Houses will never be free, the rents are well in line with incomes, and these cash flow like stuck pigs. Speculators, knife catchers whatever, all you “smart” guys said the same stuff during the 90’s. Meanwhile, those with the balls to take action made millions and we are going to do it again.

It is easy to throw a once size fits all blanket over the entire market but when you (to use your words) really look at the micro aspect of the markets you find pockets of gold. Pockets where the buying activity by owner users is very robust, where there is ample employment and solid rental demand. Pockets where a well priced home receive multiple offers and sell for over asking. Pockets where the bulk of sales are to owner users. But then again, you have your own blog so that means you know much more then us ole knife catchin speculators.

Needless to say, the increase in FHA purchase loan activity this year is startling, and at least in part reflects an increase in first-time home buyer activity fueled by the plunge in home prices.

I may buy in the spring of 2009, if I find a place meeting my strict criteria.
- less than $100.00 per square foot
- 8% return on net purchase price via rent, allowing a 10% vacancy
- less than 5 miles from major employers
- a walk ability score greater than 50%
- etc., etc., etc.

However, new data can alter my plan. The main reason for my looking at real estate as an investment to generate cash income and not as a speculation to flip, is that it can function as an inflation hedge as well. In a long term deflationary environment, I would lower rents but maintain purchasing power. In a long term inflationary environment, I would raise rents to maintain purchasing power. In all cases ‘affordability’ is key. That is affordable house prices and rents. I want mortgage underwriting rules to be like they were in 1976, not like they were in 2006. Gold does not pay interest, T-bills do and rental properties also. I see inflation followed by deflation followed by inflation. We are at the cusp of the shift from inflation to deflation. But for Real Estate, it is deflation in all classes except for agriculture where prices are continuing to rise.

Why don’t you look at apartment buildings?

The problem with apartment buildings is that the current holders expect to continue to raise rents and thus expect a price for their property than is unrealistic. In the future, things will get a lot worse for landlords in general as more communities enact rent-control, it becomes harder to evict, and as the financial condition of ones tenants deteriorates.

I do not and will not become a slumlord. I want to be able to look my renter in the eye knowing that I am charging an affordable fair rent and that my renter gains economic advantage by renting from me as to location, price, and amenities.

The ‘greed is good’ message of Wall Street has put us at risk of a major class war. We have allowed Wall Street to sell their BS to the world.

DEBT is the main problem. Financial engineering, Easy Al, Hank, Ben, and a long string of U.S. Presidents both Democrat and Republican have led us here (the ordering of Democrat before Republican is both alphabetic and that the fudging of our economic numbers started with JFK and continued through each succeeding administration). Thus we now have two ‘Change’ candidates for the title of POTUS.

As I put it, the FIRST falling knife is the most dangerous one to try and catch.

One thing is certain. There is no national real estate market and analysis should build up from regional market forecasts. For example Texas is on another planet from Calfornia/Arizona.

However, I need these to be at levels that yield 8% after ALL COSTS assuming a 10% vacancy factor. I think that in some markets these conditions exist, but my guess is that some people are jumping in early.

Expected rental income is the key, however some ‘flippers’ are there believing that the bottom will be in Q3 2009 as per Jim ‘there is always a bull market somewhere’ Cramer..

Demographics (the aging boomer population, new households with debt but no savings, overbuilding in long commute areas, people doubling up, etc., etc.) suggest that ‘The Bottom’ may well not arrive until 2012 or even latter.

In such a market, if you can get the right rent, and do not need to sell, purchasing can make sense. But if you need a rising sales price or ‘equity’, forget it.

Are you talking about my loan?? I am north bay. I am down 250k and out of money and work. D_O_O_M_E_D is me. I agree 50% is right on the money.