The SEEDS for the next housing expansion have been PLANTED!!!

Random Ramblings
1

I love reading articles from the MORONS out there that get paid to report YESTERDAYS NEWS TODAY!!!

I truly ENJOY reading about this NEW GENERATION of young adults that will NEVER buy a HOME…How RENTING is now the new AMERICAN DREAM and how DEMOGRAPHICS, ASTROLOGY, The Price of GUM or any other IDIOTIC BULLSH*T these geniuses can THROW UP onto a computer screen constitutes economic INTELLIGENCE!!!

It’s all BULLSH*T People…ALL of it!!!

How do I know???

I KNOW because the REAL STORY is NEVER written about the INTENDED SUBJECT…The REAL STORY is buried is some small article seemingly about NOTHING.

HUH???

Jake, what the *&^$ are you talking about???

I’m talking about the 2008 and 2009 HIGH SCHOOL GRADUATING CLASS in the Good Old USA!!!

Did anyone hear???

They were the LARGEST IN AMERICAN HISTORY…That’s right folks…LOOK IT UP…Because NEVER in U.S. history has a LARGER number of kids graduated from high school.

Stay with me here…

The National Association of Home Builders tracks buyers info to the point of almost knowing their SHOE SIZES.

Whats the average age of a first time home buyer???

31 years old.

See where this is going now???

So…Two years ago our school system UPCHUCKED the BIGGEST POOL of future HOME BUYERS in AMERICAN HISTORY…Right NOW these kids are 10 years out from making those purchases.

I don’t know about you…But I have EVERY INTENTION of making sure those snot nosed little college brats DREAMS COME TRUE in 2021!!!

Because here’s the bottom line…

Owning your own home SHOULD BE about F R E E D O M and S E C U R I T Y…It WAS for 100 years here…It got messed up, and NOW is being CLEANED UP…But take this to the BANK…

The class of 2009 is going to want the following…

GOOD SCHOOLS for THEIR KIDS…Last I looked, this Country’s BEST high school were SURROUNDED by SINGLE FAMILY HOMES…Not 3 family triple deckers, not Duplexes, not apartment buildings. SINGLE FAMILY HOMES!!! They’re gonna want a place to throw a BASEBALL with their kids, ride a bike, plant a TREE or a POOL where ever the hell they want to…Living next to some 20 year old kid in an apartment GETS OLD FAST…then there’s the coming’s and going’s of your NEIGHBORS at all hours of the night, the slamming doors, the arguments, the lack of PRIVACY…Basically ALL the reasons people BUY single family homes…It’s NEVER gonna change!!!

Sorry economic writers of the world…I hate to break it to you, but the DEATH of the American Dream and the American home owner has been GREATLY EXAGGERATED!

But Jake you just don’t understand…

Yea, I know…

It’s DIFFERENT this time…

Those 4 words are responsible for more economic devastation than any war in history.

The SEEDS are in the GROUND FOLKS…BUY the things NOW, those SEEDS will be buying LATER!!!

2

I call it the “me too” syndrome. They always want what others have.

Once all the media and the leaders of the herd tells them they need own a house, that’s when the talk will switch to “owning a home is a great investment, renting is a waste of money”

That buying frenzy we saw just a few short years ago will be back. It may not be 5 years from now or even 10, but I guarantee you it will be back. And for one simple reason…too many people made too much money. Wall street, investors, contractors, realtors, building material suppliers, government and home owners (who used their homes as an ATM machine) have gotten a taste of the easy money and there is no way they are going to pass it up once the chance comes up again.

If I didn’t hate being a landlord as much as I do, I would stack up a few great deals, but I just can’t stand all the BS the goes along with holding them.

3

Class of 09 here ! :beer

4

Great insight as usual fdjake…

But right now, I’m on the side that says renting IS a better option than buying… at least here in NJ.

Home prices have decreased to some extent in NJ, but it’s still no where near your local market and the deals you post about.

There’s plenty of examples in northern NJ of cases like this one:

You buy a $200k house in 1997
It’s value jumps to $400k during 2007
You hold onto it and don’t sell
In 2011, it’s back to being worth $200k + needs updating + property taxes have gone up signficantly.

Overall you’ve spent more than someone who’s been renting, you’ll gain no appreciation at all, and not to mention… MOST of the homes in northern jersey under $500k are OLD… with small rooms… outdated layouts… congested living arrangements… and they maintain their value b/c of the demand. And what are the benefits of buying that home in 1997… forced savings? having a place to call your own? Sure, but in terms of investment value, I don’t see it the return.

The “holding for appreciation” method seems to have skipped my generation (I’m 27 now). It SEEMS - and I’m not an expert - that with the current economic conditions, the only significant appreciation we’ll see is IF the federal reserve engineers another artificial bubble in 20years OR if there’s some kind of breakthrough-disruptive technology that adds significant value to the overall US economy and bridges the gap between the have and have-nots.

I like the idea of the largest ever highschool class needing homes in 10-12years, but 10 years ago from today, those who graduated highschool in 2001 (ME) also need homes NOW, right? But how many are able to buy right now? How many articles and stories do you come across about recent college graduates moving back home, lawyers not finding jobs, unemployment on the rise, and like you mentioned - articles on renting being better than buying… b/c at this point in time in some areas… renting IS better!

So is it different this time?! It seems that way to me! I came out of college broke and hungry ready to get rich in real estate. I couldn’t find a single deal on ANYWHERE where a cashflow property made sense. All the Richdad/Poordad and Trump books I read weren’t applicable. $500k beatup properties with a rent roll of $2500/month and property taxes of $8-10k/year. How’s that even profitable? This was in 2006-7, and I thought that maybe these investors know something that I don’t since I was so new… until of course, EVERY… SINGLE… one of those houses started to default.

I bought my first home when I was 24 in 2008. I short sale’d the property myself and it was a GREAT deal at the time, and at the time had an offer to flip it for $100k above my price. I didn’t b/c of technical reasons on doing a short sale flip and instead I kept the house. Since then I’ve put at least $40k into the house updating and renovating. And it’s lost significant value! I can’t get that same $100k+ margin anymore. No chance.

So… this economic rise and fall might be another repeat to people like you who have lived through it… but for people like me who are experiencing it for the first time and understand that this whole economic “boom” was FAKE, artificial, had no actual organic growth or output, and done by the biggest scumbags on this planet… it DEFINITELY seems that this time will be different!!

5

I believe that having your own house is better option especially if you want to settle for good… Renting on the other hand is only good if rent is low and if you have the plan to move out in few years.

With house, you may pay for the mortgage or loan but eventually it will be yours in due time while with renting you pay for the property that’s not going to be yours in the long run.

6

Hey FDJake. Its been a long time since I’ve been on here. But this was a great post. I think there’s another segment of potential buyers. They’re the ones who have lost their homes within the last 2 or 3 yrs. They’re being forced to rent right now. All those “joys” of renting are going to get old for them too. I would think within the next 5 yrs., their credit score could improve while some of the lending standards relax a bit. That could be enough to get them back into homes they can afford.
If that weren’t enough reason, there’s the contrarian view that shows that SFH are the buyimg opportunity right now since renting is such a “sensible” thing right now…

7

I see a lot of these right now. I also agree. They’ll be back as homebuyers after they clean up. I know I am surprised at how high income some of these folks are. Some of them keep their house in better condition than I do mine(actually all my high grade rentals do - but I have four little kids too). They are very happy to live in a nice house and be able to call me if the garbage disposal breaks.

Heck, my folks are getting older and mom is making noises about renting. She can’t get my dad to fix stuff at home and I think she feels guilty calling me all the time to maintain her house.

Really at the end of the day renting is not a terrible deal, especially for anyone that doesn’t have a good downpayment and can find a good deal. For the average home buyer buying retail homes it’s not a great deal, far from it actually.