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niravmd

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Reply with quote  #31 
Hi Ron Starr,

I'm going to have to disagree with you views on CA & I think Bob Campbell is going to win the bet on the direction of the market.

between 2001 and 2004, 50% of all new jobs were RE related. Those jobs are disappearing. NAR has 50% of its members in CA too.

when prices are sky high in CA and the salaries are only slightly higher than elsewhere, people are definitely going to move out of state and they'll buy bigger houses for a third of the price. This has already started to happen. Last year SD saw a neg. net migration of roughly 42,000.

People are not going to stay in CA just because its 8-10 degrees cooler than other places in the midwest. THATS WHAT AIR-CONDITIONING IS FOR!






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curious1

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Reply with quote  #32 
Quote:
Originally Posted by niravmd

People are not going to stay in CA just because its 8-10 degrees cooler than other peoples in the midwest. THATS WHAT AIR-CONDITIONING IS FOR!


This statement makes me think you haven't spent much time in either San Diego or the midwest.
niravmd

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Reply with quote  #33 
i guess 7 years in the SD doesn't count for much.

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dansimo

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Reply with quote  #34 
Quote:
Originally Posted by niravmd
i guess 7 years in the SD doesn't count for much.


I'd say you're right...

what was the net out-migration numbers during the 90's?
Although that was due to major job losses.




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niravmd

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Reply with quote  #35 

but Californians don't migrate out to the midwest. they have historically moved to
neighboring states like AZ, NV and UT. [the temperature comment was just a
reference to another thread stating that it was 102 degrees in OK and thats a good
reason people will stay in CA.]


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niravmd

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Reply with quote  #36 
Quote:
Originally Posted by dansimo


what was the net out-migration numbers during the 90's?
Although that was due to major job losses.



dont remember the number but is was for 4 consecutive years between 93 and 96. somewhere around 400,000, maybe?

this time i think the major industry related job losses will come from real estate jobs.

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RonaldStarr

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Reply with quote  #37 

Mirav MD--CA----------------

 

Well, you could be right.  I might be wrong.  It is certainly true that there are people selling high-cost houses in CA and moving to less expensive areas, buying a big house there, and investing the left-over money.  And I expect there will continue to be such folk.  The question is how many people will do this?  How many people may decide that they prefer CA and will move back from whereever they go?

 

Apparently some other people besides me have trouble telling what is going to happen in the future. 

 

I have never said that Robert Campbell is wrong.  I have no way of saying that.  I just say that I don’t think he is right.  His prediction is, in my opinion, quite extreme.  And I'm leary of extreme views.  I’ve seen way too many predictions of extreme outcomes which did not come true.  If you look at the history of ups and downs of housing prices in CA and other housing markets, you don’t see such big movements. 

 

Now, I’ll have to admit that the extreme run-up in house prices in CA over the 2000-2005 period is also unprecedented.  So that gives some hint that there might be a setup for an extreme move in the other direction.

 

I don’t really understand why prices went as high as they did in CA over the 2000-2005 period.  Partially it was to low interest rates and easy qualifying loans.  Partially it was due to increased demand due to increased population and lagging production of housing units.  Partially it was due to “catching up” from the decrease or flatness of prices during the 1991-1996 period.  And probably more people having jobs and better income than they had during the 1991-1996 period.  I think part of it was the “panic buying” of people who felt they just had to buy before prices got too high for them. 

 

Perhaps those factors account for all of the increase.  I’m not sure.  Do you have some model that combines factors to predict what houses should sell for?  I’ve never seen one. 

Certainly, the lower interest rates can account for less than one-half of the home price increase.  If interest rates go up again, then housing prices will likely go down some.  But, surely not the 30%-40%-50% projected by some?

 

Anyway, you have a different view than I do.  As I’ve said many times, there are a lot of different factors or influences that one can look at that point toward one conclusion, such as a big drop in prices soon.  And there are a lot of other factors or influences that another person can look at that point to a completely different conclusion: there will be no drop.  Or there will be some slight increases.  Or modest drop only.  So, one can reach any conclusion one wants, just by focusing on the indicators that point in the conclusion direction that one wants to find. 

 

To me, this is not a very satisfying state of affairs.  It means that the predictions come much more from the bias or personality of the individual making the predictions than they come from rational analysis and discourse.  And, because there are so many predictors/indicators/factors/variable, one can choose a huge range of possible outcomes and support it.  Nobody has a model for predicting house prices given other variables.  At least no model that all can agree is correct. 

 

There are some that come up with weak models based on a few variables.  Such as the PMI Corporation figures for “overpriced” markets.   Those are not satisfactory to me either.

 

Why is that there is no econometric model for local house prices based on other local market variables?  Is it really too hard for the dismal science practitioners to do?  I suppose so.

 

I think I have learned enough humility to not feel that I know what is going to happening.  And thus I can’t say somebody else’s predictions are somehow flawed, poor, or wrong.

 

Anyway, you and I will make different projections for the future.  That will not cause me to disparage you to think less of you.  It does not mean you are stupid, stubborn, ignorant, crazy, or similar.  Your predicting different directions for CA housing prices doesn’t lend any support to supposing you are any of those things.  Of course, you could be any or all of those things, I don’t know.  But your writing and typing skills suggest you are not ignorant or stupid. 

 

I will read your and others' predictions and try to understand what you might be offering.  I will attempt to understand as well as I can what is happening and what will be coming.  Meanwhile, I have an investment program going that I feel works for me and I will continue using it until I see something better.  I hope you have a program going for you that works for you.

 

Good Predicting and Good Posting*******Ron Starr*******

Subcranium

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Reply with quote  #38 
>>I don’t really understand why prices went as high as they did in CA over the 2000-2005 period.

For the sake of "why," I think it's worth pointing out that this has been a worldwide bubble.

Not every house in the world. But in many, many cities around the world. Looking for causes within California would make sense if the California experience was unique (not shared in Australian cities, British cities, Boston, Florida). I think the real causes are revealed if you look globally.

The only answer that makes sense to me (so far) is the global wash of excess liquidity and mania. There's always a "hot investment," and after the dotcom bubble, real estate was it. The fundamentals were set up for it, with margin buying, new financial levers, tax advantages.

Soon, the fundamentals were overrun, but the mania began. Price increases bring more investors and gurus and how-to's and media attention. What finally killed RE was overexposure. You need a continuing influx of new investors to maintain a bubble. It's no good running out of investors.

The turn takes time to happen. When I stop and talk with open house Realtors now, they have a new look in their eyes. It's not fear. It's something between altitude sickness and incomprehension and speed sickness and a bit of British barminess. "Yes, we've gone a little crazy, but we're OK with it."

I personally find it exhilarating. Market changes are always opportunities somehow. Just gotta figure it out.
Subcranium

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Reply with quote  #39 
>> If interest rates go up again, then housing prices will likely go down some.  But, surely not the 30%-40%-50% projected by some?

And surely they didn't go up as much as they did!

Don't be too sure of the numbers. Losing two years of weird appreciation (due to bad lending practices and mania) seems possible, and that would probably hit the range you find difficult to foresee.
Subcranium

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Reply with quote  #40 
>>Why is that there is no econometric model for local house prices based on other local market variables?  Is it really too hard for the dismal science practitioners to do?  I suppose so.

Because prices do not always move in a rational way. I'm sure one could make models that cover "normal" housing appreciation. But that doesn't seem to be where we are.
niravmd

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Reply with quote  #41 
Ron

just because you have a different opinion doesn't mean I think any less of you either. I'm sure your investing for cashflow in the midwest technique[if i remember correctly, correct me if i'm wrong] is working very well for you. So far my technique has been working well for me too and its totally different from yours.

Nirav.


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RonaldStarr

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Reply with quote  #42 

Nirav MD—CA-------------

 

Investing in the midwest?  Probably not.  I have been buying only in OK state since 1999.  Now, maybe you could consider the Northern part of the state as being a part of the midwest as the Northern border of OK is Kansas, which I do consider the midwest.  I think of OK as being mostly the Southwest.  However, the Southeast corner is called “Little Dixie” and is close to AR, TX, and LA.  

 

Good Investing and Good Posting**********Ron Starr***********

 

 

samzell

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Reply with quote  #43 

I again appreciate your comments on the board Ron.  It's interesting hearing your opinions since you are a real estate investor with 25+ exp. (I think), and you thus have been through many cycles yourself.

 

A lot of people who post on this board seem to have just started investing in real estate in say 2003, and I also like to hear their (very stong ) opinions as well.  But they have not been through different RE cycles and have not held RE over the long term.

 

I always like to hear long term investors give their opinions since I remember in 1999 all the newbie day trader stock investors saying at that time how Warren Buffett was a washed up "bricks and mortar" guy living in the past.  We ended up seeing who was right. 

 

Anyone can get lucky in the short term, it's the investors that have done it over the long term, and are still here to write about it that are especially interesting to me. 

 

 

 

 

 

 

samzell

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Reply with quote  #44 

Robert Campbell,

 

I'm curious, I never hear you talk much about your own real estate investing on this board.  What types of properties and where have you bought and sold over the last 10 years?  Have you successfully timed the market?

godann

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Reply with quote  #45 
I agree with the comments to make some cheap improvements to the property, make sure it is clean and tidy, and throw it up on loopnet.com and fire your broker to save on the commission, as that 4 or 5% comes right off the top of your profit, and gives you a possible price reduction to make the deal happen.  Your broker probably already has it up on loopnet, and is probably where he/she is finding all possible buyers.  You can do this yourself for $50/month.  I think rents will be solid or go up slightly as homeownership is too expensive compared to rent.  People need a place to live, and if they choose to rent...voila!  I would sell though.  I don't trust any real estate in CA right now.

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metabolic_dude

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Reply with quote  #46 
Quote:
Originally Posted by samzell

Robert Campbell,

 

I'm curious, I never hear you talk much about your own real estate investing on this board.  What types of properties and where have you bought and sold over the last 10 years?  Have you successfully timed the market?

 

I have no idea what Campbell's experience as an investor is.  Nonetheless, after reading his material one comes up with ideas that are backed by solid data. It would be great if Mr Campbell practices what he preaches but even if he does not, I think he has some valid points to be taken VERY seriously.

 

I did some stock investing and learned not to rely too heavily on technical analysis. Even though it is not a direct analogy, I kind of liken market timing in real estate to tech analysis in stocks. They are wonderful tools and should remain as such.


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