Author Topic: Agency Investment and Second Home lending changes.  (Read 3415 times)

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Offline Liar Loan

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Re: Agency Investment and Second Home lending changes.
« Reply #15 on: March 17, 2021, 10:15:04 AM »
Damn... I'm glad I sold my last IE rental last year, in the early days of COVID.  USC and IHO have repeatedly tried to heckle me for that, but this is going to be Armageddon for that market.  Sure, the all cash buyers will still be able to invest, but not at today's prices - the returns just aren't good enough without leverage (which wasn't the case when I bought in 2014-15, when prices were less than half of what they are today).

Meanwhile, the S&P 500 is up 66% YoY.  Where would you rather have put your money one year ago?

I think there's a strong argument to be made that the GSE's should be buying zero investor and second home loans.  What is the benefit to society of having them subsidize wealthy investors and buyers of second homes?  Shouldn't we be making home buying more affordable for those that are trying to purchase a residence, especially first-timers?  I applaud this move by the GSE's.

Offline USCTrojanCPA

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Re: Agency Investment and Second Home lending changes.
« Reply #16 on: March 17, 2021, 10:43:57 AM »
Damn... I'm glad I sold my last IE rental last year, in the early days of COVID.  USC and IHO have repeatedly tried to heckle me for that, but this is going to be Armageddon for that market.  Sure, the all cash buyers will still be able to invest, but not at today's prices - the returns just aren't good enough without leverage (which wasn't the case when I bought in 2014-15, when prices were less than half of what they are today).

Meanwhile, the S&P 500 is up 66% YoY.  Where would you rather have put your money one year ago?

I think there's a strong argument to be made that the GSE's should be buying zero investor and second home loans.  What is the benefit to society of having them subsidize wealthy investors and buyers of second homes?  Shouldn't we be making home buying more affordable for those that are trying to purchase a residence, especially first-timers?  I applaud this move by the GSE's.

What I didn't agree with you about was that you sold at the top of the market.  As I mentioned, no one can time that whether it's stocks or real estate.  If you took your cash and invested in the stock market and had strong results then good on you.  Even with higher leveraged investors and 2nd home buyers dropping out due to higher rates, prices in the short term will continue to increase because there more demand than supply.
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Re: Agency Investment and Second Home lending changes.
« Reply #17 on: March 19, 2021, 09:26:29 AM »
What I didn't agree with you about was that you sold at the top of the market.  As I mentioned, no one can time that whether it's stocks or real estate.  If you took your cash and invested in the stock market and had strong results then good on you.  Even with higher leveraged investors and 2nd home buyers dropping out due to higher rates, prices in the short term will continue to increase because there more demand than supply.

I don't recall making the claim that I sold at the top.  Oh yeah, that's right... I didn't!!! LOL. 

C'mon USC just fess up.  You were heckling me.

Yet amazingly, I have made more from unleveraged stock investments this past year than I would have with the leveraged returns from my last rental.  When I sold, the LTV was about 36% so I would have needed appreciation in excess of 40% to match my unleveraged stock returns.  The property did increase in value, but maybe only by about 20% or so after I sold (two comps have sold, so hard to tell).

Real estate was also much higher risk to be holding in my opinion.  My blue collar renters were the demographic most likely to be facing job losses.  These are not people that have the option of working remotely via Zoom.  I'm betting other landlords were facing uncollected rents along with the prospect of no eviction.  Yikes!! 

With stocks, I had none of the management headaches that other landlords had during this pandemic.  I also had the liquidity to switch to an all-bond portfolio if the sh*t hit the fan again, which was a very real possibility during the unpredictability of this pandemic.

So you are, in effect, heckling me for making more than I would have if I had kept the rental and dealt with the accompanying headaches of the past year, all while lowering my overall portfolio risk. 

Keep telling yourself (and your clients) that these things can't be timed.  It's blatantly untrue and you should know better.

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Re: Agency Investment and Second Home lending changes.
« Reply #18 on: March 19, 2021, 08:25:43 PM »
What I didn't agree with you about was that you sold at the top of the market.  As I mentioned, no one can time that whether it's stocks or real estate.  If you took your cash and invested in the stock market and had strong results then good on you.  Even with higher leveraged investors and 2nd home buyers dropping out due to higher rates, prices in the short term will continue to increase because there more demand than supply.

I don't recall making the claim that I sold at the top.  Oh yeah, that's right... I didn't!!! LOL. 

C'mon USC just fess up.  You were heckling me.

Yet amazingly, I have made more from unleveraged stock investments this past year than I would have with the leveraged returns from my last rental.  When I sold, the LTV was about 36% so I would have needed appreciation in excess of 40% to match my unleveraged stock returns.  The property did increase in value, but maybe only by about 20% or so after I sold (two comps have sold, so hard to tell).

Real estate was also much higher risk to be holding in my opinion.  My blue collar renters were the demographic most likely to be facing job losses.  These are not people that have the option of working remotely via Zoom.  I'm betting other landlords were facing uncollected rents along with the prospect of no eviction.  Yikes!! 

With stocks, I had none of the management headaches that other landlords had during this pandemic.  I also had the liquidity to switch to an all-bond portfolio if the sh*t hit the fan again, which was a very real possibility during the unpredictability of this pandemic.

So you are, in effect, heckling me for making more than I would have if I had kept the rental and dealt with the accompanying headaches of the past year, all while lowering my overall portfolio risk. 

Keep telling yourself (and your clients) that these things can't be timed.  It's blatantly untrue and you should know better.


You know that I'm not the heckling type. haha  You sold an investment property and given that your tenants would be at risk of not paying rent it wasn't a bad move on your part, especially if you parlayed those gains with more stock market gains.  I know I sound like a broken record but I'll keep saying it, a primary residence purchase is a home/place to live and an investment secondarily.  Life happens and people make their decisions to buy based upon their and their family's needs.  Most all of my buyers last year were upgrade buyers looking to get more spacious because they were working from home and their smaller homes/rentals were not suited for one or both spouses to work from home as well as getting more yard space for the kids.  I always tell my buyers, if you aren't buying for at least 5+ years then maybe you shouldn't be buying because I don't know what prices will do in the intermediate terms.  I do know what prices will do in the very short term and in the longer term.  I put my money where my mouth is and I bought 2 investment rental properties with in a partner in the first 2 months of this year and we got a 2.99% 30-year fixed rate for both properties and are basically breakeven with 25% down.

No way you, I or anyone else can perfectly time either the real estate or stock market.  Would you provide predicted we would be up 10%+ in prices from the moment that covid broke out to today back in March 2020?  Nope because I know I thought prices would go down or best case stay flattish at that time but look what the market did and what it's doing .  The market will do what it wants regardless of what you or I think and what graphs, trends, analysis, etc will tell you that it might be going.  I know only 2 things that will cause prices to drop...either less buyer demand and/or more supply of homes and today we have the opposite of those 2 things so my belief is that prices will continue to keep going higher until the market is at balance.

Some buyers told me that this run-up feels like 2004-2007.  Nope, not even close because the buyers today are very strong and loans are fully underwritten today with no BS NINJA loans.  The current run-up we are seeing today reminds me of the 20%+ price appreciation we saw from 3Q 2012 to the end of 2013.  I'm basically seeing the same things happening as I did back then.  I do think the market will get more in balance sometime this year but it'll be at a higher price level than today.  Will it be 3% higher?  5% higher?  10% higher?  I have no idea as there are too many variables that'll dictate how much further prices can go up.
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Offline paydawg

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Re: Agency Investment and Second Home lending changes.
« Reply #19 on: May 25, 2022, 08:58:13 AM »
Damn... I'm glad I sold my last IE rental last year, in the early days of COVID.  USC and IHO have repeatedly tried to heckle me for that, but this is going to be Armageddon for that market.  Sure, the all cash buyers will still be able to invest, but not at today's prices - the returns just aren't good enough without leverage (which wasn't the case when I bought in 2014-15, when prices were less than half of what they are today).

Meanwhile, the S&P 500 is up 66% YoY.  Where would you rather have put your money one year ago?

I think there's a strong argument to be made that the GSE's should be buying zero investor and second home loans.  What is the benefit to society of having them subsidize wealthy investors and buyers of second homes?  Shouldn't we be making home buying more affordable for those that are trying to purchase a residence, especially first-timers?  I applaud this move by the GSE's.

Just curious where LL put his sales proceeds when he sold his IE rental property in 2020, BEFORE the run-up?  Hopefully somewhere good, bc real estate might have been the best place to invest for the following 12 months. 

LL might be correct about a pending home price drop in the near/mid term, but even a broken clock is right twice a day. 
Thanks in advance for the 'thanks'!!

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Re: Agency Investment and Second Home lending changes.
« Reply #20 on: May 25, 2022, 11:09:11 AM »
Damn... I'm glad I sold my last IE rental last year, in the early days of COVID.  USC and IHO have repeatedly tried to heckle me for that, but this is going to be Armageddon for that market.  Sure, the all cash buyers will still be able to invest, but not at today's prices - the returns just aren't good enough without leverage (which wasn't the case when I bought in 2014-15, when prices were less than half of what they are today).

Meanwhile, the S&P 500 is up 66% YoY.  Where would you rather have put your money one year ago?

I think there's a strong argument to be made that the GSE's should be buying zero investor and second home loans.  What is the benefit to society of having them subsidize wealthy investors and buyers of second homes?  Shouldn't we be making home buying more affordable for those that are trying to purchase a residence, especially first-timers?  I applaud this move by the GSE's.

Just curious where LL put his sales proceeds when he sold his IE rental property in 2020, BEFORE the run-up?  Hopefully somewhere good, bc real estate might have been the best place to invest for the following 12 months. 

LL might be correct about a pending home price drop in the near/mid term, but even a broken clock is right twice a day.

Maybe it wasn't obvious from my second paragraph, but stocks.  If you have data showing that IE multi-families outperformed the massive gain in stocks, please post it.  I'd love to see it.

Currently, Riverside is #1 in the nation for rising inventory (according to Realtor.com) and tops in the nation for offers that did not face competition (according to Redfin).

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Re: Agency Investment and Second Home lending changes.
« Reply #21 on: May 25, 2022, 12:27:40 PM »
Damn... I'm glad I sold my last IE rental last year, in the early days of COVID.  USC and IHO have repeatedly tried to heckle me for that, but this is going to be Armageddon for that market. 

Really? Show me where I "heckled" you for selling your IE rental.
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Offline paydawg

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Re: Agency Investment and Second Home lending changes.
« Reply #22 on: May 25, 2022, 12:30:05 PM »
Damn... I'm glad I sold my last IE rental last year, in the early days of COVID.  USC and IHO have repeatedly tried to heckle me for that, but this is going to be Armageddon for that market.  Sure, the all cash buyers will still be able to invest, but not at today's prices - the returns just aren't good enough without leverage (which wasn't the case when I bought in 2014-15, when prices were less than half of what they are today).

Meanwhile, the S&P 500 is up 66% YoY.  Where would you rather have put your money one year ago?

I think there's a strong argument to be made that the GSE's should be buying zero investor and second home loans.  What is the benefit to society of having them subsidize wealthy investors and buyers of second homes?  Shouldn't we be making home buying more affordable for those that are trying to purchase a residence, especially first-timers?  I applaud this move by the GSE's.

Just curious where LL put his sales proceeds when he sold his IE rental property in 2020, BEFORE the run-up?  Hopefully somewhere good, bc real estate might have been the best place to invest for the following 12 months. 

LL might be correct about a pending home price drop in the near/mid term, but even a broken clock is right twice a day.

Maybe it wasn't obvious from my second paragraph, but stocks.  If you have data showing that IE multi-families outperformed the massive gain in stocks, please post it.  I'd love to see it.

Currently, Riverside is #1 in the nation for rising inventory (according to Realtor.com) and tops in the nation for offers that did not face competition (according to Redfin).

Massive gain in stocks is overstated, don't you think?  I don't know details of your real estate sales or stock purchases, but at a high level, the S&P 500 is up roughly ~25% since mid-2020.  I'd venture to guess the IE is up roughly ~45% during that same span. 

I don't have access or time to provide data, so correct me if I'm wrong (maybe I am).  Maybe you're a great stock-picker or maybe you sold such a unique property way above fair market value that the situation worked best in your favor, but generally speaking, I'm not sure why you're "glad" that you sold when you did. 
Thanks in advance for the 'thanks'!!

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Re: Agency Investment and Second Home lending changes.
« Reply #23 on: May 25, 2022, 01:34:57 PM »
Damn... I'm glad I sold my last IE rental last year, in the early days of COVID.  USC and IHO have repeatedly tried to heckle me for that, but this is going to be Armageddon for that market.  Sure, the all cash buyers will still be able to invest, but not at today's prices - the returns just aren't good enough without leverage (which wasn't the case when I bought in 2014-15, when prices were less than half of what they are today).

Meanwhile, the S&P 500 is up 66% YoY.  Where would you rather have put your money one year ago?

I think there's a strong argument to be made that the GSE's should be buying zero investor and second home loans.  What is the benefit to society of having them subsidize wealthy investors and buyers of second homes?  Shouldn't we be making home buying more affordable for those that are trying to purchase a residence, especially first-timers?  I applaud this move by the GSE's.

Just curious where LL put his sales proceeds when he sold his IE rental property in 2020, BEFORE the run-up?  Hopefully somewhere good, bc real estate might have been the best place to invest for the following 12 months. 

LL might be correct about a pending home price drop in the near/mid term, but even a broken clock is right twice a day.

Maybe it wasn't obvious from my second paragraph, but stocks.  If you have data showing that IE multi-families outperformed the massive gain in stocks, please post it.  I'd love to see it.

Currently, Riverside is #1 in the nation for rising inventory (according to Realtor.com) and tops in the nation for offers that did not face competition (according to Redfin).

Massive gain in stocks is overstated, don't you think?  I don't know details of your real estate sales or stock purchases, but at a high level, the S&P 500 is up roughly ~25% since mid-2020.  I'd venture to guess the IE is up roughly ~45% during that same span. 

I don't have access or time to provide data, so correct me if I'm wrong (maybe I am).  Maybe you're a great stock-picker or maybe you sold such a unique property way above fair market value that the situation worked best in your favor, but generally speaking, I'm not sure why you're "glad" that you sold when you did.

Stocks crashed in March 2020 and using the proceeds to buy into that before they had fully recovered led to much higher gains than 25%.  SPY was up over 70% from my entry point before this recent pullback.

I sold my multi-family properties located in a relatively low-income, blue collar area just before the eviction moratorium went into place, which means the 45% gain would have been offset by monthly losses due to the inability to collect rents or evict for an extended period of time.  This is the difference between theory and real world application that maybe you are missing if you've never owned a rental.

Yes, I'm glad I avoided the headache of missed rent payments and instead made a better return in stocks with less risk.

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Re: Agency Investment and Second Home lending changes.
« Reply #24 on: May 25, 2022, 02:07:29 PM »
And that's because LL timed the coming of Covid perfectly... amirite?
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Offline paydawg

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Re: Agency Investment and Second Home lending changes.
« Reply #25 on: May 25, 2022, 02:09:15 PM »
Damn... I'm glad I sold my last IE rental last year, in the early days of COVID.  USC and IHO have repeatedly tried to heckle me for that, but this is going to be Armageddon for that market.  Sure, the all cash buyers will still be able to invest, but not at today's prices - the returns just aren't good enough without leverage (which wasn't the case when I bought in 2014-15, when prices were less than half of what they are today).

Meanwhile, the S&P 500 is up 66% YoY.  Where would you rather have put your money one year ago?

I think there's a strong argument to be made that the GSE's should be buying zero investor and second home loans.  What is the benefit to society of having them subsidize wealthy investors and buyers of second homes?  Shouldn't we be making home buying more affordable for those that are trying to purchase a residence, especially first-timers?  I applaud this move by the GSE's.

Just curious where LL put his sales proceeds when he sold his IE rental property in 2020, BEFORE the run-up?  Hopefully somewhere good, bc real estate might have been the best place to invest for the following 12 months. 

LL might be correct about a pending home price drop in the near/mid term, but even a broken clock is right twice a day.

Maybe it wasn't obvious from my second paragraph, but stocks.  If you have data showing that IE multi-families outperformed the massive gain in stocks, please post it.  I'd love to see it.

Currently, Riverside is #1 in the nation for rising inventory (according to Realtor.com) and tops in the nation for offers that did not face competition (according to Redfin).

Massive gain in stocks is overstated, don't you think?  I don't know details of your real estate sales or stock purchases, but at a high level, the S&P 500 is up roughly ~25% since mid-2020.  I'd venture to guess the IE is up roughly ~45% during that same span. 

I don't have access or time to provide data, so correct me if I'm wrong (maybe I am).  Maybe you're a great stock-picker or maybe you sold such a unique property way above fair market value that the situation worked best in your favor, but generally speaking, I'm not sure why you're "glad" that you sold when you did.

Stocks crashed in March 2020 and using the proceeds to buy into that before they had fully recovered led to much higher gains than 25%.  SPY was up over 70% from my entry point before this recent pullback.

I sold my multi-family properties located in a relatively low-income, blue collar area just before the eviction moratorium went into place, which means the 45% gain would have been offset by monthly losses due to the inability to collect rents or evict for an extended period of time.  This is the difference between theory and real world application that maybe you are missing if you've never owned a rental.

Yes, I'm glad I avoided the headache of missed rent payments and instead made a better return in stocks with less risk.

I full appreciate real world application.  I just sold one rental property last month and still own another one out of state where eviction moratoriums are not so rigid. 

I'm glad that you were personally able to properly navigate the past ~24 turbulent months through luck, or savvy moves...or both.  But to give advice based on your view that real estate is overvalued back before the prices started to spike up is generally wrong.  Maybe not wrong for you and your nuanced situation, but for the run-of-the-mill TI'er....don't you agree?
Thanks in advance for the 'thanks'!!

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Offline sleepy5136

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Re: Agency Investment and Second Home lending changes.
« Reply #26 on: May 25, 2022, 02:09:23 PM »
Damn... I'm glad I sold my last IE rental last year, in the early days of COVID.  USC and IHO have repeatedly tried to heckle me for that, but this is going to be Armageddon for that market.  Sure, the all cash buyers will still be able to invest, but not at today's prices - the returns just aren't good enough without leverage (which wasn't the case when I bought in 2014-15, when prices were less than half of what they are today).

Meanwhile, the S&P 500 is up 66% YoY.  Where would you rather have put your money one year ago?

I think there's a strong argument to be made that the GSE's should be buying zero investor and second home loans.  What is the benefit to society of having them subsidize wealthy investors and buyers of second homes?  Shouldn't we be making home buying more affordable for those that are trying to purchase a residence, especially first-timers?  I applaud this move by the GSE's.

Just curious where LL put his sales proceeds when he sold his IE rental property in 2020, BEFORE the run-up?  Hopefully somewhere good, bc real estate might have been the best place to invest for the following 12 months. 

LL might be correct about a pending home price drop in the near/mid term, but even a broken clock is right twice a day.

Maybe it wasn't obvious from my second paragraph, but stocks.  If you have data showing that IE multi-families outperformed the massive gain in stocks, please post it.  I'd love to see it.

Currently, Riverside is #1 in the nation for rising inventory (according to Realtor.com) and tops in the nation for offers that did not face competition (according to Redfin).

Massive gain in stocks is overstated, don't you think?  I don't know details of your real estate sales or stock purchases, but at a high level, the S&P 500 is up roughly ~25% since mid-2020.  I'd venture to guess the IE is up roughly ~45% during that same span. 

I don't have access or time to provide data, so correct me if I'm wrong (maybe I am).  Maybe you're a great stock-picker or maybe you sold such a unique property way above fair market value that the situation worked best in your favor, but generally speaking, I'm not sure why you're "glad" that you sold when you did.

Stocks crashed in March 2020 and using the proceeds to buy into that before they had fully recovered led to much higher gains than 25%.  SPY was up over 70% from my entry point before this recent pullback.

I sold my multi-family properties located in a relatively low-income, blue collar area just before the eviction moratorium went into place, which means the 45% gain would have been offset by monthly losses due to the inability to collect rents or evict for an extended period of time.  This is the difference between theory and real world application that maybe you are missing if you've never owned a rental.

Yes, I'm glad I avoided the headache of missed rent payments and instead made a better return in stocks with less risk.
that's assuming you went 100% in at the bottom. hindsight is always 20/20.

I remember crystal clear what happened in March 2020. Each day/week the S&P would go down 7%+. If you see those moves on a daily basis, you will be afraid to buy and question whether to buy now or later. I personally bought during that time, but it was hard to do so since it feels like you're catching a falling knife. In hindsight, it was the best thing to have happened and led me to buy my first property in OC.

That's why each time I see people freak out in the Dow thread, that is generally a good signal that fear is in the market and it's time to be greedy and not fearful.

Offline USCTrojanCPA

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Re: Agency Investment and Second Home lending changes.
« Reply #27 on: May 25, 2022, 03:48:10 PM »
The reality is that LL didn't perfectly time the sale of his investment properties nor did he perfectly time the bottom of the stock market.  Hopefully he sold off his stock portfolio in early Jan 2022 because most stocks are down for the year.
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Re: Agency Investment and Second Home lending changes.
« Reply #28 on: May 26, 2022, 10:22:26 AM »
The reality is that LL didn't perfectly time the sale of his investment properties nor did he perfectly time the bottom of the stock market.  Hopefully he sold off his stock portfolio in early Jan 2022 because most stocks are down for the year.

Nor did I ever claim to perfectly time either one... So this is a strawman on your part.

that's assuming you went 100% in at the bottom. hindsight is always 20/20.

It wasn't at the bottom.  Stocks were already in recovery and it took five months to regain the prior peak.

I'm glad that you were personally able to properly navigate the past ~24 turbulent months through luck, or savvy moves...or both.  But to give advice based on your view that real estate is overvalued back before the prices started to spike up is generally wrong.  Maybe not wrong for you and your nuanced situation, but for the run-of-the-mill TI'er....don't you agree?

Covid really did not change my investment decisions or convictions.  So you can call it luck, but all I did was stick with my existing plan.  Anybody could have made huge money in either stocks or real estate over the past two years if they didn't freeze up with panic.

I also closed on my primary residence in March 2020 and now my neighbor two doors down has an asking price 60% higher than I paid, for a smaller house, so I wasn't anti-real estate prior to "the big run up". 

It's was about managing risk.  I no longer believed IE rentals had a favorable risk:reward profile based on the high prices the properties were selling for.  I originally purchased for cashflow, but since they had more than doubled in value in five years, it seemed more prudent to book gains especially since this is a market that historically gets hammered during recessions.

The advice I gave on TI prior to "the big run up" was not to buy in Irvine starting in 2018 because sales and prices were stalling out.  My advice was buy somewhere else instead, which I did.  If the average TI'er had listened, they would have gotten more house for less money, and it would have appreciated in value as Irvine was tanking.

The Fed money printing regime has sent all assets skyrocketing since the start of covid, so yes, anybody could have bought in Irvine (or any other market in the country) and done well since 2020.  Now that the Fed has reversed course, I am against purchasing real estate because there will be pain no matter which market you buy into.

It's absolutely suicidal to be buying a home in 2022.

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Re: Agency Investment and Second Home lending changes.
« Reply #29 on: May 26, 2022, 02:19:40 PM »
I also closed on my primary residence in March 2020 and now my neighbor two doors down has an asking price 60% higher than I paid, for a smaller house, so I wasn't anti-real estate prior to "the big run up". 
I don't recall any of your posts saying "Buy now!". Just "Irvine is in for pain!".

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The advice I gave on TI prior to "the big run up" was not to buy in Irvine starting in 2018 because sales and prices were stalling out.  My advice was buy somewhere else instead, which I did.  If the average TI'er had listened, they would have gotten more house for less money, and it would have appreciated in value as Irvine was tanking.

Show me this "oh so holy" post where you told people to buy somewhere else other than Irvine.

If I recall, my advice was buy what you can where you can as long as you can afford it and stay put.... didn't hear you support that.

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The Fed money printing regime has sent all assets skyrocketing since the start of covid, so yes, anybody could have bought in Irvine (or any other market in the country) and done well since 2020.  Now that the Fed has reversed course, I am against purchasing real estate because there will be pain no matter which market you buy into.

It's absolutely suicidal to be buying a home in 2022.

So that is your stance now? Ok. Quoted for posterity.
Once you go 3-car garage... your junk can never go back.
3CWG: 3-Car Wide Garage
FCB: Foreign Cash Buyer
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