All Forum Posts by: Rob Cee

This is a very good post.  So many people on BP sugar coat things to make them sound easy (especially if they are selling something or promoting something), and so many people talk a lot about their wins but you rarely hear of their losses (or all the work that went into the wins).  Paul's response is much more honest IMO.

I think we can all thank the sugar daddies and sugar mommies at the Fed for much of the appreciation since the crash in 2008.  The Fed manipulating rates and artificially keeping rates low has probably had a lot to do with propping up the real estate market.  We had NEVER had 3% 30 yr fixed rates in the 239 year history of the United States until recently.    If the free market and not the Fed were dictating rates and they were in the 6-7% range where they should be do you really think we would have seen all this appreciation since the crash?  Some also say the Fed has also propped up the stock market with low rates and QE.  And the booming Nasdaq since 2009 has a LOT to do with all the appreciation especially in places like the Bay Area, Seattle, etc...  I bought rentals post crash 2009-2012 in San Diego and benefited from the sugar daddies at the Fed.  When I bought these rentals I thought they would be long term rental holds that would slowly appreciate, I had no idea they would near double in price in 18 mos from 2012 to late summer 2013.  So I look at making that money as pure luck for me.

It seems the sugar daddies can keep rates low forever, so maybe the party will keep going on.  But don't think for a second the appreciation $$$ you made in Cali since the crash had anything to do with your skill, send a thank you card to Santa Claus at the Federal Reserve. 

 Good points Mehran.  What are you going to do with your equity when you sell your house?  I think I listened to a podcast where you were buying cash flow rentals in Milwaukee.  Are you going to continue to do that?  I think it can be smart to rent in CA right now & get a return on your cash somewhere else instead of locking it up in home equity.    I don't think there is a big upside in prices left in Coastal CA.  There was a big upside back in 2009-2011, but now I think there is a greater probability of the market being flat or even backsliding say 10%. Maybe not this year but possibly next. Not a bad time to get out and sell some rentals or your primary, I already sold some a year ago in CA.  Most all of the huge CA price run up post crash came in a 18 mos period ( very early 2012 to late summer 2013).   I do not think Coastal CA home prices could withstand a 5% interest rate very well, rates will have to stay below say 4.25% for a long time or there could be problems (unless of course incomes start spiking upwards).  Like usual in that state, it is very unafforable on the coast.  People stretch and put too much of their income towards a house payment on a $800k crap shack and eat top ramen.

 Thanks Kurt.  Finally someone steps up to say their market that is not red hot!  I would imagine Illinois has some slow markets too as that state is not doing well.

Everyones market seems to be smoking hot.  I think a better question is what markets are slow?  Albuquerque NM?  Central Valley of CA I noticed has very high unemployment still + drought may hurt AG jobs. How is Houston and OKC holding up with lower oil prices?  Seattle where I live is in the smoking white hot zone.  

@Scott Sutherland Are there any issues or laws regarding operating your property like a hotel? In terms of zoning of the neighborhood, licensing, insurance? Or is this a grey area? Is your homeowners insurance company OK with you using your property as a hotel or short term rental? Any issues with neighbors? Or maybe they don't care. I'm thinking if you had a condo it may have to be approved by the HOA to use it on Airbnb.

I don't think there is a housing bubble redux because the lending is so radically different this time (vs. 2002-2007).  The last 7 years has seen really solid lending with tough underwriting, stronger appraisals, larger down payments, and low fixed rates that are fully amortizing (that automatically create equity for owners).  Also record amounts of cash purchases the past 7 years.  So I don't think the ingredients are in place for a flood of distressed inventory like 2008.  It was really the crazy lending that caused the last bubble.

Also, there has not been a lot of new construction the last 7 years to add much new supply.  

Not to say prices couldn't be flat or fall slightly.  But IMO no chance we see anything like 2008-2011 in the near future.  That was the 100 year flood.

@Doug Merriott what is the name of the REIA Jimmy will be speaking at? I might stop by if I'm in town then.

 Thanks Amanda I will be interested to hear back.  I'd be interested in the subject matter of the course.  

I'm thinking of going to this in Tampa Feb 7th and 8th.  Has anyone gone?  Feedback?