What is it about the bubble that makes some people so happy to see others fail?
In my last post, I linked to the now quasi-famous Casey Serin, a young investor in California that got in way over his head. At age 24 he bought 8 houses in 8 months with no money down and proceeded to make a whole lot of mistakes. Being leveraged to the hilt is never safe, and can end in disaster when the market sours.
What fascinates me though, is the attitude and the general nastiness of the commenters on his blog. I often see the same attitude on real estate “bubble blogs” that track the decline in the real estate market. Why is it that some people seem to take so much pleasure when prices decline? Why are some people so happy to see others lose their shirt?
Casey obviously made some major mistakes, which he freely admits, and there’s no doubt that he’s going to pay dearly for those mistakes, most likely through bankruptcy. I hate to think that some people would look at his experience and say “see, investing is too risky.” Yes, it is when you’re reckless. Driving a car at 120mph blindfolded is risky too, but that doesn’t mean you shouldn’t drive.
Bob;
I don’t know about everyone else but I am anxious for the market to crash so I can get back to investing. I am 55, I bought my first house at 19 and have flipped at least 350 in my
like time. Not to be smug, but frankly I lost count.
Prices are so high and coming down, to what level and exactly when we can only speculate. Historically, prices will return to the mean, or 3% per year compounded. I predict prices to drop to this level in 12 to 24 months and the market to remain stagnent for 2 to 5 years. How do I figure? Historical data. This is what has usually happened, more or less. Figure the price of a house in 2000, appreciate it by 3% per year, compounded and that is what it should be selling for today. If I have to tell you how to figure that, go back to working at the 7/11.
That formula has worked for me for 36 years. Still, before I jump back in I will do reams of research on everything from median incomes to school enrollments. Again, if you wonder why I would look at this data, the Slurpie machine awaits your gentle but firm touch.
Just a little fact to consider: Residential Real Estate prices are based on three factors
: 1 - Return on Investment, that is what will the house
/condo rent for, 2 - Median income which determines affordablitity according to Fannie Mae guidlines and 3 - the prevailing interest rates.
Gee, I bet you all knew that FUNDEMENTAL! If this is news to you, you’re definitly in the wrong business!
Frankly, I say screw all you idiot, amatuer real estate speculators. You went into a market you didn’t understand and screwed it up. I hope you all loose your ass. I’ve seen speculators do the absolute dumbest deals you could possibly imagine. if you don’t know the market and what you’re doing it’s like bringing a knife to a gun fight. You were unwise, to say the least and you deserve what your get.
I have some sympathy for the working people who were suckered into stupid ARMS, neg am or other such insanity. But don’t tell me that alot of these people didn’t jump in with that glint of greed in their eye. “We can make 100k on this place in 2 years!!”. My sympathy is limited because they also went into a situation with limited understanding and little if any real research. Asking Uncle Ned who made 250K on a house he bought in 1957 doesn’t count as research.
I bought 53 houses in 2003, 5 in 2004 and none since. I am just waiting for the dumb asses to get out of the market. If you loose or will loose money in real estate you weren’t paying attention and you didn’t fo you homework, you deserve whatever happens to you. Just get the hell out of the market so the real professionals can make money again.
Mike,
Thanks for your comment. I like to see what more experienced investors have to say about the current market.
When I started in 2005, I had planned to rehab some houses but quickly realized that the market was headed the wrong way, so I’ve been wholesaling and looking for solid income properties.
Many investors that I’ve spoken to are happy that the speculators are leaving and that there will be opportunities to buy properties “cheaply” in the next few years.
Bob;
Very smart. You make your money when you buy.
I think it’s a little early to expect a lot of good deals but there are some “steals” out there. Just do your math and your research. You’ll do fine.
From my experience I can say that we are approaching the best real estate investment opportunity that most of us will ever see in our lifetimes.
It appears speculators have left most markets but there is that nasty little “second wave of stupid money” that jumps on the house that has been discounted 10%. Just don’t let that be you.
Lets refer to them as “stupid speculators” because myself and a number of my associates are long time speculators. I have never lost money on a piece of real estate. At times, I haven’t made what I wanted but I’ve never lost. That type of caution may cost youa few profitable deals, but if your not in this for the long term, 7/11 awaits.