Anyone have an idea where the market is headed?

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

I'm just curious what y'all think about the general market? Good time to buy or sell? Buyer's market/Seller's market/neither?

I had a discussion today with a Realtor who expects a rough time ahead....what with the election year coming up and the current state of the Economy/Feds/Rates/Etc. I don't necessarily agree, but I'm thinking status quo is maintained. I am selling a big property and buying a couple of LTRs so I would prefer that.

But what the heck do I know?

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Scott TrenchPro Member

Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes

The first high level point, for me, is that I think that the housing market is about to see a huge regional variance. Over the next few years, some markets will see appreciation and rent growth, and others will see severe corrections. If I had to guess, on a national basis, I'd expect to see deep correction/crash declines in multifamily real estate (5+ units) and more muted declines or close to flat prices in single family housing in 2024 and beyond, with 2-4 unit properties somewhere in between.

The second high level point is that I personally do not believe interest rates are coming down. I think we are nearing the top in terms of raises from the Fed, but I expect the federal funds rate to remain north of 5% for the next several years, and personally believe that the yield curve will uninvert, seeing mortgage rates and interest rates on commercial real estate investments continue to increase from here. I understand the counterpoints here, but feel that the bet on rates coming down is a bet on the Fed suddenly and dramatically reversing course - something I think unlikely until Jay Powell's term expires and a new chairman is installed.

Diving a bit deeper:

5+ unit multifamily: I'm deeply, deeply bearish. Cap rates are already rising nationwide, and we have 700K+ units currently under construction (multifamily alone) nationwide. Mostly concentrated in the South and West. I think it's really hard to believe in interest rates saving the space from general cap rate expansion, and the glut of supply coming online in the next 16 months is going to continue to crank the vise on operators already struggling by and large to achieve their NOI targets. I think this is going to get worse before it gets better, and 2024 is going to be a part of the "getting worse" phase. I'll be really surprised if any major market in this country sees Cap Rates decline or even stay totally flat in the next 2-3 years. Thus, I believe that only the true value-add plays are viable at this time, and investors need to have a really long time horizon.

Fundamentally, investors have to believe in interest rates coming down, or believe rents will rise rapidly in the commercial space to justify buying property at cap rates below interest rates. I don't believe either, and I bet the market will be painfully forced to agree in a process that will get more excruciating with each passing month for the next 18.

Now, sometime in 2025 and beyond, the bottom hits, and a new dawn will emerge for the multifamily space. All that new construction will cease coming online, and there will be very few new projects hitting the market, and a lot of painful exits may mean less competition for entrants.

In the residential space, I'm cautiously optimistic that a "Crash" (nationwide) will be avoided. however, note that supply is even bigger here with some 900,000 single family units under construction (also concentrated in the south and west). Some markets, like Florida and big chunks of Texas, unfortunately, are unlikely to be spared. These markets, and their neighbors, have a ton working against them. Huge supply growth, huge anticipation of inbound migration that I think, frankly, is overly optimistic), and rising costs, due in part to climate change, do not bode well for these areas. I'd lump cities like Phoenix, Denver, Boise, and Nashville into this category as well, but I'd bet that they will feel a "secondary pain" to many Texas and Florida markets.

Markets that have already taken hits in 2022 and didn't see a big run up in the aftermath of COVID, like California, might actually not see the same pain. I'm not bullish on California, I'm just less bearish on big parts of the state, including Southern California, than the South and other parts of the West.

Markets that didn't change or have been steady for years are likely to be the best friend for investors over the next few years. Upstate New York, big chunks of the midwest, and less urban parts of the West and NorthEast are likely to do great. Chunks of the South as well, but in places that didn't see the big booms of the last few years.

I think that vacation rental operators will feel a ton of pain, relatively speaking, over the next 2-3 years. Prices in these markets can swing by 50-100% in a matter of a few short years, and the party's over in terms of "moderately wealthy" Americans being able to afford vacation homes for the forseeable future. I'll be surprised, frankly, if we do not see a couple of notable vacation rental markets decline precipitously from a pricing standpoint in the next few years. Further, even though demand for buying these properties puts downward pressure on rates, even the well-off investors and homeowners are likely to try to find extra ways of generating cash, and a personal home or vacation home in a vacation rental market, even at lower Average Daily Rates, generates cash for the owner. Expect to see even more competition in markets that allow short term rentals over the next few years, even as the profitability in the sector per unit declines. I think this is going to be really hard.

I think that by end 2026, investors will be feeling very differently about real estate depending on their strategy and market, but very few will have created massive amounts of wealth through market forces.

Investors with a long-term, traditional outlook on investing will see their properties slowly amortize and rents go up over the next 5-10 years, and are still likely to do better than alternatives like the stock market or a conservative bond portfolio. I personally have this viewpoint, and even though I am in Denver with my portfolio (a market I expect to underperform the nation over the next few years), I am holding and will continue to buy (1-2 in the next 2 years).

But, investors chasing great returns in a 2-3 year timeframe may be disappointed in some of the recently hot markets, and those depending on big rent growth and appreciation in any form may be devastated.

As usual, the well-capitalized, long-term investors will soak up inventory, buy when their financial positions are ready, and do so on solid properties that they can and intend to hold for decades. A few will place bets and try to time it, and inevitably, there will be some really smart but unlucky losers, and the same in reverse on the upswing.

Lastly, some real estate entrepreneurs (I use this term to describe wholesalers, flippers, large-scale operators, turnkey providers, etc.) will likely be "business as usual". The spread on deals, flips, etc. is likely to normalize quickly, and these activities will likely be as profitable as ever for the select few who perform them professionally, quickly, and at reasonable scale.

Podcast Guest on Show #223

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Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
3y
The first high level point, for me, is that I think that the housing market is about to see a huge regional variance. Over the next few years, some markets will see appreciation and rent growth, and others will see severe corrections. If I had to guess, on a national basis, I'd expect to see deep correction/crash declines in multifamily real estate (5+ units) and more muted declines or close to flat prices in single family housing in 2024 and beyond, with 2-4 unit properties somewhere in between.

The second high level point is that I personally do not believe interest rates are coming down. I think we are nearing the top in terms of raises from the Fed, but I expect the federal funds rate to remain north of 5% for the next several years, and personally believe that the yield curve will uninvert, seeing mortgage rates and interest rates on commercial real estate investments continue to increase from here. I understand the counterpoints here, but feel that the bet on rates coming down is a bet on the Fed suddenly and dramatically reversing course - something I think unlikely until Jay Powell's term expires and a new chairman is installed.

Diving a bit deeper:

5+ unit multifamily: I'm deeply, deeply bearish. Cap rates are already rising nationwide, and we have 700K+ units currently under construction (multifamily alone) nationwide. Mostly concentrated in the South and West. I think it's really hard to believe in interest rates saving the space from general cap rate expansion, and the glut of supply coming online in the next 16 months is going to continue to crank the vise on operators already struggling by and large to achieve their NOI targets. I think this is going to get worse before it gets better, and 2024 is going to be a part of the "getting worse" phase. I'll be really surprised if any major market in this country sees Cap Rates decline or even stay totally flat in the next 2-3 years. Thus, I believe that only the true value-add plays are viable at this time, and investors need to have a really long time horizon.

Fundamentally, investors have to believe in interest rates coming down, or believe rents will rise rapidly in the commercial space to justify buying property at cap rates below interest rates. I don't believe either, and I bet the market will be painfully forced to agree in a process that will get more excruciating with each passing month for the next 18.

Now, sometime in 2025 and beyond, the bottom hits, and a new dawn will emerge for the multifamily space. All that new construction will cease coming online, and there will be very few new projects hitting the market, and a lot of painful exits may mean less competition for entrants.

In the residential space, I'm cautiously optimistic that a "Crash" (nationwide) will be avoided. however, note that supply is even bigger here with some 900,000 single family units under construction (also concentrated in the south and west). Some markets, like Florida and big chunks of Texas, unfortunately, are unlikely to be spared. These markets, and their neighbors, have a ton working against them. Huge supply growth, huge anticipation of inbound migration that I think, frankly, is overly optimistic), and rising costs, due in part to climate change, do not bode well for these areas. I'd lump cities like Phoenix, Denver, Boise, and Nashville into this category as well, but I'd bet that they will feel a "secondary pain" to many Texas and Florida markets.

Markets that have already taken hits in 2022 and didn't see a big run up in the aftermath of COVID, like California, might actually not see the same pain. I'm not bullish on California, I'm just less bearish on big parts of the state, including Southern California, than the South and other parts of the West.

Markets that didn't change or have been steady for years are likely to be the best friend for investors over the next few years. Upstate New York, big chunks of the midwest, and less urban parts of the West and NorthEast are likely to do great. Chunks of the South as well, but in places that didn't see the big booms of the last few years.

I think that vacation rental operators will feel a ton of pain, relatively speaking, over the next 2-3 years. Prices in these markets can swing by 50-100% in a matter of a few short years, and the party's over in terms of "moderately wealthy" Americans being able to afford vacation homes for the forseeable future. I'll be surprised, frankly, if we do not see a couple of notable vacation rental markets decline precipitously from a pricing standpoint in the next few years. Further, even though demand for buying these properties puts downward pressure on rates, even the well-off investors and homeowners are likely to try to find extra ways of generating cash, and a personal home or vacation home in a vacation rental market, even at lower Average Daily Rates, generates cash for the owner. Expect to see even more competition in markets that allow short term rentals over the next few years, even as the profitability in the sector per unit declines. I think this is going to be really hard.

I think that by end 2026, investors will be feeling very differently about real estate depending on their strategy and market, but very few will have created massive amounts of wealth through market forces.

Investors with a long-term, traditional outlook on investing will see their properties slowly amortize and rents go up over the next 5-10 years, and are still likely to do better than alternatives like the stock market or a conservative bond portfolio. I personally have this viewpoint, and even though I am in Denver with my portfolio (a market I expect to underperform the nation over the next few years), I am holding and will continue to buy (1-2 in the next 2 years).

But, investors chasing great returns in a 2-3 year timeframe may be disappointed in some of the recently hot markets, and those depending on big rent growth and appreciation in any form may be devastated.

As usual, the well-capitalized, long-term investors will soak up inventory, buy when their financial positions are ready, and do so on solid properties that they can and intend to hold for decades. A few will place bets and try to time it, and inevitably, there will be some really smart but unlucky losers, and the same in reverse on the upswing.

Lastly, some real estate entrepreneurs (I use this term to describe wholesalers, flippers, large-scale operators, turnkey providers, etc.) will likely be "business as usual". The spread on deals, flips, etc. is likely to normalize quickly, and these activities will likely be as profitable as ever for the select few who perform them professionally, quickly, and at reasonable scale.

Podcast Guest on Show #223
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Bruce WoodruffPro Member
OP
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
3y
Wow @Scott Trench nice reply! Great analysis.....thanks.....!
6 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
3y
Big correction coming to FL for sure, 750- 1k a sq ft is INSANE!'!!!! 1st the condo market will correct as all the condos have to get the balcony/ structure renovations completed, many will fail. This will cause a massive assessment to the owners. Many will not be able to afford it and will dump. Then housing will correct. I receive emails daily with price reductions in my area, so it seems to already be starting,
All the best to everyone
7 Reply
Zach Wain
Scottsdale, AZ · Member since 2019 · 434 posts · 248 votes
3y
Great read Scott!
Regarding rates, 6-9 months ago I was in the camp that inflation would cool and we would enter a recessionary environment and rates would settle down. But the labor market and consumer spending keep trucking along forcing the higher for longer theme. There is a pretty decent chance that the yield curve uninverts by long term bonds moving higher, which means rates go even higher. But, there is a 300bp spread between the 10yr T and 30 yr fixed mortgage rates, when 175 bps is historically the spread range (roughly). Does that spread return to normal as 10yr T rates go higher and we are in the same mortgage rate situation? Too tough to tell.
I think it is possible the strong consumer spending and labor markets force the Fed to raise further and rates jump across the board. I think there will be a breaking point when high prices, high rates - take the steam out of the consumer and job market and things come crashing down, which will cause the Fed to shift policy.
For a soft landing it seems like we need to quickly see wages/job growth/consumer spending to get reigned in fast.
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Bruce WoodruffPro Member
OP
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
3y
I have lived through many of these markets and cycles and the only thing that I/we know for sure is that we're all just guessing. But the best guessers win huge prizes... :-)
15 Reply
Karl B.
Rental Property Investor · Erie, PA · Member since 2015 · 1k+ posts · 2k+ votes
3y
It's all very much market dependent, so I'll tell you about my main market in Erie, PA.

Inventory is VERY LOW and properties are selling at a surplus. I've seen pieces of crap go for big money. I viewed one property recently I wouldn't pay more than 70K for (they were asking 89K - I didn't even make an offer as the layout was awful and it was only a two-bedroom without the ability to add a third) and it sold for 105K.

The duplex next door to one of my rentals is currently asking 3X what I had paid for mine six years ago; granted, I got a deal, and six years is not a small time frame, but come on!

In my market, a lot of people will be underwater; and some local 'real estate moguls' are playing with a whole lot of debt as they keep accumulating overpriced properties, thinking they'll be able to refinance. If things go sideways, they're absolutely (beeped!)

And heck, there could be another Black Swan. For example, another rent moratorium will be a problem for the overleveraged.
3 Reply
Jay ThomasPro Member
Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
3y
With an election year and economic variables, the waters might get a bit choppy, as your Realtor hinted. But hey, sticking to your game plan isn't a bad move. Real estate's usually a long game, you know? Take time to suss out local trends, chat with the experts, and make choices that jive with your financial goals. Can't crystal ball it, but smart moves? They're always in style.
[email protected]832-889-5607
5 Reply
Bruce WoodruffPro Member
OP
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
3y
Quote from @Karl B.:

It's all very much market dependent, so I'll tell you about my main market in Erie, PA.

Inventory is VERY LOW and properties are selling at a surplus.
I am in 2 markets at the moment between buying and selling. Northern AZ and PHX area. Both are similar. Seems to be neither a buyer's or sellers market right now....everything is just kinda dead although there is decent inventory. Never seen it quite like this. Maybe it's the summer heat :-)
But I am talking about higher end houses right now, a recent STR rental sale went pretty fast. Might be the niche market only is slow...?
3 Reply
Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
3y
It really depends on where you are looking. I have properties in two markets-one the prices have gone up over the last 10 years and now they are starting to go down a bit since spring. The other has been stable, but saw increases in the last two years and most homes were selling pretty fast over the summer.
I think it will also depend on the price point-some of the higher end homes will go down in price and those at the lower end will go up in price.
1 Reply
Matthew Paul
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
3y
I know EXACTLY where the market is heading . But that doesnt matter , what matters is where it ends up .
0 Reply
Jared Threat
Member since 2020 · 36 posts · 13 votes
3y
Can anyone post any recommendations for daily readings/blogs/news that keep track on these things?
3 Reply
Henry ClarkPro Member
Developer · Member since 2020 · 4k+ posts · 4k+ votes
3y
Quote from @Jared Threat:

Can anyone post any recommendations for daily readings/blogs/news that keep track on these things?
Would recommend looking at just your market area. Look at last 3 or 5 years. Listings and building permits.
2 Reply
Karen MargraveBusiness Member
Moderator
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
3y
@Bruce Woodruff I agree with most of Scott's points. However, all real estate is local. My local market is becoming stagnant. Interest rates have stopped sellers from listing, making it difficult for the buyers (and there are buyers). Building costs and red tape in CA make new construction, which is sorely needed, unreasonable. Rents are high. The cost of living (food, energy, fuel are ridiculous) add to that the difficulty finding insurance, and it's a mess.

Then, what's going to happen with China? If their economy falters, it's all bets off. Oh, and now the talk of mask mandates, new vaccines, and an election season. There's no telling what lies ahead. Sit down, buckle up, and hold on!
2 Reply
Henry ClarkPro Member
Developer · Member since 2020 · 4k+ posts · 4k+ votes
3y
Where is the market heading? I would look at macro items.
1. Interest rates will continue to go up. If the Feds mandate is to manage unemployment and inflation.
A. Unemployment is at historic lows. They would need to get a lot of people unemployed. Baby boomers are going out of the workforce and will not be replaced by new babies. They also won’t be replaced by white collar immigration from over seas. Plus you have to unemploy illegal work force which won’t show up. Labor rates will continue to rise.
B. Inflation will continue to rise. a. As mentioned labor cost will continue to rise due to shortage of workers. b. Fuel cost which goes through everything will continue to rise. Whether you believe in alternative power sources or not, there is not a transition plan between them and fossil fuels. Energy costs will go up. c. That leaves Steel, concrete and lumber material costs. Steel is energy based whether virgin ore which China primarily does or recycled steel which the U.S. does. China supply chain will get disrupted although it has the lowest energy costs due to dams and nuclear. US costs will go up as energy costs go up. Concrete is also energy based. It will stay up.
Lumber is the outlier. What are the Canadian fires doing? Summer is prime logging season, is it being impacted? Usually burnt over forest get sold off. Will there be a glut on the market? Lumber prices were 3 times high about a year ago. They already dropped to a 1/3. Will they go up or down? Anyone in the Canadian lumber industry?
2. Interest rates will go down. Yes I said it would go up before.
Three historic actions are occurring at the same time. A. Baby boomers going off the labor market. B. Federal debt is now multiple factors of our National GDP. We are past the return point. Taxes have to go up. Feds can't print money or inflation goes up. C. Forget it. Not for an REI forum.
Feds have to let rates go up since they can’t cover interest on federal debt. Federal debt averages 7 years. We have about 3 years left where rates can stay up.
The only way out for the Geds is inflation. Paying debt off with cheaper dollars which I like.
Markets. We do self storage, country subdivisions and flex buildings.
Iowa, Nebraska, Texas, and Washington markets. Actually a shortage of self storage nationwide. Country subdivisions are good in those 4 states. Have a 75 acre subdivision coming on line this fall. Shortage of houses thus they will buy lots and get out of the city. Flex buildings. Normally these contractors are the first to go bankrupt. There is a shortage of contractors as baby boomers age out. They will make more money working solo.
That’s where our money is at. Along with Teak plantations in Belize. They have some good local artists.
4 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
3y
Quote from @Jared Threat:

Can anyone post any recommendations for daily readings/blogs/news that keep track on these things?

tripwire dude
0 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
3y
Quote from @Bruce Woodruff:

I'm just curious what y'all think about the general market? Good time to buy or sell? Buyer's market/Seller's market/neither?

I had a discussion today with a Realtor who expects a rough time ahead....what with the election year coming up and the current state of the Economy/Feds/Rates/Etc. I don't necessarily agree, but I'm thinking status quo is maintained. I am selling a big property and buying a couple of LTRs so I would prefer that.

But what the heck do I know?

Commercial :

Self storage (city) : going down
Self storage (rural): going up

Warehouse: going up, 20% IRR at least

Class A in big city: dead

Class C rural: there're some hope

Multifamily 5+: with floating due on 2024 is basically die die die ...
1980s office building: crash
1990s office building: "convert-me-to apartment" mode.

Residential SF:
Milwaukee/Birmingham/Indiana/South: Modest or Strong
San Jose SF: Flat
Hawaii: overall flat except Honolulu may be going down
San Francisco: slow crash
AZ: Airbnb pressure
Interest rate for sure going down, there's no need for crystal ball. Inflation is already 3%, next few quarter like this by mid 2024/late 2024 we will have the pivot LOL because if they pivot now, inflation may be going up again.

What people doesn't realize if the rate continue going up, most bank need to be rescued by Fed due to unrealized HTM losses. And inflation is already went down a lot btw
8 Reply
Randy Rodenhouse
Investor · Charleston, SC · Member since 2011 · 606 posts · 413 votes
3y
My only input is to expect interest rates to be higher for longer much longer than you expect. Even if the Feds cut in the feds funds rate (which I don't expect in the next 6 months) it will not necessarily translate into a lower long-term 30 year rates.
4 Reply
Peter W.
Member since 2020 · 351 posts · 329 votes
3y
Powell tends to mention he wants housing costs to go down. In the stock market they say don’t bet against the fed. I expect interest rates to remain high unless housing seems a substantial decline. With that said labor and materials costs suggest new housing can’t go down in price (and old housing as well)

With that said I expected a recession between now to q1 2025 and that doesn’t seem to be shaping up.
In my market (Rochester, ny) the economy is primarily driven by defense and healthcare so I expect to be largely unaffected by the broader economy. (We didn’t feel as much of a pinch in 2008 as the rest of the country).

1 Reply
Marcus Auerbach
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
3y
Medium term (1-3 years) is the hardest to predict. Short term is easy because you have some many leading indicators in real estate and the market does not chnage direction quickly (except you have a national lockdown or something to that scale). Long term is also easier, because it ultimatley always comes down to supply and demand, the rest is just noise.
Paying attention to changes in demographics is super important and the probability of people ageing is 100%. Migration trends are a bit harder. I think the trend to moving south will slow soon, maybe even reverse at some point, as the summers get hotter and the storms more violent.
I definitly agree with Scott on seeing markets in different states develop very different in the next years. I have been posting a monthly market updates on YouTube and that often includes comparing local data with national data. Two things stand out: Milwaukee has not participated in the exuberance we have seen 2021 and 2022 in many highflying markets like Austin, Boise, Miami etc and second, while most markets corrected a bit during last winter, we have seen steady appreication every single months and eventuelly a crazy hot spring markets, that put Milwaukee at the 7th hottest markets in the US (along with 3 other Wisconsin markets, who would have thought...).
On rates I am a bit more optimistic, especially residential rates - banks charge a historic premium at the moment, that will balance out at some point. The mortgage banker association has a great forecast by quater and they predict rates in the high 5's for end of 2024. But I also dont think we wil see sub 4% rates again, maybe ever.
Our local market is doing extremely well economically and is not depending on one particular industry: Wisconsin has a 2.6% unemplyment rate and the State budget has a billin dollar surplus lawmakers are fighting over on how to best spend (luxury problem!). We also see some population growth, mostly in the surrounding suburbs and not in Milwaukee propper, which has been stagnant. However the major has launched an initiative to grow the population of MKE propper from 600,000 to one million by rezoning and developing mixed use midrise districts in place of delapitated single family homes in some parts of the city. The total metro area has 1.6 million to give some context, so this would bring us to 2 million. We are also currently building a brand new freeway system, should be mostly done next year and large scale infrastructure usually also helps spark economic growth.
So bottom line, I am pretty bullish on the next 10 years in Milwaukee and I think it will outperform US averages. I have been investing here for more than a decade and we continue to buy (especially now with a little bit of an interest rate induced summer lull, but it's all relative, we only have 1 months inventory and 103% list to sale price ratio).
My working assumption is that prices will double (and catch up with the national median) in the next 10 years. At some point even our ultra conservative developers should pick up on this and start building more new construction, but it will take years to build up capacity, change zoning and catch up with the inventory deficit we have created over the last 15 years.
4 Reply
Justin R.Pro Member
Rental Property Investor · San Anselmo · Member since 2015 · 659 posts · 600 votes
3y
Yes, In an unknown direction
0 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
3y
Quote from @Peter W.:

Powell tends to mention he wants housing costs to go down. In the stock market they say don’t bet against the fed. I expect interest rates to remain high unless housing seems a substantial decline. With that said labor and materials costs suggest new housing can’t go down in price (and old housing as well)

With that said I expected a recession between now to q1 2025 and that doesn’t seem to be shaping up.
In my market (Rochester, ny) the economy is primarily driven by defense and healthcare so I expect to be largely unaffected by the broader economy. (We didn’t feel as much of a pinch in 2008 as the rest of the country).

The thing is Fed has failed to crash the stock market , to crash the job market , and to crash the housing market. So far.

If the Fed has failed miserably to do their job than their analysis is not super accurate as well, although they're able to lower inflation to three percent.

In bond market we have hedge fund shorting the bond but majority of the funds is long the bond LOL Everyone confused.

So I do have crystal ball for the future , and it says the fed has no crystal ball.

I would say this decade of how the Fed manage the economy is like what the San Francisco local gov doing to their city, they intentionally trying to increase the crime in the city by defunding the police, the Federal gov. is so keen to laying off people LOL these are so weird time in America, they want to create more criminal, homelessness and joblessness in the society. Market say no no no LOL
4 Reply
Travis TimmonsPro Member
Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
3y
Quote from @Carlos Ptriawan:

Quote from @Peter W.:

Powell tends to mention he wants housing costs to go down. In the stock market they say don’t bet against the fed. I expect interest rates to remain high unless housing seems a substantial decline. With that said labor and materials costs suggest new housing can’t go down in price (and old housing as well)

With that said I expected a recession between now to q1 2025 and that doesn’t seem to be shaping up.
In my market (Rochester, ny) the economy is primarily driven by defense and healthcare so I expect to be largely unaffected by the broader economy. (We didn’t feel as much of a pinch in 2008 as the rest of the country).

The thing is Fed has failed to crash the stock market , to crash the job market , and to crash the housing market. So far.

If the Fed has failed miserably to do their job than their analysis is not super accurate as well, although they're able to lower inflation to three percent.

In bond market we have hedge fund shorting the bond but majority of the funds is long the bond LOL Everyone confused.

So I do have crystal ball for the future , and it says the fed has no crystal ball.

I would say this decade of how the Fed manage the economy is like what the San Francisco local gov doing to their city, they intentionally trying to increase the crime in the city by defunding the police, the Federal gov. is so keen to laying off people LOL these are so weird time in America, they want to create more criminal, homelessness and joblessness in the society. Market say no no no LOL

At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul.
2 Reply
Sam YinPro Member
Los Angeles, CA · Member since 2021 · 583 posts · 738 votes
3y
@Bruce Woodruff
Good morning Bruce. Lots of great points and opinions already. But I'll chime in... from a SoCal perspective...
I think the market is still hot! It's predominately a sellers market still. Although I mainly concentrate on small multifamily, I can tell you that it is HOT!!! It flies off the shelf if it gets listed at any reasonable price. However, most times it never gets listed because the demand is so hot that the agents get it sold with only a few calls.
The last 5 out of 7 deals I closed were all off market. And I had to jump on it because I knew if people got wind, I would lose them. They were all small multifamily, 6 to 20 unit buildings.
My most recent deal, to be closed next week, is also off market. It has a blended COC of 7.5, CAP of about 7.5, and GRM of about 8. Total price was originally about 2M, but I negotiated to 1.85M with a promise of no trades. Its 14 homes and one vacant lot, spans 1.5 blocks, and unit mix from studios to 4 bedrooms.
I am always looking and negotiating and I can tell you that the market here is so competitive that you better have funding at a moments notice. There is no sign os slowing down, only limited inventory. I was negotiating a 32 unit and was almost there when the word got out. Suddenly all kinds of investors jumped it to snatch it up.
I feel that the market will vary from region to region. However, the major markets might have seen their bottom, or close to bottom... with the stagnant prices. Now, there may be a good possibility that it will begin another in up in 2024. I do not have any concrete evidence, just a gutt feeling based on experience.
1 Reply
Deanna Ardoin
Member since 2023 · 7 posts · 2 votes
3y
Quote from @Bob S.:

Big correction coming to FL for sure, 750- 1k a sq ft is INSANE!'!!!! 1st the condo market will correct as all the condos have to get the balcony/ structure renovations completed, many will fail. This will cause a massive assessment to the owners. Many will not be able to afford it and will dump. Then housing will correct. I receive emails daily with price reductions in my area, so it seems to already be starting,
All the best to everyone

Agreed!
1 Reply
Bruce WoodruffPro Member
OP
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
3y
@Sam Yin Thanks for the input. I think SoCal will always be an anomaly. Definitely can't figure out what's going on elsewhere by them....Glad you're doing well though!
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