How many people think the worst is over and why?

How many people think the worst is over and why?

Investor · San Francisco, CA · Member since 2016 · 338 posts · 444 votes

I'm trying to reframe the question from too much of the gloom and doom talk, and looking for an informal poll about the way forward. My belief is that anyone analyzing their market needs to look slightly to the future, or at least stay solidly in the legitimate present to take advantage of opportunities. I can't believe that I am still hearing people ask "are we in a recession?" type questions. To me, it's way past the time to be asking that, and largely irrelevant from this point forward. 

Disclaimers - No, you can't time the market exactly, but the general trends can and do affect underwriting. Yes, some people have just continued to operate as normal with conservative underwriting standards, but not everyone or the opportunities they pursue operate that way.

Here's my sense of things from my market:

1.) There was a "Covid discount" that took affect after the shelter in place orders. That wasn't an across-the-board discount, but there have been some fearful sellers in a rush to get in contract/close. However, that is quickly going away now that the dust has settled and shelter in place is ending. 

2.) I don't hear the rumors of certain landlords/developers in financial trouble like I did after 2008. That makes me think people are reasonably capitalized. I'm skeptical of the idea of something bigger hitting 6-12 months out due to forbearance, etc.

3.) April and May rent collections were better than people expected. And people started getting back to work these last couple weeks, so pay checks will be steady again.

4.) Constructions costs have not dropped. If anything they are up due to material supply constraints and a backlog of work.

5.) Lenders tightened up, but seem to be starting to lend with better terms again.

6.) There's definitely shifting going on with rentals (people moving in and out), which is unsettling, but the rents in my neighborhoods have stayed steady. San Francisco has softened, but I think that's temporary due to transition. The suburbs seem stable.

Am I being too optimistic here? 

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Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
6y

42 million people have filed for unemployment since March.  That's 1 in 4 workers in the US.  Worldwide demand remains low, even in Asian countries which have been back to work for months.

This is all just getting started.

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  • Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
    6y

    The effects of the bankruptcies are not going to be felt immediately. 

    If I stop going out to eat, no big deal. I am one of 325million people. BUT when BKs happen it has a ripple effect. Not only is there $2k less in the economy that month. People spend money. That is 1000s of people who will not go out to eat as much. Less new cars will be bought. Less rent paid at the Regional Shopping Mall.

    If less people are going out to eat, the workers at the restaurants are going to work 30 hrs instead of 40. That makes them cut back also. THEY will now go out less, less likely to buy a new car, less likely to go to the Mall and buy stuff they dont need. Then if all these people are buying fewer cars, car mfgs are going to produce less, which means fewer hours for the people that make Tundras in San Antonio, BMWs in Greer, Nissans in Tennessee and Mississippi. And on and on.

    We will see the fallout in the next 6 months to a year. And it will last for a year a two.

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