Your Opinion on the Market?

Question

I'm not sure what the market is like in other areas, but I am finding in my area (northeast MA) that multi family properties are going very quickly.  Properties are quickly going "under agreement" soon after being listed.  I think with the low interest rates that people are starting to buy property instead of rent.  I feel like if you don't evaluate the property within a few days and make an offer you've lost it; especially the homepath properties.

I was talking with my father's fiance who is a real estate agent for Caldwell Banker and she was saying that they are waiting until after Easter when the snow is melted to start listing some of their portfolio, although she sells in a higher price point market where homes go for between $700,000 and $1,500,000.

Just wanted to see everyone's take on the market and what they are seeing as far as how fast cash flowing properties are going.

Laird Wynn · Answer

Here in Cleveland, Ohio the supply of good investment properties is tight in the middle to high priced areas with abundant opportunity for those with more tolerance for the inner city.

In a tight market you have to get creative and find ways to get to the properties before they come on the market.    It's also worth remembering that even in a market with more supply than demand the good deals always go fast so you always have to go fast!

Account Closed · Answer

Listing only grew 2% in jan and feb and there is only a 4.5 month inventory supply when normal is 6 months First time buyers are being shut out because of high demand.strong sellers market with rising prices

http://www.cnbc.com/id/102451064

Charles Worth · Answer

Account Closed

Good point. the only thing I would add is that a straight average like that might be problematic here. I mean for investors much of the housing stock is not really the type of housing we can buy because it is marketed to homeowners and priced accordingly. So the fact that listings are low might reflect more on the owner occupied market than the investment market (althugh from everything I have heard and/or read investor activity is also very hot).

Dawn Brenengen · Answer

I'm in Raleigh, NC, and homes under $250k are flying off the shelves in the good areas.  Most of these $250k homes would only rent up to $1700/month, so it's a tough market for investors AND retail buyers here!

Adam Hershman · Answer

Hey Nick,

I can't really speak as a RE pro, but I am somewhat of a technical analysis/trend guy so I do have an opinion on this. I think investors are hungry for multi-family properties of all kinds for two major reasons. First, the market is rebounding, it simply makes buying property more natural to more investors. Second, astute investors are betting that the very vast majority of people who have wanted to buy a house over the last 5 years, have bought a house. There are very few holdouts who are still "looking for the bottom of the market" or people who couldn't be financed or were waiting for an even lower ridiculously low rate.

Additionally it probably wont be this easy or cheap to buy a house for a long time, because most people believe the overall RE trend has stabilized and is bullish, add to that the fact that money will probably not be cheaper to borrow than it is now for 10-20 years (if ever), and you can see why investors are betting that the new homeowner trend will shrink while the renter trend increases.

Right now houses are cheap, money is cheap, and there are tons of assistance programs so we are likely to not see any major increase in home purchases as primary residences in the near term, and in fact if the market becomes tighter in terms of inventory, lending restrictions become tighter, or interest rates rise then most people would expect a decline in the number of home purchases as a primary residence.

Adam

Trevor Ewen · Answer

@Nick Noon

Our perception is always colored so heavily by where we live.

As for NYC, there is definitely an urban hype going on that is a little shocking at times. When it happens in areas like Dallas or Portland (areas that you can argue were under-valued before 2008) it makes a bit more sense, but New York has never been known for being cheap.

I do think low interest rates are contributing to a great deal of investor activity. Investors love multi-families for the obvious reasons, so I think there is a lot of competition. The US rental market is really dense right now, so I don't think owner occupants are in the market quite as much as they were in the past.

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