Hi all, after chairman Powells speech yesterday, it is clear that the fed is committed to fighting inflation by raising interest rates and selling bonds. This will have a negative effect on the housing market due to less demand from buyers. We have already seen price declines in many markets all over the country.
Now, I know that the real estate pros say to never try to time the market, however, the fundamentals don't look too great right now and there is a good probability that buyers will be able to buy at lower prices if they wait a bit. I would love to hear from all of you on this forum your arguments for why it is a good or bad idea to wait for home prices to fall.
You do what you want to do. We are always a buyer. We bought property in 1981. We bought property in 2008. For the last 35 years we have averaged buying more than 1 property every month. We don't care if interst rates are low, high, stable or fluctuating. We don't care if if a buyer's market or a seller's market. We are ALWAYS buying. Don't wait to buy real estate; buy real estate and wait.
When it comes to investing in real estate, it's all about the numbers.
You get paid rent on a month-to-month basis.
Your mortgage payments are on a month-to-month basis.
Therefore you should be analyzing the same.
Even if prices go down, if interest rates go up, then your cash flow is still hurting.
I could take a 10% hit on the value of my house hack, but if rents stay the same, I'm still making the same amount of money. It is a paper loss.
If the deal makes sense, then jump on it.
The fundamentals are showing a strong demand, not the opposite. Much of real estate is emotional. Unemployment is low, household formations is growing. That is what drives real estate values in the residential market.
you need to take into consideration financing cost over the next several years. If you don't have your properties on 30 year notes your payments are going to sky rocket. Better hope the rent keeps up with the new numbers. A recession means the average joe has less money to spend. So don't you think rents will come down they did in 2008- 2013. So higher payments lower rent does not equal success. It is not a good time to buy a house at the top of the market anytime unless you going to live in it and stay in it for years and the average person does not do this. Average ownership a few years ago was 3-5 years.
@Kevin Maher My experience has been a little different that yours. I've been renting properties for decades, long before 2008.
1. In the period from 2008 to 2013 we never lowered rents not even once.
2. In the period from 2008 to 2013 we never had extended vacancy and always had high demand for rentals. Several times there was no ad, no sign and people would stop because there was a bunch of trash on the curb. They would ask, are you going to be renting this place?
3. In that period from 2008 to 2013, there was less demand for BUYING real estate, but MORE demand for renting property. The less demand caused less competition, very few over asking price offers, and more foreclosures and defaults. Some were horific, one development built circa 2004 has town houses selling as high as $225,000 or so. At the lowest part of the recession prices dipped below $100,000 briefly. Some people lost their homes, but other continued paying the mortgages even though they were underwater. And there were good reasons for them to act in that manner.
4. In that period from 2008 to 2013, we never lost a tenant because they bought a house, and didn't want to be a renter any more.
5. We didn't buy any TH in the development above. There was other properties that we did buy and got good value for property. One property we bought in 2014 had previously sold for $96,000, we paid $34,000, rented it to one tenant for 7 years, when they moved out (to another rental) we sold the property for $149,900. Another house we bought in 2013 had previously sold for $200,000, we paid $119,000, rented it for 5 years, tenant moved out and we sold for $210,000.
6. During that period from 2008 to 2013, for the most part the tenants that we dealt with did NOT want to move. In general that meant that the tenant behaved and we actually had very few evictions. When tenants are not wanting to move its a good time to be renting properties. Recession means more renters, and you get to chose from a larger renter pool, making for better tenants staying longer. During that period we had some very long term tenants, some more than 30 years!