Time to buy a home is now?

[Wild Style]

Re: Time to buy a home is now?

Future Salary - No assumptions on my future salary, I'm unemployed and want to stay that way! "Semi-retired" sounds better. I've assumed $0 annual wages in my future estimates.

Not having a job to suck 60 hours a week from one's life, no dictator boss, annoying coworkers, bumper-to-bumper commuting ... no stress. Living reasonably well and doing what you want to do every day ... PRICELESS.

I've structured the life I wanted for my future, this missing dream home is where I want to live the next 5-10 years. My income stream is from RE sales, I'm an ex-semiconductor engineer/successful newbie land developer in 2004. While sales were good 2004-2007, I paid off debt, bought more land, bought gold and stashed cash ... awaiting the inevitable bust. Sales are slow, but I'm in a great position with most of my lots sold and no business debt.

Bottom line, my income stream is really variable in the new economy, but I'm not overly concerned as long as I maintain a cash cushion. The gov't is just starting to work the mortgage side of it now, 2009 could be a banner year for sales (but I'm not counting on it). I should get a sales bump out of Obama's 4.5% deal ... and/or the next deal ... and/or the next deal ...

The opportunity to invest that cash into something that gives a return larger than 4.5% (or assume 3.0% with post tax writeoff) during the "poom" should be quite fruitful ... vs the same cash buried in a house that may continue losing "value" through asset deflation and fiat inflation. I guarantee I can find a way to make more than 3% on that money.

Keeping ahead of inflation - Gold, if you want to sleep at night. The "poom" phase will make holders of gold richer (in fiat money) and historically protects wealth in troubling times.

With job losses expected in the million per month range. The likelihood of sales taking off is extremely, extremely low. I think people will have more pressing issues, like will the food pantry run out of food before their bus arrives.

[powersown]

Re: Time to buy a home is now?

The gov't is just starting to work the mortgage side of it now, 2009 could be a banner year for sales ...

I was a Real Estate broker in a resort area (Kona, Hawaii) from 1980 to 1990. The real estate market crashed in about '82 and sales did not begin to pick-up for 5 years. Of course, different areas recover at different rates, so it depends on where you are.

Looks like things are worse this time than they were then, so depending on real estate sales for income during the next few years is probably not a good plan.

I am thinking that there are going to be some real property bargains out there in 2 to 3 years. I wouldn't want to be a seller in that market.

[BigLandbaron]

Re: Time to buy a home is now?

I was stunned by the number of sales I had during the past 12 months considering the RE conditions elsewhere. I planned for 2 sales in 2008, I got 7. The most recent was last month, 94% of full list; and I've never lowered pricing to improve sales. The buyers are usually retired or retiring in a few years and have cash. I have a great product, but I won't burden anyone here with those details.

Sales have dropped off significantly over the past 6 months, but sales are somewhat seasonal in my market. I'm mentally and financially positioned for "0" sales in 2009 through 2011, that way I will be delighted if I get a sale. I've sold most of the lots over the past 4 years, just 5 lots left for sale now. Whew.

I'm hunkered down on the sidelines watching everything unfold. :cool: There will be many baby boomer retirements and "early retirements" as the layoffs unfold, inadvertently my market segment is growing! These folks generally do have the most cash/equity of any age group, are shifting gears and selecting where they want to spend the last 20+ years of their lives. A portion of this group is financially set for life and will get what they want. They do like my product. I should tweak the pricing down a notch or two for 2009; coupled with low-interest gov't mortgage programs might provide a nice dead cat sales bounce to liquidate the few lots I have left ... before the "poom". ;)

I have more raw land ready to develop but I would be insane for thinking such thoughts at this point in time (and I'd get persecuted within this forum!) :eek:

[BigLandbaron]

Re: Time to buy a home is now?

I think it will continue to get better for buyers (with the cash/credit) through 2011-2012 as option ARMs peak and all that aftermath. When the tide goes out, the naked people are all forced to unwind.

The gov't will have a tough time figuring a way to avoid that mess between now and then. That's got to be when TSHTF, if not sooner.

Other than buying a better home for one self, what RE would be worth buying in these times? Would multi-unit housing be a good investment in "poom" and beyond??? I'm not too keen on becoming a slum lord and getting paid in state vouchers in "the new economy".

[AndyKnoch]

Re: Time to buy a home is now?

Thanks iTulip members for the informal education you provide me with via your posts - this is my first post. I think the info I'm looking for is probably already contained in the thread above but I might need someone to dumb it down for me.

I'm currrently jobless and tired of swimming upstream (i.e., trying to find employment in sectors where jobs are disappearing). I've done my own property tax appeals in the past and am now thinking about starting my own one-person property tax appeals/reduction business, to help property owners who are paying taxes based on property values from the last few years (higher than today's values). I think this could be a good business model for at least a few years but my concern is that I don't really understand how the eventual inflation will affect property values.

Will property values continue to decline (in both real dollars and nominal dollars) or will they decline in real dollars but increase in nominal dollars, thereby causing property tax appeals to be non-applicable in the long term?

Will inflation affect values of income-producing properties differently than values of housing and land?

Thanks in advance for any insight you can provide.

[raja]

Re: Time to buy a home is now?

the same cash buried in a house that may continue losing "value" through asset deflation and fiat inflation.

Why would fiat inflation make houses lose value?