What are you Insights for the Spring market?

Question

Hello Community--As we roll towards the end of 2024, I would love your insight on the coming Spring market.  Are you gearing up to buy hold or flip or both?  I am hopeful we will see another interest rate drop and have a hot Spring market.  Let me know your thoughts...

Sean Wagner · Answer

Regarding Chicago, the 2024 property tax re-assessment in Cook County should cause some inventory to hit the market, specifically on the mixed-use and multi-family side of things which will be hit especially hard. Some townships have sent out tax bills already and I am hearing of 25%-50% being the norm, especially on the mixed-use properties or properties with 3-18 or 2-12 classification.

The multi-family market has remained strong, and if rates decrease I think we see more buyers in the market irregardless of property tax increases. Too many people waiting for rates to drop and I think more buyers than sellers still. I think higher values are inevitable but election, fed policy, inflation, etc. will dictate and what pace.

Riley Poppell · Answer

I think it could be a good time to do a fix and flip (start the process in the next couple of months and sell in March/April). I think this because the fall is a buyers market since there are less buyers (you could get a good deal on the purchase) and the springtime in Chicagoland typically is a sellers market (you could sell for a premium) since so many buyers come in to buy. Interest rates will probably be the same or fluctuate a little bit in this time.

Shannon Mogilinski · Answer

Ouch hadn’t heard that yet on multi fam for Cook , but then again every time we buy there, we always immediately dispute the tax bill so I guess not shocking!  Loved the thoughts thanks for insight!

Gino Barbaro · Answer

@Shannon Mogilinski

Valuations peaked in 22, and I think have dropped about 20%, depending ons the market.  Bridge debt has killed a lot of operators, and trying  to extend while praying for rates to drop,, while the 10 yr went up.

I personally think it's a great time to get in. Brokers are calling you back because of slow deal flow, and while everyone is fearful, as Buffet says, you need to be greedy.

Ultimately, it's only time if you're ready.  Long term, the fundamentals are great, not enough supply,y and it will continue to be in demand

Hope that helps

Gino

Gino Barbaro · Answer

@Shannon Mogilinski

Are you referring to the residential market? Rates dropped 50 basis points and the 10 yr shot up. I don't see rates dropping, especially if they can't control inflation, which was supposed to be under control, but appears not. And who knows what is in store with the jobs market.

It also depends upon the election and what policies are implemented.

I am hoping prices continue to drop in multifamily, and we see a pick up in activity. Investors thought they could extend their debt, but that doesn't appear to be the case with what has happened to rates.

This cycle would have been a disaster if our banking system was in the same situation as 08.

Gino

Rick Albert · Answer

This is a very broad question.

From a residential sales perspective, I think it will go up by virtue of life events (family formation, etc.) but it will be a wash.

Those that locked in a high 5% to low 6% interest rate in 2022 will now be gearing up to move because they aren't locked into their rates like those in the sub 4%. The problem: Yes they will buy, but they will also sell, so it becomes a wash in terms of supply and demand.

I'm still gearing up to buy more hold properties. That's just me though. But I will say I am and going to be extra conservative going forward. The cost of maintenance is gone up so high there is no margin. Just to trim a massive tree on one of my rentals is $4,750. That's 5 months of profit gone just because the insurance company wants it done.

Shannon Mogilinski · Answer

Hi Riley--Thanks for the insights.  That is my world so where I am thinking to stick as well.  Did a bit of research this year on seasonality for our market which I believe will be helpful.

Shannon Mogilinski · Answer

Thanks Gino very helpful!!!!  I'm great a flipping but looking to grow and experienced voices are the best!

Shannon Mogilinski · Answer

Hey Gino--follow-up question --just starting to look at multifamily ...are the problems I see referred to (pretty much everywhere) that the property valuations have fallen for multi or that a large number of loans are maturing?  I get its always a few things but I am interested in your take

What are you Insights for the Spring market?

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