First off, I would take any number the CAR, NAR, NAHB or any other industry shill posts with a grain of salt.

To give you some idea of the integrity of these groups, the CAR actually stopped reporting its HAI (Housing Affordability Index) last December when it hit an all-time low of 14%. No doubt it would have gone even lower in 2006, which is of course why they stopped reporting it. They then issued a “reformulated” HAI, which magically shot up to 23%. Read all the gory details here: http://patrick.net/wp/?p=285

The fact that they’re even reporting such a large drop in sales is an indication that conditions on the street are far worse than they’re letting on. Don’t worry about the CAR’s bullshit “median” stat. Anyone who works in the industry wil tell you it’s already falling –and falling hard.

Why are sales decreasing but the median price of a home continues to increase? Any thoughts?

Right now I am getting cash flows in Denver and some parts of Ohio. The other members of my real estate group are getting cash flows in Missouri, Tennessee, Idaho.

Certainly the cycle in California, Florida, New York, and Nevada make it unwise to buy in these places right now.

jmf wrote: “it was just luck and a matter of timing.”

threadkilla wrote: “what kills me in that story is the only people that seem to have “done it right” have so since 2002 or put another way during the biggest run up in RE prices in history.

i wish we could check back with a few of those when the down side of RE really starts to surface.”

Amen to that. One of my closest friends has accumulated 50 properties (yes 50) as a result of applying the Marshall Reddick principles (no flipping, buy and hold in new, developing areas) and he keeps prompting me to get in and get on with it. He started buying them in 2001….. again, perfect timing.He does not understand my reluctance to dive in right away (although I came near to purchasing in Austin, TX a few months back).
I’m not jealous…. I’m delighted for him. all 50 homes rented out with modest positive cash flows (t and I accounted) I just think a lot of people whoget suckered into these seminars forget how important timing really is.
I wholeheartedly believe that in about five years time it may well be possible to purchase investment properties and make positive cash flow. Right now I run the numbers and just don’t see it making any sense….. hold on to your cash now and buy more with 20% down when the homes are being given away is my take on it.

I think you have the answer to this question, already..

A TALE OF 3 TYPICAL SELLERS IN MY ZIPCODE.

A: Candidate Bubble Sitter ===>
House bought for $500,000 in early 2004. $100,000 down. On the market since late 2005. Listed just below $900,000. Price reduced many times, now at $800,000. Motivated seller. Mortgage is ARM 4.5% fixed 5 year (until 2009)

My take == > Candidate “bubble sitters”. They are trying to unload but they are reluctant to accept the fact that their equity is already gone (with the wind)!!!.

B: King of FBs ===>
House bought for $650,000 in early 2004. $0 down. On the market since late 2005. House sitting empty. Listed just below $1,000,000. Price never reduced. Refinanced in 2005 and took about $300,000 out. “Own” at least 2 other houses all 100% financed. Every drop of equity HELOC’d out. Refinanced out of first Mortgage due to reset in early 2006 and now on a 2/1 ARM 7.5% fixed until 2009.

My take == > King of FBs. HELOC’d out a lot of cash on top of the no-money-down mortgages. They seem to have a lot of borrowed cash available. Have already refinanced (but into another crazy 2/1 interest only ARM…the FB’s trademark loan!!!). The result is that their price is ridiculously high and they have no room to reduce… Foreclosure in 2 years or when they run out of loan money to pay the bills!!!

C: RE investor/gambler ===>
House bought for bought $650,000 in late 2005. $0 down on the market since late 2005. Investor-owner moved in a few months ago after house sat empty for a while. Listed just below $720,000. Price is now $650,000. Never been refinanced yet. “Own” at least another house. All 100% financed. Every drop of equity HELOC’d out. Mortgage is ARM 6.5% resetting next summer.

My take == > Investor who bought at the height last year are trying very hard to bail out, by offering their house at a small loss (may be he made some money on a previous flip!!). Likely to try to HELOC’d his way out of trouble but foreclosure is a few months off.

QUESTION to all:

What will be the impact of the wide use of no-money-down and HELOC loans by FB’s??

Didn’t these guys ever hear that deposits should go into escrow? Wouldn’t that be mentioned on a decent real estate course?

I have zero pity for the suckers that fall for these GRQ schemes. I am beginning to buy distressed property in Nevada from a lot of other “suckers” who thought they too, could GRQ by flipping property. It’s about 60¢ on the current valuation dollar now (at least the most I will pay), and headed down. Since Americans have all become consumer-bots (A T.V. advertising driven culture that thinks materialism equates to happiness, and therefore consume for the sake of consumption), I see no end to GRQ seminars. MML is exactly the same. Stupid people get what they deserve. Thank goodness for a steady supply of suckers.

drbrightside - Your link is as misleading as the rest of the GRQ spin-doctors. The economy is bright? ONLY for the wealthy, ruling class. But that’s ALWAYS been the case, hasn’t it?

See: http://www.cnn.com/2006/US/10/03/Dobbs.Oct4/index.html
for a dose of reality.

http://graphics10.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif