Should I buy Real Estate in February 2012?

[lisabrown3340]

Hello, I've watched your video and it seems very compelling. Makes me want to go spend money! I was wondering though, about your credentials. Are you an economist? You seem very knowledgable about timelines and such so I wonder if you do this for business or pleasure???

[MrAlanKendall]

@lisabrown3340

I never had a business class nor an econ class. I took a two night R.E. Class in 2007 and I was apauled it's poor quality. I read around 2000 books on Real Estate, the Stock Market, Warren Buffet and Technical Analysis. See my Youtube video on "CASE SHILLER INDEX grossly flawed" and "How to double your money in Financial Stocks in 2012 and 2013". I was so convinced that Prices would fall that I sold my home in 2007 and bought back Aug 2011. I now pay 1/4 for a larger home.

[Jamillion12]

Do you believe 2010-2020 will be very similar to 1970-1980 in terms of inflation, PMs going up like crazy and high interest rates?

The thing is PMs like Silver have already gone up 900% since 2002, you don't think the usual 15-18 year bull market is near the top in the next 2-5 years?

[MrAlanKendall]

@Jamillion12

The Banks are scared and not loaning on Real Estate because the Alt-A and Option Adjustable rate loans are still adjusting up until October 2012 causing short sales which have the most depressing (deflationary) effect on house prices. After 2013 homes will start to move up (I expect about 30% in the next 3-4 years + 1.5% interest rate hike).

[Jamillion12]

@MrAlanKendall

I live in Florida and bought a small home in 2009.

Do you suggest I do a refinance and keep this as my rental, then buy my "long term" home before 2015 before rates and prices increase?

What would you do in this situation?

[MrAlanKendall]

@Jamillion12

I usually trade single family residences for dulexes/tri-plexes/four-plexes because you can give one tenant a reduced rent to be a resident manager and it reduces your time running errands for vacanices and repairs. If the unit is in a desirable area, you can keep it but screen the tenant and get someone with a good job. Small houses can rent to professionals that work and use one room for an office and they make good paying tenants.

[MrAlanKendall]

@MrAlanKendall

I find that large houses have a lot of maintenance becuase big families have a lot of wear and tear. Singles/studios/bachelors have a lot of vacancies because the guy in his 20's is unstable in his career. Small houses have low vacancies and low maintenance.

[MrAlanKendall]

@Jamillion12

In 2015 the Bank owned foreclosures will be sold off, so I expect the Banks to inject a lot of cash into home loans which will cause massive inflation between 2016 and 2020. I still expect silver and gold to quadruple in price.

[ssfbbh2]

Alan, if money is kept in an s/p500 index fund over the years (include compounding the interest), how would that compare to making money by timing the real estate market?

[MrAlanKendall]

@ssfbbh2

Real Estate has the benefit of leverage but can have management headaches. I bought a home in August 2011 for $11,400 down and about the same in closing costs. The Foreclosures ran dry the next month in the city and the property has jumped $10,000 per month for 5 months and is likely to do the same for the next few months and possibly years. I only put in the home $21,000 but have $61,000 in equity and in a year will have over $100,000 equity.

[MrAlanKendall]

@ssfbbh2

What is really amazing is that I was paying $4050 per month in interest for a smaller home but am now paying $977 per month in interest for a larger home. By following foreclosures I knew the prices would fall so I sold at the peak. By following foreclosures I knew the prices would rise so I bought back at the low.

[Econofresh]

Real estate going up 700% into 2027?! How are people supposed to buy that? I downpay 1600 euro for ly house a month. That would make it 11.200 euro a month for the same house? Get real!

[MrAlanKendall]

@Econofresh

I am talking about the Real Estate in the United States because the Government is printing 3.3 billion dollars of cash per day. What is holding down the inflation in the US is the contraction in Jobs and Construction but when foreclosures are sold off, prices will rise.

[joaranna]

I like your videos, however I am curious to know how much money have you made so far. Because Warren Buffett has a saying like "See how much money the seller is worth himself before you buy what he's trying to sell". I like your ideas and I just want to be sure before putting in my own money.

[MrAlanKendall]

@joaranna

I sold my home at the peak and bought back 4 months ago. I was paying $4050 a month in interest on a variable loan but I am now paying $936 fixed interest on a larger house. Real Estate does NOT follow the economy but rather the law of supply and demand so if you follow foreclosures like I do you will never make a timing mistake in Real Estate. Listen to this video again and you will do very well like I have. Since 2006 I have been making all the right decisions Proverbs 22:2-3.

[MrJohngalt2011]

@MrAlanKendall Real estate market follows supply and demand, but it is a very local market. You can not look at national data and extrapolate that to the local market. The markets are disconnected in econ speak.

[MrAlanKendall]

@MrJohngalt2011

Yes, and the national board of Realtors show national averages but tells people to ignore the national aveages, that "All Real Estate is local". Completly designed to play off of peoples emotions so they can Sell, Sell Sell. I folow the foreclosures in my area and I was paying $4050 per month in interest, sold and bought back 4 months ago. Now I am paying $936 fixed interest per month on a larger home.

[MrAlanKendall]

@joaranna

There are four sources of Supply per year, 300-400,000 short sales, 300-400,000 Bank owned sales, 300-400,000 New Construction and 4 million owner-to-owner sales. After 2012 Short sales will be almost eliminated when Loans quit resetting and in 2015 Bank Owned Foreclosures will be all sold off. After 2012 prices and interest rates will rise some and after 2015 prices and interest rates will sky-rocket.

[joaranna]

@MrAlanKendall Thanks. I have another question. Which areas do you think have a better future? Places like Texas where housing prices haven't moved much since 1990, or do you prefer for example Nevada where housing prices have fallen a lot?

[MrAlanKendall]

@joaranna

I prefer Nevada, Arizona, Florida and some Parts of California because the prices are crashed. Crashed prices have to make the larger advances. I was paying $4050 per month in interest, sold at the peak and bought a larger home 4 months ago in California across the street from where I sold. I am now paying $936 per month in fixed interest on a larger home.

[Jamillion12]

@@MrAlanKendall Mr. Kendall,

What are your thoughts on the following;

Some investing experts are suggesting that 500-800oz. of Silver will be able to purchase a median priced family home sometime between 2014-2016. In 2012, would it be wiser to invest $20k in Silver or use that as a down payment for a cash flow real estate opportunity? 

[MrAlanKendall]

@Jamillion12

I bought a home in August 2011 for $11,400 down and slightly less in closing costs. The Foreclosures ran dry the next month in the city and the property has jumped $10,000 per month for 5 months and is likely to do the same for the next few months and possibly years. I only put in the home $21,000 but have $61,000 in equity and in a year will have over $100,000 equity. Real Estate has the benefit of leverage if you get a fixed loan.

[Jamillion12]

@MrAlanKendall

Thanks/

What are your thoughts on Silver and PMs? Are we in a Bull market like the nasdaq and when do you think we'll hit the 3rd phase "top"?

[MrAlanKendall]

@Jamillion12

Since the US Government is printing 3.3 billion dollars of cash per day to keep the dollar weak to promote exports, I believe that Gold and silver will quadruple in price by 2020. We learned from the 1970's that the contraction in jobs and real estate held inflation down (less spendable cash) but when the foreclosures finally sold off in 1975, prices shot up dramaticaly. In California, prices jumped 30% per year for 5 years and were quadruple the price by 1980 and 6x by 1983.

[Jamillion12]

@MrAlanKendall

Thanks/

What are your thoughts on Silver and PMs? Are we in a Bull market like the nasdaq was in the 1990s-2000 and when do you think we'll hit the 3rd phase "top"?

[Jamillion12]

Also, For Silver to rise to the $200-$500oz. stage, wouldn't that mean that interest rates would be jumping to a high level (comparable to what happened in 1980)?

Do you believe that by investing in Silver in 2012, you would actually miss out on the low interest rates and low prices of Real Estate?

[RETIREMESOON]

I spoke about you TODAY.Your either a GENIUS or an idiot that made a lucky guess :0(

I was at 600 K in Gold and Silver Juniors in November 2010 when you said get the hell out for 2011.

Instead I went with my brother with his Masters Degree,9 years experience in Juniors and his experts BOB HOY ,and many other EXPERTS.

I'm now at 257 K .....YOU WERE RIGHT. F$#!@#%^ I hate and respect you.

[MrAlanKendall]

@RETIREMESOON

I like Yale and David Hirsch that wrote the "Stock Traders Almanac". Gold usually does well in the third quarter when Jewelry companies buy up silver and gold for Chrismas sales and Indian weddings in January. Gold and silver is not purchased the first and second quarters unless there is a dollar collapse. In Recessions Gold and Silver fall like they did in 2008. I want to be sure that Asian and European slow downs do not cause enough slowdown to affect commodities.

[rcusto1999]

Will rents also increase 700%?

[MrAlanKendall]

@rcusto1999

Rents in a very depressed area like Arizona will increase 700% (and home prices 1900%) but in areas that are not depressed like the California Beach cites I only expect a 300% increase in rents but still a 700% increase in price. I expect home prices to rise about double the rise in rent prices (like they did in the late 1970's) from 2016 to 2020. Optimism pushes home prices to high on the rise and pessimism too low on the dips.

[rcusto1999]

@MrAlanKendall Thanks. Here is my situation. I just bought a florida Condo/villa for 35000USD that in 2006 had a worth of 125,000USD. Now I have a job that gives me the ability of saving 36k a year. Here are my plans...if homes remain depressed I am going to keep buying year after year these types of properties cash and have a rental income. What do you think? What would you do if you were in my situation?

[MrAlanKendall]

@rcusto1999

I would get as many low interest fixed loans as possible to get increased leverage. I also like one bedroom rentals in a nice area because you can run an ad on Craigslist and get a good quality professional tenant that will take care of the yard and inside the unit. Big units have lots of maintenance and small units have high vacancies. And avoid Rent Control Areas. See my video on "What to look for in Buying a Rental Property".

[curts]

However, the "supply and demand" in housing is hugely manipulated.

Search for this article:

Housing, the most manipulated market in the world newworldparty

[pepperjack8]

Good video. I believe you very much.

[JJaouli1]

@MrAlanKendall You're not talking about home prices in real terms though, if home prices rebound 30% and gold or silver go up five-fold then you had an "invisible collapse", and secondly, what happens when inflation really gets out of hand and the Fed has to raise interest rates and ends up making the government insolvent in order to really stop inflation? If you raise interest rates to 1980s levels (and they're gonna be worse than that), cap rates will SKYROCKET and prices will collapse.

[MrAlanKendall]

@JJaouli1

Great comments. April 2012 Alt-A and Option Adjustable rate loans quit adjusting higher so the supply of the most depressing on home prices, that is the short sales cease. At the Rate the foreclosures are being sold, the Bank Owned foreclosures will be sold off in 2015 and the supply gets even thinner. According to the census, the US populatioh is growing at 2.93 million per year so that should absorb the extra supply. I am counting on the population increase and inflation.

[JJaouli1]

@MrAlanKendall Also one more thing, if inflation really gets outta hand, there's no way the Fed can't raise rates if gas prices are $7-$8 a gallon and that's gonna really depress prices don't you think?

[MrAlanKendall]

@JJaouli1

Yes, the 1970 recession lasted till 1983, thirteen years. Raising rates will bankrupt retail, airlines, automanufactures that own 30 to 50 times the value of their assets. We should have increased unemployment throughout this decade. A future housing boom will translate to more layoffs.

[JJaouli1]

@MrAlanKendall How does a future housing boom translate to more layoffs and how does unemployment help real estate? you lost me on this last comment about the 1970s

[MrAlanKendall]

@JJaouli1

$3.3 billion/day is printed to prop up the economy. The contraction in jobs and construction is keeping inflation under control now. As soon as the foreclosures are sold off in 2015, the banks will agressively loan money on Real Estate that is rising in price causing inflation. The govt will raise rates to slow inflation. Raising of rates will bankrupt industries that are high in debt (retail, auto man., airlines) because their loan payments will rise (A repeat of the 1970's).

[joaranna]

Great video. Where in California would you recommend to purchase houses now?

[MrAlanKendall]

@joaranna

I like 90260 because the prices have fallen in half and it is 2.2 miles from the beach.

[Pelavitafan]

Fundamental problem with your thesis. The troughs in this latest cycle are way, way below what you show. In fact, they are---in most locations---back down to 1980's prices (California, AZ, NM, and most states). Thus, the upward trend you show doesn't hold water. Also, where are the jobs. For the first time in history, decent paying jobs are gone except for government employment. The only properties worth buying now are those with land for self-sufficiency and business opportunities on your land.

[MrAlanKendall]

@Pelavitafan

I live in California and I just bought a home at a price from around 2002. Parts of California are super depressed. Nevada and Arizona are down to the 1980's prices. Florida has come back up some. In 2000, 2001 and 2002 we had increased unemployment during the dot com bubble but real estate went up year. In 2011 the new residence sales rate is down to 295,000 per year from 2.2 million in 2006 so I expect the population increase will create more demand after 2015.

[TheFaithfulFew77]

@Pelavitafan

The Government has been averaging 3.3 billion dollars of cash printed per day. This will cause inflation.

[Pelavitafan]

Fundamentally flawed. Example, homes in California are selling at the same prices that they were purchased at in the 1980's. Same in Arizona, New Mexico and most states. That being said, your curve shows that the troughs are there, but they show a net upward value trend. The reality is this is not the fact! Also, where are the high income jobs coming from? We manufacture little and export little and Obamanos has no plans to abolish banker greed not to create jobs.

[UltimateBargains]

Every 40 years we have a major realignment of the dollar. This next realignment will be more funny money with a different name. The correct solution is to move to gold and silver with non-denominated coins (just the troy weight and purity, no "dollar" denomination). That won't happen, because the true uber wealthy families won't allow it. They need inflatable fiat currencies to steal the wealth of the general population.

[GeorgetheArchitect]

Excellent data and analysis

[SynergyOfTwo]

I am expecting a global down turn and depression. I wouldn't buy real estate, unless you are buying just land in an uninflated area or farm land.

[MrAlanKendall]

@SynergyOfTwo

With the US govt printing 3.3 billion dollars of cash per day I am expecting massive inflation and the benefit of Real Estate is leverage.  After March 2012 when loan quit resetting to higher payments prices will only rise.

[jonvssocrates]

Instead of only using time as a measure, what about home prices relative to their inflation adjusted historical mean price? AND, I would assume an over correction?

Thus, the bottom should be when the average 2 story house is closer to $80,000 than $180,000?

[rpothuraju]

@theearthgerm may I ask where you are buying property? I am a beginning investor and am curious. Thanks

[MrAlanKendall]

@rpothuraju

Avoid Rent Control cities because the inspections make your life miserable and most banks will refuse to loan unless they charge you an extra percent interest. Avoid 2 story properties with flat roofs, basements, hills, large units, small units, allys, comercial streets. Look for 2 to 4 residential units with inclined roofs. I find 2 to 3 bedroom units high maintenance and studios/singles/bachelors high vacancies so I look for 1 bedroom houses or duplexes on flat land.

[MrAlanKendall]

@rpothuraju

I am looking on homepath.com because the 3.5% down homes require no appraisal and the banks will finance easily. If it is a second home they charge 10% down. You can compare prior sales prices on zillow.com. Look for the non-rent control cities that have crashed prices.

[TheEarthGerm]

@rpothuraju California

[112ayla]

Banks are buldozing homes and destroy the law of demand and supply.......they do the same thing with comodities....wheat ,milk, etc. dump in the sea to keep prices up.

[TheEarthGerm]

@112ayla I was thinking the same thing. Shows you how evil these banks are.

[MrAlanKendall]

@TheEarthGerm

If you ever need a heart transplant, wait and hold out until the last possible moment and get a banker's heart for it will never have been used.

[MrAlanKendall]

Detroit and Banks are bulldozing houses to create more demand but primarily they bulldoze houses to eliminate squatters and delinquency situations where faulty electricity might cause a fire and someone might die.

[112ayla]

@MrAlanKendall The news says;NEW HOMES ...including Arizona, California and many others.....you can see in youtube......

Banks wants to destroy the supply]demand formula.....

[112ayla]

@MrAlanKendall .....Bank of America and others, are buldozing masive amount

of houses......demand is low supply is going to be lower.....

What is your opinion on this situation....????

[f007scott]

i wish you graph was to scale

[jonvssocrates]

What's your take on Japan's housing prices. Going down for 15 years. If we follow, that would put the housing bottom around 2021.

[TheEarthGerm]

Mr. Kendall returns!! Im in process of purchasing a rental as we speak and targeting another one early 2012. thanks for the vids.

[comebigarestayathome]

great video

[TheFaithfulFew77]

Nice!!!!!