Real Estate Investor Warns US Is Entering Greatest Correction of His Lifetime

originally posted by: Ravenwatcher
According to Zillo in the last 30 days I have lost

Last 30-day change
- $3,252 (-1.8 %)

Thats alot to lose in 30 days

I thought interest rates where coming down in 2024 so home value would rise .

Supposedly it's suppose to start lowering in late Spring or early Summer, then again after that maybe in the Fall. So far all I heard is that it will lower twice in 2024, of course that is just a prediction.

a reply to: FlyersFan

I was looking at real estate in different parts of the country yesterday - we are getting ready to retire and want to move away from the city - and it was all too expensive for

your damn straight, no way in hell i would buy a preexisting or new home in any town, city, or neighborhood. it's gonna have to be miles and miles away from them and not from some developer. it will be land that i bought and built by a independent contractor to my design or myself.

here are images of one of three new neighborhoods that have been popping up within of five miles of one another in the city / county i live in less than 10 years, most are cookie cutters, less than 10 foot apart, and only have windows on the front and back of the house. they started at 250k and up, now their starting at 325k and up according to the developers signs at the entrances, and i'm pretty sure they are HOA's. there are also 6 others that are planned.

blacked out the street names so you don't know where i live, but i will tell you it's in the panhandle of fl santa rosa county





now it may be because i spent 45 of my 61years of my life living in the fast becoming not the boonie's, if i'm gonna spend 250k, 325k on a home, i at least want me a yard all way round it. not some ten foot ally way with no windows. in the image above my first wife and i bought a house about 3/4 of a mile from there, with a farm home loan in 1984. it was in a neighbor hood that had 1 acre lots, side yards were about 100 feet from the houses on either side, front yard wasn't very big but the back was huge and had oak trees in it. we bought it for forty four thousand dollars. about six years ago she sold the house and got 260k for it, she said she could have got more but the age is what kept it down.

when my family first moved here where i live now, there was nothing, and the closest neighbor was a 1/2 away through the woods. a acre went for 1000 bucks.
all of the kids use to walk to the closest cross roads meet up and could play there just about all day and would only see about see 15 or 20 cars if that many.

getting to old for this world. when i win the lottery i'm gonna buy land in one of the dakota's, wyoming, montana where the population is less than a million folks and land even though still expensive is much cheaper than most places.

originally posted by: Xtrozero

originally posted by: KKLOCO

I do not feel bad for the sellers whatsoever.

Because you are not trying to sell...lol

That is correct.

Doesn’t negate the fact the prices got stupid ridiculous.

You’re doing the right thing. If I owned a home, I’d sell now and wait for the correction. Only thing you might run in to is the 1031 exchange only has 180 days if I remember correctly.

originally posted by: KKLOCO

That is correct.

Doesn’t negate the fact the prices got stupid ridiculous.

You’re doing the right thing. If I owned a home, I’d sell now and wait for the correction. The only thing you might run into is the 1031 exchange only has 180 days if I remember correctly.

First 500k is not taxable....

Grant Cardone is a huckster.

I have 20 years in mortgage biz. There are definitely some bubbly areas but things are not like they were back in 2008. No one really knows though as there is always some unexpected black swan event that can set off a market.

The 2008 bubble was primarily driven by small time investors and mortgage fraud. What actually happened is that credit dried up and it made is so that borrowers were not able to refinance out of their sub prime mortgages. This then set off a wave foreclosures which started causing home values to fall. This then affected your regular homeowner causing them to go "underwater". As the broader economy started to collapse, those homeowners also lost their jobs and started requiring loan modifications, short sales, and ultimately foreclosures because they were so far underwater.

The subprime mortgage market actually kind of kept the economy booming longer than it probably should have... once the subprime mortgage market imploded, it forced a lot of people into foreclosure who probably would have foreclosed years earlier were it not for subprime.

This market is a little different as the loan quality in general is a lot higher than it was back in 2008. Even though high rates have put a damper on homes sales, values have remained high because the high rates have also caused a shortage of inventory.

Homes go into foreclosure when there is a curtailment of income. Basically, once someone loses a job or income, that is usually what will trigger foreclosures. Job market is still relatively strong.

I have bought and sold six houses since 2002. One thing I think that makes things worse is the use of comps, comparing what a similar recent sale on a home one is purchasing in order to ascertain whether it is valued right or for a seller to set a price.

The comps aren't a bad thing but I think (I'm no real estate expert) that the real issue I have with them is that they seem to indicate the sale price of the home but I noticed a couple of the houses I purchased around 2007 and 2014 there were a lot of first time buyers snapping up homes and it is my belief that a lot of them had the Sellers pay closing which may have inflated the sale price in the cases I was seeing both in WA and MN at least for me.

I am not sure but that would be a sneaky way to generate higher values for the next homes in the area and if done enough times in succession would be contributor to a bubble of some magnitude.

I don't think banks/lenders or the real estate industry should allow someone to purchase a home if they need the sellers to pay closing costs, that is already a red flag that they did not save enough and are starting off behind. I have always been told 20% down minimum to ensure favorable loan terms and eliminate the PMI requirement plus all necessary costs to close. My wife and I typically used a two to five percent earnest money depending on how the sale was moving in terms of interest in the property and how risky things may have seemed at the time. The whole circumventing the pain of saving up enough by allowing the closing costs to be covered by seller just seems to make some people feel that they can buy that little extra that will probably break them in the end.

I think the practice should be outlawed.

ETA: I used to be Evc1Shop but after sitting on here waiting for my account to get fixed, I decided to open a new one, looks like I converted to a British Name now. It is good to be making posts again even though I don't do them often. Love the community here, plenty of people clearly from all walks and talents.


a reply to: nugget1

originally posted by: quintessentone
If his predictions happen then if I sell my home for much less then the next home I purchase, I can purchase for much less. To me this evens itself out.

I've been trying to convince the wife to sell both of our houses, then rent until the correction happens, then buy something we can turn into our 'last home', the one we'll live in ... until ...

ETA: my point being, sure, you could maybe stay relatively even, but why not get ahead - and if you are willing to wait it out (it may be a year or three before it happens), it is definitely doable.

I'm holding mine, because I didn't pay too much.

originally posted by: Xtrozero

originally posted by: KKLOCO

I do not feel bad for the sellers whatsoever.

Because you are not trying to sell...lol

We are also trying to sell. Bought land a year ago and have an RV we are going to live in and then build doing a large part of the work ourselves. Water and electric already completed.

We've already advised the realtor that we are willing to help buy down the rate if necessary. We've been on the market for almost a year now.

originally posted by: Xtrozero
a reply to: quintessentone
It is 2400 mortgage and 3100 rent at the same time,

Wha? You are paying a mortgage and rent in the house you're living in now? How exactly does that work??

oh and 600 rent for one kid in college and about 800 for the other, so I'm actually like 6900 per month, I also love my 7000 a year insurance bill on 4 cars with two boys in their early 20s.

I've already decided that my kids will be earning their own way, I'm not giving them anything. That just makes them weak and entitled, and we have far too much of that today as it is.

Feds said they are done with increases and starting about April they are looking at reducing. That is why the stock market hit an all-time high last week. That is good news as people can buy today at a higher rate knowing shortly they can always refinance free to a lower rate. I bought my house in 2010 at 4.5% and now it is 2.3% with 3 refinances that cost me nothing.

I've heard many people talk about free refi's, but never seen one. What mortgage company is going to do it for free even once, let alone 3 times?

a reply to: tanstaafl

refinancing with lowering the payment due to interest savings is just like getting the mortgage for free. Sure you pay, but you don't realize the outlay, and in some cases, even save money every month.

originally posted by: KKLOCO
a reply to: Xtrozero
Only thing you might run in to is the 1031 exchange only has 180 days if I remember correctly.

If I'm not mistaken, if it is your primary residence, you get an exemption from capital fains, the 1031 exchange would only apply to investment/rental properties - right?

Houses around me are still moving in a couple of Months in the $250 range , I'm in a good spot as we paid cash for ours around 5 years ago , My problem is the labor rates to get any repairs done - I put a new roof on not a complete redo just a shingle over and it was $15 grand , I need to paint the place and they want like $20 grand - It is a big victorian but the labor rates are insane .

originally posted by: network dude
a reply to: tanstaafl

refinancing with lowering the payment due to interest savings is just like getting the mortgage for free. Sure you pay, but you don't realize the outlay, and in some cases, even save money every month.

Exactly. The refi is NOT 'free' as was claimed. You either pay up front, or roll the costs into the new loan.

Much better to just double up on mortgage payments until you get to the point in the mortgage life where the principal payment is much greater than the interest.

This is why we always do either 15 or even 10 year mortgages if we can swing it.

a reply to: BernnieJGato

My rule is that one home should never cast a shadow on the others.

originally posted by: tanstaafl
Wha? You are paying a mortgage and rent in the house you're living in now? How exactly does that work??

No, my house is in WA, and my rental is in VA.

I've already decided that my kids will be earning their own way, I'm not giving them anything. That just makes them weak and entitled, and we have far too much of that today as it is.

They have done well, and their colleges are free because of that, so give and take. One is a Electrical Engineer and the other will start as a doctor in the military. I'm a boomer, so I hear you.

I've heard many people talk about free refi's, but never seen one. What mortgage company is going to do it for free even once, let alone 3 times?

I did it through Quicken loans and they begged me...lol All three never cost me a thing. On my last one, they offered 2.8% and I was already at 3.5ish and told them unless they can do better it's not worth it to me, and the guy was like give me a day I need to run this up to my boss, the next day he came back with 2.3%.

originally posted by: tanstaafl
If I'm not mistaken, if it is your primary residence, you get an exemption from capital fains, the 1031 exchange would only apply to investment/rental properties - right?

250k single 500k married.

originally posted by: tanstaafl

Exactly. The refi is NOT 'free' as was claimed. You either pay up front, or roll the costs into the new loan.

I had zero closing costs each time with Rocket mortgage, they used to be Quicken loans. About 200 less a month per refi in interest, so I'm not sure what your definition of free is or what the pay upfront would be. They take your balance owed and reestablish a new 30/15 year loan.

originally posted by: Edumakated

The subprime mortgage market actually kind of kept the economy booming longer than it probably should have... once the subprime mortgage market imploded, it forced a lot of people into foreclosure who probably would have foreclosed years earlier were it not for subprime.

Back then liberal Congress said that owning a home was a right and not a privilege based on income. So we got the subprime loans where people were paying interest only with the goal that the value of the house would keep going up and they could sell with equity while only paying interest. Then things exploded and variable loans saw interest rates shoot through the roof and people just walked away as values dropped and they had zero equity invested.

I remember buying my house in 2003 and I just showed my Military LES statement. In 2010 when I bought my next house they wanted to see a ton more even though I was then making 3 times what I was making in 2003.

originally posted by: network dude
a reply to: FlyersFan

my son is about to get out of the military and move somewhere. He rarely does exactly what I tell him to, but on this one, I'm going to push hard for him to do my idea, and put a trailer on my back 40 and ride this mess out. it's not time for a first time buyer to enter the market. They would be slammed with ROI massively negative.

I think that’s a good idea.

Only suggestion I’d make would be a possible gamble. If prices hit a floor and interest rates are still up, scoop up a find if it’s a super good deal. Then just ReFi in the coming years where it will likely be lower interest.

Most likely scenario you have up to five years with high interest. Unlikely case you’re stuck with high interest longer, but you could always sell.