James Peterson's Discussions

When selling a home there are certain low cost items that can drastically increase the value of the home in the buyers eyes.  Other expensive remodeling can be a loss especially in a down market.  But typically most buyers are looking for a home that they can move right into and have to invest little to no money on upgrades therefore an updated, clean looking home will command a much higher selling price than an outdated home with wear and tear. The highest returns on improvements would be #1 Kitchen, #2 Bathrooms, #3 Addition of Master Suite #4 Curb Appeal and so on.  Your best bet is not to sink 10's of thousands into your remodels, yet to focus on the functionality, lighting and overall appeal. Location also plays a huge part in 'bang for your buck' remodels.  If your home is over remodeled for the area, your return on investment may be a huge LOSS!   Yet if your home is originally the most outdated home in the neighborhood you will most likely benifit from many different updates.  For more specific thoughts on remodeling I would be happy to answer any personal emails  

What everyone needs to realize is that Real Estate is very cyclical just like business is.  I agree Renters should be the ones on this post because Renters should have a dream of homeownership, and that only shows that they are interested!  As for the Renters that are bashing on homeowners that have bought in the past 2 to 3 years that's just not right.  Real Estate is a long term buy and hold investment with the most tax advantages of any investment next to commercial real estate.  That is why the rich hold their money in real estate! luge668 made a good point that he might have lost 30% in one year, but guess what?  In 30 years from now you would realize an 800% gain on average.  Yes there are ups and downs on the way but if you are smart you just hold on for the ride!  Remember back in the 70's when homes were selling for less than $50K?  Now the median price is $400k?  Right now is probably the best time in a decade to buy a home.  If you live in the Bay Area or a pricey area today lenders have integrated new Conforming Limits and Money is CHEAP again!  There are hundreds of great deals out there and the market will be turning around soon, so keep your eyes open or talk to a realtor you can trust to find a great home or investment for a great price!  

Wow, you guys are obviously PHD Economists specializing in Real Estate! You got me there. The market has never dipped like this before? 2018 before the same prices back in 2005 replicate? There are some real positive thoughts here. Do any of you actually own real estate?It's obvious that you may think renting is better and that the real estate market will completely collapse! OMG, the sky is falling.Actually in the Real Estate business we call this a market correction. Obviously the bigger you are the harder you fall. The market could not handle such high appreciation and simply corrected. If you look at the actual numbers (instead of listening to the media) prices have dropped to ' 04 levels which in turn has made homes more affordable to many first time home buyers and sales #'s have increased year over year to '05 levels.For those of you that think you can tell the future by spitting out random numbers like 2018, 1 million in interest payments etc...Guess what Mickee:Actual #s you pesimist...$1.0 Million property (most people would actually save to put 10% down)$900k 15y P&I Mortgage @ 7% ~ $8000 mthInterest 1.25% ~ $1250 mth10yrs later...Property Value = 2.0 millionMortgage Balance= $402,000TOTAL Equity = $1,598,000Total tax savings = $370,000 ( Money you would give to IRS if you RENT)Sooo... Money Spent after Tax Savings is actually: $740,000A little different from your #s but it's OK you're not in the business...

Correction: Taxes not Interest = 1.25%

And guess what in 5 years you have no mortgage! You can make $100,000 improvements every year after...I agree with sunnyview on the part that you should properly research property before investing. Buying a home is completely emotional. My job is to inform my clients of the location they are buying into, economic, and physical obsolecenses that may affect their property value in the future. I have the utmost care for my clients and they trust me because I've done business with someone they know and trust.Actually Randy: According to the US Department of Housing and Urban Development data show that median home prices appreciated at an annual rate of 6.1 % from 1972 to 2002. At the same time, the cost of living (inflations as measured by the Consumer Price Index) increased only 4.2% per year.Randy, you also forgot one minor detail as well:Real estate is typically leveraged.Example: I buy an investment property and find a great renter willing to sign a 1 year lease which makes it cash flow even ( Rent = Expenses). And I put 10% down (Initial investment).Price Paid: $150,000Down Pay: $15,000Appreciation (1yr @ 6.1%) 159,150Gain $9150Rate of Return on Price: 6.1%Rate of Return on Investment: 61% (Beat that in the Stock Market)That's the power of leverage...Not to mention for you renters: The US Dept. HUD reported that rents have been appreciating over the last 30 years at an annual rate of 5.3 %.So renters consider this:If your rent is X, in ten years it will be Y:X - Y1000 - 17652000 - 35303000 - 5295The Power of Real Estate investments... Land Appreciation - Rental Appreciation - Structure Depreciation!Just a little FYI

Flip of the Flipper:  'You're too young to remember the housing slump in San Francisco in the late 80's and all the way to the mid 90's!!! Try reading a little history'Why don't you explain the slup instead of making random uneducated quotes from your History Book?  While your at it explain why the prices in San Francisco continue to rise and exceed most markets in the US?  Why is the average appreciation over 30 years closer to 12% per annum in San Francisco?Again Folks, Real estate is a Buy and Hold Investment.  There are always ups and downs.    

A lot of negativity.  I'm not seeing a huge dip in your chart Flip?  I do see ups and downs, mostly ups?  Again following what I said before:  There are ups and downs but in the long run it's definately a solid investment.  The time periods?  It's not like I picked the 40's -70's?    Randy, an Investment can be something as simple as going to school expecting it to pay off later in life.  Are you against real estate investment?  Do you think it's a fluke that people actually profit from it?  Sure my #'s were simple and don't take into consideration vacancy rates.  But they're not wrong or impossible. Cash flow positive homes happen all the time!  Not everyone here will understand this and I never said it was easy.  The market right now is helping though!  Real regulation?  We are under very stringent regulation.  The Morgage Lenders are who need to be regulated telling people they can afford homes with creative financing such as Neg-Am loans.  We have them to thank for the massive amounts of foreclosures in the Bay Area.  It's just a Business Name - nothing to be confused about. PALO ALTO - CUPERTINO- LOS ALTOS  area  

Every sub-market is different.  A lot of REO's present below market buys because banks want to get them off the books ASAP.  Hollister is a small community that along with all the commuter towns surrounding the Bay Area are taking a large hit.  Mainly in the central valley where prices have seen 50% declines.  Santa Clara county on the other hand has seen some down turns mostly in East and South San Jose.  West San Jose - Palo Alto have slight depreciation, even or some are appreciating markets ( Palo Alto- Sunnyvale- Cupertino) 

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