Rental Property Investor · San Jose, CA · Member since 2013 · 188 posts · 228 votes
I've noticed a steady increase in the frequency of unsolicited mailers I receive offering my buy my house ("why worry about repairs, we'll buy you house as is, all cash, quick close" etc., etc.). I take this as a sign we are nearing market peak.
I've seen other peak market indicators, such as the number of friends approaching me for advice on how to get into RE investments, and the number of kids (teenagers) posting on BP about getting rich in RE.
As Joe Kennedy said, when the shoe-shine boys start giving you stock tips, you know the market is saturated.
What are some of the indicators that you have seen that the market is nearing its peak?
In 2006 it was the movers who asked me how much I bought the home for. They wanted to buy a similar home.
They could barely speak English but they knew that if they wanted they could buy a home like mine for how they described it as "Seero Down".
Yup I guess they ended up with some NINJA loan and plonked 600k on a home soon thereafter. I do look at those signs as indicators of froth.
Luckily I am not seeing those drastic signs yet but for sure the chatter on real estate investing has gone up a lot.
Getting more flyers, probably means more seminars have come through your city.
These too come in cycles. Big wave right now in my area. Seminar rolls through, more postcards. Sometimes I wonder if the seminar guys also own the post card company or get a referral fee from them.
What you are seeing is proof that many people pay big dollars to attend a marketing guru's sales pitch. The frequency and severity of the offers are a good indicator of how many folks bought the course. Wait six months. The folks who don't cut the mustard will be out of the business and the number of requests will slack off.
Thanks for the link, I read it that's really interesting. Will be interesting to see what happens with the tax plan. I keep reading that it could be bad for CA if it doesn't end up allowing the deduction of state and local taxes.
The 1% top earners pay about 48% of the state's taxes in CA. If more wealthy decide to change their residence to Nevada,Texas ,Florida or another no income tax state it seems like it could have significant repercussions for CA.
Will be interesting to see what happens.
Other interesting thing from your link is "industrial being the new retail" and that 60% of new warehouse construction is coming from Amazon.
I also believe we will see a lot of outdated retail space converted into housing in CA especially since there is such a housing shortage , seems to be a lot more demand for housing versus retail.
David Song I wouldn't be surprised .. but these big jumps in price can't be sustainable forever .
When do you believe there will be a downturn in the Bay Area?
I don't think the next downturn will be anything like the last one . But once real estate isn't viewed so positively in the media etc sellers will be more open to negotiating.
Right now there is so much enthusiasm it's "cool" to be in real estate .. like it's cool to work for a startup .
I think anyone expecting the Bay Area or SoCal to become "cheap" though will be disappointed.
All real estate is local though of course . I'm sure some places in the country will be hit hard in the next downturn .
The down turn will come after a major stock market crash, then layoffs, then company bankruptcies, etc. there should be a few years leading signs before housing market crash. IMHO.
@Joseph M. I think we will start to see some changes at the city/planning department level in parking requirements in the next decade. When that starts happening, we might see a bit more conversion from retail/office to residential. The thing people forget about - parking and schools. Residential is not as easy to "add" as everything else because a lot of planning should go into it (i.e. if you add 500 residential units to a city with 2 kids per residence you can imagine the potential infrastructure changes that might need to take place).
In terms of people leaving from a high tax state to a lower tax state, it really is relative. Some wealthy people will make the move, sure. But that is something the vast majority of people do not think about (or won't be able to - imagine a successful dentist that runs a local practice).
It will be interesting to see how the Bay Area and SoCal deal with housing. If you ask anyone in either metro I guarantee they will tell you the traffic sucks enough already lol
I'm also a guru and for just $9,999.... Many areas seem unsustainable until they make sense. We are in changing times, technological, medical, economical and mailer count metric might make LESS sense with the accessibility of one-click mailing websites, photoshop, etc.
When the other 7+ BILLION people in the world decide that America (with a mere 300+ million) isn't a good place to live, places where immigration is high (CA, TX) should start to worry.
With that being said being from CA I have seen a lot of business that depend on minimum wage workers take a hit. @Ryan Landis But I agree with Ken Rosen that it would take a larger event to make theses "extra innings" as he calls it come to and end. (I believe that event is China.)