The market downturn is here, at least in my market. Anyone else?

182 Replies

Originally posted by @William C. :
Originally posted by @Karen Margrave:

@William C. Im back in Redding, CA and we only have an inventory of around 700 houses on MLS. Its due to the fires in nor cal. Things sell before we even finish the paperwork for MLS.

That's interesting, and as real estate is obviously hyper local, instances like this are happening in other pockets of the country as well. I guess it's good for sellers in your market, but bad for the markets those people are running from. Scary stuff, unfortunately out here on the east coast, the CA fires become a 10 second segment on the nightly news.

well town of paradise 95% burnt down displacing 25k thousand people. lots of them trailer parks

in Santa Rosa CA two years ago 6,000 houses burnt down.. I am thinking the folks that used to live there might have scattered with the wind.. Where I lived in Napa at Silverado 2 years ago about 100 houses burnt down.. many I knew personally those were higher end 1 to 7 million dollar homes.  and many of my friends there are not moving back they are selling their lots.  but they will buy something somewhere.. 

If you bought reit stocks in January you would be up 10% already and if you bought long term options on vnq a real estate index on those you would be up 40%

@Storm S. I'm not sure I follow? The stock market is doing well? I just read the article above that would indicate a recession is on the way. If your implying because REITs are up 10%, that the shift isn't here, I'd say them being up 10% is actually a sign it's close. As I said, we are peering over the edge. REITs, and prices may continue to rise short term, my main point is we are not at the start of a 9 year bull run as if this were 2010...

We're seeing things sit on the market for longer and more prices cuts here in Los Angeles. Realtor friends tell me this is more true for properties over $900 K or so, than for the stuff which is say $800K and under (those seem to be holding steady in price, definitely not appreciating the way they were in the recent past). 

I remember in 2015, we all said the same thing in NYC CRE. Market was turning etc etc. Volume slowed down, prices went up or stayed the same (flight to quality), and then the market continued to go up from 2015-2019 lol. But I do agree the bull run needs to stop at some point

Deals are still hard to find here in NY/NJ. But well priced properties are still selling if priced slightly under market. Being the most expensive house on the block is a scary place to be right now. I've stopped taking any project above $1.5m and ones that have to have an ARV near the top of that market.

I don’t even understand people taking on expensive new construction deals right now in my areas. Betting and needing top dollar on a property that won’t even hit the market for another 18-24 months seems insane to me. But there are builders left and right breaking ground right now. 

Everyone seems to think they are Nostradamus....but I dont seem to see any billionaires posting in these forums, which everyone would be if they could predict the market like they think they can.

@William C.

In tiny SW Michigan I’d agree. Market turned about mid 2018.

No offense to real estate brokers, but investors around here need to get off their laurels and find deals off market. There are plenty out there. SF especially.

No downturn in Omaha, NE yet:)

Entry level homes are still very hard to come by. Most have many offers above list price within a day or so of being listed. I’m welcoming a downturn as it doesn’t affect my area as much as a lot of the country.

Originally posted by @Kyle Godbout :

No downturn in Omaha, NE yet:)

Entry level homes are still very hard to come by. Most have many offers above list price within a day or so of being listed. I’m welcoming a downturn as it doesn’t affect my area as much as a lot of the country.

 I have a feeling that prices will continue to rise due to all the towns flooding nearby. 

Originally posted by @Roger Edington :

So am getting started in real estate investing at a bad time? I figure real estate is a better investment than the stock market.

 There is no such thing as better or worse in investing. There is only the risk of the asset, and your risk tolerance. Deploy capitol according to your goals and risk tolerance.

I would say any correction, downturn, or crash is bad for flippers. And I'm no expert but if the market does dip, I'm willing to bet it will go back up again eventually. Money is still cheap right now. Rates are still below what they were pre-crash (2008 +\-). I actually read mortgage rates dropped last week. That being said, buy and hold investors should be fine assuming you do your due diligence.

@William C. The question isnt how many properties for flips there are in an area, but what is the demand for housing overall? What are rents, high or low? How many vacant rental units are on the market, are prices dropping? Same for new homes, are builders discounting prices? Is there excess houses andcm rental units? Those are the numbers that tell the story. The fact the smokin deals have dried up means little.

@William C. Open houses I go to in San Diego have fewer bids. Two separate property managers have told me they have had to lower rent expectation by $100/m against the owner’s wishes get new renters in units.

@William C.

How do you determine how much a home will net on a flip? I just applied to get my real estate license and want to prepare in case I have buyers who are home flippers. Will be a real estate agent starting in April.

Thanks for your time!

Originally posted by @Jay Hinrichs :
Originally posted by @William C.:
Originally posted by @Karen Margrave:

@William C. Im back in Redding, CA and we only have an inventory of around 700 houses on MLS. Its due to the fires in nor cal. Things sell before we even finish the paperwork for MLS.

 That's interesting, and as real estate is obviously hyper local, instances like this are happening in other pockets of the country as well.  I guess it's good for sellers in your market, but bad for the markets those people are running from.   Scary stuff, unfortunately out here on the east coast, the CA fires become a 10 second segment on the nightly news.   

well town of paradise 95% burnt down displacing 25k thousand people. lots of them trailer parks

in Santa Rosa CA two years ago 6,000 houses burnt down.. I am thinking the folks that used to live there might have scattered with the wind.. Where I lived in Napa at Silverado 2 years ago about 100 houses burnt down.. many I knew personally those were higher end 1 to 7 million dollar homes.  and many of my friends there are not moving back they are selling their lots.  but they will buy something somewhere.. 

@Jay Hinrichs have you literally seen it all?

Originally posted by @Syed H. :

I remember in 2015, we all said the same thing in NYC CRE. Market was turning etc etc. Volume slowed down, prices went up or stayed the same (flight to quality), and then the market continued to go up from 2015-2019 lol. But I do agree the bull run needs to stop at some point

Deals are still hard to find here in NY/NJ. But well priced properties are still selling if priced slightly under market. Being the most expensive house on the block is a scary place to be right now. I've stopped taking any project above $1.5m and ones that have to have an ARV near the top of that market.

I don’t even understand people taking on expensive new construction deals right now in my areas. Betting and needing top dollar on a property that won’t even hit the market for another 18-24 months seems insane to me. But there are builders left and right breaking ground right now. 

 You hit the proverbial nail on the head regarding new construction.   My thoughts EXACTLY.  I'm scared to flip anything that will take more than 2-3 months.  Just another anecdote to help my case, my builder brought me a $300k lot that would yield four $500k homes....subdivision alone would take a year, then what, at least 3 months before we are market ready on the first one?  No thanks.  Might be worth sitting on, if I had that kind of cash just laying around.  No way would a deal like that have even hit my desk a year ago.  

@Jay Hinrichs Hey Jay, I was reading that a year ago approx. 40 of the primary 300 plus (or 200 or more they monitor) US markets were already showing major signs of a 'correction...' but of course nearly ALL of those main metros also have micro demographics therein with neighborhood market maturation stats that are not "the average" brush bristles the faux media tends to paint the "herd" into the corral with, about every decade to get them to 'stampede' for the exit doors, only to get 'slaughtered,' time, and again! (And some areas will mostly remain up, down, or 'correct' up to 50% plus either way, so knowing what to be in or not, where, when and why (so you realize when to EXIT) are all valid concerns! 

I believe I have a better 'approach' than this "buy -n- hold" mentality that remains almost entirely beholden to whims of a highly controlled and regulated "casino play..." just like the rest of their "what goes UP, must come down, roller coaster" games. And like ANY 'commodity,' homes that are bought and resold like clockwork ultimately can 10- 100X say a 15- 30 year play, with 3:1 interest, to principal... so it amazes me that ANYONE is still buying, holding and "renting" SFRs, in the 21st Century?! (Unless they EXIT prior to every correction. And good luck, with that!)

I know noone wants to tie- up $500k. plus into the aforementioned in "investor unfriendly" California, however if they opted to "think outside the box..." they might even 'rethink' their perspective, in lieu of what I'm envisioning??? If you know of anyone that would consider acquiring properties in the North Bay, etc., I just rented a place in Calistoga, last month. (I couldn't stand the heat in the Valley of to much sun... so I came back to Cali, for now, and Sonoma and Marin counties were a total "rat race..." so I am for now, in a town with minus 6000 people?)

The pre- foreclosures here (Napa, Sonoma, Marin counties, the Bay Area, Sac, etc.) are definitely intriguing me, especially after the additional things I've leaned (and since thought of, that relate) recently regarding what to do with these "little to no equity" homes x10 - 15 million, just in the US. I need to find a few (then more) "private lenders" and utilize OPM while paying them well to do some 60- 120 day deals (i.e. Cash resales, vs. lease purchase deals) so if you see anything that looks 'intriguing' near me to check- out and/ or know of any investors (for either California north, south and/ or in NV, AZ, etc.) I suspect the ROI will exceed the alternatives the vast majority of these guys are making, elsewhere (i.e. Like 99% of them...) precisely because I'm not your average "cud chewer, grazing on conformity..." until they close my CQV 'trust' account. ;-) Let me know if you want to know more about what I'm eluding to here? ATB :-) Scott T.

Originally posted by @Russell Brazil :

Everyone seems to think they are Nostradamus....but I dont seem to see any billionaires posting in these forums, which everyone would be if they could predict the market like they think they can.

 Just one mans opinion, based on anecdotal evidence, in his own little market.  Never claimed to be Nostradamus.   And Warren Buffet does post in forums, maybe not this one though.  Thanks for the input.  

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