interesting bit of advice I read.

Wait until they rugpull they CARES act. Wait for interest rates to go back up. Save up cash to pay down as much of the mortgage as you can outright. Otherwise you are stuck with debt and depreciation from interest rate spike.

Maybe I can get more specific with my idea. My friend wants to buy house together and split into two living spaces. He would stay there long term if I left to travel, overlooking the rental while I'm gone. That seems reasonable to me because I would have somewhere to live, if need be, and then also have somebody I trust monitoring the rental as an investment. Thoughts?
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#14
(10-11-2020, 07:04 PM)churros Wrote: Interesting bit of advice I read.

Wait until they rugpull they CARES act. Wait for interest rates to go back up. Save up cash to pay down as much of the mortgage as you can outright. Otherwise you are stuck with debt and depreciation from interest rate spike.

Maybe I can get more specific with my idea. My friend wants to buy house together and split into two living spaces. He would stay there long term if I left to travel, overlooking the rental while I'm gone. That seems reasonable to me because I would have somewhere to live, if need be, and then also have somebody I trust monitoring the rental as an investment. Thoughts?

No comment on market movements but I can comment on the challenges of coownership.

I own my property with my brother and it works ok because (a) we're both flexible and reasonable (b) we plan to hold the property forever and © there are no disputes over maintenance as we both have the same mindset of paying for quality and being on top of shit. 

I'd be highly weary of co ownership otherwise because disputes can easily arise over maintenance, delinquency of payment, or being on the hook to sell or finance a buyout of the other based on one's changing lifestyle or the needs of someone else.

Imo, it can work but tread carefully and get an agreement in writing.

My brother and I keep a shared account for the property that we fund quarterly to pay out taxes, insurance, utilities, internet, lawn care, hvac maintenance, and a reserve for inevitable repairs (roof, plumbing, hvac, appliance repair/replacement, deck repair etc)
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#15
(10-07-2020, 02:26 PM)AirWaves Wrote: IIRC, it wasn't until 2012 that US home prices bottomed after the 2008 stock market crash.

My guess is it takes time for various stimuli to run out, including credit, before folks are unfortunately forced to sell into a crowded market.


Very good points.

Studies of housing bubbles and collapses also show a peak-to-trough time of approx. 6 years to hit bottom. 


As well, something to consider re: NYC

https://jamesaltucher.com/blog/nyc-is-de...heres-why/
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#16
I checked out of the game. I bought property in Kansas and live off the grid in a town of 400.

It is strange when people you've never met know your name. There will be no women for the foreseeable future.
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#17
(10-11-2020, 09:30 PM)LeBeau Wrote: As well, something to consider re: NYC

https://jamesaltucher.com/blog/nyc-is-de...heres-why/

Nah I don't buy these reports anymore. I find the arguments insubtantial. This guy is just retrospectively justifying the move out of town. Same thing with CA deserters.

People will be back here in one year or so, when they realize what it means to live in Kansas. Same thing with office jobs. Remote working won't fly for long.

There's no city in the US like NYC. I'm not glorifying it. Just that everywhere else in the US is a car-infested shit hole that you can't walk around. Maybe Chicago or Boston but they ultimately don't compare.

And the hot chicks haven't left NYC just let. I'll let you know when that happens! i.e. never. For better or worse, NYC is the capital of the western world.

edit: lol this blogger is the guy who makes the "bandwith" argument... but hey, he got my click and yours by claiming that "NYC is never coming back."
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#18
(10-11-2020, 10:52 PM)churros Wrote:
(10-11-2020, 09:30 PM)LeBeau Wrote: As well, something to consider re: NYC

https://jamesaltucher.com/blog/nyc-is-de...heres-why/

Nah I don't buy these reports anymore. I find the arguments insubtantial. This guy is just retrospectively justifying the move out of town. Same thing with CA deserters.

This guy gets it. Never take advice from someone who made a debatable decision and is probably still trying to convince themselves that it was the right move.


(10-11-2020, 10:52 PM)churros Wrote: People will be back here in one year or so, when they realize what it means to live in Kansas.

There's a reason why people live the places that they do. There's a reason why I live in Beijing, even though it's 10X as expensive as Chinese cities no one has ever heard of.

People excited about a new big change in their lives rarely consider how hard it is to break into social circles in an established community leery of outsiders or how truly boring most places are. If you're used to NYC, very few places are going to any fun at all.

(10-11-2020, 10:52 PM)churros Wrote: Same thing with office jobs. Remote working won't fly for long.

My company did remote work for about three and a half months during the height of corona here in China. Luckily, thanks to the government taking this virus seriously, things went back to normal after that, because most people simply do not have the skills to co-ordinate and engage in fast-paced teamwork without the benefit of face-to-face communication.

I'm fully confident that 100% remote company can be effective, but you'd need to build that culture from the ground up by hiring people suited to that type of business approach. It's never going to work for most people. A lot of my coworkers complained that they really struggled to get their work done at home just because they weren't in a work focused environment.

(10-11-2020, 10:52 PM)churros Wrote: There's no city in the US like NYC. I'm not glorifying it. Just that everywhere else in the US is a car-infested shit hole that you can't walk around. Maybe Chicago or Boston but they ultimately don't compare.

If you've lived in a walk-able city, residing somewhere that driving is required to do anything feels very disconnected. Very few places offer this. One of the reasons I love Beijing is that it's very easy to live somewhere with all of your daily essentials easily within walking distance.

(10-11-2020, 10:52 PM)churros Wrote: And the hot chicks haven't left NYC just let. I'll let you know when that happens! i.e. never. For better or worse, NYC is the capital of the western world.

They don't have a choice. There's not enough concentrated demand for a nice pair of boobs in many places other than NYC. Hot chicks feel entitled to certain things and there's very few places that can afford to give them those things just for showing up.

(10-11-2020, 10:52 PM)churros Wrote: lol this blogger is the guy who makes the "bandwith" argument... but hey, he got my click and yours by claiming that "NYC is never coming back."

He didn't get mine.
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#19
Yes, I am hoping my house will be destroyed by a tornado and I will be able to return.
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#20
(10-11-2020, 10:41 PM)dingdongditch Wrote: I bought property in Kansas and live off the grid in a town of 400.

There will be no women for the foreseeable future.

Pussy is the unofficial currency of any reasonably developed society. Attractive women will go wherever they get an advantage just for the way they look. Men will go wherever the attractive women are. The only place that this doesn't seem to be true is church.

I've got a theory that if some no-name town wanted to bring in huge tourism dollars, all they'd need to do is offer a million dollars each year to the winner of some sluttiness competition.

That's why NYC is NYC. 100X the number of women that could ever get a high paid job as a model show up and wait tables for minimum wage and tips just hoping that their big break will come along. It's just chum for the sharks. But you need a massive fashion industry to make that happen. No small town in Kansas wants their daughters being sluts just to attract money and jobs.
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