Anybody else regretting a land purchase?

Then I have to ask, what do you "shoot"?

And please, don't gross me out.

 

I'm glad you did get carried away as it was an education. I also found what you say really interesting.

 

Thanks for the great post. Lot of detail to digest there. The gist of it, I guess, is that real estate really fucking sucks right now.

I'd love to upgrade into a nicer house right now. In fact, judging by what you said and what I see around me, and the current interest rates, I'd have no problem affording a much, much better home. Problem is, what do I do with the one I've got? I hated being a landlord, so renting it is out. And it'd be impossible to sell my current house for much at all. Maybe I should just take whatever I can get and move on....

 

...this is a very good idea [easy money]!!!

 

This is a basketball board, so I'll give you 3 guesses.

 

I'll bid $50.00

 

Relax about the land, Shooter. If you don't plan to sell it right now, then don't sweat the current value as it doesn't matter. RE is one of the classic inflation hedges. Given the pressure on the dollar due to government spending and our money supply, we're going to see a ton of inflation which will be great for the value of your land.

The writing was on the wall for a long time. It's too bad people refused to see it. The bottom line is that residential real estate HAS to be tied to income growth. Over the past decade we've had an overall stagnation in income growth but huge increases in real estate values. It was driven by low interest rates and easy financing.

Real estate is still a great investment, it's just the real returns will return to more traditional levels.

 

Good point. I can't believe I didn't mention how awesome the rates are right now. When I bought my first home in the early 80's the rate was close to 9%. Now it's sitting around 5%. It's literally hundreds of dollars cheaper per month, and maybe $100,000 cheaper over the term of the loan. #1 biggest factor in my opinion.

Another biggie right now (but not for you) is the first time buyer tax credit of $8,000 if you haven't owned a home in the last 3 years. It is set to expire next month but will probably be extended and maybe enlarged or made available to all buyers. Call your Congressman!

As for your predicament, it's a common one lately. My view is move when you want to move, 'cause life's too short to let "the economy" or "factors out of my control" influence me to spend years of it sitting and waiting for just the right moment when the stars all align, like I'm at the DMV waiting in line to get my tags or something as unimportant and dull as that. Not gonna go all Steve Smiley here but my home is where I base my life out of and the nicer it is, the nicer each and every day I live in it is.

Whether the market is high or it is low makes no difference if you're selling AND buying. If you're upgrading you'll still come out ahead. You'll get less for your hour current home, but you'll pay less for your new home. Wait a few years and you'll get more for your home and pay more for your home. The tipping factor is rates, which are historically low right now. When inflation hits, they'll be gone for another decade or so.

My advice would be to get a good Realtor, hopefully someone you trust can recommend one, or maybe you know one since you own a home, and be honest with him/her about what your goal(s) is. Then be prepared to follow his advice on pricing, staging...and be proactive in telling everyone you meet about your home for sale. All the while be looking at properties you are interested in buying. Look at as many as you have time for. I have been showing clients 50-100 or more homes before they buy, all in or soon to be in their price range. That's how big the selection is.

By the time your home sells you will be familiar with all the homes that meet your criteria, may have found your dream home, and you'll have been able to track the price drops on most of them to get a feel for what you should offer. As an added incentive to your Realtor, have him be the one to show you other homes. He may work a little harder to sell yours knowing it may lead to another commission when you buy. And it will give you time to get to know him better and see if he knows what he's doing and has your back. A good Realtor should be more interested in getting you your perfect place at the best price possible than getting a big commission. Successful Realtors know it's all about the referrals.

Go for it. Sounds like you deserve it and can afford it. You will not only be glad you did, there's something else there too, a feeling of accomplishment, like you've won the first round series in life, and a "been there done that" cockiness. It can be a huge attitude adjustment, always coming home to a place that makes you grin no matter what a crappy day you may have had.

 

A lot of it is the local economy, especially in bigger cities.

Here, because of the beauty, the clean environment, the outdoors opportunities, we will always have the steady influx of retirees, which is 90% of my clients this year. Most of them are cash buyers or have their finances arranged, and that's who's putting the food on my table this year.

Young families are not moving here because our unemployment is 16%. There seems to be a little vacation home interest this summer but that's expected. Nobody local is buying or moving up much as they're either on fixed incomes or scraping by. Lots of entreprenuers and self employed people here. The one exception is the health field. If you work in the healthcare industry, nurse, cna, doc, vet, phlebotomist, tree surgeon...there's a job here for you. I expect in Portland it's mainly tied to jobs, and I don't think it's been as big a hit there yet. It probably won't be as bad in the long run. The next rebound will be much more gradual at first I think, because the government will try to put controls on it, but overall I expect it to be bigger and longer lasting. People want property more than ever now that it's been taken away from so many.

 

Lots of people have been moving to Tennessee to retire lately, because the cost of living is much lower than in many other places. In fact, some retirees have been moving back up to TN from Florida. Don't know if that trend will continue or not.

VW is building a new manufacturing plant in Chattanooga, not too far from my property, so I'm hoping that will also stimulate land values. The economy in the South has been pretty positive, on the whole. Atlanta is only 2 hours away, and their economy has been booming for years.

 

Marvel has done extremely well. That stock, which I sold about a year ago, is now over $51.00 a share. Triquint Semiconductor, on the other hand, is at about $8.00, way down from the $55.00 it was when I bought it.

 

Obama signs extension/expansion for home-buying tax credit:

http://money.cnn.com/2009/11/05/news/economy/Extending_unemployment_benefits/index.htm

Tax break for buying a home
The legislation also will extend the $8,000 homebuyer tax credit to contracts signed by April 30 and closed by June 30. The controversial credit, which many say has boosted home sales in recent months, was set to expire after Nov. 30.

The bill also creates a $6,500 credit for those who buy a home after living in their current house at least five years. That measure will apply to contracts signed by April 30 and closed by June 30. The current credit defines a first-time homebuyer as someone who has not owned a residence within the past three years.

The credit will be available only for the purchase of principal residences priced at $800,000 or less.

The bill will raise the adjusted gross income cap to $125,000 for single filers and $225,000 for joint filers. The amount of the credit currently begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.

"It's gonna put people back to work, the home builders, put people in the real estate business," said Sen. Chris Dodd, D-Conn. "The kind of jobs that can make a difference."

The extension will cost $10.8 billion over 10 years, according to the Joint Committee on Taxation.

Through mid-September, 1.4 million tax returns had qualified for the credit, according to the IRS. Some portion of those returns, which the IRS couldn't specify, represents buyers who took advantage of an earlier version of the tax credit, which was only worth $7,500 and has to be repaid over time.

By the end of November, the credit will have been used by 1.8 million homebuyers, at least 355,000 of whom would not have bought a house without the tax break, according to estimates by the National Association of Realtors.

"The data on the present home buyer tax credit show that the credit has had its intended impact -- sales have jumped in recent months to a projected 5.1 million for the year and housing inventory has been trimmed, thus stabilizing home prices noticeably," said Ron Phipps, the association's first vice president, in Senate testimony last month.

 

Intended to be used as seed money to make credit available again, it was mis-appropriated for bonuses for big bank execs.

 

I'm curious about that money as well. Just not as curious as I am about the Trillions in off balance sheet loans the FED gave out...TRILLIONS!

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Here's a great link to info on the tax credit for homebuyers:

http://www.federalhousingtaxcredit.com/