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haele

(12,778 posts)
Tue Dec 20, 2022, 05:11 PM Dec 2022

Just finished talking with a co-worker who's SO is a high-end realtor and property owner...

We were discussing housing in Coastal San Diego county (between them there's 6 school aged kids and they need a bigger house). He informed me that since 2020, 1/3 of the house and apartment purchases have been investment or realty firms - the Blackstone/Zillow/Redfin type - and they've been losing their shirts.
They buy houses sight,-unseen at inflated prices to snap them up, then try to flip them for half again what they paid.
Unfortunately, Southern California homes are susceptible to termites and dry rot, especially those built from 1960 on that are approaching their major renovation needed age, which can easily end up being half the price they overpaid... apparently Blackstone has told all the realtors that that aren't adding any more to their San Diego county portfolios after the September purchases get processed.
So they're stuck with about 10k to 20k empty homes they either have to sell at a loss or try to rent. A 3500 sq.ft near the beach on half an acre in Carlsbad they had looked at that was selling for $3.2 million this summer, (Blackstone bought it at $2million in 2020) was just dropped down to $1.8 million, then taken off the market to rent for $9k a month. Which made him sad, as they were planning on selling two of her high end rentals and their current house to make a 50/60% down payment, putting it well within reach. And my co-worker said his SO figured they still needed about $100k in structural renovations when they looked at it -as she said," new hardware floors, granite countertops, and paint isn't the same as fixing dry-rot, updating the electrical, and leveling of the foundations that have gone out of true on a 60 year old house."
She comes from a family that builds and renovates houses.

So - the housing bubble is starting crack. And it's going to hit the most "deserving" corporate flippers first.

Haele

18 replies = new reply since forum marked as read
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Just finished talking with a co-worker who's SO is a high-end realtor and property owner... (Original Post) haele Dec 2022 OP
Must be nice Meowmee Dec 2022 #1
California seems to be the bellwether for many trends Trailrider1951 Dec 2022 #2
I am hoping the market for selling stays very good Meowmee Dec 2022 #3
It's already inthewind21 Dec 2022 #5
Same. It's not going to be like 2008, too much demand still. we can do it Dec 2022 #14
Great I hope so Meowmee Dec 2022 #16
I have inthewind21 Dec 2022 #4
Despite all the articles pushing property investment portfolios, haele Dec 2022 #13
I'm worried Meowmee Dec 2022 #15
2008 was a good year, let's do it again! Shermann Dec 2022 #6
we bought our house about five years ago mike_c Dec 2022 #7
watching the same here i sunny west coast floriduh onethatcares Dec 2022 #8
Interesting. Wonder what will happen to all of the home equity loans based upon the higher SWBTATTReg Dec 2022 #9
supposedly used cars tanking as well...too much overpriced inventory dembotoz Dec 2022 #10
Dag nab it!! Nictuku Dec 2022 #11
Is your friend's name Mike Brady? d_r Dec 2022 #12
There's talk that the Airbnb bubble has burst Kaleva Dec 2022 #17
Even worse - some locations are restricting the short-term rental. haele Dec 2022 #18

Meowmee

(5,164 posts)
1. Must be nice
Tue Dec 20, 2022, 05:18 PM
Dec 2022

To be able to afford all of that with all of those children etc. I guess overall they are doing well then. I assume this applies to CA only maybe.

Trailrider1951

(3,426 posts)
2. California seems to be the bellwether for many trends
Tue Dec 20, 2022, 05:26 PM
Dec 2022

I just hope that trend goes nationwide. Too many people are being priced out of the market, both prospective owner and rental families.

Meowmee

(5,164 posts)
3. I am hoping the market for selling stays very good
Tue Dec 20, 2022, 05:27 PM
Dec 2022

And prices stay higher for people who will be selling.

 

inthewind21

(4,616 posts)
4. I have
Tue Dec 20, 2022, 05:33 PM
Dec 2022

been saying it's coming for about a year now. My prediction, within 24 months or less the bottom is going to fall out. An investment firm bought my condo complex last spring. This place has been full since I moved here in 2019. As leases expired, they jacked the rent through the roof. Now the place is half empty. And I am seeing price decreases all over the place on homes for sale.

haele

(12,778 posts)
13. Despite all the articles pushing property investment portfolios,
Tue Dec 20, 2022, 07:57 PM
Dec 2022

I suspect the investment firms have already priced their "product" too high and are looking for new suckers to pay the costs of maintaining homes they can't easily sell or rent.
The world is in a recession. The Chinese and Saudis aren't going to be snapping up over-priced US property to park money in while they wait for the economy to level out.
Co-worker's wife suspects Redfin alone is losing billions over the next year/year and a half if they don't offload empty inventory quick.
Unfortunately, those who bought recently and are currently underwater are going to get screwed. If they're looking to get out from under now.

Haele

Shermann

(7,699 posts)
6. 2008 was a good year, let's do it again!
Tue Dec 20, 2022, 05:44 PM
Dec 2022

It felt so wrong, it felt so right
Don't mean I'm in love tonight
I kissed a girl and I liked it
I liked it

mike_c

(36,281 posts)
7. we bought our house about five years ago
Tue Dec 20, 2022, 05:53 PM
Dec 2022

It's small and was built in 1963 but we got a good deal at the time. Hardly a day goes by without a real estate agent cold calling to offer to sell it or to buy it out outright to flip. I guess the frequency of those calls has declined a little, maybe two or three per week now. It sure seems like a sellers market here in the Phoenix area.

onethatcares

(16,312 posts)
8. watching the same here i sunny west coast floriduh
Tue Dec 20, 2022, 06:50 PM
Dec 2022

seems people aren't giving up their homes so fast anymore and when you add in the property insurance crisis and rates, it's a slow market.

The last hurricane slowed it down alot too.

SWBTATTReg

(22,587 posts)
9. Interesting. Wonder what will happen to all of the home equity loans based upon the higher
Tue Dec 20, 2022, 07:04 PM
Dec 2022

appraised values which are now a significant percentage below the original appraised values? Will loans be called in, will banks foreclose more and more (I can't see them doing this, and adding to the glut, thus driving prices down more). Will underwater homeowners simply stop paying on these adjustable-rate mortgages and still stay in the houses (like they did before in the last housing crash)?

Will this lead to higher interest rates across the entire board (yes, IMHO) and will this lead to less credit overall (fewer credit cards, reduced credit balances, stricter terms by banks, etc. (yes to all, IMHO).

Personally, I think this is long overdue, so I hope that there isn't too much pain. And in the long run, some will benefit, the new buyers perhaps (but watch your mortgages, don't get stuck in one you can't easily refinance). To those corporate types who have been preying on the housing markets, it kind of serves you right. There's going to be a glut of rental properties available, so you'll have to either drop rental prices down to keep your properties rented or you'll be forced to sell off some of your properties when the bank(s) demand more collateral to back up your loans.

dembotoz

(16,915 posts)
10. supposedly used cars tanking as well...too much overpriced inventory
Tue Dec 20, 2022, 07:15 PM
Dec 2022

cars and houses at the same time could be a real bumpy ride for the rest of us

Nictuku

(3,668 posts)
11. Dag nab it!!
Tue Dec 20, 2022, 07:41 PM
Dec 2022

I think it would be good for the people if prices come down on house sales, but I'm waiting until next year when I qualify (finally) for a reverse mortgage on my house. I want the higher prices to hold to at least then!

Kaleva

(36,613 posts)
17. There's talk that the Airbnb bubble has burst
Tue Dec 20, 2022, 08:43 PM
Dec 2022

There is still a lot of people renting but the issue is that the market is saturated with homes. People who own Airbnb's have seen a great decrease in the number of days a home is rented out each month.

haele

(12,778 posts)
18. Even worse - some locations are restricting the short-term rental.
Tue Dec 20, 2022, 09:01 PM
Dec 2022

In the city of San Diego, come Jan 1, SROs and VBROs have to compete in a Lottery for a limited number of licences. And the city has already notified the various short term rental sites out there that without a licence, the listing will be considered fraudulent and subject to fines and/or legal action.
There's gonna be a whole lot of very surprised "investors" who have been buying up properties to rent for $300 to $1k a night or as underground mini-hotels.
I do feel sympathy the folks like one of the kidlet's friends who lives in her car or couch surfs while she rents out her home on the weekends to pay the mortgage her ex left her with. Or people who rent out their ADU or a spare room on occasion. But they're not the majority of Air BnB owners.

Haele

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