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.
Quick update on the current market in South OC:
Last week, we put in an offer of $915k + over 40% down and removal of appraisal and inspection contingencies in addition to a $2500 escalation clause on a 4/2 home listed at a little under $880k in Laguna Hills. Someone outbid us by a margin of $60k and barely $100k over the asking price.
Yesterday, we put an offer of $925k + 40%+ down and removal of appraisal and inspection contingencies (no escalation clause) on a 3/2 home listed at $900k. I'm pretty certain this isn't going to be enough and someone will buy it for $950-$960k at least. We are expecting to hear back on a decision by tomorrow or soon after. I'm not optimistic about any of this. It's absolute madness.
@Jeremy Lee
For the last 6 months, we hear about Californians exiting CA. Theoretically there are fewer people coming in than leaving. Do you agree with this? If so, why would RE prices (especially in your area) continue to act this way? That's crazy.
It's uncommon to see less than 10 offers submitted on a starter home in Tampa. I see many folks coming in from the Northeast. Every day, I think I speak with someone trying to move down from New York (renters and buyers).
@Jeremy Lee
For the last 6 months, we hear about Californians exiting CA. Theoretically there are fewer people coming in than leaving. Do you agree with this? If so, why would RE prices (especially in your area) continue to act this way? That's crazy.
It's uncommon if I see less than 10 offers in on a starter home in Tampa. I also see many folks coming in from the Northeast. Literally every day I think I speak with someone new from New York moving down here.
Hi Dillon,
I think there are definitely more Californians leaving the state but I don't think it's nearly as many to reduce the demand so that the supply can keep up - there is a housing shortage in CA and home building/residential land development has not been a big priority here (at least around where I live).
Also, I think a lot of renters or those with smaller homes in LA (especially those in tech or those with generational wealth) are realizing that WFH is a thing, and are leaving the bigger metros for the suburbs (my realtor said that in most metro areas and places near universities, etc apartment/multi-family landlords are experiencing higher vacancy rates and having to offer more concessions to get people in). Regarding OC, a lot of people from LA are migrating south and getting more for their money (the LA market is even crazier than it is here from what I've heard, so it must seem like a bargain for anyone who was considering living in LA but can now WFH in OC). That's my theory in explaining at least part of it. According to the seller's agent at the place where we were outbid by $60k, these people were moving from Hollywood Hills and were already outbid 5 times and got fed up with it.
I think over time, more and more people (particularly middle class) will get priced out of living in CA in general and the ones left will be the ultra wealthy, upper middle class and the poor/homeless. Homelessness has increased seemingly exponentially too - it feels like yesterday when we would drive the 5 or 101 from OC to LA and vice-versa and you'd see maybe a few tents here and there. Now in many places (beginning around downtown LA and north through Griffith Park area) there are patches of mini-tent cities. I think it's worse along the 101 actually. It's pretty sad how bad things are getting, and I fear it'll only get worse. I think the frenzy and desperation are settling in as far as people wanting homes. 3/2 and 4/2 SFRs seem to be the highest demand and are commanding the most drastic overbids.
Update #2: our offer for $925k on the last house was exceeded by an all cash offer that was well above every other offer (according to the realtor... he didn't disclose a range/number so I'm very curious what someone was willing to spend on a 3/2).
Was reading with interest your home buying adventure.... wow that is insane. Just curious are you renting right now?
I am renting right now in Irvine and was toying with the idea of buying a place. But even though I have a good income and could probably spend up to $800k by myself, I don't have enough liquidity for a 20% down payment and I don't want to go into a lot of debt. And after reading how crazy the market is right now, I am thinking I just don't want to get caught up in FOMO madness, and the better choice is to just do nothing and keep banking my paycheck.
What you said here:
"I think over time, more and more people (particularly middle class) will get priced out of living in CA in general and the ones left will be the ultra wealthy, upper middle class and the poor/homeless"
This is a pretty sad commentary considering I was born and raised in LA and lived most of my life in SoCal and your above description sounds like a third world country, not the California dream :(. But this seems to be happening all over the place and you can't deny it's happening.
I would love to do another deal, but real estate in general all over the US seems kind of toppy to me... so not sure how I feel about it.
@John M - yes we are currently renting in Laguna Niguel. I agree though - buy what you can afford and nothing more. I think more and more people are getting forced out of state with all this madness. It's probably going to take some time before things settle down as far as dog-eat-dog/Ebay housing bidding wars.