REAL ESTATE PREDICTIONS
I'm a vet real estate agent (10 years and counting) and I've been watching the rising market over the last couple of years as well as the economy, analysts predictions, the stock market, the news, and politics. All play a role in where the market is headed.
After the major crash in 2008 with often bank insured predatory loans, (guess who made out like a bandit) my prediction is that we will indeed have another economic downturn within the next couple of years. It's inevitable. Will it be as bad as it was in 2008? Probably not. Some analysts say the 2008 crash was comparable to the 1929 crash and while both were drastic and tragic, most consumers have learned a good hard lesson DO YOUR HOMEWORK, READ BEFORE SIGNING, and UNDERSTAND LOAN TERMS. It's incredibly tragic to buy a home and then lose it and everything else a couple of years later to go back to apartment living. I've literally seen people die from the 2008 debacle when they lost everything.
RENTING AIN'T EASY
Renting an apartment in several markets is now a severely overpriced catalyst that prevents people from saving to buy a home or a condo my renters who want to buy are just spinning wheels. At some point, you have to ask yourself if it's wise to struggle when you can live more comfortably in another city? I've watched people get booted out of major cities like San Francisco and commute from outside towns up to 3 hours each way to get to a job in the San Franciso? Is San Francisco heaven or something? Your entire LIFE is spent working, getting there and getting home. I can't remember what actor said it but he started his career in LA by buying distressed properties with his actor income and he made huge profits within a year. He stated, “renting is just stupid.” His point can be well taken especially for those in the industry where income can be unpredictable at times.
Some people don't like the responsibility of owning a home or a condo but for those who have owned, it's the only way to go. It's amazing how some people think renting an apartment is a better financial decision than owning. That's like saying it's better to do a 72-month loan on a new car instead of buying a used version in cash. Cash is ALWAYS king because it gives you massive leverage.
If you lose your job or if you have a negative situation take place as an owner, you have MANY more options to stay in the property from city programs to modifications to refinancing to standard sales and short sales or simply calling the bank. When you buy a house in LA, if you sell it in two years you can walk away with everything you paid for the mortgage during those two years and get a bonus on top of that. You just lived for FREE for two years AND got paid for it? Let me do some research on what apartment will do the same thing for you. DONE … NONE! I will mow YOUR lawn each week for a deal like that. Sure, you hear about people having an illness and having to mortgage their home and that's unfortunate but you NEVER hear about people having an illness and having to mortgage their apartment. They will wheel you out on your bed with a cup of water and leave you by the trash bins. Buying a home IS a wise and a GREAT investment. But remember the old saying because it's true LOCATION, LOCATION, LOCATION!
EVICTION VS NEGOTIATION
To drive the point home further from the previous paragraph. In LA there is NO negotiation when you miss a rent payment. It's pay or GTFO and the procedure to evict usually starts on the 2nd or 3rd day of the FIRST month you miss your payment. At one time they, AT LEAST, gave you 30 days to sell your furniture but no more, THEY will keep your furniture and sell it themselves as payment after they kick you out. Owners will also further your dismay by destroying your credit and passing attorney fees on to you before the first 30 days of missing a payment is up. These days potential JOBS look at credit reports, AT LEAST, you can get 90 days to six months or more to get out of a mortgage AND you may have an option to do a short sale which could save your credit. Apartments don't LOOK OUT for you, they LOCK you OUT! (hint)
Even if you could afford to buy a home in LA, let's say. Something decent is going to cost you $600.000 right now. This is a mansion in a city like Atlanta. The bigger question is, if you lose your job and/or the economy shifts, can you carry a $5500.00 mortgage payment? The key right now is about investing but also SAVING, which is why I'm a big fan of mid-sized markets for home purchases right now.
Palm Springs, for example, is still very reasonably priced. You can still get a great house there for $300,000 or less. It's hot as a boiling pot of Turnips (reaching 125 degrees) but what some people fail to realize is the Valley's of Los Angeles are JUST as hot during the summer and the traffic in LA is unbearable and progressively getting WORSE. Palm Springs has Coachella, the Film Festival and many other events coming to the market that make it appealing for a home purchase and it's easy to get around. So in this instance, you get a good affordable deal and you can maintain it if the economy turns. If you have to work in a major market this would not work for you but for entrepreneurs, it's a great idea.
WHAT'S CAUSING THE TRAFFIC PROBLEMS IN MAJOR CITIES
I can speak for LA and tell you it's the kids who are moving here and piling up in one and two bedroom apartments trying to make it in showbiz. The cost of living makes them live four-deep in a two bedroom and they all have cars on the road. You see people in their 50s in LA with roommates now with the same situation, they all have cars. In addition, Uber and Lyft have exploded in the market because of the cost of living and people trying to make extra money. Airbnb contributes because a lot of the hotels are centrally located in LA and they charge hefty parking fees Airbnb puts a lot of people on the road who don't know the city well to find someone's home or apartment. Apartments are doing Air B&B too, telling tenants they can't do it but reserving 10 to 20 apartments for themselves to do it (lol) and designating parking spaces for those units. Public transportation still leaves a lot to be desired in LA but I'm going to get on the train soon to see what it's like for the hell of it.
HOW HOMEOWNERS AND APARTMENT COMPLEXES ARE MAKING A TON OF MONEY AS OWNERS
Elevated rent hikes for apartments – and homeowners can rent garage apartments. Apartments built after 1978 LOVE it when a long-term tenant moves out because whereas that tenant may have been paying $850 a month for rent (because of rent control laws) they can charge a new tenant $3000.00. In addition, if the apartment was built AFTER 1978 they can go up on your rent as soon as your first year is up by as much as they want if you don't sign a new lease, SIGN THE LEASE, but read the terms too. Most leases will not go up during the term of the lease but if you stay past the lease term and don't sign a new one because this is when all hell can break loose. I've seen people's rents DOUBLE in a year in the market. Owners are ruthless. Complexes make money from the film industry. They list the complexes as film locations and get a hefty fee for use, same as homeowners.
PARKING PROFITS AND GAMES
Apartment complexes make parking random for tenants which means grandmothers, hookups, boyfriends, and girlfriends get to park for free on a first come first serve basis and tenants may be sh out of luck and have to park on a nearby street. THEY then charge tenants a fee for an assigned space up to $150 a month or more. This should be illegal. They also rent spaces to nearby car lots who need a place to store inventory. The list goes on. For some apartments, condos, and houses the benefit is Airbnb.
WHY DON'T BLACK BUYERS USE BLACK AGENTS
Most major celebrities and industry people do not use black agents in markets like LA because they often take recommendations from their attorneys, accountants, managers, and agents who deal with people who look like them. This is horribly unfortunate for hard working black agents who are often shut out in the market anyway because of racism and prejudice. Buyers often use the people who look like them but the exception to that rule is more often than not Black buyers. The number one reason I have heard is “I don't want black people [or the “n” word] in my business, you know how we are.” This is suggesting that if we work in the industry together, an agent will be messy and call the mortgage broker to find out the buyer's salary then gossip about it to other industry people. It's a legitimate concern but so it the fact that we don't often trust each other.
Doing business with a non-black agent may make the black basketball player or the black actor feel more comfortable because they don't know the same people. Finally, we have bad experiences by bringing our cousin' Lil Man on tour with us and we make the whole community pay for Lil Man's actions when it comes to business.
At the end of the day, MANY black sports figures and entertainment industry folks have been ripped off by those same people they trust and get the recommendations from when they wake up and see a 0 balance in their bank accounts. There is nothing wrong with using black agents, make your terms clear from the beginning and if you don't want ANY agent in your business find your OWN INDEPENDENT mortgage BROKER, which is something that I STRONGLY suggest to get you the BEST deal. Get an independent mortgage broker who knows about all the programs in the city that could benefit you. I rarely recommend, as stated earlier using mortgage companies affiliated with a subdivision or a property you are planning on buying, you may not be getting the BEST deal and the terms often don't allow you to use grants. Some people don't know for example, that if you have not owned a home in three years you automatically qualify as a first time homebuyer again which can help with closing costs and much more. Questions about buying a home in California or Georgia? Contact me at [email protected]