Posted on 03/30/2021 6:40:21 AM PDT by blam
My son owns four houses in LA county, Two in Glendora and two in Sierra Madre. He wanted to make an offer on two houses in Redondo Beach and both sold for more than the asking price before he could make the offer.
He says the Chinese are buying everything that comes on the market.
That was my exact thought when I read the COVID BS.
Scary times. Do you have lots of cash in a big bank? Think it's protected and insured by the FDIC? Nope. If big banks have money problems (and they do), the FDIC is only capable of paying out a tiny fraction of depositor funds. They will do a bail-in for banks, converting depositor funds into shares of the bank, and the FDIC will pay out greatly reduced funds per depositor. You would be lucky to receive 10 percent of your bank funds. They say you're insured up to $250,000 but the reality is that they'll act like a bankruptcy court and give fractions of what you're owed by the bank.
This is another reason why investors are putting money into physical assets.
I live in southern NH 10 miles from the MA border.
I just read an article that the northern counties of NH along with rural ME and VT are now stating that 35% of their real estate purchases are from buyers out of state. A couple years ago, it was about 10% or less out of state buyers.
The quote about feeling safe walking their dog at night was a direct quote from the sister of my customer in northern IL right on the WI border. His sister moved out of a high rise condo they were renting right near Wrigley Field. That is the nice part of Chicago where all the yuppies live. He said that their landlord offered to drop the rent from $2400/month to $2000/month IF there would sign another year lease.
This multifamily real estate in the big cities is the biggest potential for foreclosures. There is a big percentage of these owned by investors.
The other issue nobody is talking about is commercial real estate. There is empty office space all around here in Nashua. Sometimes entire buildings. People think that once covid is over everyone is going to come back to work in their office. Some will, but a lot will continue to work from home. Therefore, the long term demand for commercial office space is going to be lower.
A buddy who lives in York Beach, ME was telling me just yesterday about office spaces a 5 minute walk from the beach that have been empty for over a year. He said if they were converted to condo they could be sold for 3X as much.
Thanks for the feed back re the big rental units aka multifamily real estate.
Out here the old malls and strip malls are basically dust collectors and places for our so called homeless.
A successful and one of the oldest small malls started the downward spiral after the pharmacy and a couple of good businesses closed their door due to the aging owners.
The now basically empty old mall keeps changing owners with wild A$$ plans like a collective art building for struggling artists.
This mall is in the middle of a low priced home area filled with retiring white couples and recent Hispanics with several families in one rental.
Not really an area of high demand artsy stuff.
A lot of former economic basics have changed with the pandemic, and we as a nation will not go back to them.
A few miles south of us and in another county there was a very successful and big Walmart in a small stand alone re stores. The Walmart closed over a decade ago and most of the other stores left with the exception of a discount grocery store. Every business that has come into this disaster, closes after a few weeks/months due to crime and homeless.
Walmart opened a super Walmart about 8 miles north, and the parking lot looks like it is Good Friday, fully packed, 24/7.
He says the Chinese are buying everything that comes on the market.
That petered out in our area about 3 years ago.
A few homes have been bought in the end of cul de sacs and then the windows and doors have been boarded up. No one lives in them. They are investments by those ready to flee the ChiComs or have fled.
One of our neighbors has rental homes in the Seattle/Vancouver area. He said that buying homes, boarding them up and not living in them was fairly common among those who escaped Hong Kong in that part of Washington.
I’m not sure it’s coming back down. Inflation is here and the quality of the buyer is 50x what it was in 2004...and remember it grew massively for 3 years before it fell off
M2 money supply doubled roughly in the last 15 months. This will have legs imo
If the big banks collapse, everything is collapsing, so it almost doesn’t matter. The US large banks are actually in pretty good shape - not so with European banks.
That would be a nice answer if true, but its simply not. Existing home sales since last May have been 20 to 40% higher than the historical 5 year average and the year prior to covid (and up massively from 10 years), which means tons of homes are coming on the market, just they are selling instantly. See the 5 or 10 year trend of existing home sales here!”
We are seeing the same thing in a lot of Californicator land.
One of the hot home realty items are homes built after WWII and the Korean War. Smaller homes with 2/3 BR’s, smaller kitchens and two baths. 2-3 years ago, those homes took about a year to get a buyer. Now, the realtor puts up a for sale sign and offers come in that day.
And that may happen very soon. U.S. banks operate with about a 10% core capital (leverage) ratio, having on hand $1 for every $10 they've loaned out elsewhere. Chase has lost billions on credit derivatives, bad loans, and lawsuits. They operate world-wide, as do most large US banks. There is no way the FDIC can handle the coming collapse in banks without paying fractional payouts to depositors. A big collapse in over-inflated balloons in most sectors will happen soon, and the Fed won't be able to prevent it. That will take down banks, the stock market, the housing market and most other investment havens.
Yesterday I pulled a large amount of my savings out of Chase Bank, just too risky to leave it there. I also recently pulled 2/3rds of my investments out of the stock market. I fear a large crash is coming, between now and the fall season. After the crash, I'll buy back in.
Chase is in very good financial shape, but you can believe what you want. They may have lost some on credit derivatives and every bank always has some bad loans but they’ve also made a ton money elsewhere in banking and have plenty of strong loans as well. 10% reserve is far better than 2001-2007, where it dropped to as low as 3% (bear sterns)
I guess I should just speak for my area. The hot market in Maryland is the result of tight supply. I know multiple realtors who agree. We are still wearing masks in this Communist state, the schools are closed, etc. Neurotic leftists are afraid of China Virus getting in their homes, so hardly anyone is putting their house up for sale.
Again, supply is low because they are taken off the market within days, not because no one is listing. 5 years ago if 100 homes went on the market in your area it would take 6 months to work through them, now it takes 6 days. So your area is still selling the same or more existing homes as it was before, there are just more buyers and potential buyers, both from home owners and a ton of rental investors.
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