Is market softening? How does your local market look?

108 Replies

Hello Joanne Tsai from New Jersey, I can see that you are more detailed with specific Economic numbers that you find important to long term Real Estate Investing. Let's just look at Monetary Policy, which for us is the most important figure. My understanding as a Rental Market Investor in Tampa, Florida for thirty years, the main concern for us is the Feds Interest Rate at Zero. The Mortgage Rates are based on the Ten Year Bond. If the Fed raises the Rate to the Banks, the Mortgage interest rates will move up. There are not a lot of Direct Correlations out there that mean anything to a small time Rental guy, but, if the Mortgage rates go up you will see a slow down in home sales with each quarter point increase. As a Futures trader our main concern is with the Fed printing endless "Stimulus Money" which keeps the Stock and Futures Markets moving up. "You Devalue the Currency, the price of Stocks etc. goes up." The Fed has started to tighten up and we wait to see that affect on the Markets at this top. "Will the Trend continue up on our Daily, Weekly and Monthly charts?" "Macro Economic and Monetary" for us depends on this. We don't care about Inflation, CPI, Jobless Rate, Unemployment numbers, or anything on the Daily Economic Calendar. As a micro-scalper and a chartist, not using Fundamentals, I just know when to trade Long or Short for another profit. I have a contract on my last rental house in Tampa and I am not looking to Buy at this Top. I have the rest of my paid off properties in Brazil, where if the price of Gasoline goes up, the price of everything goes up on a day by day basis. As a Futures trader, we can look at the price of Gold going up and the value of the Dollar going down or vice versa. If the value of the Dollar goes up, the Real goes down, etc. Simple correlations that you can bet on. I had a small portolio of rentals in Tampa for 30 years and this Reventureconsultants video about Florida R.E speaks to me clearly...Florida Housing Crash 2021? Best v Worst Cities to Buy. He also has a good one specifically, right now, on Tampa. 

Still offering $25K+ over asking and waiving contingencies.

Originally posted by @Joanne Tsai :

@Rob Lee

That still means above listing price, correct? Do you have a sense how much over the asking? And are buyers still waiving contingencies?

Thanks for the insight!

It depends so much on your local area. The big people on tv will give a generalization of what they think that will get ratings. For example if the market is slow that day and that will get ratings.... guess what the headlines will be..... It depends so much on the area you are in and even the price point. For example I'm in AZ and I might see homes over $1.5M taking longer to sell than they did a month ago but just down the street in Mesa I'll see $400k houses going immediately still. So for me I'd have to say it depends on the part of town and the price point you're targeting.

Here in Phoenix, we are seeing the brakes being lightly tapped- some buyer fatigue/trying to wait out the high-priced market. But in no way are we starting to see the market turn. Last month in Maricopa County 60% of the closings, went for over list price. And 60% of the new listings in July were under contract within 30 days. But we are also seeing 1 in 5.5 listings fall out of contract. Whether that be due to getting the inspection back, having multiple offers submitted/accepted, submitting blind offers, we are not sure. We are still in a solid seller's market here in Phoenix.

@Michael Haynes I am not saying Nick is completely wrong on this, I also don't have a crystal ball. There are people out there speculating whether it's inflation, stagflation or inflation and then deflation. "Nick" guy seems to agree with Powell that inflation is "transitory", which I think most likely not. As Ray Dalio discussed, it would be difficult for the FED to raise the rate by any meaningful amount due to the amount of money printed and the debt we are in. He thinks that we are heading towards monetary inflation. I don't necessarily know if that will ultimately lead to deflation in RE market, and how soon that will happen. Again, Nick said the best markets to invest is Buffalo and Albany NY based on "data", but I don't think to invest in states like NY that's crushing landlords right now is anything wise. RE investing has a lot of factors, and Nick himself is without a track of success in REI, that's why I would take his words with a grain of salt.

@Joanne Tsai

The market is still hot in Saratoga Springs and surrounding areas.

I have clients offering 20-50k over asking and still not winning the bidding war. There is increased demand right now during the summer months but do see things cooling off a little this winter in the area.

The only deals I see are off market.

Hello again Joanne Tsai, you seem to be really concerned with the long term, Fundamental conditions of the US Economy. Like Inflation, Deflation or Stagflation make a difference with your ability to make Money in Real Estate. If you have been following Powell's Fed meetings, you would know that he is trying to deny the current Inflation in everything in order to not spook the Public and have to raise the Interest rate. When the current Administration stops pumping Oil and the price of Gasoline goes up, you have to wait and see later on when those decisions change and that part of "Inflation" in gas prices, goes back down. That is what I am saying with what the little Investor has to guage the Fiscal and Monetary condition of the Economy. Dalio and a lot of other smart guys know the correlation I pointed out for a simple guage of our current State of the Economy...if the Fed continues, like every other Central Bank in the world, to print endless amounts of Money, the only result will be Currency Inflation and not Real Estate Market Deflation. I think you are relating the word Deflation to the original question which was, "Is the R.E. Market softening?" That's taking a simple question and making it a college course discussion that has no ending. Nick at Reventure Consulting is a Data programer who is using current data graphs from Zillow etc. to show you current conditions of the R.E. Market from City to State to the whole Country. It's like the Government Census data. Indisputable organization of the numbers on easy to read graphs for you to develop a picture of the condition of the Market that you are interested in. Based on the Data, the numbers, the CAP Ratio etc. is where Nick got an idea that the numbers are pointing you in one direction or another. It's not his opinion. "Just give me the Facts" and let me sort it out for myself. There is nothing personal about it.

Hello Joanne Tsai, I can give you an example from Robert Kiyosaki on the question, "Is the Real Estate Market softening?" His latest youtube video is a long interview, where his is totally flippant about the Fundamental that you are thinking about, which can be defined as, "Risk On or Risk Off." Robert says he has some 30,000 Doors and the only thing he is doing is SELLING. He has been on TV and youtube for two years telling us that, "he has Faith in Silver." He says the only thing he is buying is Gold and Silver and Cryptos. There are degrees of Greed and Fear in Investing and Trading. It is a personal thing that you have to decide for yourself, based on the available information to you. I am selling my last house in Tampa next week as a Tax-free Sale of my Residence. My Townhome in Valrico I paid Cash for. The rest of my paid off properties are in Brazil. I owe zero Debt and I will be on my way to take care of my Rentals, beach home and farm in a couple months. I am concerned with the horrible situation we have with the new Administration and all the mismanagement. I studied with Krishnamurti 50 years ago and he said, "When the House is on Fire, all you can do is save yourself." God Bless America. 

Definitely softening in Milwaukee area. Buyers are burned out from touring, offering and getting a rejection letter. Buyers have taken a vacation in July (best month in WI), and I expect will be back on after school starts up. Sellers are not seeing 30+ offers within the first 2 days. It takes a good week to get 1-2 offers now, if the house is not overpriced. There are some homes sitting for 45days+ even.

@Joanne Tsai

More than a couple of my agents friends in the Bay Area who are everywhere from San Francisco to the far inner suburbs have noted a slight slowing and cool down just in the past month or so. It needs it. This stuff is crazy.

@Sean Lopez there are a few factors that play into it. Bend is a tourist town for most of the PNW and CA. Beautiful mountain town that doubles its size in the summer.

Before the pandemic we were top 5 in the country in regards to people who work from home and since then it’s only grown. I just double checked and it’s one of the fastest growing cities in the country.

We also just had Facebook build a big facility in prineville which is a farm town about 30 minutes away, lots of people from Silicon Valley have been moving up for those jobs as well.

I know most areas have seen housing shortages and increases in prices, but most of us in bend don’t see it stopping for a while.

If you’re interested to hear more I’m happy to talk more about it, I think it’s a great market to invest in and would be happy to help however I can!

@Michael Haynes

The stuff with Rich Dad is this.... yes, the collapse is coming because of the amount of money we are printing, and he has a lot of assets that he has to protect, but has he actually told you where else to invest? He also said Bitcoin right now is too high and he bought it at $9000. At this point, if he is advising anyone to sell their assets to put the money in the bank, then wait till one loses all that purchasing power. It's all relative, a lot of people are rushing into the RE market, because to them, it's less of a bubble than the stock market. We are experiencing an asset bubble, where almost all assets are inflated. Amazon share was $1700/share pre-covid, and now it's more than doubled in a year. Is it a bubble like AMC or Gamestop? would it go down to $1700 when the bubble bursts? I align more with what Ray Dalio's saying; some price surge is dangerous, but not all stocks are bubbles evne though right now a lot of them are.

That's why I don't believe in everything Nick is saying. He has been warning the housing crash in 2021 since early this year. There are a few months left, and we shall see. when the market cools down, it's not equivalent of "crash". I am a trained statistician, the first thing I look at is how sound the data one is using, to use CPI to indicate inflation, that's quite misleading (and that's what he uses). His clip on NYC and Black Rock is also not very accurate (I am not familiar with Tampa market, so I can't comment). While he does compile the data for his viewers, one can always pick and choose what data he uses to narrate the stories, and that's what he is doing. Again, I am not saying everything he said is wrong, but I've seen enough red flags that would lead me think twice. and yes, GOD BLESS AMERICA!

@Joanne Tsai I’m In CA, SoCal near Pasadena. Average DOM barely ticked up, prices still very high, still seeing multiple offers over asking (oftentimes with no inspection contingency). Not sure if prices are lower than their peak or still trending higher, would have to do some more looking into it. Overall, not much seems different from a month or two ago.

Beutler Exchange Group LLC was great. They are tax consultants and we're very helpful with questions. They are local to my area in Lake Oswego, Oregon.

Originally posted by @Robert McAllister :

Definitely softening in Milwaukee area. Buyers are burned out from touring, offering and getting a rejection letter. Buyers have taken a vacation in July (best month in WI), and I expect will be back on after school starts up. Sellers are not seeing 30+ offers within the first 2 days. It takes a good week to get 1-2 offers now, if the house is not overpriced. There are some homes sitting for 45days+ even.

Agreed. Buyer fatigue and the blistering hot summer/vacation time certainly caused it to take a step back. Still in the seller's favor, but not blistering hot the way it was a few weeks/months ago.

Originally posted by @James Thiel :

@Jack Orthman Interesting that tour initial buyer was willing to give you > $120K over asking immediately, but then balked in a seemingly minor fix. Hmm, ya just never know. 🤔

Sorry! There must be some sort of error. I put the house on the market for $330k and the buyer immediately offered $350k, or $20,000 more than the asking price. Then, the buyer cancelled after the home inspector told him the foundation was leaking because there was because the dog urinated on the walls and the baseboard had bubbles on them on the entire first floor, on an inside wall on the 2nd floor hallway and in the master bedroom on the 2nd floor.

The inspector also wrote in his report that the stucco walls were damaged because I removed a satellite dish and put some caulking in the screw holes. I am not happy about him saying the walls were 'damaged'. 

Not going to lie! It was my fault that the inspector the inspector saw the bubbles in the baseboards because I should have replaced the baseboards when I painted the house, but I think the bubbles got larger from the water in the paint and I thought the carpets were going to cover the bubbles.

Hello Joanne Tsai, Now I understand where you are looking for information and data to judge the current Real Estate Cycle. With Real Estate you can be an Inverstor or a Trader. You can Buy to Rent for the longterm or you can do Flips. My Buy and Hold Investing was always with Rental Houses and Duplexes. My Trading started thirty years ago with Mutual Funds and then Stocks and Options on Stocks and now I am a micro-scalper with the ES Future. In a couple weeks when I close on my last house in Tampa, I will have $206,850 in Tax-free Sale of my Residence to put to work. You are a Fundamental data, longterm Investor. Your Timeframe is Daily, Weekly, Monthly, Yearly. I am a Technical Chart Trader. My Timeframe is Intraday. I trade inside a One Second chart with 10 to 50 Tick charts. I am a Chartist, which is why I see what Nick is presenting on his Real Estate data charts at Reventureconsulting.com. Especially the videos on Florida and Tampa where I have had Rentals for 30 years. The main thing I learned from Robert Kiyosaki was that, "Cash Flow is King." Right now, "Cash is Trash," but, when the Market rolls over and begins the Downtrend, "Cash will be King." In a couple weeks I have to look for a place to park some money like everyone else who is looking for Yield in a Federal, Zero percent Interest Market. You talk about the current Bubbles, but, I have lived through three Maxi-devaluations of the Currencies in Chile, Argentina and Brazil. I pray that this Administration is not allowed to continue in its effort to Inflate and destroy the Dollar, which will cause a Maxi-devaluation and collapse our Banking structure. I do not want to buy another Rental in the US as it will take me years to rehab and sell all my properties in Brazil, where I want to retire to. I can make $100 to $300 an hour trading a couple ES Future contracts on my laptop. My partner averages $2000 in two hours and this week is making $4000. Today was a tough day because he was trading before noon. It smoothed out for the afternoon into the Close, without any problems. What I learned in foriegn countries is that when the Government lowers Interest rates to where you cannot make any Money Investing in Fixed Income vehicles, they force the citizens to make Businesses and buy and sell things like Houses and Cars etc. Can you imagine living in Europe where Interest rates are Negative and you pay the Banks to hold your Money? The question, "Is the Real Estate Market softening" for me is a Cycle Study. I understand charts and Harry S. Dent has shown me on his Correlated Demographic charts, Long Term, Age Related Spending Cycles. Do you know why the Euro and European Union will never work? Martin Armstrong's Historical Currency studies, very simply connected all the dots for me and his longterm graphs and charts make broad brush sense. For the Futures and Commodities Markets, the Larry Williams broad brush charts also give you Inflection Targets to Swing and Position trade. The same is with Ray Dalio and his youtube video lessons like, "How the Economic Machine Works." His example of the Business Cycles, Short and Longterm are very easy to understand. So, based on Ray's video you should know what part of the Cycle we are in and be able to Invest your Money with his picture of the current Economy. I am headed back to my properties in Brazil where we went through a collapse of the Economy because of a huge political, corruption scandal involving enormous kickback schemes to the International builders of the Olympics in 2016. 500 Congressmen and women, Senators and even the President went to prison. The value of properties devalued just like what we had in Tampa. We lost 60% in Tampa and around 50% in Brazil. My properties in Brazil have been increasing in value for the last couple of years and I expect that it will take me ten years to get back to the past values and more as they have decided to do what the Saudis are doing. In front of my beach home we have two oil fields with up to 200 years of natural gas and oil. Where the US, influenced by the Socialist, One World Government types in Europe are "going Green," the Brazillians are going to pump till they can't pump no more. Jobs have opened up again and I live in the Oil Field Capital of Brazil where building programs to support this new wave of production are ongoing after the Covid Crisis. That means my properties will increase in value and I have to get ready to Sell one at a time for my Retirement. I am not in the Accumulation of Wealth phase and everything I own, I built or it is paid off. I thought out my Business Plan when I was 15 years old. I was never a Real Estate Pro. I'm just a small time Landlord like that guy in Oregon who wrote, "The Millionaire Next Door." I worked in the oil field on boats and ships for twenty years and I am, "The Seasick Sailor Rowing Home." 

Here in Tampa Florida, we're selling properties like hotcakes to hedge funds companies and a whole bunch of international and out-of-state investors. We still feel "strong" for the next two years.

Unless days on market moves above 45-60 days, still seller market.

Now DOM is below 10 days for more properties.

Even Fed moves up rate, mortgage rate is likely to stay low. I predict no slow down until 2023 (if fed rate hike is fast), or even longer.

Sorry for those people who try to wait then buy.