‘Speculators ‘Venture Into Unfamiliar Turf’
A pair of reports on housing speculators. “Even as the market for single-family homes cools in much of the country, individual real-estate investors are seeking out profits by snapping up rental properties far from their home markets. Rather than sticking with their home markets, as they tended to do in the past, apartment owners increasingly are scouring the country for what they see as the most promising deals.”
“Landlords in California, for instance, are moving torrents of money into Arizona, Nevada, Texas and other states. Many Californians believe property values in their own market are peaking. So they want to take profits there and invest in less-expensive areas with better long-term prospects.”
“The rush by investors to expand geographically has already spurred something of a buying frenzy in some markets, which has pushed up prices in such places as Phoenix. That in turn has pulled in more investors, eager not to miss out before prices go even higher.”
“Venturing into unfamiliar turf can be treacherous, though, as some of these investors are finding. ‘These guys used to be local,’ says Dan Fasulo, director of a research firm. ‘They used to buy what they could drive to. Now state lines don’t matter anymore.’”
“Tracy Tippetts, who lives near San Diego, decided in 2004 it was time to take profits on about 55 rental units he owned in that area. ‘I knew that Phoenix was going to be the next big market,’ he says. Mr. Tippetts then invested $2.3 million in four buildings managed and partly owned by Eddie Klugman.”
“Mr. Tippetts says the value of the buildings has jumped as much as 50% since he invested. But, he says, the rental income he has received so far has been far lower than what was projected, and that Mr. Klugman has failed to respond to questions about the performance. When Mr. Tippetts made an unannounced visit to one of the properties in March, he saw police making arrests and wrecked cars in the parking lot.”
“Phoenix police confirmed the building had more than 400 police calls in the past two years, including more than 20 involving gunshots or assaults. Mr. Tippetts says he now is reviewing his options on what to do with the investments.”
“Mr. Klugman concedes that income from some of the properties has been lower than expected. But he says Mr. Tippetts should be happy because the value of the properties is up sharply. ‘The bottom line is Tracy is stupid’ to complain about the situation, Mr. Klugman says.”
The Wall Street Journal. “The adjacent towns of Bryan and College Station, home to Texas A&M University, were ranked as the most ‘undervalued’ housing market in the country in this year’s first quarter by economists.”
“Larry Mariott, president of Mariott Homes Inc., which builds in this area, says that there are more builders there per capita than in most other places and that builders are willing to work for lower margins.”
“The locals are hopeful. California speculators have noticed the phenomenon and waded in, buying houses sight unseen. ‘We’ve sold properties through FedEx and the fax machine,’ says Eric Walley, a sales manager at Stylecraft Builders Inc.”
“But Janet Higgins, a veteran real estate professional in the area, doesn’t think these speculators should get their hopes up. Anyone expecting mammoth price gains ‘isn’t thinking it through,’ she says.”
‘Mr. Tippetts says the value of the buildings has jumped as much as 50% since he invested. But, he says, the rental income he has received so far has been far lower than what was projected’
The kind of neighborhoods that are like this in Phoenix are unlikely to have appreciated one dime. Let me know about the profits when you sell. Who’s going to hand over a 50% profit on a ghetto project that is underperforming?
Someone else who buys sight unseen. The complex my wife manages was also bought by an investor who never saw the property. Fortunately- she does not have the same crime issue, but they did drop rents to attract tenants.
I would never buy a multi-family in an area I didn’t have intimate knowlege of what was he thinking, have a client like that now and he’s getting an enema with a telephone pole right about now.
That is what happens when you rent to illegals
“That is what happens when you rent to illegals”
Most illegals are quiet, lurking below the radar. If you want to see your rental property go to hell try the gorillas for tenants.
you idiot… illegals don’t lurk below the radar… they protest by the millions in our streets demanding amnesty and concessions for lowering american wages. remember, 1/3 of all US prison inmates are illegal aliens. Do they come here to work or WORK THE SYSTEM of welfare and healthcare?
“Do they come here to work or WORK THE SYSTEM of welfare and healthcare?”
I see mostly Mexicans working in the manual labor jobs, e.g., construction, landscaping, automotive bodywork, etc., and their families are in Mexico. In Yakima, WA a 23-yr old illegal Mexican laborer was busted for consensual sex with a 15-yr old girl, which is typical in Mexico. Instead of deportation, you and I are now paying for his room and meals.
These unbelievable racist comments. There are good and bad people in every community and there are some excellent quality people who happen to be minorities…I am one of them (African American).
I loved this site, but think I will never come here again.
Sorry to offend you, sir. I have formed my minority opinions from over 5-yrs working as an automobile and truck repossessor in the worst cities in the SF Bay Area; you name the armpit…I’ve worked it. I’ve recovered automobiles from every race and class of people that exist, but most of the serious problems and fallout belonged exclusively to one race…your guess. Oh yeah, almost forgot, several colleagues recently returned from “Chocolate City”, and they said they saw mostly Mexicans working there. Good day!
I can surely bet that I know more black people than you do, so your opinion of us means little to me. You know nothing. There are obviously some black people that I don’t like. But, there are some white people that I don’t like either. I give neither of them enough credit to speak for an entire group of people.
I am here now in an area with several African Americans who work for international companies. We all have advanced degrees and have made it near the pinacle of our professions. We are all living abroad for the moment and see the value in being an immigrant (even here we see things that could be improved that the locals do not see because they’ve been in it for too long).
Also, my grandfather grew up in the South, wanted to start a business there, and almost got lynched by whites for wanting “too much as a black man”. He had to escape with his family to the North. He could have easily hated white people from his experience during the 1950s in Georgia. He did not. I guess that made him a bigger man than you. Well, I guess that doesn’t take too much anyway.
Finally, this “divide and conquer” dance that you are trying to do will not work on me. I know some good and bad Latinos as well (you call them all Mexicans, even when you do not know if they are, because of your ignorance). They are just like us all.
I think you should be barred from this site for comments like this.
Loafer
What’s racist about the term “illegals”?
Nothing is racist about the term “illegals” I suppose. Of course, blaming them for all of our problems and painting them with a broad brush certainly is.
Nothing is racist about the term “illegals” I suppose. Of course, blaming them for all of our problems and painting them with a broad brush certainly is.
Quite right. There is nothing racist about the term “illegals” in itself, although rms’ comments subsequently indicate the way his/her mind was going.
However, “try the gorillas for tenants” was deeply racist and offensive.
Loafer
PS - It never ceases to amaze me that a land built by immigrants can turn in on itself so quickly. It will all end in tears.
I hear you on the Gorilla comment Loafer. When I read it, my first thought was, “did this person really type that and did he/she mean what I think he/she meant?” Talk about over the line. Anway, that person has to live with itself so that should be punishment enough.
Loafer,
Quit being a b*tchy little queen. Just because you read something you don’t like doesn’t mean you get to be all huffy and start calling the shots on who gets to do and say what. You want to play parent, go have kids of your own.
Any of you folks ever been an inner city landlord?
*flame on*
I have two kids of my own, thanks for asking.
OC Max - I think you might find that the majority of people would prefer you and rms keep your offensive racist views to yourselves - it doesn’t contribute to the purpose of the blog. Black people don’t make crap tenants, bad people do, including plenty of white trash.
Oh, and rms - yes I have been an inner city landlord, and am a member of the Royal Instiution of Chartered Surveyors, the world’s leading professional property body.
Tell me f*ckwit - where’s your qualification from - redneck uni?
Loafer
*flame off*
I am. What do you want to know? I have not had any problems. I’ve inherited properties from my grandfather and we rent them out. Some inner city properties are in PRIME locations, near universities or main downtown areas. I sold a property last year to a doctor who wanted to start a medical practice in the area (time that people stop complaining and start doing something good if they feel enough to type about it over the Internet) and got twice as much as what I thought I would. It was still a lower offer than someone wanted to give, but I thought it better to sell to someone who wanted to do something in the neighborhood than to an eventual slumlord who will only make problems worse.
OC Max - I fully respect Loafer for speaking out. More people need to stop accepting ignorance as an excuse with people. Just because the guy had a bad experience with someone, does not give him a right to come on the Internet and offend me and every black American. He has provided me with a bad experience on an otherwise excellent website and I have done nothing at all to him.
guess who’s - I am predominately Latin American, yet I don’t feel any personal association or bitterness when the discussion turns to immigration from South America. I have no desire to live in a low class barrio, and I don’t care to fund any of them either. While you tout your professional background you’re obviously thin skinned as you demeanor remains “in your face” aggressive. I enjoy Ben’s blog too, so I’ll cache the comments that upset your “on-line experience.”
There we go. Blame me. I now know why you’ve had problems with black people. You call someone a gorilla and then expect them to be gentle and sweet to you. If someone isn’t kind to you, maybe it is how YOU approach them in the first place. Think about it the next time.
guess who’s — After 9-yrs of dead end jobs, I went to school on the GI bill and student loans, and I paid off my loans, but I’m likely not as fancy as you. However, when I hear a derogatory Latino / Mexican remark it rolls off like water off of a duck (a Tom Wolfe belly laugh?) because when I look in the mirror all I see is a self supporting person, not a parasite of society. Derogatory remarks are generally aimed at society’s losers who cause expense and trouble for others, and there are plenty of them in every flavor. Personally, I don’t view any black businessman, soldier, professional, craftsman, etc., to be any kind of loser, and I’m surprised that you feel that the term gorilla fits you, a successful professional, so it is your problem — maybe that “rage” thing?
I personally had no issue with you before seeing the gorilla comment and some of the silly discussions about illegals/Mexicans. I am happy for you that you worked hard and tried to do more for yourself. I wish more people would do the same. I made it through undergraduate school via an ROTC scholarship and spent eight years in the Army Reserves after I graduated.
Maybe derogatory words do not bother you, but they do bother me. Derogatory words have sometimes broken a person’s spirit. I do not want to be known as someone who breaks spirits and I do not respect people who do this. You made a comment that was directed at an entire group of people (whether you meant it or not). My response was not about rage. It was about self-defense.
Sometimes I think we all would be wiser if everyone was blind. Then these race discussions would not matter anyway.
I wish you well RMS. No ill feelings. But, please before you make another gorilla comment, remember there are some good black folks out there who are just trying to get through this thing called life, just like many other good people out there.
Ben, nobody mentioned what color these tenants were. I live in Europe at the moment. The term ghetto comes from here, not the United States. It annoys me that people now think ghetto automatically means a minority neighborhood. Have you ever been to West Virginia or a trailer park area? Additionally, just because people are poor does not mean that they are bad. There are plenty of rich people who do harm in our society. I grew up poor, worked hard and my family were always good tenants. We are African Americans. I decided, however, to be an owner rather than a tenant. I hate giving my money to people who do not respect me. I don’t believe in using my race as a problem. But, I will not accept others to do that either. There are good and bad in every color, creed and religion.
My only question to these ignorant racist POS is why arent they in Iraq killing brown people for our freedoms? I hear we are looking for a few good men for the job.
Amen! I get tired of the comments too — and I’m white.
The easy, non-thinking way out is to lump everyone and everything into one box. Nobody wants it done to them. When a person of our own group does something wrong to us, we can easily see that person as an individual. I hope the time comes one day that we can see everyone as individuals. I hope this for our children. If not, we never have to worry about terrorists. We will destroy ourselves.
Looks like Tracy is an idiot. He should have checked out the properties before he bought, and taken a look at the neighborhood & propective tenants.
He can kiss his big fat RE gains goodbye!
Perhaps he bought the buildings while in the state of drunken giddiness, as a result of all that extra cash he had from the run up in real estate prices in San Diego?
Here is a nicely written piece by Bill Bonner which paints a grim future for RE specuvestors (thanks, Patrick!):
http://www.lewrockwell.com/bonner/bonner258.html
Thank goodness! This RE nonsense is over, finished, Kaput!
“It’s some kind of EPIC disconnect between the reality of a newly falling housing market and an unwritten social contract that says home prices do not fall.”
As good a concise summary as I have yet seen…
It’s called negative appreciation!
“Phoenix police confirmed the building had more than 400 police calls in the past two years, including more than 20 involving gunshots or assaults. Mr. Tippetts says he now is reviewing his options on what to do with the investments.”
Bwahahaha. His sole option is to lose money.
“Tracy Tippetts, who lives near San Diego, decided in 2004 it was time to take profits on about 55 rental units he owned in that area. ‘I knew that Phoenix was going to be the next big market,’ he says. Mr. Tippetts then invested $2.3 million in four buildings managed and partly owned by Eddie Klugman.”
Tragically, had he actually known the PHX market he would have been selling off properties there instead of buying them. Another case of greed leading to big losses for a so called “experienced” RE investor who has only known the delights of an up market.
Falling real estate prices are indeed a black swan for those conditioned by the post-WWII era in US real estate history when, by and large, prices did always go up.
Nah, this guy just got caught up in greed 55 doors in San Diego is no small task. Unfortunately he got greedy and didn’t do his homework. The same thing happened during the last downturn Phoenix gets the California investor everytime. They see the low numbers on those properties and remeber back in the day when California property was that cheap and they fall for this deja vu illision. The desert has that effect on folks I guess.
Tracy fell victim to the mirage of an oasis, and died of thirst…
Well put, exactly
This is a perfect example of why supply has been so “tight” and how the bubble became a self-fulfilling prophecy as more and more people grabbed up inventory for “investment”, reducing supply, and artificially driving up prices.
One wonders exactly how many residences are owned by Flippers and investment clubs buying up houses and condos like they were stocks.
I suspect it is a rather large number.
It really is “different” this time….ouch!
I think the number of wannabe investors right now (if one could ever get a good figure) would be mind blowing. I just recently sold my house (Seattle area) and one evening, I glanced out the window only to notice a young couple standing in my back yard with their child. I was a bit surprised by their boldness but even more relieved that my 120 lb territorial dog was inside with me. I was friendly with them in spite of their blatant disregard for my privacy and upon asking if this would be their first home they said “no, we are just looking for an investment”. I quickly pointed out that if they wanted to invest, this was not the place to buy. There is absolutely NO POSITIVE CASH FLOW TO BE HAPPENING FROM THIS PLACE IN THE FORESEEABLE FUTURE (rents are less than half of mortgages at this point in time). But I know they were just dreaming of buying anything and realizing huge rates of appreciation. Like they say….real estate only goes up!
I think this “equity pyramiding” is going to continue for longer than people think, perhaps for at least another 5 to 10 years, or longer. The small investor remains totally turned off by the stock market–it’s still all real estate. The “rolling bubble” is going to roll on for a long time, even as values begin to decline somewhat in the most heated areas.
“Phoenix police confirmed the building had more than 400 police calls in the past two years, including more than 20 involving gunshots or assaults. Mr. Tippetts says he now is reviewing his options on what to do with the investments.”
- bwahahahahaha!!!, just be polite when demanding the unpaid rent from your tennants.
- 400 police calls, at least he’s getting his money’s worth on the property taxes he’s paying.
“The bottom line is Tracy is stupid’ to complain about the situation, Mr. Klugman says.”
- Eddie Klugman is my hero
One can only imagine Tracy sitting at home watching an episode of “Cops” only to spit up his favorite beverage and exclaim “HEY I OWN THAT PLACE DAMMIT !”
Or “HEY THATS MY WIFE!”
Dammit, you made me spit coffee onto the keyboard! rotfl
This real estate bubble story gets better and better every day and week. Lots of information coming out of the woodwork. This must be the first time in history that a large group of diverse individuals have the opportunity to dissect and discuss the situation as it unfolds. Its an incredible learning experience.
Unfamiliar Turf? Uncharted Territory. We really never have been here before. There are parallels to be sure but nothing can prepare for the things that are going to be different this time. When David Crisp goes Barry Mankow on the Bakersfield housing market ZZZZBest will look like a small carpet stain.
Are you telling me you didn’t put a deposit on one of the 31 story condos??
the kind of “deposits” I’m thinking of leaving for David Crispy involve doorsteps and flaming paper bags.
A ZZZZBest reference…nicely done Mr. Cote.
You must be at least 40 to get the reference. And a mea culpa; Bary Minkow for people doing a google search.
Notice how David Crisp feels the need for bodyguards? Same thing happened with Minkow.
I was pretty young then, the reason I know about it is that I knew the LA Organized Crime Division Cop that single handedly infiltrated the Mob and brought that whole thing down. He had some good stories.
I think this story will play out very quicly. I know some associates of him who have been involved as Straw Buyers on some of his deals. If the FBI reads these blogs I will deny it. LOL.
re: FBI: there are many Female Body Inspectors reading the blogs
These things are tied to the price. If the price goes down everything will come apart. Same thing with Enron, when the stock fell the truth came out.
Barry Minkow is the pastor of a church now?
Criminals and frauds ALWAYS find God. It’s pathetic. Then they become “heros”.
Sorry to be bitter.
At least he’s paying some of his debt off. (last I heard he was making like $60k, and had to pay 1/3rd of his salary back to some bank… and his speaking fees go to his many victims…)
How long do you think it will take to pay off $20 million in debt on $60k/year?
And we thought an overpriced McMansion was a prison of debt!
clouseau
“Mr. Tippetts then invested $2.3 million in four buildings managed and partly owned by Eddie Klugman.”
Did Eddie Klugman partly own the buildings before he found his angel Mr. Tippetts? Gee, wait till Mr. Tippetts got his share of the dough from drugs(dealing) and the government takes all. This would be another story I like to see revisited with a year along with those gals out Palm Springs way.
Does anyone have an update on the Fab Flipper Four (Nina Smith & Pals) and their Palm Springs “investment” house? They have to be in the red by now.
Go to her website. She is still “Sitting Pretty” on the Palm Springs “fixer”. She’s also “Sitting Pretty” on 3 properties in two of the most bubblelicious cities in the west.
Mr. Tippetts and Mr. Klugman seem like such an odd couple to go in on such a lemon of a deal. I guess they didn’t do their math…..ow!
A gal here in Salinas bought (little over a month ago) sight unseen in Visalia,CA. Her words, “Why here in Salinas that size of house would be selling for $600K.” She was paying around $260K- $280K. They’ve managed to get several places here as the market moved up. They may have a combined income of $100K but that may be on the high side.
…..I thought that it was already built but was told that it is in the process of being built. I can’t see them flipping down that way nor breaking even on the rent plus they’d be a long distance LL and people down the valley can do a good job on trashing a place in a short period of time. I knew several LL’s in Bakersfield that took some six months to get an eviction and they only got the first and last months rent plus all the legal fees.
Salinasron,
No way she will either profit or be able to command a decent rent in Visalia. Prices there are going DOWN big time…my old neighborhood now stands 15% lower than over the winter–and no one is buying.
Perhaps she should read Talbott’s book? Actually, these people are all the same. They all believe that their market is somehow different.
Friends of mine just dropped $750K on an 1100 square foot ranch in Carmel Valley. I almost had the dude convinced it was a bad decision (I think deep down he knew it is), but his snappy wife thought they needed to buy now or be priced out forever. “But, Carmel Valley is different!!!” Can’t remember how many times I heard “Visalia is different–we’ve been discovered, we have population growth, we are still cheap compared to the coast, etc. etc. etc.”
Perhaps it is best these people learn the tough way.
Women are the cause of this bubble, I’ve been convinced all along. I even read how the housing bubble is the feminine anti-thesis of the male-dominated Internet stock bubble.
If it was not for women, nobody would give a crap where to live.
In my house it’s me (the woman) who plays the stock market and assured my husband it was ok to sell our house and rent. But he gets to go to work and I’m stuck in house prison with the kids so I like to have a choice in the matter, too. I know personally many other couples where the woman doesn’t get any say. And it’s kind of sad, too. I have a sick and lonely friend whose husband decided to plant them away from civilization so he could have his “spread”.
I know I am (intentionally) big-brushed, I just see how it is usually the wife’s initiative to even talk about buying. I know there are lots of you exceptions-to-the-rule girls, but that doesn’t invalidate the rule.
True, but perhaps just wanting a home to dwell in hasn’t caused the housing bubble. (Are the majority of speculators men or women? Hmmm - might be surprising.) I don’t talk to my women friends about the economy or stocks but they sure do like to talk about real estate.
First,
As a rule, I disagree with “women are the cause of this bubble.”
I’ve seen enough male coworkers jump in to know better. Most of the flippers at my work are male.
Sadly, my sister in law kept my brother from selling their place. She wanted a full 500k profit (why???) He figured they could get out quick with a 350k profit. Instead… they rented the place for 12 months. Ghad… they’re going to regret that decision. (They’re out of the country on a 3 year assignment… At least they’ll have a home to come back too… I guess…) Next year’s rent will suck… At least they can swing the bills (but it will hurt).
Neil
Max:
I think that you are a long term poster, but a little over a year ago there were a number of articles making this comparison. Nesting instincts that make big bucks.
I still think it is generally appropo.
If you recall, our friends the Realtors had a commercial in which the woman of the house pretty much shamed the husband into buying. There IS truth to that dynamic and that it is far from uncommon.
‘Visalia is different!’ from what? it’s as hot and dusty and smelly as any other central valley town. ok maybe there’s not as much crime as in Fresno but big whup. I suppose people will descend on Porterville as the next big thing…
Porterville? Already happened.
Check out some of the other cities that made the hot list. Talk about scraping the bottom of the barrel, with Porterville at #9.
From the CAR report (April 2006)-
“Statewide, the 10 cities and communities with the greatest median home price increases in March 2006 compared to the same period a year ago were:
Reedley 58.9%
Atwater 52%
Twentynine Palms 48.8%
Barstow 45.7%
Beaumont 45.6%
Taft 44%
California City 43.1%
Burlingame 40.4%
Porterville 40.3% (down from 47.5% Oct ‘05)
Highland 36.8%
People have truly lost their minds.
I have a buddy who is doing this- trying to stop him
out of town landlording scks
Didn’t proof what I was typing. Meant to say..
“Gee, wait till Mr. Tippetts finds that Eddie got his….”
mr tippette is proof that there is no limit to human stupidity,how in god’s name could anyone buy income property without doing due diligence and call it an investment!400 calls in 2 years! talk about a “jerry springer moment” wouldn’t you love a video of him talking to klugman in front of that building! YOW! he’s lucky he didn’t get mugged by a tenant after getting mugged by his partner…wonder what the appraisal looked like?
Bakersfield has had its share of high flyers in the past and has devoured them all. I wish I could recall all of the players.Freymiller of freymiller trucking was one. He built a McMansion, got in some financial problems, moved his trucking to OK and then went belly-up. Col. Nichols lost most of his empire. You might remember that he got some rather questionable disaster loans and made Dateline or 60 minutes. Another came to town to build a super complex south of town with a lake, the dry ditch is still standing. There are some crafty old money there like the SA Camps, Antongiovannis, dairymen, and astute commercial RE agents like Greg Bynum. Any hocus-pocus and they have a very active DA (Ed Jagels) who loves to go after high flyers.
You nailed it Ron! The old money stays quiet and invests it very conseratively!
I remember some of those names in good old Bakersfield. Some have owned property since the 1920’s. They know how to capatilize when the time is right.
College Station????? Thanks Ben, another keyboard covered with diet coke
College Station would make Bakersfield or Fresno look erudite.
If you go down to College Station
Well, you better walk right
You better not jaywalk
You better buckle up tight
Speaking of uptight. That place is so uptight they squeak when they walk. And yes, I’ve been there, and no, I wouldn’t want to live there. Anybody thinks that they’ll be able to run up prices in College Station by specuvesting has got another thing coming. Doesn’t it occur to these flippers that when someone is begging them to come and buy that they might just lose their shirt? The humanity…
I used to go to College Station on occasion and I concur that this is about as “nazi” as it gets. The whole place is oppressive. It is not uncommon to see cadets marching thru grocery stores.
Naturally the town is home to the “George Bush (Sr.) Library”.
Got to join in on the College Station bashing. Some reject corp moron screamed at me for having the audacity to walk on some hollowed grass. Good luck sinking your money into that hellhole. What a joke.
I seem to recall certain well-known universities in other parts of the country having weird rules about tradition.
It’s also the home of one of the best universities in the country. People who say Bryan/College Station is “nazi” are ignorant and intolerant.
The Nazi tag is not deserved.
Texas A&M one of the best universities in the country? Not quite.
Now, if you had said UT-Austin (or UMich, UIUC, UVA…) was one of the best universities in the country, then you would have been correct.
College Station would make Phoenix’s climate seem Mediterranean.
LOL. My sister and her husband went to college there. Everyone in that freakin’ town is brainwashed to think A&M had the best football team on the planet. Now that I remember, It did seem rather anal-retentive for an area that has a million drive-thru liquor stores.
I did like the What-a-burger up the street from their house though.
There are no drive-through liquor stores in Texas.
Lou, I knew you would jump in sometime to defend your home state.
I do remember the drive-thrus at several mini-mart/liquor stores though. There was one down the street from where my sis rented her house. There was one near us in Spring too. Alcoholics like me remember silly things like that
College Station is an armpit within an armpit. I won’t comment on the school, which is very good in some areas. My veterinarian graduated from there 40 years ago and he’s the finest vet and person to ever walk the earth. But that does not make the town a place you’d want to invest money.
I agree txchick, A&M has some great areas of study…my sis went there for engineering which is highly-rated from what I’ve heard. I actually got to see George Bush Sr. give her commencement speech which is more than I can say for my alma mater CSULB where our speaker didn’t even show up!!!!
I agree, nothing wrong with the A&M university, I just can’t see the local folks getting worked up into a speculative frenzy. Most don’t make sudden moves on anything and they have the patience of Job. I bet the outlying areas are even more “undervalued”, that doesn’t necessarily make them a good investment though.
instead of “undervalued”, “cost less” is better
OT: Can anyone comment on Albuquerque market? A buddy of mine is about to invest (speculate) in: (1) land, (2) a built SFH, and (3) a precon. Loan papers to be signed soon.
Anyone???
Bad idea. The place is getting very overbuilt ala Queen Creek (Ventana Ranch is Albuquerque’s Queen Creek). Jobs pay nothing, people are not wealthy and who’s going pay up. And I like the place!
I’m in Albuquerque and prices are still going up here and stuff is still selling. A house identical to mine was on the market for less than a week.
If friend is buy a new place preconstruction, it’s most likely on the west side of town where stuff is being slapped up all over the place. You couldn’t pay me to live on that side of town. Most of the jobs are east of the Rio and there’s only a few bridges over the river and traffic is only going to get worse and worse.
Also, I’d bet a huge chunk of the houses in that part of town are sitting empty, owned by speculators from CA who got priced out of Phoenix.
Thanks txchick & Jim very much for the feedback! I think it’s too late though for this guy. I’ve been telling him that in general RE nationwide is on a slippery slope down…but I couldn’t find very much info specific to ABQ…other than it is one of the last markets that’s still seeing very high appreciation (which simply can’t last with the credit bubble unwinding in the near future). What can you do (?).
I spent a very long day in Albuquerque which led me to wonder how anyone could live there…
I have 2 friends from home (SF) who are buying sight unseen in Albuquerque. It’s also becoming more common to see Alb on the SDCIA.com site. To me, this means it’s one of the top speculator markets right now (along with Salt Lake, Boise, Coeur D’Alene, and San Antonio). That SDCIA site is gold for finding the “next” sites.
All the flippers go to the same conventions, then they squawk and gobble about the “new” undervaluead areas on the SDCIA site, and then magically a few months later those areas are the top appreciators in the nation.
I’ve only been to Albuquerque a few times. Seems like a nice sleepy town, with cool geography. Too small for me, but seems nice enough.
Perhaps if you were gonna live there long term, it wouldn’t be too bad to buy (it seems not TOO expensive, so even if it drops 20-40% you’re not losing your life savings or anything), but I doubt that the appreciation will continue much longer.
I agree wholeheartedly with the Queen Creek analogy, if the SDCIA boards are indicative at all.
The problem with the flipping game now is that EVEN IF you jump into an undervalued area early, it’s hard to cash out in time, because EVERYBODY has the same idea. So you buy your pre-con, (and you time it like a genius), but then the market softens so fast, in some cases in just a month or two, that you can’t sell before the market goes into standstill mode. (witness Queen Creek)
just my thoughts on the matter, but I’m a specuvestor Bear so take it with a grain of salt…
I’m sure Donald Trump and David Lereah would say differently
clouseau
“I almost had the dude convinced it was a bad decision (I think deep down he knew it is), but his snappy wife thought they needed to buy now or be priced out forever.”
Oh No!!! Suzanne’s had a hand in this!
But but but…I thought that the “value” of multi-family units were derived from the income stream…so how can prices be higher? Is there are premium to multifamily as well? Is the entire US going towards California cap rates (4%)? Sheesh. I look forward to the day when buying multifamily buildings includes doing due diligence…as I said before, wake me up in 3-5 years.
why phoenix and miami will always be hot markets for real estate.
http://tinyurl.com/rsd4p
Phoenix is at 50,212!
http://www.jimmessenger.com/mls.php
It says 60,699 local listings in Phoenix.
I limit my search to only the first 4 catergories. I checked OCrenters site and he is 49,800 or so??
He is at 49,377.
More Californians coming into Arizona to buy homes for renting out? Bring ‘em on! Ha! Methinks they have the worst of the deal while the renters have the best of the deal!
I am hearing from branches of this bank here in SoCalif, that people are continuing to transfer money to out-of-state escrow companies for investment purchases. They are cashing out CDs and other investments, and buying in AZ, TX, NM, ID. It is a noticable activity.
Cashing out CDs to buy real estate? Why don’t they cash out CDs and go long the homebuilders’ index XHB? Same expected return but a lot less hassle. After all you can’t take your own house public and then borrow funds to buy back shares to prop up its’ value. Or maybe you can……..
This is an interesting trend.
Recently in OC the over-valuation as reported by City National Bank has been decreased from 60% down to mid 40%.
The next question that follows would be how much equity in OC homes is driving out of state speculation?
“The rush by investors to expand geographically has already spurred something of a buying frenzy in some markets, which has pushed up prices in such places as Phoenix.
Market top…Absentee landlords were the first to get f*cked in the ‘90/’91 bust.
Idiots are buyin’ commercial properties based on possible appreciation vs. positive cash flow.
It means the lenders are still pushin’ money out the door based on bogus and/or flawed appraisals.
“The rush by investors to expand geographically has already spurred something of a buying frenzy in some markets, which has pushed up prices in such places as Phoenix.
Market top…Absentee landlords were the first to get f*cked in the ‘90/’91 bust.
Idiots are buyin’ commercial properties based on possible appreciation vs. positive cash flow.
It means the lenders are still pushin’ money out the door based on bogus and/or flawed appraisals.
Albuquerque is a nice place to live. If these flippers are investing from out of state, I think that they will be losing their shirts. They are buying homes on the west side of this valley. Homes are being built too fast, much poorer quality than a few years back, and a lot to rent. I like it better than the Bay area.