Have we hit bottom yet?

Question

I know that "every market is different" but I was wondering what the investors here in the sunbelt states that were hit the hardest (AZ, NV, FL, parts of CA) think about this? Do you think there's still a shadow inventory that will hit the market, or will the government and/or banks find a way to prevent that from happening?

Bienes Raices · Answer

I think that's true, and maybe sometimes out of state investors who don't know the local market very well.

Karen Margrave · Answer

In Orange County, CA I think in certain price ranges, under $1m that we've hit bottom. As far as foreclosures, there are still properties over $1m, but below that it's extremely rare. As to shadow inventory, I think there is some, but that rather than dumping them all on the market at one time, they will trickle them out in order to keep prices up. In this area often times the REOs end up going for over market value.

I think it's because some novice invetors think just because something is an REO that means it's a good deal, and buy it. Here the banks are listing them close to market value, then bidding wars start, and .... quickly go over! I've seen houses with gaping holes in walls, drywall with severe water damage, foundations cracked, need new roofs, etc. and they end up with multiple offers, over the ARV! It's crazy.

Ryan M. · Answer

As for this area, prices are on the rise. They could nose dive again within a year and thats fine if they do, we can pick up some more.

Michael Lauther · Answer

I believe that we will bounce along the bottom until there is a real retail market.

Currently prices are low , interest rates are at an all time low and affordability has never been better but the missing element is confidence .

Until the jobs come back there will be no recovery in the real estate market.

Of course I must ask, to which market are you referring? In Dayton I have been surprised by increased competition for properties I have bid on. In one case it appears that a retail buyer snatched up a property listed with Hud prior to the window for investors to participate.

James H. · Answer

Who knows? But I'll throw out my crystal ball reading.

I predict forclosures will enter the market at pretty much the same rate they are right now over the next two to three years. All the while, though, the competition for these offerings will increase as the housing market slowly improves overall.

Of higher interest to me is how much longer will interest rates stay so low? I am really hoping they stay down below 4 and 5 percent for at least another year so I have time to get at least one more great mortgage. Once those interest rates go up to 7+ (if they do), then that might keep house prices in check since the payments will become relatively high comparted to today.

Dick Green · Answer

One man's trash is another man's treasure.

In my opinion, banks are still holding on to some toxic assets.  They're also at the same time streamlining and tweeking their foreclosure, short sale and mitigation processes.  They seem to be waiting for all the hoopla and the witch hunt against predatory lending to fade away.  When it does, I believe they are going to rip off the band aids and cause one of the greatest opportunities for cash investors since the mid 80's.

Manuel A. · Answer

Call me Mr. Doom, but I think it hasn't even hit yet. I believe we'll hit somewhere in 2013...

Steve K · Answer

I think we hit it a few years ago here and the bottom is already gone.  The past year the pricing seems to go up and down a bit, but as you know lately the pricing is continuing on an upward swing.  Based on the prices here i'm becoming much less interested in being a landlord in Orlando as we're pretty open to unemployment risk should some things go sideways with the economy.

Nathan Emmert · Answer

Market timing is akin to gambling IMO.

Make good fundamental choices and over the long term you will turn out to be right more than you are wrong.