Buying the dip, Is it too soon?

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Buying the dip, Is it too soon?

Rental Property Investor · Sicklerville, NJ (08081) · Member since 2020 · 10 posts · 2 votes

When are we buying the house dip? I know it still has more to go down but when do we jump in to grab it? I'm currently looking to purchase a STR in Tennessee or Florida.

When do you guys think that area will be good to purchase?

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Avery CarlBusiness Member

Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes

Timing the market is like trying to catch a falling knife. You know the general direction that is going, but catching it at exactly the right time is pure luck. Just run your numbers at the price and interest rate you're able to get a property for and if they work they work. If not, move on to the next deal. I don't like everyone running around saying "marry the house, date the rate." I feel that it encourages people to buy deals that don't work and bank on refinancing and lowering the rate later. Make sure that the deal works NOW and if you can refinance to a lower rate later, then that's extra.

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Garrett CrosbyPro Member
Real Estate Agent · Los Angeles, United States · Member since 2021 · 392 posts · 162 votes
3y
Don't stress too much on this. If your numbers make sense, then it's worth the investment. I will say that typically when the rest of the world thinks it's a bad time to buy - it generally means you should consider at least exploring the option. :)
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Christopher Liu
Rental Property Investor · Santa Rosa CA · Member since 2014 · 56 posts · 48 votes
3y
@John Zurzolo imo you’re putting the cart before the horse. Find a good deal first. Once you find and verify that it’s a good deal the worry is not whether the market is “right”. The worry is whether the deal will still be there when you think the market is right.
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Aaron Barber
Rental Property Investor · Las Cruces, NM · Member since 2017 · 65 posts · 38 votes
3y
Quote from @Simon Ashbaugh:

Im recommending my clients keep buying. Prices may go down but who knows what interest rates will do.

I mean, of course you are recommending your clients keep buying. Your making profits off them...

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Simon Ashbaugh
Realtor · Columbus Ohio, Cleveland Ohio · Member since 2022 · 849 posts · 830 votes
3y
Quote from @Aaron Barber:

Quote from @Simon Ashbaugh:

Im recommending my clients keep buying. Prices may go down but who knows what interest rates will do.

I mean, of course you are recommending your clients keep buying. Your making profits off them...

And they're making money off the investments. Ohio markets are still strong, and I would be out of a job real quick if I was selling bad deals.
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Jeremy Horton
Rental Property Investor · Somewhere over the Rainbow · Member since 2021 · 1k+ posts · 1k+ votes
3y
@Simon Ashbaugh
Well the Fed has literally told us interest rates will go up. So my bet is they will go up. That's the primary reason housing prices have gone down lately...because demand is down...due to interest rates. The supply didn't change. The demand only changed because of rates, and demand moves much faster than supply
0 Reply
Maurice D.
Coppell, TX · Member since 2015 · 485 posts · 310 votes
3y
The bottom is going to be bouncy and not an overnight shift up after hitting bottom.
We have the price drop everyone mentions here due to rates and low demand. What might also happen if the economy gets worse is an increase in defaults which will end up with a number of foreclosures/distressed properties. Banks will then take an even lower price just to get some dough..
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Brett Lee
Member since 2021 · 9 posts · 8 votes
3y
@Dylan Speer
Tell me more about how to get into treasury. My money is camped on 3.10 cd waiting for better deals which should be coming in the next 6 months or so ..
Can you get money out of Treasury quick?
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Simon Ashbaugh
Realtor · Columbus Ohio, Cleveland Ohio · Member since 2022 · 849 posts · 830 votes
3y
Quote from @Jeremy Horton:

@Simon Ashbaugh
Well the Fed has literally told us interest rates will go up. So my bet is they will go up. That's the primary reason housing prices have gone down lately...because demand is down...due to interest rates. The supply didn't change. The demand only changed because of rates, and demand moves much faster than supply

For sure, that's why i'd say to buy now before it hits 10, 11, 12 %
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Ryan MoyerBusiness Member
Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 991 posts · 1k+ votes
3y
Quote from @Simon Ashbaugh:

Quote from @Jeremy Horton:

@Simon Ashbaugh
Well the Fed has literally told us interest rates will go up. So my bet is they will go up. That's the primary reason housing prices have gone down lately...because demand is down...due to interest rates. The supply didn't change. The demand only changed because of rates, and demand moves much faster than supply

For sure, that's why i'd say to buy now before it hits 10, 11, 12 %

It may go up to those numbers, but it won't necessarily, right? I don't exactly know how all these things work, but haven't fixed rate lenders essentially already priced those future rate increases into their current rates?

My adjustable HELOC rate, which is based on prime, is still 2 points lower than fixed mortgage rates. Fixed rates are well above prime already. I would assume a big part of that is because they know the fed has said they'll raise more, so they're getting out ahead of it and pricing those into their fixed rates already.

I could be totally wrong on that, but that's mostly how it worked earlier this year. The Fed raised 1.5pts and fixed rates shot up from 3% to 6% (more than 1.5pts) because the fed said they'd raise more. Then the fed raised a couple more times and the rates stayed pretty steady around 6% (those raises were already priced in). It wasn't until the fed said they weren't done and that they were going to raise at least 3-4 more times that rates shot up again.
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Account Closed
Investor · Denver, CO · Member since 2022 · 184 posts · 78 votes
3y
Quote from @Brett Lee:

@Dylan Speer
Tell me more about how to get into treasury. My money is camped on 3.10 cd waiting for better deals which should be coming in the next 6 months or so ..
Can you get money out of Treasury quick?

Yes, very liquid. I'd do some research on your broker or call them and ask if they offer treasury bonds and how you should go about getting them.
0 Reply
Simon Ashbaugh
Realtor · Columbus Ohio, Cleveland Ohio · Member since 2022 · 849 posts · 830 votes
3y
Quote from @Ryan Moyer:

Quote from @Simon Ashbaugh:

Quote from @Jeremy Horton:

@Simon Ashbaugh
Well the Fed has literally told us interest rates will go up. So my bet is they will go up. That's the primary reason housing prices have gone down lately...because demand is down...due to interest rates. The supply didn't change. The demand only changed because of rates, and demand moves much faster than supply

For sure, that's why i'd say to buy now before it hits 10, 11, 12 %

It may go up to those numbers, but it won't necessarily, right? I don't exactly know how all these things work, but haven't fixed rate lenders essentially already priced those future rate increases into their current rates?

My adjustable HELOC rate, which is based on prime, is still 2 points lower than fixed mortgage rates. Fixed rates are well above prime already. I would assume a big part of that is because they know the fed has said they'll raise more, so they're getting out ahead of it and pricing those into their fixed rates already.

I could be totally wrong on that, but that's mostly how it worked earlier this year. The Fed raised 1.5pts and fixed rates shot up from 3% to 6% (more than 1.5pts) because the fed said they'd raise more. Then the fed raised a couple more times and the rates stayed pretty steady around 6% (those raises were already priced in). It wasn't until the fed said they weren't done and that they were going to raise at least 3-4 more times that rates shot up again.

Yeah, the bottom line is no one knows for sure. The fed signaled plans to raise rates another 1.25 percentage points before the year is out, so it's looking like it'll continue to rise. Obviously, I can't say with certainty how high, which is why i'd recommend buying now instead of waiting till it gets too high.
0 Reply
Craig J.
Investor · Gallatin, TN · Member since 2020 · 59 posts · 62 votes
3y
Bottom will not be in until the Feds are done raising rates and realize that they have stifled the economy and then start lowering them. IMO
0 Reply
Jeremy Horton
Rental Property Investor · Somewhere over the Rainbow · Member since 2021 · 1k+ posts · 1k+ votes
3y
@Simon Ashbaugh
This is flawed thinking from an investors standpoint, in my opinion.
I would ALWAYS prefer to buy at a higher rate lower price, than lower rate higher price.
Why?
You can NEVER change the purchase price, but you can refi in a few years when rates go down. If my deal works at 8-10%, imagine how good it will be when I refi at 5-6%.
If you buy at a high price, low rate...cool the deal works now. If you ever want to get $ out of that property, you're going to be paying a higher rate. If you want to build any kind of equity you'll need to hold for 10-15 years. Not only that, but it will take you longer to build equity because you bought at a higher relative price.
Interest rates drive demand. We literally saw that over the last 2 years. Higher rates slow demand, and prices will follow. It may take 6 months but if you want to sell, you'll have to drop the price.
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Simon Ashbaugh
Realtor · Columbus Ohio, Cleveland Ohio · Member since 2022 · 849 posts · 830 votes
3y
Quote from @Jeremy Horton:

@Simon Ashbaugh
This is flawed thinking from an investors standpoint, in my opinion.
I would ALWAYS prefer to buy at a higher rate lower price, than lower rate higher price.
Why?
You can NEVER change the purchase price, but you can refi in a few years when rates go down. If my deal works at 8-10%, imagine how good it will be when I refi at 5-6%.
If you buy at a high price, low rate...cool the deal works now. If you ever want to get $ out of that property, you're going to be paying a higher rate. If you want to build any kind of equity you'll need to hold for 10-15 years. Not only that, but it will take you longer to build equity because you bought at a higher relative price.
Interest rates drive demand. We literally saw that over the last 2 years. Higher rates slow demand, and prices will follow. It may take 6 months but if you want to sell, you'll have to drop the price.

"if it works at 8-10%" this is my point exactly. If the numbers work, they work. Certainly don't buy if the numbers don't work BUT, it'd be better to lock in a deal at 7.25% now and then refi when it goes back down to 3-5% than to wait till it's at 10%+ where the numbers are are tighter.
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Salvatore Lentini
Rental Property Investor · Doylestown, PA · Member since 2008 · 1k+ posts · 1k+ votes
3y
@John Zurzolo - buy something that cashflows now at these rates and you may be able to greatly increase your cashflow in the next few years if rates come back down and you refi. Tough to say on prices because all real estate is local. Some areas could drop 20% while others just go flat for a year or two. Overall, there's barely any inventory out there so it's going to be tough for prices to drop a lot. but again, it's all local. Some areas of FL could have bigger drops if they are 2nd home areas. 2nd home areas are volatile. Big upswings and big drops.
0 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
3y
Quote from @John Zurzolo:

When are we buying the house dip? I know it still has more to go down but when do we jump in to grab it? I'm currently looking to purchase a STR in Tennessee or Florida.
When do you guys think that area will be good to purchase?

Ok so you have a crystal ball and are going to time the market, not going to happen. If your buying rentals and getting 10% net caps who cares about up or down 10% or so,,,
0 Reply
Ray Johnson
Irvine, CA · Member since 2016 · 545 posts · 614 votes
3y
@John Zurzolo Depends on where you're planning to buy. If you're buying in Boise Idaho, you got some time to wait to buy, If you're buying in Newport Beach, CA. there won't be much of a dip so you can buy now.
Like everyone else has said, don't waste your time trying to time the market.
0 Reply
Sebastian Giraldo
REALTOR, Investor, and Rehab Expert · Miami Beach, FL · Member since 2015 · 196 posts · 74 votes
3y
It is too soon and I am also a firm believer that "Its always a good time to buy a great piece of real estate."
2 Reply
Jessie Leonard
New to Real Estate · New Braunfels/Canyon Lake TX · Member since 2019 · 32 posts · 21 votes
3y
The best time to buy real estate is yesterday!
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