Is there a large supply increase coming?

Question

I see 3 near term drivers of supply increases coming:

1. Foreclosure moratoriums are/have ended creating a wave of properties being auctioned and flipped.

2. Eviction moratoriums will (may) end June 30. Evictions may lead to weary landlords selling their properties.

3. Workers who changed jobs and didn't move, but otherwise would have, may now need to move as work goes back into the office.

It seems that all 3 of these were pre-pandemic drivers of supply that effectively stopped in Spring 2020. As foreclosures, sheriff sales, evictions and moving for the new job all return to normal, do you think we will see a surge in properties for sale that might drive down prices, if only temporarily?

Russell Brazil · Answer

Nope.

Anthony Caruso · Answer

@James Mc Ree I think a lot of people are whistling past the graveyard, but this is good for us... in a sense. When foreclosures hit and evictions start rolling out there is going to be a lot of bleeding before things get better. The main issue is in this moment housing prices have been to a degree artificially inflated due to there being no foreclosures or evictions thus limiting supply. Its almost as if the nature flows that kept things moving have been halted for some time, and we can see the pressure building by the crazy prices of lumber now due to the only way you will find a house is to build one. With that being said, the second banks begin to foreclose on properties all houses will begin to lose value. This isn't a good thing, even for us. The issue is that all properties like a sinking tide will go down in value. This will leave a lot of newer home owners with mortgages potentially higher than the actual value of the house, (reminiscent of 2008).

So yes there were be tons of opportunities for us, as long as we have cash, because mortgages will become hard to get once again. Think about it, the bank is in the business of loaning out money, they don't want nor know what to do with a house. So similar to 2008 they will become super strict on who they give out loans to, thus even though we will get these properties at a great deal, we may have to hang onto them for an extended time before they are able to sell.

The last thing I will add cause I can talk about this for days (economically speaking I don't see how this isn't going to be a big issue) cnbc reported an estimated 11 million foreclosures coming soon. You can't convince me this isn't going to be an issue causing a ripple throughout the economy.

Mike Dymski · Answer

We should focus on agents, owners, brokers, and offers.  The rest is all just noise.  Nobody knows what is going to happen.  Buy properties in decent locations that are affordable to a large target audience, add value, and there will be large supply increase in our savings accounts!

Karl B. · Answer

There may be a supply increase in some markets but it's not going to be a large increase (and an increase doesn't say much as current inventory is as we all know insanely low).

Until interest rates rise people are going to continue to gobble up properties Pac-Man style.

Eric James · Answer

I do direct mail to purchase off market distressed properties. Post Covid I've had a huge increase in my response rate. I sent out 300 letters and purchased 4 properties from these. Pre Covid I would have needed to mailed out 20 times that many letters. That's different than what you're talking about, but the supply in my niche has greatly increased.

Jerry Holt · Answer

I don't think there will be a huge increase in inventory, but with post moratorium eviction estimates as high as 6,000,000 there will definitely be opportunities with individual and mom and pop landlords. There are a ton of burned out landlords out there that may be rethinking their decision to get into the rental business.

Is there a large supply increase coming?

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