Hi,
I’m an MBA student doing a research thesis on “Impact of Govt. Policies and Market Variables on Real estate industry”. Could anyone tell me one major policy change that boosted the real estate industry in past 5 years? I would appreciate your help. Thank you.
Sincerely,
Mrunal.
Interest rates lowered to record lows made refinancing and new home sales soar. I will try to think of something else and will add to this post.
Good luck and thank you,
Ted P. Stokely Jr
Hi Ted,
I could finally log on to the chat room. Thank you.
Regards,
Mrunal.
Mrunal:
I did not have anything to do with the chat room. I just write stuff and try to help fellow investors. I believe the thanks should go to Tim.
I found a good website for you too that will help with trends. Again just a google search. You may already know of it
http://www.fdic.gov/bank/analytical/survey/
FDIC stopped in 2002 with the reports but they have great info for the past. Kind of number rich for my reading but it may help your project. If you will send a copy to me i would love to read your report
Ted Jr
hi Ted,
Thanx to you and the rest of the team.
Mrunal. 
But, on the otherhand…
The lowering of the interest rates has also, in my opinion is a factor in the record numbers of foreclosures we qre experiencing…
And it amy get worse with new legislation being passed…
To create even more No Money Down programs…
David Alexander
The Zero Down Grant program may be less than 5 years old and may qualify for your project. If older it has really started being popular of late and like David says has for sure contributed to more foreclosures and has put more people owning a home too. The program is where a non progit grants the down payment money to a first time homebuyer and actually gets a fee for doing this. Somewhere there is a for profit company making big bucks marketing the programs. I am not exactally sure how it all works and there are variations from what I just explained too. I know some where the grant is actually added to the sales price or the seller pays out of pocket. May be worth some research and hopefully some other members will help explain it better. Hope this helps some too
Good luck and thank you,
Ted P. Stokely Jr
11505 Sw Oaks
Austin, Texas 78737
512-301-9171 h
There are new products from what I understand coming out with FHA… that don’t require you to work with Nemehiah… to get folks into a house with little to no money down…
So, that will continue the trend for homebuyers to make houses throwaway… they’ll get into a house… and 6 months - 2 Years later… decide it isnt for them… they have no money at stake… and so… they walk… In Texas it’s particularly bad…
The builders are capitalizing on the low interest rates and building like there is no tommorrow… there is no shortgage of buyers who want a new house… where thye can walk in with, again little to no money down… almost no closing costs… everything is dicsounted and rolled in… by the builders…
So, the folks escrow is set based on the previous tax value… So, say taxes are $1200 a year currently… Insurance (which has also almost doubled since 2000 - Mold) is $900 a year, the payment is $800 a month… that’s a total payment of $975 a month… That’s about a $120k house… Fast forward after a year…
They redo escrow… Taxes should have been… say $2000 a year… instead of the $1200… So, now your payment… goes up by… $133 a month… $800 divided by 12 for the shortgage… and $800 divided by 12 for the current…
So, the payment is now… $1108…
They signed up a $975 house payment… they’ve now bought a new car… financed furniture… got the big screen… etc, etc…
That extra… $133… and that’s a mild case… usually sends them saying… it ain’t worth it… Or something happens and puts them behind… and they can’t catch up… so, they decide to take the credit hit and walk… can’t tell you “How Many folks say to me… Guess, I shouldnt have been a homeowner”…
So, now the new builds come back… as well… You now have two problems… folks ain’t buying in the older neighborhoods… and you have newer houses… that are plentiful… That will not cashflow… even as rentals…
If your not buying right… your not an investor that will be around long…
David Alexander
You sure can paint a bleek picture. What about the family that gets a house for a few hundred and works hard and pays extra every month and pays it off 15 years early. Or the one that sells in two years and makes $30,000 profit and loans it to the govt by buying 2% bonds. I am just trying to help the MBA student do a paper that is the most important thing in his live. I guess though he could write how these programs are making drug users and dealers out of all the kids whose parents are working to pay the huge house payments too. Or the suicide rate increase due to cheaper rates. I do not know. I hope he gets his PHA even and comes up with some kick but positive stuff out of all this. I have a fault and always the very best in everything and everybody.
Good luck and thank you,
Ted P. Stokely Jr
11505 Sw Oaks
Austin, Texas 78737
512-301-9171 home
512-587-6177 mobile
I assure you…
I’m always looking for the Pony under the pile of poop…
But, I’m also, aware… and pay attention what’s happening around me… I have to… that’s what you do as an investor…
People coming in to the market… learning to buy houses the way I did… can’t do it the same I way I did it, when I started… That frustrates me…
It’s also the same in other industries… good business people recognize this and that… when it’s best to use what type of technique…
Meaning… when I started in this business, I could buy any decent house… from a motivated seller… that was current… to a few months behind… market and sell the house… and use that money to make up the arrears… and usually turn around a house in 2 weeks to 30 days…
That playing field has changed… I believe the explanation for the change in Texas… at least in the Dallas area is greatly to do with waht I said above…
Now, the positive effect is like you said… more homeowners… but, is that a long term gain… or a bandaid… I mean putting folks into houses… that don’t have a fico until it’s created by a mortgage broker… and who can’t budget for next week, not even mentioning next month… That’s dangerous… to me… And worse… I don’t know the solution… I know there are people that will do whatever it takes to enjoy homeownership… and thankfully, I have some of those individuals in some of my houses…
Also, add the changes to the contract for deed legislation… going statewide in Sept. 2001.
Which makes it where most investors are selling on a L/O… It is no longer a thing… It is no longer the fast way to sell a house… (Dallas Area)
I think that is important for folks to know… Whether that be viewed as positive or negative…
From my take… Mrunal is working on his MBA… and there are two things… What your taught in school… and what the street teaches you…
Hopefully your able to learn what the street teaches without learning it directly form the street…
Ted… there is definitely no “offense” meant… I’m just a guy who has a business or two… and buys some RE here and there Just like You…
David Alexander
David:
I love your response. I like the Pony in Poop thing. The contract for deed changes too are something that has changed the re industry that Mrunal could work with too and how it has changed the market for good or bad. You have come up with some really great points and I certainly understand your point of view. I was not attacking you either. I am too positive as I said earlier and I should be more questioning like you. I have gone broke several times by not seeing the bad parts of the industry. My own fault for sure. Even last week I bought a house because it was cheap and not really investigating and thinking ahead and inspecting and listing faults. Knowing what I know now I would have tried to get it for a few grand less and probably would have been successful. Thanks for your input here and I hope we both make money in this tough market and have given some food for thought for a MBA
Good luck and thank you,
Ted P. Stokely Jr
11505 Sw Oaks
Austin, Texas 78737
512-301-9171 home
512-587-6177 mobile
Wow! This a great thread. As a newbie investor, this is exactly the type of information that I need to know…BEFORE IT HAPPENS.
So I’m still trying to figure out what this means for investors. One concern of mine has always been the abundance of new homes going up all over. It is so easy to get into a home these days, and it only seems like it’s going to get easier. How will this effect creative investors, seeing as these homes won’t be very old when they are foreclosed on, thus needing less repairs, thus being harder for an investor to make a profit. We won’t even talk about how it will affect the rental market…
Brother David speaketh the truth.
To SeniorC: Here’s what it means:
It means that creative investors will be EVEN MORE tempted to jump into bad investments, simply because they are wooed by the novelty of someone (actually, many people) who are willing to give them their house, scott-free.
Many will be tempted by their EGO and the ease of collecting FREE HOUSES to IMPRESS THEIR FRIENDS AND NEIGHBORS, that they will start collecting houses “Subject To” because they wish to show up at their investment group and BRAG about how many houses they own.
BUT… with little equity, weak demand, a bad rental market and no cash reserves… these “investors” will soon find themselves facing multiple default scenarios.
In the long run, I think it’s possible that all of these defaults-- by owners and by investors-- can seriously threaten the banking industry as we know it. Why? Because the only way the banks will be able to get rid of these houses will be to sell them at a deep discount (this is years down the road, folks).
And at that point-- for those of us still in the game-- there MAY be some good deals.
But maybe not. Don’t get excited, yet…
Please remember that most of these houses were built by unscrupulous, crappy builders (for example, one that rhymes with “JB Homes”) …
Just some random thoughts. Probably the benedryl talking.
I think good deals are going to be harder to find. Gone are the days (late80s and early 90s) where banks are partically selling foreclosures well below market prices just to get rid of them. Now, what I’m seeing is that you’ll be lucky to find deals 20-30% below market. The banking institutions knows that the housing market are still strong and can let a home sit until they sell close to market value.
OK, so we agree that it’s only going to get harder to find good deals. If that’s the case, what is everybody’s plan to still be successful at investing then? Sub2 doesn’t seem like a good option, and there may not be enough good deals for rehabbers, especially if new investors come to Austin when the boom hits again.
Marketing campaigns will always generate at least some deals if you stick with it, but maybe not enough to quit your day job.
“When the rebound comes” is a completely different issue.
What we’re talking about is market conditions NOW.
And what I see is that the big boys are sitting on their money, just waiting for the market to come around. They’re out fishing… not trying to force things or feel pressured to invest when they don’t need to. Or, they are investing in other markets.
Good deals aren’t harder to find…
You just have to understand your market… and know how and which tools to use to buy…
All businesses are marketing plan and simple…
It’s your game… you set the rules… the market is booming in some markets… and is lousy in others… that trend will continue…
People often make excuses about not making deals… or not making money… when you go home at night… your circumstances… aren’t anyone elses fault…
David Alexander
David,
Pretty idealistic view, the fact of the matter is that not everyone is as resourceful as you. If that was the case, this message board would not even exist. I think, we are talking about the whole market in general here. We didn’t say that there are not good deals out there but with more investors are getting in the act and a strong housing market, deals are going to be more competitive.
Hi -
I have to say that I pretty much agree with David – other than I believe there is more to a sucessful business than marketing alone.
You may choose to look at the RE market in general
(after all, a general knowledge of broad based trends is useful), but in almost every case the real money is made when you work the niches that exist everywhere.
And David is also right that you have to learn to play this game (or any other game for that matter) by your own rules rather than listen to other people.
Deals are out there everywhere - they always are. Sometimes, they come easily and sometimes they don’t come nearly as often as we would like. That’s just the way it is and the way it will always be; either you learn to adjust your strategy and accomodate change or you don’t.
Take care,
Eric C
PS - I’ve always made more money in “downturns” than in “booms”.