What Are Real Estate Values Doing in Your Area?

59 Replies

Corey

Great question. A question as a newbie; Do I still have time to make money now, if Im just starting? Short term goal is to wholesale/assign, long term buy and hold apts.

Thank you for your replies.

Talked to a Realtor yesterday about a house I have and he said there were 10 offers on a small trainwreck in that area. He thinks there is already a bubble there.

Originally posted by @Anthony Ruiz :

Great question. A question as a newbie; Do I still have time to make money now, if Im just starting? Short term goal is to wholesale/assign, long term buy and hold apts. Thank you for your replies.

Anthony Ruiz Welcome to BiggerPockets!

When I dove into this business seriously a little over three years ago, I had the same question/concern that you do. Will the opportunity last and for how long? Since then, I've learned the more experience and exposure I get to the market, the more deals I see. What I thought of as a good deal a couple years ago, I routinely pass on now, because there is almost always a better deal around the corner.

So what about everyone in this thread who says deals are drying up? I think that means deals based on last year's buying criteria. Now we might have to spend a bit more to buy, and face more competition to buy, but we can typically rent for more and even sell for more and faster in many markets. If not today, the signs are pointing that way.

Talk to the ones that have been doing real estate for decades. They'll tell you that you can make money in any market In the past few years we've gotten used to a bad market that told us we have to buy for dirt cheap to make money. That's not always the case. For example is it worth it to pay more for a great location? Absolutely. Especially, for long term buy and hold.

We do need to work with the market we are given and be willing to change as the market changes. This may be the year to rethink strategies.

Last week I was talking to a guy who has been an Apple fan boy before we knew what a fan boy was. He's loved and evangelized for the company since the 1990's. Last July, i told him I was buying Apple stock in the mid $300's and I though it was under priced, fundamentally. He kind of agreed, but said it was too expensive at the same time. Huh??

Fast forward to last weekend. He sent me an article on Apple hitting $600 a share. He never bought any. I didn't even have to say anything. He said, "you know Jon, my problem is that I remember when Apple was $15 a share and I can't bring myself to pay today's prices." Ah ha! We can let the same thing happen to us when we become anchored in the past.

The past is gone and we have today to act based on today's reality. Reality changes. Apple netted over a billion dollars a week last quarter. The bottom of the real estate market appears to be in the rear view mirror. Plan and act accordingly.

Denver is really strong right now. We have the lowest active inventory right now since 1999.
Average DOM is 105 vs 121 in 2011 (13% decrease)
Sales volume is up 14% in Feb 12 vs Feb 11
Sales units are also up 14% Feb 12 vs Feb 11.

Good time to be a rehabber. Our rehabbed properties are going under contract in about 30 days right now, which is much better than the average in Denver.

Rent market is strong as well. I have a property that I charged $1650 for in early 11, and I had 3 people fighting for it at $1950 this year.

Originally posted by Craig P.:
Denver is really strong right now. We have the lowest active inventory right now since 1999.
Average DOM is 105 vs 121 in 2011 (13% decrease)
Sales volume is up 14% in Feb 12 vs Feb 11
Sales units are also up 14% Feb 12 vs Feb 11.

Good time to be a rehabber. Our rehabbed properties are going under contract in about 30 days right now, which is much better than the average in Denver.

Rent market is strong as well. I have a property that I charged $1650 for in early 11, and I had 3 people fighting for it at $1950 this year.

And Denver's SFR vacancy rate is just 1.6%
http://www.biggerpockets.com/forums/86/topics/71861-focus-on-denver

What a great discussion.

Here in Richmond the rental market is the strongest I have seen in a few years. We are finding a better quality tenant, faster, but not sure that rents are actually going up. For me, I would rather have a great tenant then top dollar in rent anyways.

Jim

In the markets I buy in (typically 1.5-2.5 hours outside of LA), anything under 120K has multiple offers. The low inventory and influx of new investors has driven prices up 10-15% over last year ( in B class areas 50-120K).

AG

In the Seattle market we are seeing multiple offers on REO's and Shortsales. Anything in the under 300k market that is in move in ready condition gets snapped up quickly. It took two months of putting in offers daily and getting out bid on REO's and Shortsales to get one under contract.

I am working with folks who are rehabing SF's in Indianapolis too. We have been experiencing the samething there just at lower price points.

Dayton OH:
from my small view of the market I see it as flat to slightly down. more properties have sold to cash investors at lower prices
but there is still a large inventory of properties in need of rehab and remain vacant
I see a growing need for rental properties so the vacancy rate of around 14% is misleading because it includes many properties that will need rehab before they can be rented. Mostly new plumbing, electric clean and paint.

@Cheryl C. For Riverview FL, & south of the Tampa area, prices are still good. SFH are a little under $100k for good 1,300 sq ft 3/2/2 REO's which rent for $1300. Towns are the best bet now at $55k-$85k for 3/2/1, 1200 sq ft rents $1100-$1200. Rentals are in extreme demand if they are quality housing.

Prices in general are slightly softer than in 2011 as there appears to be a bit more REO's coming on the market. Investor competition seems quiet except in the <$50k market. Lots of Section 8 townhome stock avaialble at $30k-$40k which rent for $875-$975. But this comes with a very questionalbe HOA fee.

Odd fact is, there has been a flurry of new SFH construction in the last 6-months. Something we haven't seen in 5-years, (from nothing to whole sub-divisions going up almost overnight). Preference seems to be buy new rather than re-sale since new is within $30k-$40k of re-sale at some sites.

Short Sale market is still strong with little movement from the banks to accommodate you. Hillsborough County has the highest number of new foreclosures in 2012 YTD, at 2,500 units. This is added to the 450,000 Florida homes more than 90-days in arrears, (St. Pete Times yesterday). Overall, there is a 13-month supply, (I haven't seen the latest Case-Schiller report).

We may be at the bottom....but we'll be staying here for a bit longer.

Naples is a bit pricier but always has been. Situation is the same there, but at a 50% premium.

@Joshua Dorkin / Still can't seem to get that signature block sorted out.

Mike P.

Corey,

I own properties in Indianapolis, IN. Following the initial avalanche of REO inventory, partiularly in 2009, prices were just plain silly. Silly good, for me, as a buyer. I could get a 1200SF 3/1 ranch-style house on slab b/t $15-20K in a moderate-quality area with strong rents.

This same inventory has risen in price over the past few years, but not dramatically, and only b/c of competition among investors pumping money into the market. I'm convinced that the increase in price is not synonymous with a general value improvement. Investor demand is the only driver.

In any case, the same type of house will cost b/t $20-25K today, on average.

Hope this helps build your picture. Best of luck!

Originally posted by Corey Dutton:
Glad to hear everyone is pretty much booming in their areas. Some areas may be the victim of a 'micro bubble.' Watch out for this...

From what I read, many are seeing modest improvement in their markets, especially at the wholesale level. i might call the "micro-bubble" a choppy recovery. Or even a head fake, in the areas that are in a macro decline. Or in all areas, if we are heading back into recession, but that doesn't appear to be happening.

I think people are going a little crazy, so its certainly not out of the question that prices can get artificially inflated in some markets. Who would agree?

This is not implying another "recession" as you say, but that people will pay more for a property than they maybe should...

In metro Detroit we're seeing multiple offer situations on REOs and short sales if they're priced right. There are still some that are really overpriced out of the gate and they linger for a while until they lower the listing price to near market.

There's a lack of "nice" homes so ones that show well and are priced correctly go fast. The increase in short sales has helped provide additional non-trashed homes to buyers looking for a move-in condition house. Flippers who execute well are rewarded with quick sales.

I've seen an increase in demand in rental areas that's driven up purchase prices above where they were last year. More investor activity, especially newbies. It's tough as an investor to get the better HUD and Fannie/Freddie homes since most don't make it past the 15 or 30 day owner-occupant only period. Homes rent quickly except in the worst areas.

Home prices in Michigan are at the same level they were in 1994, since we had all of the housing market bust but little of the last decade's boom (based on the Case-Shiller index). That combined with ultra-low mortgage rates make for really affordable housing for those able and willing to buy. Add to that the fact that unemployment in Michigan has dropped 5.2% since August 2009, from 14.2% then to 9.0% now. Consumer confidence around here is improving, compelling many who were on the fence, able but not willing to commit, to buy.

On the other hand, there's still a ton of shadow inventory in Michigan. I know people who haven't made a payment in 24 months and still haven't receive their Notice of Default. Add in a six month redemption period after the sheriff's sale and there's several year's worth of shadow inventory that will/might/could hit the market (who knows if, when or how?). Additionally there are a lot of underwater homeowners that are current on their mortgage but may eventually capitulate and decide to let their house go via short sale or foreclosure, adding to the distressed inventory.

But at least for now, the real estate market in Michigan is pretty good.

I ran across this article and thought it would be helpful: http://www.upi.com/Business_News/Real-Estate/2011/09/19/How-to-Predict-Local-Home-Prices/5171316460711/

It points you to several real estate websites that I'm looking at now to see how it all works. Hope it helps!

I too am in the Las Vegas market and I have to agree with Bruce's post. The Las Vegas market is lower most markets in the country. With increasing deamnd and inventory STILL decreasing lower and lower each month, the worst is behind us. Cash flowing properties are attracting investors from all over the country and abroad. The good deals go fast and often have multiple offers on them.

The higher priced homes $500k and up still have some room for price reductions in my opinion but th elower priced homes are going fast and around list price if priced correctly. Everything under $200k is in high demand right now.

A lot of investors have been picking up $50k 2 bd condos in low crime areas for positive cash flow. Future appreciate is an added benefit.

Originally posted by Bruce M.:
In Phoenix where I bought last year, prices are going up. Something that was 75K is now 90K. Everything under 100 seems to now have multiple offers from what I am seeing. Lots of money flowing into the Phoenix market in the last 12 months. I am also buying in the Las Vegas market now. Prices there still hovering around the bottom, but lots of money coming in from all over (China, Canada, Large Investors, rumors of hedge funds) and for good deals, there are multiple offers. I tend to like areas that I feel have over corrected and are poised for a rebound and offer cash flow as well. The data I watch show inventory levels way down. Look forward to hear whats happening in other areas.

Orange County California is really tightening up. However; there are still a few foreclosures, there's one on the Newport Coast that is currently listed for sale for $37 million! Other than those types, investors have pretty much bought up the bank owned properties. One of the problems I see is that investors bought the foreclosures, and now we have to wait for them to come back on the market after they rehab them to get values established for many areas, so that homes can sell again at real prices and not be undervalued because of the foreclosures. Does that make sense?

Here in Hawaii, the real estate market is a bit more vibrant than in the rest of the country thanks to a few unique features (warm weather, idyllic tropical setting, extremely low crime rates, etc.), so demand is consistently higher than in most other places. With that said, the housing market in Hawaii was hit by the recession, prices did drop a bit, and there was a brief spike in foreclosures... However, things have been recovering steadily since then, with building starts up, home sales up, and other industries - like tourism and hospitality - recovering now as well. It's funny, I actually recently made an infographic (for those who don't know, that's an image that displays facts in an easy-to-read manner) about this very topic: [REMOVED] Let me know what you think!