Re: San Fran M-F Hits Market
|
Jul 18th, 2008, 09:47 PM
#17 (permalink)
|
Please keep in mind that what you are looking at are
aggregate figures.
There are a LOT of REOs and foreclosures being offloaded by the banks right now.
So for every RE prop that's sold by an owner (250 days on market), there might be another 10 or 12 dumped by a bank (20-25 days on market) sold during that same 250 day time frame . . .
This is an EXCELLENT market for REIs looking to pick up bargains for long term holds (4+ years).
You can even buy a nice house in Napa right now for $250K (in 2005/6, the cheapest, crappiest house in Napa was selling for almost $400K). That's a 37.5% price reduction.
So again, this is a great market for those who are in it-- they're literally going around snapping up as many deals as they can afford.
Those who do not have to sell have their homes on the market, and are NOT dropping the prices on them very much. A home may sell for 15% less than its original listing price, whereas in 2004/5, it sold for 5-7% less than its listing price (so, 15 minus 5 or 7 means houses are selling for 8 to 10% less than the highs of 2004/5).
This is NOT a market to sell a house quickly, unless you are giving it away (which is what the banks are doing). You need to plan on your house being on the market for up to a year before it finds the right buyer (compared to 4-6 weeks in 2003/4).
To sum up:
This is a market for:
-Long term plays (buying a house that you won't sell for 4+ years, or selling a house that you can keep on the market for 250-400 days)
-Rehabs (buying a fixer that will take a few years to fix)
-Conversions (buying a prop that is zoned for one thing, and getting approval for converting it to something else).
This is NOT a market for:
-Buying for appreciation
-Quick fix 'n flips
-Good cashflowing props from a "richdad" perspective (as has been pointed out before, CA RE cap rates do not really pencil out unless you have a very unique angle)
Still, the main point of my post is *some* people are getting pretty good prices for their homes (say, 8% off the highs). It's just taking them a LOT longer to sell their homes.
And, my other main point is that so many foreclosures/repossessions are being dumped (and sold) on the market right now that the sheer number of these is skewing the stats.
Hope this all makes sense.
-Russ H.