For the Real Estate Drop in sales and price Naysayers HOLD ONTO YOUR HATS

[Heylam]

Liars figure, and figures lie.

 

[Heylam]

And the people that have it all figured out, rarely do.

 

[LargeOrangeFont]

Don't know where you've been the past few years, but here in America, math both lies, and now they say it's racist too!

Math, traditionally, is truthful. The problem sits with who's calculations are derived from who's sources. Much like the meme with one person saying "9", and the other "6".

I'm not a banker or investor. I know my strengths, and most of them are based in more "hands on" type skills. I'm far from brilliant, but consider myself to be reasonably bright. From my point of view, the smarter people in this discussion all have valid points, mostly backed by both facts and logic as well. The funny part is, the two diametrically opposed groups are quite obviously the two groups that make their living primarily from sources directly related to whatever side of the argument they back. In some ways, one may say their vision may be slightly clouded.

Like anything else, the actual truth will probably be found somewhere in the middle. 4900 posts, and neither "side" has actually been proven right, or wrong.

No one is diametrically opposed in my view. Everyone agrees housing is softening. The disagreement is what that means.

Some think it means financial armageddon the likes we have never seen, some think it means 2009 all over again, some think we are going to go backwards on price by a handful of years and the historical trend of upward pricing will continue in earnest. I’m of the latter.

There has been plenty that has already been proven wrong, and some that has yet to be proven either way.

Why we would discount the opinion and experiences of people in the industry is quite frankly beyond me. These people are not trying to sell to you. It’s like saying you don’t trust a plumber to tell you what is happening in the plumbing industry. Pair that with fact that not one of them has disagreed that the market is changing, and I find it difficult to believe their judgement is clouded. They are in this every day as their career.

 

[regor]

Some think it means financial armageddon the likes we have never seen, some think it means 2009 all over again, some think we are going to go backwards on price by a handful of years and the historical trend of upward pricing will continue in earnest. I’m of the latter.

There has been plenty that has already been proven wrong, and some that has yet to be proven either way.

Why we would discount the opinion and experiences of people in the industry is quite frankly beyond me. These people are not trying to sell to you. It’s like saying you don’t trust a plumber to tell you what is happening in the plumbing industry. Pair that with not one of them has said disagreed that the market is changing, and I find it difficult to believe their judgement is clouded. They are in this every day as their career.

A lot of unknown factors in housing for sure and you've been pretty spot on with it, as have others.

Office Space/Retail is getting dicey and the Blackstone's of the world are licking their chops unfortunately.

"The Fed needs to drop interest rates back to where they were."

 

[LargeOrangeFont]

A lot of unknown factors in housing for sure and you've been pretty spot on with it, as have others.

Office Space/Retail is getting dicey and the Blackstone's of the world are licking their chops unfortunately.

"The Fed needs to drop interest rates back to where they were."

Commercial has a lot of exposure for sure.

I don’t know if or how that translates to residential.

I have said this before.. I think commercial will be converted to residential coming out of whatever economic goat rodeo we are in now.

The post covid YOLO spending, and all the people with 3% mortgages have been keeping things moving thus far.

 

[regor]

Commercial has a lot of exposure for sure.

I don’t know if or how that translates to residential.

I have said this before.. I think commercial will be converted to residential coming out of whatever economic goat rodeo we are in now.

The post covid YOLO spending, and all the people with 3% mortgages have been keeping things moving thus far.

The only way it relates to residential is if jobs are lost, as you've been saying from the beginning.

One things for sure, the agents, brokers and everyone else in the RE profession are in for some rough times IMO.

Feast or famine, only the disciplined survive.

 

[Englewood]

A lot of unknown factors in housing for sure and you've been pretty spot on with it, as have others.

Office Space/Retail is getting dicey and the Blackstone's of the world are licking their chops unfortunately.

"The Fed needs to drop interest rates back to where they were."

Commercial is a whole different beast. I'm sure glad I do not have any retail exposure. The future does not look good for that sector. If people think residential is inflated, go look at commercial...Holy shit!

 

[NicPaus]

Commercial is a whole different beast. I'm sure glad I do not have any retail exposure. The future does not look good for that sector. If people think residential is inflated, go look at commercial...Holy shit!

I searched for a commercial spot for 2 years. I don't see how people can swing it. Rent to park 2 trucks inside a office and small work area. Was $3500 when I finally found 1. Before I signed the lease I was told in 6 months it goes up to $4150.

1000 sq ft units friends are paying $1200 for. Once they go vacant $2200. With long waiting lists.


There is a lot of vacant big commercial spots in the Southbay. 10,000 sq ft +. A few I have seen sit empty for 3 years now.

 

[monkeyswrench]

I searched for a commercial spot for 2 years. I don't see how people can swing it. Rent to park 2 trucks inside a office and small work area. Was $3500 when I finally found 1. Before I signed the lease I was told in 6 months it goes up to $4150.

1000 sq ft units friends are paying $1200 for. Once they go vacant $2200. With long waiting lists.


There is a lot of vacant big commercial spots in the Southbay. 10,000 sq ft +. A few I have seen sit empty for 3 years now.

If someone had the means, could they modify the interior structure of buildings like those into an industrial "mall" of sorts? If you could take a 10,000sqft building and turn it into 6-10 units, could they be rented out? I guess the major factors would be costs to plumb, multiple utility drops and other needs...that would add up extremely fast.

 

[pronstar]

Unless converted to residential, commercial RE and especially commercial RE financing, is a completely different animal versus residential.

I don’t know if there’s much correlation between the two unless we look at other factors like employment or the broader market.

 

[OldSchoolBoats]

I searched for a commercial spot for 2 years. I don't see how people can swing it. Rent to park 2 trucks inside a office and small work area. Was $3500 when I finally found 1. Before I signed the lease I was told in 6 months it goes up to $4150.

1000 sq ft units friends are paying $1200 for. Once they go vacant $2200. With long waiting lists.


There is a lot of vacant big commercial spots in the Southbay. 10,000 sq ft +. A few I have seen sit empty for 3 years now.

Been looking for similar to what you were looking at. Small warehouse with 14 foot door that has a small office up front. The one that was available out here could fit 2 vans and a dump trailer inside, was like 1100 square feet. They want $2K/ month with a 3 year lease and a 5% increase each year. Still have to pay internet and utilities too. Said screw it and keeping my small executive suite that is currently month to month with utilities and internet included.

 

[530RL]

Commercial has a lot of exposure for sure.

I don’t know if or how that translates to residential.

I have said this before.. I think commercial will be converted to residential coming out of whatever economic goat rodeo we are in now.

The post covid YOLO spending, and all the people with 3% mortgages have been keeping things moving thus far.

It's very hard to make a conversion of a high rise from office to residential and make it pencil.

A lot of it is going to have to come down or remain vacant.

 

[LargeOrangeFont]

It's very hard to make a conversion of a high rise from office to residential and make it pencil.

A lot of it is going to have to come down or remain vacant.

Agreed.

I think it comes down to location.

With LA paying $700k per unit for domiciles for the homeless… you could make something pencil out pretty quickly

 

[Cdog]

A lot of unknown factors in housing for sure and you've been pretty spot on with it, as have others.

Office Space/Retail is getting dicey and the Blackstone's of the world are licking their chops unfortunately.

"The Fed needs to drop interest rates back to where they were."

I dont really work the office space market but I do focus on retail & industrial flex space. I have 2 restaurant uses trying to find spaces with drive thru's. Buyers fighting over the former Bush's Chicken locations. Rents in the $50-75 per sqft range. Massive demand over supply. Projects with drive thru's being sold before grading.

On Industrial I have been looking for a 10-15k sqft space for my powder coater in the Deer Valley air park area. last week a 14 sqft building listed for 3.2M. By Friday the price was up 700k more. He's at full capacity with the space he has leased. This exact building sold for 1M in 2012. California exchange buyers buying up buildings and turning them into leased spaces. Lack of inventory. This is insane....

 

[RVR SWPR]

Don't know where you've been the past few years, but here in America, math both lies, and now they say it's racist too!

Math, traditionally, is truthful. The problem sits with who's calculations are derived from who's sources. Much like the meme with one person saying "9", and the other "6".

I'm not a banker or investor. I know my strengths, and most of them are based in more "hands on" type skills. I'm far from brilliant, but consider myself to be reasonably bright. From my point of view, the smarter people in this discussion all have valid points, mostly backed by both facts and logic as well. The funny part is, the two diametrically opposed groups are quite obviously the two groups that make their living primarily from sources directly related to whatever side of the argument they back. In some ways, one may say their vision may be slightly clouded.

Like anything else, the actual truth will probably be found somewhere in the middle. 4900 posts, and neither "side" has actually been proven right, or wrong.

You sometimes claim you not among the “ smartest in the discussion”. Which usually proves to be BS. Somewhere over the years obvious you have spent time reading heavy stuff.

 

[monkeyswrench]

You sometimes claim you not among the “ smartest in the discussion”. Which usually proves to be BS. Somewhere over the years obvious you have spent time reading heavy stuff.

Reading and learning requires time and a little effort, but minimal financial investment. If I would have chosen better topics to learn at an earlier age, I may have amassed a small fortune by now
Then again, if I'd done that, I wouldn't be the "me" that I am...and I don't think I'd like a well-off, even more arrogant, version of me

 

[Fastdadtsmith]

You sometimes claim you not among the “ smartest in the discussion”. Which usually proves to be BS. Somewhere over the years obvious you have spent time reading heavy stuff.

I've been reading his stuff for weeks thinking the same thing, just haven't had the right opportunity to commend @monkeyswrench on his skills.

 

[Looking Glass]

quotes and capitalizations

Fortunately (or unfortunately for some) the math does not lie.

YADA-YADA-YADA

 

[Looking Glass]

YADA-YADA-YADA

 

[monkeyswrench]

I've been reading his stuff for weeks thinking the same thing, just haven't had the right opportunity to commend @monkeyswrench on his skills.

I do appreciate the compliment...heck, maybe even blushing a bit. I find it weird though. There are many people here that I consider to be quite a bit brighter than myself. Always something to learn or something to learn about around here.

 

[petie6464]

Rat hole 8 unit old apartment building on Oro Grande 1.9 asking, relator that can't seem to put a sentence together claims buyer should see 6ish cap rate...

Yep, prices have bottomed out!

 

[shintoooo]

https://twitter.com/i/web/status/1648168631380094977

 

[LargeOrangeFont]

https://twitter.com/i/web/status/1648168631380094977

Yore Microsoft subscription just went up $1 month

 

[regor]

Brookfield defaulted today on a $161.4 million mortgage for twelve office buildings in Washington, DC.

According to Bloomberg, the loan was transferred to a special servicer working with "the borrower to execute a pre-negotiation agreement and to determine the path forward."

Real estate data firm Green Street said DC office space values had slid 36% through March compared with a year ago due to rising vacancies amid the rise of remote and hybrid work post-Covid.

The gold-standard measure of office occupancy trends is still the card-swipe data provided by Kastle Systems. The average office occupancy across Washington, DC, is only 43% and has yet to recover to pre-pandemic levels.

Brookfield has also defaulted on debt tied to two Los Angeles buildings, the Gas Company Tower and the 777 Tower.

Brookfield could potentially be the first in a series of companies defaulting on their office space loans. We've pointed out that the state of the CRE market is in dire shape as delinquency rates across property types, particularly offices, are rising. The lending environment is getting tougher ahead of $400 billion in CRE debt maturities this year.


New homeless housing from Democrat mayors in 3....2....1

 

[shintoooo]

I would be more worried about the auto industry right now.

https://twitter.com/i/web/status/1648444995526103041

 

[LargeOrangeFont]

I would be more worried about the auto industry right now.

https://twitter.com/i/web/status/1648444995526103041

A cheap vehicle in the next 18 months is a doom and gloom parade I can get behind.

 

[Todd Mohr]

Dealers that floor used cars usually have a hard time weathering any downturns, not quite the end of the world yet.

 

[USCFAN]

I have no doom and gloom to add. Just thought maybe my post would get this thread to 100 pages.

 

[DrunkenSailor]

Commercial will be trickle down. As banks and securitization bond holders take losses lending guidelines will tighten and securitization spreads will widen. Illiquidity in the financial markets are my main concern.

The bond buyers are all the same regardless of asset class. It only comes down to acceptable level of risk. An insurance company, hedge fund, retirement fund or mutual fund will all buy bonds if the rating of the bond matches their investment criteria. Pain in auto and commercial will bleed into residential and consumer through illiquidity of the assets.

Rmbs spreads have been incredibly volatile over the last year. Ranging from 125 to 300 and everywhere in between. Today we sit at 175. With treasury markets slowly rebounding back up to 4.2 on the two year from the drop after the mini banking crises that saw yields drop from over 5 to 3.75. Yields on rmbs bonds for the first time in a year and a half are making sense. I.e. there is enough excess coupon on the collateral (loans within the securitization) to spin off enough cash flow to pay the bills and earn everyone some money without risk of default.

This may be good news for the economy as a whole today if we can maintain the stability. It could also be a lull in the storm.

Commercial had me worried before covid. Type "corporate bond debt junk" into Google and just scroll through the headlines. More than half of all corporate debt is rated BBB or worse. 70% of all corporate debt is rated A or better at secutization launch with roughly 35-50% rated as AAA. All of that debt has been downgraded. It's not just cmbs but general commercial debt as well.

I have long ago stopped trying to predict what is going to happen. I am in capital markets. It's in my best interest for the market to maintain stability. I just see too many pending issues in the market to believe that will be the case.

 

[Orange Juice]

It's very hard to make a conversion of a high rise from office to residential and make it pencil.

A lot of it is going to have to come down or remain vacant.

Paradise Valley Mall is an example of commercial retail being converted to residential Condo’s.

 

[HNL2LHC]

I have no doom and gloom to add. Just thought maybe my post would get this thread to 100 pages.

Nope you did not push it to 100 just disappointment……100 here we go….:banghead: Not y…….

 

[Wmc]

I bought, sold, reinvested 2X and reinvested into the house I had built.
Trying to get this to 100 pages

 

[Orange Juice]

I bought, sold, reinvested 2X and reinvested into the house I had built.
Trying to get this to 100 pages

I’m convinced real estate has only one direction.

 

[beaverretriever]

No doom and gloom here that we can see. My wife and I just completed a new build across the street from these new homes that start at 4.5mil and almost every lot sold in less than a few months ( the two dark brown ones on the map are the only ones left and literally the cheapest lots). Somebody has crazy money to spend. Definitely not in my wheelhouse. The one we are in is lot 34 and one of the less expensive lots as you can see by the size. The ones on the water are out of control. Love homes. Im an MLS fanatic. I dont think a day goes by I'm not looking at real estate or scouting out design trends. Love modern design and a shared hobby of my wife and mine.

 

[mesquito_creek]

I wonder if I can be the first post on page 100? Do I get a prize if I submit and hit 100? Page 99 look light but I am going for it. It doesn’t look like you can time it based on pages and reply count…

 

[Gonefishin5555]

No doom and gloom here that we can see. My wife and I just completed a new build across the street from these new homes that start at 4.5mil and almost every lot sold in less than a few months ( the two dark brown ones on the map are the only ones left and literally the cheapest lots). Somebody has crazy money to spend. Definitely not in my wheelhouse. The one we are in is lot 34 and one of the less expensive lots as you can see by the size. The ones on the water are out of control. Love homes. Im an MLS fanatic. I dont think a day goes by I'm not looking at real estate or scouting out design trends. Love modern design and a shared hobby of my wife and me.
View attachment 1220589 View attachment 1220590 View attachment 1220591 View attachment 1220592 View attachment 1220593 View attachment 1220594 View attachment 1220588

Love the infinity pool and large glass doors. But where are the photos of the dungeon room?

 

[2Driver]

I never would have guessed it would be so robust after mortgages doubled and housing spiked so much from 2019- 2021. I suppose lack of sellers and builders keeping inventory close to the chest is helping drive the market.

Shit, I don’t know. I have no hard money loans out and doing better with 100% of the cash deployed at 5%. Sleep better too.

 

[hallett21]

Lol I need to finish our ADU

22011 Crespi St, Woodland Hills, CA 91364 | Redfin

For Rent: 2 beds, 1 baths · 800 sq. ft. · $2800/mo · See photos, floor plans and more details about 22011 Crespi St, Woodland Hills, CA 91364.

www.redfin.com

 

[NicPaus]

Lol I need to finish our ADU

22011 Crespi St, Woodland Hills, CA 91364 | Redfin

For Rent: 2 beds, 1 baths · 800 sq. ft. · $2800/mo · See photos, floor plans and more details about 22011 Crespi St, Woodland Hills, CA 91364.

www.redfin.com

Finally got permits on 1 of the ADUs been waiting on for over a year.

Changed my garage plans to 20' interior wall height instead of 12'. Almost ready to submit. Need to build it so I can get my ADU cleared out. It's expensive storage for now.

 

[hallett21]

Finally got permits on 1 of the ADUs been waiting on for over a year.

Changed my garage plans to 20' interior wall height instead of 12'. Almost ready to submit. Need to build it so I can get my ADU cleared out. It's expensive storage for now.

The rents they get are unreal. You’re better off having 3 1/1 500 sq ft adus than an 1800 sq ft SFR

 

[NicPaus]

The rents they get are unreal. You’re better off having 3 1/1 500 sq ft adus than an 1800 sq ft SFR

For sure. My ADU is 300 sq ft or so. One of plumber buddies old employees rented it like 8 or so years ago for $1200 from previous owner. Probably worth $1800 now. Figured $1000 was fair to one of my guys if they watch and feed the dogs when I am gone.

 

[LargeOrangeFont]

The rents they get are unreal. You’re better off having 3 1/1 500 sq ft adus than an 1800 sq ft SFR

Yes. The way this is going aside from having 0 rights as a landlord in CA, a residential property could actually be profitable in CA.

 

[pronstar]

Shit, I don’t know. I have no hard money loans out and doing better with 100% of the cash deployed at 5%. Sleep better too.

Are you concerned that the real rate of inflation is well-above 5%?

 

[LargeOrangeFont]

Are you concerned that the real rate of inflation is well-above 5%?

I would imagine that only matters if you are buying real estate.

 

[Gonefishin5555]

I would imagine that only matters if you are buying real estate.

property is way more protected from inflation than a CD so wouldn't the opposite be true?

ADU for rent in FV is $3700 its 1200sq ft and 4/2 looks like they took up the whole backyard to build it.

 

[pronstar]

A great way to maximize rental profits, is to rent the house out by the room.
It’s also a huge hassle LOL

 

[BabyRay]

A great way to maximize rental profits, is to rent the house out by the room.
It’s also a huge hassle LOL

I have a nephew who has two houses he’s renting out by the room, and his cash flow is unreal, but tenant turnover is rather high. Personally, I couldn’t be bothered, but he’s so ADHD that it works for him. Also, he’s gay and promotes them as gay-friendly homes, which seems to draw tenants like flies. Surprisingly, a fair number of his tenants are straight.

 

[bonesfab]

I have a nephew who has two houses he’s renting out by the room, and his cash flow is unreal, but tenant turnover is rather high. Personally, I couldn’t be bothered, but he’s so ADHD that it works for him. Also, he’s gay and promotes them as gay-friendly homes, which seems to draw tenants like flies. Surprisingly, a fair number of his tenants are straight.

Well they know they won't have any problems getting there shit packed when it's time to move on down the road.

 

[c_land]

page 100 baby

https://twitter.com/i/web/status/1648695257469534208

 

[BabyRay]

Well they know they won't have any problems getting there shit packed when it's time to move on down the road.

I was waiting for the jokes. That’s a pretty good one.