Housing Bubble Bursting?

[moh malekpour]

why some of you are fixated on the world "Bubble"? Bubble is a generic word or term. It is not an economic, real estate, appraisal, or investment word. It just symbolizes an over price of something, anything. meaning that the price is artificial, irrational and illogical created out of hot air with no fundemental and basis to support it. Now, if somebody tells over price, irrational price, illogical price, artifical price, would you settle with that or you just have gotten bubble phobia?

 

[JSmith43]

There was a kid with an impaired immune system that was called a bubble boy. Bubble boy is not a medical term:icon_smile:

Houston Press: Bursting the bubble "Bubble Boy" David Vetter was hardly the happy, well-adjusted child portrayed in the media. Thirteen years after his ...

 

[DTB]

Mike,
You can consider yourself a lucky speculator but please don’t call yourself a knowledgeable person in real estate market or economy. You just have gambled and won just like many other speculators who have absolutely no knowledge in real estate market or economy and made tons of money in recent real estate fiasco. Are gamblers knowledgeable? No. Do they get lucky sometimes? Yes. Are they ultimately winners? No, They are all losers at the end.
If you can think about this and have a convincing answer, you can call yourself knowledgeable , otherwise call yourself speculator or gambler.

I finally stopped laughing at this post. You CAN'T be serious Moh! Care to match track records with me, my Dad or even my 16 year old son? I will be a loser at the end? I could "end" right now and walk away, but I like what I do. What else would I do with my time? Surf? (Sorry George, couldn't resist)

I remember a post where you couldn't comprehend why someone would buy extra tax stamps to put on the deed. You thought it was related to property taxes. LOL.

Don't wade in over your head, particularly into investment waters, the sharks will eat you alive.

 

[Bobby Bucks]

My apologies to anyone who is offended by an off topic post, but it seems inevitably all topics in here run into the same direction eventually anyway. It distresses me to read the non-stop bickering in here about bubbles, unsupported deck adjustments, redacts and risk. I’ve found a way to stay in the game part time and not worry about lender pressure. To each his own, but I sincerely believe that being a part-time, cherry picking appraiser removes much of the temptation to accept those questionable orders and the net result is less risk to me. If everyone did this, there would eventually be no bottom feeding sleazy lenders because I refuse to acknowledge them.

Much of the bubble argument seems to deal with lender QC and their risk. Maybe the question should be why be even be concerned with their risk? They’re big boys and know the score, I no longer care because they can fix the QC problems they created whenever they wish to and presto, no more big scary bubbles. I believe there is far more risk for the individual appraiser accepting and completing the orders discussed here daily than taking a calculated risk with personal assets on a venture where you’ve done your homework. I’ve concluded that being the quality control police on HBU nightmare properties for unappreciative lenders isn’t cost effective for me. I’ve found that observing, persevering and acting on the flaws in the current system pays handsomely. I just put another one to roost which had zero risk as far as I was concerned. Vacant lot listed by a gold jacket thug. No sewer in the subdivision on the listing date. There will be in 60 days. Maybe the gold jacket was reading the bubble news instead of visiting the planning office. Christmas came early this year. Buyer was “yours truly and/or assigns” to close in 4 weeks. The day after the accepted offer it’s listed for 40K more with a clause for “subject to seller taking title”. My only investment interest was for 4 days since there were 2 closings within the same week. This is not meant to boast, but to show others it can be done, it isn’t brain surgery, but it isn’t easy. It’s work.

I don’t read articles about bubbles, but I do read my MLS a dozen times a day and the classified sections of 3 different newspapers. 99% of it is wasted time I’m sure. It’s that 1% that bears fruit. I didn’t grow up with the country club, the silver spoon, the electric garage door openers, nor do I care to have any of that, but I do intend to celebrate tomorrow. I’m going to forego the adult beverages, what I’m going to do after they record the deed is smoke me one of those big long Cuban mule dick cigars like the high rollers do. Maybe even put on my Poncho Villa hat and provide personal bumper music for all incoming calls …..

Won’t you pour me another Tequila, Sheila.
Take off that red satin dress.
I crossed the border, and I beat the dealer,
For all the damned gold in Juarez.
I feel like ol' Pancho Villa, Sheila,
And I got the pesos to spend, yes I do.
So pour me another Tequila, Sheila,
And lay down and love me again.

 

[Mr Rex]

Bucks, good to hear from you again, and I agree with your " off post" commentary. As many here are asking, so what is the magic formula to get away from mortgage work? I have begun my journey to new revenue streams with market knowledge and builder knowledge of "Legal flips" (poor terminology, but sums it up). As you do not accept e-mail or p-mail, you can respond if you wish, how you wish or not at all. I hope for all but the latter.

 

[JSmith43]

Nice tune, Bucks.

If the risks were properly discounted, and the opportunity costs of not pursuing other ventures were given ample consideration, the supply and demand for appraisers doing mortgage related work would quickly reach equilibrium.

Of course, a lack of state reciprocity helps interfere with normal market forces of supply and demand, Therefore there will exist some exceptions. I guess the negation of market forces is part of that "public trust initiative" woven into title 11 that has been known to be called The Risky Regulatory Scheme

The terms of employment suck, the legal risks are great, but like farmers in the late '70's and 80's, appraisers stubbornly resist exploring market alternatives. That is quite a paradox, since appraisers are allegedly experts in markets, and analyzing market behavior. Looking inward is a tough thing to do.

 

[DTB]

Bobby-big-Bucks

Couldn't agree with you more.

 

[The Warrior Monk]

Bucks, good to hear from you again, and I agree with your " off post" commentary. As many here are asking, so what is the magic formula to get away from mortgage work? I have begun my journey to new revenue streams with market knowledge and builder knowledge of "Legal flips" (poor terminology, but sums it up). As you do not accept e-mail or p-mail, you can respond if you wish, how you wish or not at all. I hope for all but the latter.

There's nothing wrong with doing mortgage work. IMO, it is profitable; you just have to find the right people and be very competent in your specialty.

We have several different conversations going on here. Mike N. is basically stating what I believe. Bubble or no bubble, you can make money in the market. Buy below market and your ahead of the game.

Mike S. seems to be referring to something different. If one is buying at market and plans on riding the equity elevator, then timing is dependent on holding period. If the holding period is 20 years, you're going to come out ahead. If the holding period is short, then depending on increases in equity is much more risky.

For example, in the market where I work, if one would have bought a home in 1989, they would have had to wait 10 years just to sell the property at what they bought it for. Technically that's a loss, due to inflation.

What I'm seeing here is that risky financing, such as interest-only loans and ARMs have dramatically increased. That's even before the consideration of concessions, which have also dramatically increased. Home prices in certain areas are inflated simply due to the sales prices reflecting the concessions. I personally don't think that their is any equity elevator to ride at the current time. If some believes that they can ride the equity elevator up after year after year of 20%-30% increases, be my guest.

I stick with the mentality of buying homes below market price and selling at market price; that works in all markets.

 

[TC]

There's nothing wrong with doing mortgage work. IMO, it is profitable; you just have to find the right people and be very competent in your specialty.

AGREED,

I do nothing but A paper and life is semi-good.


TC

 

[Scott Kibler]

If one is buying at market and plans on riding the equity elevator, then timing is dependent on holding period. If the holding period is 20 years, you're going to come out ahead. If the holding period is short, then depending on increases in equity is much more risky.

Depending on increases in equity is mainly a function of the holder's cash flow. Guys like Mike N are successful in part because they don't have to sweat the monthly P/I/T/I on their investments. I recall one example he posted on: a house bought for 300k, left vacant a couple years then resold at a significant profit. I forget the exact numbers involved but you get the gist. That's a great scenario if you can swing it; buy a place for cash or nominal, painless payments then sell it at your leisure.

It's a tougher go if your forced to screw around with tenants to make your month nut, max the credit cards making repairs in hopes of a quick flip or find yourself banking on an annual refi to stay above water. Obviously interest rates are key here but I think the real danger for the neophytes is tightening credit standards. This new paradigm business is hogwash. Like any other business cycle, underwriting standards tend to be cyclical in nature, looser then tighter dependent on economic climate and more importantly, regulatory oversight. You can pretty much bank on greater regulatory oversight in the near future. A "soft landing" with drastically reduced new mortgage volume will pretty much seal it.