What does everyone think of the current market?
downey, CA · Member since 2018 · 70 posts · 13 votes
Wondering what is everyone's opinion on the current market? It seems that RE prices are the same and nothing has changed
I think there will continue to be strong demand but probably some frustrated/bruised small landlords selling to get out of the game, just not enough selling to drop the market.
Optimistically, I don't think there will be a big wave of foreclosures as people have a lot more equity in their homes this time around and will fight harder to hold onto them, unlike the financial crises when so many were underwater anyway.
The cost of repairs/renovations/maintenance seems to be rising so that will possibly continue upward pressure on newer home prices. I could also see lower- and middle-income buyers in a lot of markets getting frustrated at high prices, so it's hard to predict. My strategy is to neither buy nor sell.
Wondering what is everyone's opinion on the current market? It seems that RE prices are the same and nothing has changed
That is correct. RE has not been hit, just lending has contracted. We are seeing a decrease of LTV lenders are willing to risk.
@Guifre Mora so weird that RE price hasn’t been affected so far, even though a recession seem to be looming ? What with so many industries being impacted and all. Will the market downturn be later in the year?
Look at it like this. It has nothing to do with any peculiar industry it's about the ability for borrowers to get a loan or buy a home. Whether it's their personal or investment. So out of the 30m people in unemployment how many are really buyers? There are more Americans than homes available and even more Americans today than 40 years ago. So all these people still need a place to live- rent or buy but they need a home so someone is buying them and renting them out. Also, low rates help borrowers afford more home or homeowners refi to lower rates equaling to more cash in their pockets.
Volume is down but pricing is stable. Nobody is desperate to sell (at least no yet), and so we’re not seeing any sellers willing to reduce prices yet. Investment property (small and medium size multifamily) looks unchanged. I think it’s subject to less volatility, and quite frankly I expect money to flow IN to these investments as money flows OUT of the stock market.
Price discovery is a slow process, especially when no one able to buy or needs to sell. From a pure valuation standpoint, less rent collection implies a lower value. Practically speaking though, valuation seems little changed as it often is disconnected from purely theoretical prices.
I felt like the market was cooling off before the pandemic hit. I have been paying close attention to the multi and single family market in my target area (LA County - mostly on the coast from Santa Monica to Long Beach) for the past 2-3 years. I feel like 2017-2018 was the high point. Now, people are listing at those same price points and properties are sitting for a long time. The buyer may withdraw the property and relist it a few months later (at the same price or with a ridiculously small reduction) to make it appear to be a "new listing" but if you look at the history, it's still been on the market on and off for months. I see a few properties go into escrow as "Active under contract" but then they fall out because the buyer can't get financing. From what I can see, only a small percentage of properties are actually selling, relative to the number listed.
My current opinion is that we will get some real estate owners who will need to liquidate their portfolios. This will create some good buying opportunities for others. I do not believe real estate prices will tank but we probably will feel the effects of it in some capacity.
I felt like the market was cooling off before the pandemic hit. I have been paying close attention to the multi and single family market in my target area (LA County - mostly on the coast from Santa Monica to Long Beach) for the past 2-3 years. I feel like 2017-2018 was the high point. Now, people are listing at those same price points and properties are sitting for a long time. The buyer may withdraw the property and relist it a few months later (at the same price or with a ridiculously small reduction) to make it appear to be a "new listing" but if you look at the history, it's still been on the market on and off for months. I see a few properties go into escrow as "Active under contract" but then they fall out because the buyer can't get financing. From what I can see, only a small percentage of properties are actually selling, relative to the number listed.
We are around the same area (LA here) so this caught my attention because I also noticed a pattern on a bunch of re-listings for the same property with (as you mentioned) ridiculously small decreases on the price.
What does everyone think in terms of a time frame to seeing prices fall. Whether it's minor or major. I don't see major decreases any time soon (even a year). Thoughts?
I think there will continue to be strong demand but probably some frustrated/bruised small landlords selling to get out of the game, just not enough selling to drop the market.
Optimistically, I don't think there will be a big wave of foreclosures as people have a lot more equity in their homes this time around and will fight harder to hold onto them, unlike the financial crises when so many were underwater anyway.
The cost of repairs/renovations/maintenance seems to be rising so that will possibly continue upward pressure on newer home prices. I could also see lower- and middle-income buyers in a lot of markets getting frustrated at high prices, so it's hard to predict. My strategy is to neither buy nor sell.
The situation seems even crazier now. From what it appears like in my area (South County/Laguna Niguel) people are going in (presumably for primary residences) as much as $50k-$100k over asking price. It's insane. Talking to my realtor it seems as though the only "correction" may come in the form of properties having less competition on them due to the slowly rising interest rates. But as far as the current appreciation and inflation, the demand spurring the accelerated appreciation is "doing some damage" as far as home buyers are concerned. Great for homeowners/investors though. We're looking to buy a primary home around here and it's pretty discouraging and frustrating.
On my market what's driving the prices and fats DOM is high demand and no inventory. That with rates being historically low is a perfect mixture for prices to soar. I don't think it'll slow unless rates go up or something shifts in the market. People are investing into RE like crazy so the multi fam market is on fire.
On my market what's driving the prices and fats DOM is high demand and no inventory. That with rates being historically low is a perfect mixture for prices to soar. I don't think it'll slow unless rates go up or something shifts in the market. People are investing into RE like crazy so the multi fam market is on fire.
I'm assuming you're talking about multi-fam especially in the more urban city center areas? Seems like a lot of people are exiting these areas due to the shift from having to work in an office to being able to work remotely from home. I've heard this particularly is the case up in SF. Are a lot of MF landlords now selling to get out of it?
The situation seems even crazier now. From what it appears like in my area (South County/Laguna Niguel) people are going in (presumably for primary residences) as much as $50k-$100k over asking price. It's insane. Talking to my realtor it seems as though the only "correction" may come in the form of properties having less competition on them due to the slowly rising interest rates. But as far as the current appreciation and inflation, the demand spurring the accelerated appreciation is "doing some damage" as far as home buyers are concerned. Great for homeowners/investors though. We're looking to buy a primary home around here and it's pretty discouraging and frustrating.
Coincidentally, I just bought my first primary residence in Laguna Niguel a little over a week ago (closing on track for 3/15). We bid on about 6 properties. We were out-bid on all. Here are the results (forgot to record 1st, but lost it to a higher than asking bid):
Asking - Our Bid - Final price
$620k - $622 - Cash offer for $620 and no contingencies won
$610 - $620 - Last we heard, it was at $670 (cash)
$630 - $636 - Sent multiple counter offers for $700
$640 - $645 - Last we heard it was at $770!! $130k over asking
$578 - $572 - This is the house we ended up winning. Right place/Right time situation. Appraisal just finished today too. We were getting really discouraged as well, especially since we were so quickly getting out bid by things we had no chance of competing with. Fortunately, we snagged this place and did not overpay.
The week we ended up locking in our rate is the week that it started creeping up. 3bd/2bath. Had to make some compromises on things like 2 car garage (only got 1) and a backyard (got front courtyard and open back area), but we are looking at it from an investment standpoint and plan on using it to jump to something better next.
Just keep reminding yourself not to overpay. It can be easy to get caught up in the frenzy of outbidding others and just trying to finally win something, but make sure you're making the right financial decision.
The situation seems even crazier now. From what it appears like in my area (South County/Laguna Niguel) people are going in (presumably for primary residences) as much as $50k-$100k over asking price. It's insane. Talking to my realtor it seems as though the only "correction" may come in the form of properties having less competition on them due to the slowly rising interest rates. But as far as the current appreciation and inflation, the demand spurring the accelerated appreciation is "doing some damage" as far as home buyers are concerned. Great for homeowners/investors though. We're looking to buy a primary home around here and it's pretty discouraging and frustrating.
Coincidentally, I just bought my first primary residence in Laguna Niguel a little over a week ago (closing on track for 3/15). We bid on about 6 properties. We were out-bid on all. Here are the results (forgot to record 1st, but lost it to a higher than asking bid):
Asking - Our Bid - Final price
$620k - $622 - Cash offer for $620 and no contingencies won
$610 - $620 - Last we heard, it was at $670 (cash)
$630 - $636 - Sent multiple counter offers for $700
$640 - $645 - Last we heard it was at $770!! $130k over asking
$578 - $572 - This is the house we ended up winning. Right place/Right time situation. Appraisal just finished today too. We were getting really discouraged as well, especially since we were so quickly getting out bid by things we had no chance of competing with. Fortunately, we snagged this place and did not overpay.
The week we ended up locking in our rate is the week that it started creeping up. 3bd/2bath. Had to make some compromises on things like 2 car garage (only got 1) and a backyard (got front courtyard and open back area), but we are looking at it from an investment standpoint and plan on using it to jump to something better next.
Just keep reminding yourself not to overpay. It can be easy to get caught up in the frenzy of outbidding others and just trying to finally win something, but make sure you're making the right financial decision.
Congrats!!! Sounds like a wild ride. I feel like the line is becoming blurred between what is considered "overpaying" and the "new normal" at this rate. Also, a lot of agents are purposely under-listing properties in hopes of instigating aggressive bidding wars (and it's working). We'll see what happens but I feel like things are only going to continue getting worse (more in the ballpark the 2nd, 3rd and 4th properties you looked at). Were those properties more "turnkey" and highly upgraded compared to the first property and also the property you're about to close on? $572 sounds like a heck of a deal around here for a 3/2 - is this a SFH and was it off-market or something?
The situation seems even crazier now. From what it appears like in my area (South County/Laguna Niguel) people are going in (presumably for primary residences) as much as $50k-$100k over asking price. It's insane. Talking to my realtor it seems as though the only "correction" may come in the form of properties having less competition on them due to the slowly rising interest rates. But as far as the current appreciation and inflation, the demand spurring the accelerated appreciation is "doing some damage" as far as home buyers are concerned. Great for homeowners/investors though. We're looking to buy a primary home around here and it's pretty discouraging and frustrating.
Coincidentally, I just bought my first primary residence in Laguna Niguel a little over a week ago (closing on track for 3/15). We bid on about 6 properties. We were out-bid on all. Here are the results (forgot to record 1st, but lost it to a higher than asking bid):
Asking - Our Bid - Final price
$620k - $622 - Cash offer for $620 and no contingencies won
$610 - $620 - Last we heard, it was at $670 (cash)
$630 - $636 - Sent multiple counter offers for $700
$640 - $645 - Last we heard it was at $770!! $130k over asking
$578 - $572 - This is the house we ended up winning. Right place/Right time situation. Appraisal just finished today too. We were getting really discouraged as well, especially since we were so quickly getting out bid by things we had no chance of competing with. Fortunately, we snagged this place and did not overpay.
The week we ended up locking in our rate is the week that it started creeping up. 3bd/2bath. Had to make some compromises on things like 2 car garage (only got 1) and a backyard (got front courtyard and open back area), but we are looking at it from an investment standpoint and plan on using it to jump to something better next.
Just keep reminding yourself not to overpay. It can be easy to get caught up in the frenzy of outbidding others and just trying to finally win something, but make sure you're making the right financial decision.
Congrats!!! Sounds like a wild ride. I feel like the line is becoming blurred between what is considered "overpaying" and the "new normal" at this rate. Also, a lot of agents are purposely under-listing properties in hopes of instigating aggressive bidding wars (and it's working). We'll see what happens but I feel like things are only going to continue getting worse (more in the ballpark the 2nd, 3rd and 4th properties you looked at). Were those properties more "turnkey" and highly upgraded compared to the first property and also the property you're about to close on? $572 sounds like a heck of a deal around here for a 3/2 - is this a SFH and was it off-market or something?
Have definitely seen the underpricing/bidding frenzy. Some are extremely obvious, but the annoying ones are the ones that make you think you have a chance.
The other properties were all around the same. Not 100% remodeled with the latest and greatest, but all basically turn key. Completely livable upon moving in, but we would have done minor things, like changing or refacing cabinets, repainting, floor changes in some rooms based on preference, etc.
Ours is a condo (another compromise, 2 shared walls). It was actually in a location we had put on our "hard no" list a while ago, because the area didn't look that great in pictures. Our realtor suggested we drive down and walk it one day and it turned out to be different than we expected. Out of 5 homes currently available in that area (Laguna Woods), ours seemed to be on the better looking side with the best view, so we jumped on it. The next upgraded home with same floor plan sold for around $580 I think. So I guess another suggestion would be to keep an open mind and actually drive the areas that you don't think look great in pictures. Obviously, depends on your individual price range and needs for a home. We HAD to have work space available since we both work from home.
The situation seems even crazier now. From what it appears like in my area (South County/Laguna Niguel) people are going in (presumably for primary residences) as much as $50k-$100k over asking price. It's insane. Talking to my realtor it seems as though the only "correction" may come in the form of properties having less competition on them due to the slowly rising interest rates. But as far as the current appreciation and inflation, the demand spurring the accelerated appreciation is "doing some damage" as far as home buyers are concerned. Great for homeowners/investors though. We're looking to buy a primary home around here and it's pretty discouraging and frustrating.
Coincidentally, I just bought my first primary residence in Laguna Niguel a little over a week ago (closing on track for 3/15). We bid on about 6 properties. We were out-bid on all. Here are the results (forgot to record 1st, but lost it to a higher than asking bid):
Asking - Our Bid - Final price
$620k - $622 - Cash offer for $620 and no contingencies won
$610 - $620 - Last we heard, it was at $670 (cash)
$630 - $636 - Sent multiple counter offers for $700
$640 - $645 - Last we heard it was at $770!! $130k over asking
$578 - $572 - This is the house we ended up winning. Right place/Right time situation. Appraisal just finished today too. We were getting really discouraged as well, especially since we were so quickly getting out bid by things we had no chance of competing with. Fortunately, we snagged this place and did not overpay.
The week we ended up locking in our rate is the week that it started creeping up. 3bd/2bath. Had to make some compromises on things like 2 car garage (only got 1) and a backyard (got front courtyard and open back area), but we are looking at it from an investment standpoint and plan on using it to jump to something better next.
Just keep reminding yourself not to overpay. It can be easy to get caught up in the frenzy of outbidding others and just trying to finally win something, but make sure you're making the right financial decision.
Congrats!!! Sounds like a wild ride. I feel like the line is becoming blurred between what is considered "overpaying" and the "new normal" at this rate. Also, a lot of agents are purposely under-listing properties in hopes of instigating aggressive bidding wars (and it's working). We'll see what happens but I feel like things are only going to continue getting worse (more in the ballpark the 2nd, 3rd and 4th properties you looked at). Were those properties more "turnkey" and highly upgraded compared to the first property and also the property you're about to close on? $572 sounds like a heck of a deal around here for a 3/2 - is this a SFH and was it off-market or something?
Have definitely seen the underpricing/bidding frenzy. Some are extremely obvious, but the annoying ones are the ones that make you think you have a chance.
The other properties were all around the same. Not 100% remodeled with the latest and greatest, but all basically turn key. Completely livable upon moving in, but we would have done minor things, like changing or refacing cabinets, repainting, floor changes in some rooms based on preference, etc.
Ours is a condo (another compromise, 2 shared walls). It was actually in a location we had put on our "hard no" list a while ago, because the area didn't look that great in pictures. Our realtor suggested we drive down and walk it one day and it turned out to be different than we expected. Out of 5 homes currently available in that area (Laguna Woods), ours seemed to be on the better looking side with the best view, so we jumped on it. The next upgraded home with same floor plan sold for around $580 I think. So I guess another suggestion would be to keep an open mind and actually drive the areas that you don't think look great in pictures. Obviously, depends on your individual price range and needs for a home. We HAD to have work space available since we both work from home.
Makes sense - we sold our place in Irvine (condo) back in September and kind of regret it now with the prices soaring sky high the way they are. Although, it became really hard living there especially within the past few years as we were downstairs and the last two renters above us were extremely noisy. I couldn't stand the thought of being there for much longer. After that incident, we vowed to never live in a downstairs unit ever again. Preferably no shared walls either. But around, here things like that cost a premium :) We too are looking for an extra room that can be used as an office since I WFH as well. Currently we're renting a 2 bed 1 bath apartment - we've gotten used to it but it's nuts thinking that we were in a 3/2 before this. We have two kids, ages 5 and 4 hahahaha.
Anyway, we may be forced into a situation where we have to just rent for a couple more years.
Hi David - Did you buy in Laguna Niguel or in Laguna Woods? Laguna Woods is a 55+ community that's pretty luxurious (plenty of amenities and a relatively high HOA). I don't believe activity there is representative of the market in Orange County. Activity in Laguna Niguel is likely much more representative of the general market conditions.
Hi David - Did you buy in Laguna Niguel or in Laguna Woods? Laguna Woods is a 55+ community that's pretty luxurious (plenty of amenities and a relatively high HOA). I don't believe activity there is representative of the market in Orange County. Activity in Laguna Niguel is likely much more representative of the general market conditions.
Is all of Laguna Woods exclusively 55+? I thought there were some neighborhoods/areas that were standard condos/townhomes/SFHs...?
I believe the city consists of Laguna Woods (the gated retirement community which used to be Leisure World) and some commercial areas. I do not think there are any residential units outside of the gated community. If anyone knows otherwise please let me know (with some reliable references). Thanks
Hi David - Did you buy in Laguna Niguel or in Laguna Woods? Laguna Woods is a 55+ community that's pretty luxurious (plenty of amenities and a relatively high HOA). I don't believe activity there is representative of the market in Orange County. Activity in Laguna Niguel is likely much more representative of the general market conditions.
Oops! Laguna VILLAGE. Not Woods. Too many Laguna's....village, woods, hills, niguel. And on their website I think they call it "Laguna Woods Village" which makes it more confusing.
Woods, as far as I know, is full senior community like Joaquin mentioned. Village is right next to it.
Laguna Village condos in Laguna Hills
Haha thanks for the clarification! Makes sense now :)
Do any of you guys see much 'relief' in terms of home pricing in the years to come? I'd prefer not to be stuck in a long-term rental situation if I don't have to. But the current scene is just insane. It just feels like everything is way overpriced and people are settling for it all. Since my last post, I saw a couple homes going for $50-100k more than the listed price. On one hand, you hear people saying don't jump into the fray and wait it out but I feel like if we don't try to get it now it'll be even worse 1-2 years later and homes that are selling for $800-900k currently will be selling in the millions (factoring in appreciation and inflation). What do you all think?
I am in Northern Virginia and it is so competitive here that just offering on a listing does not cut it. You have to get creative with financing the deal and finding deals. I have been educating myself lately on finding off market deals. But definitely very tough out there for REI.
Depending on the MSA the residential or commercial real estate is in, value is going to be driven by the unemployment numbers in my opinion.