Tri-State Area or Bay Area Better To Be A Real Estate Agent?

Question

Dear Buying & Selling Real Estate Forum:

I am seriously considering a career as a real estate agent and am also considering relocating to the San Francisco Bay Area from New York City. I'd like to know everyone's thoughts on which metropolitan area might be better to start a career as a real estate agent and a real estate flipper and buy and hold investor?

Sincerely,

John G. Amiri

Russell Brazil · Answer

As far as being an agent, I think the best place to be one is where you have the best market knowledge.  It takes years to develop good enough market knowledge to be a great agent....but then again plenty of sucky agents with little to no market knowledge make a living all over the country.

Amit Urban · Answer

Real estate is a function of the local economy. If the economy is doing well, the real estate market is doing well. I track the SV 150, which is the top 150 publicly traded companies based in Silicon Valley (Apple comprises almost 50% all total revenues!). Compared to last year, many of these companies' sales numbers have shown signs of slowing down and if this continues we'll probably start seeing people losing their jobs, which means people might start missing their mortgage payments, etc. I can't predict the future, but I'm keeping a close eye on the local economy.

Also, anecdotally, we are seeing less buyers making offers. In the past, we'd see 10+ offers on a house, now we are seeing much less. Again, this depends on which pockets within the Silicon Valley - some areas are hotter than others.

I do agree with @Chris M. , I don't think we'll see a meltdown of the market like we did in 2007. But I do think we are entering a period of an economic slowdown.

Amit Urban · Answer

Hi John,

The SF Bay Area is a great market. I'm currently working in the South Bay (Palo Alto, Los Altos, Mountain View, Sunnyvale, etc.) doing brokerage and some development. Things are becoming expensive for investors/flippers, but there are good opportunities for agents. I do believe that we are approaching the end of this current cycle, which may present some opportunities for investors in the future. Anyway, let me know if you have any specific questions.

-Amit

Arjan Amiri · Answer

Dear @Amit Urban,

My friend has 5 properties and he is wondering what move to make next. One of the properties is his primary residence. He has thought about selling one of his condos and using the cash to pay off his primary residence. He also has thought about refinancing all the properties and taking the cash and making a down payment on one rental property and another down payment on a more expensive primary residence. What would you do in this situation?

Sincerely,

Arjan G. Amiri

Amit Urban · Answer

Hey @Arjan Amiri,

I don't have a crystal ball, but there are two cycles that I follow: the seasonal cycle and the overall economic cycle. Seasonally, the summer is very slow. Usually, more supply comes onto the market, while many potential buyers are away on vacation. This is an opportunity for buyers that are actively looking.  The overall economic cycle is also showing signs of a slow down, as I discussed before. So given the current market condition, we have been able to negotiate prices below or at list price with contingencies for many of our buyers. This would have been unheard of a year ago. I don't know where the market is heading, but I do see signs of a slow down. How much will the market go down? I don't know.

To better answer your question I would have to understand your objectives. Are you looking for appreciation? Cashflow? Are you looking to buy and hold, or flip the property after 6-months?

Arjan Amiri · Answer

Dear @Amit Urban,

So if indeed we are at a slowdown in Bay Area real estate, would it be better to buy now or wait six months?

Sincerely,

Arjan G. Amiri

Chris Mason · Answer

There's some % of people always sitting on the wings trying to time the market rather than make money today. There's opportunity out there regardless of current market conditions, but so many people are sitting on so much equity today that purchased during the great recession, that many people are convinced the Great Recession is a once a decade thing rather than a once a century thing.

IMHO, Great Recession Part 2 is not around the corner. The good news is that no one is going to get screwed as hard as they did then any time soon. The bad news is that no one is going to make that same killing again any time soon, and some folks are just going to be sitting on the fence growing old waiting for it.

I'm also going to point out that nearly everyone who purchased at the "worst" time to purchase, in 2007, in the Bay Area, is 9 years later sitting on a crap ton of real estate equity/wealth.

Arjan Amiri · Answer

Dear Amit,

Thank you for your response. I was wondering why do you think we are approaching the end of the current cycle and how would that present opportunities for investors?

Sincerely,

John G. Amiri

Tri-State Area or Bay Area Better To Be A Real Estate Agent?

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