Miami, FL · Member since 2015 · 84 posts · 69 votes
I am definitely holding off buying real estate for now. There are too many signs suggesting that the Seller's market has peaked. I'm noticing homes staying on the market longer and have seen more price reductions here in Miami at least. Stock prices of home builders like Tol, KB Homes, and LGI Homes peaked in January of 2018 and are going much lower, plus US Housing Starts "rise less than expected". We can not prevent economic cycles and a recession is due within a couple of years, maybe even next year. Housing Starts is a very good indicator, since 1965 it has never been wrong predicting a recession. This is just my own humble opinion. https://tradingeconomics.com/united-states/housing-starts
While many of us investors (me included) want to think of ourselves as market and RE geniuses for doing so well in the last 8 years and recently inspiring a herd of new investors (speculators), let’s not forget what really happened. 1) We got lucky as most of were not playing brrrr and other stuff in 2005 - 2008. By 2010, we were the survivors with money in our pockets while the rest of the buyer community had gotten hurt 2) After 2010, the Fed was our best friend. Near 0% rates. 3) The forces of quantitative easing were a huge tailwind 4) The stock market went up nearly 4x 5) Unemployment fell from 8% to 4%. 5) Banks were lending prudently 6) Investors were cautious and very prudent in searching for the right deals vs getting in because of FOMO. 7) We had massive foreign investment from China that got channeled into major coastal markets which drove home prices and equity values.8) Dodd Frank was in place 9) Tax laws were more in favor of Home buying
None of these trends are likely repeat at the same magnitude as the last 8 years. The Fed is on the opposite side of the fence now. QE is closing down. The stock market is finding it harder to go higher. Investors are in because of FOMO.
My worst fears are the proliferation of speculators aided with the most dangerous weapon in REI which is 100% financing. Yes that is happening in growing numbers.
@Lorin K. - I see the pattern in the years you listed but what about all the other decades? 30's thru 70's. 90's? Did the pattern hold true in any of those decades?
@Caleb Heimsoth - I don't think that's the only way SSI or Medicare plays out in the future. They can and should raise SSI minimum age as it was implemented when the average lifespan was 61 and now it's 75. It was meant to be a safety net for a few years of retirement, not decades. As far as Medicare, that will morph into a much bigger dilemma no matter which side of the fence you're on and whether you like it or not...it's inevitable...Universal Healthcare. But, the one thing we can't predict is the potential cost savings in the future due to technological advancements in medicine/healthcare. Our current healthcare system is incredibly inefficient and expensive on both sides (private and gov't programs) and there will be tech companies and innovations that form to eliminate those inefficiencies.
The de/appreciation of real estate can be determined by a formula that utilizes mixture of mortgage rate, purchasing power/savings, real estate taxes, consumer confidence, jobs, migration. As for monetary part of the formula - the situation is getting tighter. The rate is set to raise, the taxes are soaring, purchasing power is eroding due to 'skillful' political actions. So from that point of view for now we peaked. Considering the value can be real or nominal I'd say in real prices for sure.
I am not expecting a market crash in foreseeable future . Most likely for couple years there will be plateau movement on the average. With some price correction in the bubbled areas.
This is what I'm talking about. Real estate prices are softening. It's a fact. This is great news because we'll be able to buy properties much cheaper next year or two. As a disciplined stock investor, I wait for prices to come to me. I never chase stocks. Same goes for RE.
Here is an interesting article providing real estate trends thru charts. It's certainly compelling in that we have not peaked: Has the Housing Market Peaked?
I stopped subscribing to Seeking Alpha a while back because they gave contrary commentary and analysis. I bet they will have an article next week about real estate prices peaking. One wild card that I posted yesterday here on BP is, what will happen to the stock market, housing market and global markets at the POSSIBILITY of a U.S President and Supreme Court Judge being impeached? Wallstreet is irrational and they trade based on "whispers" and future guidance. If the Democrats win the majority on November 6th, what will happen to the markets Nov 7th? The Democrats don't have to impeach anyone, just the thought and possibility of impeachment may be enough to spook the markets.
I stopped subscribing to Seeking Alpha a while back because they gave contrary commentary and analysis. I bet they will have an article next week about real estate prices peaking. One wild card that I posted yesterday here on BP is, what will happen to the stock market, housing market and global markets at the POSSIBILITY of a U.S President and Supreme Court Judge being impeached? Wallstreet is irrational and they trade based on "whispers" and future guidance. If the Democrats win the majority on November 6th, what will happen to the markets Nov 7th? The Democrats don't have to impeach anyone, just the thought and possibility of impeachment may be enough to spook the markets.
In order to be impeached, doens't the actual reason for impeachment have to happen during one's term in office? What is Kav gonna be impeached for? (or Trump, for that matter)
Its pretty much a fact the us has entered another 8 year cycle. Just like 1921 to 1929 1980 to 1988 and 2001 to 2009 I think the us is on another major shift and the market is leveling out or stocks and housing values are dropping. Seattle is seeing some big drops in values.
Its pretty much a fact the us has entered another 8 year cycle. Just like 1921 to 1929 1980 to 1988 and 2001 to 2009 I think the us is on another major shift and the market is leveling out or stocks and housing values are dropping. Seattle is seeing some big drops in values.
Many people said the same thing in 2012-2017. There's not enough housing out there. There's a serious affordability problem and the costs to build new homes are increasing. Where is the supply? Seattle is seeing big drops in values. I am sure it is on the higher end! There's a lot of high end homes in NJ not being able to sell either! That's not the kind of rental's I want.