Where Do You Think the Real Estate Market is Heading......

Question

.........between now and 2020????

A) Going Down (as in some type of correction; thus prices are lower in 2020 than now)

B) Going Flat (between zero and 1% annual appreciation)

C) Going up at reasonable rate (about 3% annual appreciation)

D) Going way up (more than 5% annual appreciation)

Ned Carey · Answer

@Aaron Grant  I used to live in Montgomery Village.

What market are you referring too? What State? What City? What type of properties? Real estate does not uniformly go up and down. Often when one market is crashing others are stable. As the saying goes "All real estate is local." 2008 was an exception. We are starting to see a more normal trend, in the sense that different markets are reacting differently.

In Baltimore for example, higher end markets are hot. It is tough for rehabbers to find inventory. Yet the lower end of the market is very cheap. Same geographic area but different price ranges going in different directions.

By the way as a contrarian the cheap low end stuff may be the way to go.  I was at two auctions today that would make great low end rentals. Both could meet the 3% or maybe even the 4% test. One was mine.  I sold it for only $12,500! and it was in decent condition and needed modest work.* The other was tenant occupied at about $30K

* Side note. I hated to give the property away that cheaply but it was an auction and you get what you get. We took this is a tax foreclosure. The woman who owned it paid $82K in 2007

So I am not going to give a guess. I will say that the next downturn will probably come from a different direction than the last one.

Ned Carey · Answer

In addition to Milken reports check out dividend capital research market cycle reports by Glenn Mueller. A narrower scope than Milken but I think the type of thing you are looking for.

Gabriel G. · Answer

@Aaron Grant

Not to beat a dead horse, but real estate is very local. If you want to anticipate where the market is going to go then you should stay in tune with population trends in area as well as job trends. Is there more companies coming to a particular area. The Bureau of Labor and Statistics has a lot of great info that is free. Also the Milken Institute has some free reports that they do on different major markets and as Ned mentioned, you have to even go further than that. In Baltimore City alone you have many different submarkets that you will have to do your research and find out what the level of inventory of homes, DOM and these different indicators. Long story short... You can predict what the entire market will do in a particular time since every local market is so different. Even during the recession there were some markets that were not as affected like others were.

David Dachtera · Answer

@Aaron Grant,

To second Ned's remark, yes - markets tend to be local.

That said, we ARE in a housing shortage right now. Some 80% of builders went under in the crash and building is just beginning to recover. Some economists estimate we are around 5 million housing units behind the demand right now.

That's why we're seeing rents escalating these days. The number of new rental units coming online lags the demand by a good margin.

For SFRs, what's keeping a lid on values is the dearth of lending. If lenders weren't so tight-fisted, we'd likely see home prices launch into interstellar space.

It's just supply and demand. Supply flattened out majorly while demand rolled merrily onward.

Something major would need to happen to dampen demand before you'd see anything profound in the market at-large.

Abel Curiel · Answer

I'm leaning towards B. I think it will correct itself and somewhat recover by 2020. Just a hunch. I think by year's end, we'll see the beginning of a correction to put it nicely- to put it bluntly, I think there will be another collapse/recession.

Whats your take on it?

Where Do You Think the Real Estate Market is Heading......

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