do you think there might be a double dip after the election?

Question

Everything seems so volatile to me- variances on shadow inventory estimates, stock market up & down, lenders backtracking on loans, possible bulk sales by the gov't., job growth vs sustainable job/wage levels etc etc.

And of course this IS an election year....How much is hype?

I've learned a lot but am such a newbie. What do you all think? I think a double dip in RE prices is a possibility unless the gov't bulk RE sales go through en mass. I suspect the packages may not be offered at such a great deal though... who knows? who can guess?

Greg B. · Answer

Is "double dip" even possible in the truest sense?  I thought the recession officially ended June 2009.  Double dip recessions occur 1-2 quarters apart.  It has been close to 3 years.

I do agree that looking at the national picture will scare you into doing nothing but digging a hole and grabbing your gun.  Nationally, it was scary in 1975, 1979, 1980, 1981, 1987, 1992, 1998, 2001, and 2008.  Yet, in all those scary years people were making money with investments.  Sure, people were losing money as well.  Which one makes the news, the poor people losing money.

If you focus on your local market you may be able to find profit opportunities with a degree of comfort.  I wish you well.

Lynn Harrison · Answer

We're looking at 10% interest for 5 years. Thinner margin. If we're lucky. We should reach our goal in 2 weeks and then off to see the wizard of oz. Oops- I mean the neighborhood HM lender. Anyways,  looks like we might have to wait for a deal, or go to our plan B area. The banks have REOs in possession here that are not yet hitting the market. I think they are purposely going slow on it.

LOL, dead cat bounce. That was good JP.

I'll bet they won't print too much money till after the election. Then I'll bet we are looking at higher inflation.

& I'd guess rents will fall as houses get sold.

Anne, my parents live in NH and it seems things are better there than on the west coast right now. But here as there, there are multiple bids on houses- I'm wondering if people who usually invest in stocks are instead  looking at RE. The again, northern California's inventory is down.

Joseph M. · Answer

Hi JP , You are probably right  , it most likely might be a dead cat bounce.

You mentioned owner financing with less than 5% interest.

Are you focusing on non REO deals? Are you having any luck getting owner financing? Any tips of how you are able to persuade owners into carrying financing? What type of down payments are
typical?

JP Quesnel · Answer

Yeah, technically we are still in recession, so what we are experiencing right now is the "dead cat bounce". Basically we still have another down leg to go. if you remember the Big banks stopped all foreclosure proceedings in the last 6-9 months. So inventory shrank in the last few months. Bank of America alone is getting ready to put 4000 homes in the market here in florida.

to be honest, i dont think we will have to wait till after the elections to at least begin seeing prices roll over. Unless the bottom drops from the dollar and inflation takes off, i cant see much more than 10-15% drop in the volatile states.

either way, the time to buy is now... owner financing with less than 5% interest on fixed 30 years is the way to go. Interest rates will move up. Its only a matter of time.

Joseph M. · Answer

Lynn, Yes I agree. With rising transportation costs manufacturing in U.S does become more appealing. Also chinese wages are rising very fast.

Ann, I do believe that anything can change. News reports to influence people a lot.

Greg, I totally agree. There are a bunch of people making fortunes now (some of them are on BP)...but we rarely here those stories. 
It only makes sense to buy when prices are low.

I guess only time will tell what exactly happens after the election.

Ann Bellamy · Answer

In the northeast, there seems to be a large shift in activity beginning the first half of March.  Buyers seem to have moved off the sidelines and are making offers.

But I do believe there is sufficient inventory of REO's that one little hiccup in the news reports will send everyone running, and that we can easily create a double dip.  It will depend on news reports about Europe, North Korea, etc.

I do believe unemployment is worse than published, and there will be "corrections" in the numbers after the election.

Lynn Harrison · Answer

Huh. Yeah, no doubt.

Lynn Harrison · Answer

I think a double dip at some point. I think election year is propping things up and er... massaging data. I don't see any new jobs here. Unless there are enough jobs any noticeable increase in the economy might be a small bubble.

Wondering about peak oil too. Some say we are past it- fracking isn't cheap. I read something recently that as oil and gas prices rise manufacturing in the US becomes more enticing- transport costs get too high. Just a thought.

Joseph M. · Answer

It's hard to tell what will happen. I'm not sure if the election will really change much. I have been wondering about shadow inventory as well. But as Joel mentioned all real estate is local.

I feel that with the large number of REOs and government manipulation (foreclosure moratoriums,etc) we are seeing prices fluctuate kind of frequently , at least that is how it seems in the SoCal market. It all depends on how many REOs are in the market during whatever particular month you are looking to buy. It's definitely not a normal market.

It seems that it would be smart to look into those areas with a lot of shadow inventory/high default rates .

Hard to say about those bulk package deals..I'm guessing they will be getting good deals on them...but unfortunately only the largest of investors will be able to get in on those deals as far as I can tell..

Lynn Harrison · Answer

I plan to invest in northern California. But they aren't releasing a lot of the inventory up here yet and that is increasing prices. Prices vs realistic rental income is not too good right now.

But really- just wanted to start a general conversation about the economy. Not about me.

do you think there might be a double dip after the election?

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