How are you responding to price cuts?
Specialist · Indianapolis, IN · Member since 2021 · 312 posts · 282 votes
How are you responding to price cuts?
Most Popular Reply
Joseph CacciapagliaBusiness Member
Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votesMarket inefficiency is where profits come from. Right now many sellers are panicking. I've already seen several sellers take deals well below what I thought possible, because they're staring into the unknown right now. The savvy investors I know are starting to make a lot of low offers, because some sellers are actually taking them. I believe some of these will end up being below the actual market bottom. Some of the best deals I saw during the GFC happened in 2008, long before the bottom, but right when the panic was highest.
Im in San Antonio, which is performing relatively well compared to several other markets I follow. Despite that, we still have plenty of nervous sellers, and not many buyers out there trying to capitalize on it.
27 Replies
- 3yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
I am keeping my eyes open nowadays as well.....whether driving around, or checking Zillow every few days....
Prices are definitely dropping here, at least at the price point I am looking for (<$300k). Can't give an exact number, but based on my observations and knowledge, I would say about 15% at this point. Time on market has increased as well.
I don't know your market, but I think we are a ways from the bottom of this 'correction'. I'd definitely wait until after the elections in November, wait out the winter where housing is kinda dead anyway....next Feb/March might be the time. But what do I know.....?
- 3yTyler LingleBusiness MemberReal Estate Consultant · Indianapolis, IN · Member since 2021 · 440 posts · 292 votes
Curious -- How do you see rent rate increases leading to price reductions?
Roots Realty Co. 561 Reviews - 3yJoseph CacciapagliaBusiness MemberLender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
Market inefficiency is where profits come from. Right now many sellers are panicking. I've already seen several sellers take deals well below what I thought possible, because they're staring into the unknown right now. The savvy investors I know are starting to make a lot of low offers, because some sellers are actually taking them. I believe some of these will end up being below the actual market bottom. Some of the best deals I saw during the GFC happened in 2008, long before the bottom, but right when the panic was highest.
Im in San Antonio, which is performing relatively well compared to several other markets I follow. Despite that, we still have plenty of nervous sellers, and not many buyers out there trying to capitalize on it.
- 3yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votesExactly. Another thread has poster with an opinion that sellers will not panic, but your examples are where I think we're headed, and pretty quick. Winter is coming fast and people know that is a dead market...
Quote from @Joseph Cacciapaglia:
Right now many sellers are panicking. I've already seen several sellers take deals well below what I thought possible, because they're staring into the unknown right now. The savvy investors I know are starting to make a lot of low offers, because some sellers are actually taking them.
Despite that, we still have plenty of nervous sellers, and not many buyers out there trying to capitalize on it.
- Member since 2022 · 485 posts · 216 votes3y
Quote from @Bruce Woodruff:
Exactly. Another thread has poster with an opinion that sellers will not panic, but your examples are where I think we're headed, and pretty quick. Winter is coming fast and people know that is a dead market...Quote from @Joseph Cacciapaglia:
Right now many sellers are panicking. I've already seen several sellers take deals well below what I thought possible, because they're staring into the unknown right now. The savvy investors I know are starting to make a lot of low offers, because some sellers are actually taking them.
Despite that, we still have plenty of nervous sellers, and not many buyers out there trying to capitalize on it.
You do realize you are in Arizona where people are seeing bigger adjustments than say the northeast, Carolinas or Florida right? It’s like being in Cali right now and saying the rest of the country will see what they are seeing.
Now I agree with you it will drop (maybe not same degree) but region matters.
- 3yJoseph CacciapagliaBusiness MemberLender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
Quote from @Michael Wooldridge:
Quote from @Bruce Woodruff:
Exactly. Another thread has poster with an opinion that sellers will not panic, but your examples are where I think we're headed, and pretty quick. Winter is coming fast and people know that is a dead market...Quote from @Joseph Cacciapaglia:
Right now many sellers are panicking. I've already seen several sellers take deals well below what I thought possible, because they're staring into the unknown right now. The savvy investors I know are starting to make a lot of low offers, because some sellers are actually taking them.
Despite that, we still have plenty of nervous sellers, and not many buyers out there trying to capitalize on it.
You do realize you are in Arizona where people are seeing bigger adjustments than say the northeast, Carolinas or Florida right? It’s like being in Cali right now and saying the rest of the country will see what they are seeing.
Now I agree with you it will drop (maybe not same degree) but region matters.
I think there will be at least a few panic sellers in every market though. I'm in San Antonio, and we're not doing too bad here yet, but people listen to the national news, and some of them will make a decision to sell below where the market is actually headed, based purely on fear. Waiting and watching prices won't make those deals happen though. You actually have to be out making the offers.
- Member since 2022 · 485 posts · 216 votes3y
Quote from @Joseph Cacciapaglia:
Quote from @Michael Wooldridge:
Quote from @Bruce Woodruff:
Exactly. Another thread has poster with an opinion that sellers will not panic, but your examples are where I think we're headed, and pretty quick. Winter is coming fast and people know that is a dead market...Quote from @Joseph Cacciapaglia:
Right now many sellers are panicking. I've already seen several sellers take deals well below what I thought possible, because they're staring into the unknown right now. The savvy investors I know are starting to make a lot of low offers, because some sellers are actually taking them.
Despite that, we still have plenty of nervous sellers, and not many buyers out there trying to capitalize on it.
You do realize you are in Arizona where people are seeing bigger adjustments than say the northeast, Carolinas or Florida right? It’s like being in Cali right now and saying the rest of the country will see what they are seeing.
Now I agree with you it will drop (maybe not same degree) but region matters.
I think there will be at least a few panic sellers in every market though. I'm in San Antonio, and we're not doing too bad here yet, but people listen to the national news, and some of them will make a decision to sell below where the market is actually headed, based purely on fear. Waiting and watching prices won't make those deals happen though. You actually have to be out making the offers.
Those that have to sell for whatever reason. I’m sure there will. I’m not so sure I believe there will be panic like 08 though which has been said a lot. When people look around and see the $750k at 4.125% is as cheap as a $550k home at 7.125% - well I think most won’t panic.
IF you have to sell it’s a different scenario but we had a lot of factors requiring to sell back in 08. Now if somebody wants to argue stagnation for a bit I won’t disagree.
- 3yJoseph CacciapagliaBusiness MemberLender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
Quote from @Michael Wooldridge:
Quote from @Joseph Cacciapaglia:
Quote from @Michael Wooldridge:
Quote from @Bruce Woodruff:
Exactly. Another thread has poster with an opinion that sellers will not panic, but your examples are where I think we're headed, and pretty quick. Winter is coming fast and people know that is a dead market...Quote from @Joseph Cacciapaglia:
Right now many sellers are panicking. I've already seen several sellers take deals well below what I thought possible, because they're staring into the unknown right now. The savvy investors I know are starting to make a lot of low offers, because some sellers are actually taking them.
Despite that, we still have plenty of nervous sellers, and not many buyers out there trying to capitalize on it.
You do realize you are in Arizona where people are seeing bigger adjustments than say the northeast, Carolinas or Florida right? It’s like being in Cali right now and saying the rest of the country will see what they are seeing.
Now I agree with you it will drop (maybe not same degree) but region matters.
I think there will be at least a few panic sellers in every market though. I'm in San Antonio, and we're not doing too bad here yet, but people listen to the national news, and some of them will make a decision to sell below where the market is actually headed, based purely on fear. Waiting and watching prices won't make those deals happen though. You actually have to be out making the offers.
Those that have to sell for whatever reason. I’m sure there will. I’m not so sure I believe there will be panic like 08 though which has been said a lot. When people look around and see the $750k at 4.125% is as cheap as a $550k home at 7.125% - well I think most won’t panic.
IF you have to sell it’s a different scenario but we had a lot of factors requiring to sell back in 08. Now if somebody wants to argue stagnation for a bit I won’t disagree.
I agree this probably isn't going to be an '08 scenario. I think there is just a lot of fear mongering, so there will be some fantastic individual deals made, if you can find the sellers that are spooked right now. I don't expect the whole market to drop to a similar extent.
- Member since 2022 · 485 posts · 216 votes3y
Quote from @Joseph Cacciapaglia:
Quote from @Michael Wooldridge:
Quote from @Joseph Cacciapaglia:
Quote from @Michael Wooldridge:
Quote from @Bruce Woodruff:
Exactly. Another thread has poster with an opinion that sellers will not panic, but your examples are where I think we're headed, and pretty quick. Winter is coming fast and people know that is a dead market...Quote from @Joseph Cacciapaglia:
Right now many sellers are panicking. I've already seen several sellers take deals well below what I thought possible, because they're staring into the unknown right now. The savvy investors I know are starting to make a lot of low offers, because some sellers are actually taking them.
Despite that, we still have plenty of nervous sellers, and not many buyers out there trying to capitalize on it.
You do realize you are in Arizona where people are seeing bigger adjustments than say the northeast, Carolinas or Florida right? It’s like being in Cali right now and saying the rest of the country will see what they are seeing.
Now I agree with you it will drop (maybe not same degree) but region matters.
I think there will be at least a few panic sellers in every market though. I'm in San Antonio, and we're not doing too bad here yet, but people listen to the national news, and some of them will make a decision to sell below where the market is actually headed, based purely on fear. Waiting and watching prices won't make those deals happen though. You actually have to be out making the offers.
Those that have to sell for whatever reason. I’m sure there will. I’m not so sure I believe there will be panic like 08 though which has been said a lot. When people look around and see the $750k at 4.125% is as cheap as a $550k home at 7.125% - well I think most won’t panic.
IF you have to sell it’s a different scenario but we had a lot of factors requiring to sell back in 08. Now if somebody wants to argue stagnation for a bit I won’t disagree.
I agree this probably isn't going to be an '08 scenario. I think there is just a lot of fear mongering, so there will be some fantastic individual deals made, if you can find the sellers that are spooked right now. I don't expect the whole market to drop to a similar extent.
Agreed. The property I just bought was 5% under asking. They were living in (so no rental) and given the rates thats just came out as they were making their decision it timed well. I’m planing for 10-15% depreciation - so already mitigated some of that initial drop.
I have no doubt we will see some truly good deals down the road. I just don’t see 20-30% nationally. Individual areas maybe but my day job is tied to labor market and despite everything I know how strong that is and how it has changed. It’s also why the fed wants to hit it right now to slow inflation. I think they will but I just don’t see the big reduction but somethign in between.
That does exclude a nuke going off in Ukraine and/or the fed going in so hard and stubbornly that they completely break the economy - the 1980 rates would do that.
- 3yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @Michael Wooldridge:
Exactly. Another thread has poster with an opinion that sellers will not panic, but your examples are where I think we're headed, and pretty quick. Winter is coming fast and people know that is a dead market...
You do realize you are in Arizona where people are seeing bigger adjustments than say the northeast, Carolinas or Florida right? It’s like being in Cali right now and saying the rest of the country will see what they are seeing.
Yep, I know where I am and we're getting some of first of the trend that will hit everywhere before this is over. People from California have been flooding in here for the past few years and paying outrageous prices for houses just because they had all the 'Cali money' from the cash sales of their houses over there. That was dumb and now those houses are worth much less. Prompting a good bit of angst and hand wringing. People hate getting a bad deal. Will that make them sell, maybe not....but the people that didn't pay cash and got loans are now having a moment of regret...
- Real Estate Agent · Minot, ND · Member since 2021 · 131 posts · 223 votes3y
What we are seeing in my Midwest location is a massive slowdown in transactions. The trading volume will go down until some level of future predictability returns for buyers & sellers. It's amazing to see the psychological impact of the headlines.
- Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes3y
Quote from @Zachary Inman:
Hey BP!
My home market is Indianapolis, Indiana, and I'm seeing many price reductions following the continued increase of rates — which comes as a surprise to no one. I'm prowling the market for good opportunities, as always, but can't help but think that it might be best to hold off for a bit to see some more normalization. True, the cost of money will rise, but I can't help but think it'd be a less turbulent acquisition environment in a few months or so.
Two questions for you all:
1. How significantly are rate hikes affecting your market?
2. What is your short-medium term strategy in the current environment?
Austin has had price drops, but still up 5% yoy. That is down from the peak in April/May of 15% appreciation yoy. Closed sales are down, active listings are up, but new listings have recently decreased as well. It'll be interesting to see how that plays out going into the winter.
- Member since 2022 · 485 posts · 216 votes3y
Quote from @Bruce Woodruff:
Quote from @Michael Wooldridge:
Exactly. Another thread has poster with an opinion that sellers will not panic, but your examples are where I think we're headed, and pretty quick. Winter is coming fast and people know that is a dead market...
You do realize you are in Arizona where people are seeing bigger adjustments than say the northeast, Carolinas or Florida right? It’s like being in Cali right now and saying the rest of the country will see what they are seeing.
Yep, I know where I am and we're getting some of first of the trend that will hit everywhere before this is over. People from California have been flooding in here for the past few years and paying outrageous prices for houses just because they had all the 'Cali money' from the cash sales of their houses over there. That was dumb and now those houses are worth much less. Prompting a good bit of angst and hand wringing. People hate getting a bad deal. Will that make them sell, maybe not....but the people that didn't pay cash and got loans are now having a moment of regret...
Actually very similar to 08. To an extent SLC and Nevada saw the same impact. This time around we’ll see in some of the places in Oregon and the rest of Northwest where you have a mix of Cali/Seattle and that tech movement. I definitely don’t doubt any of that for a second.
Wen you pull back to nation wide view though East looks good and we won’t have FL to drag down this time like 08. The Midwest is usually pretty consistent no mass jumps or dips.
Texas certainly had some big jumps but Dallas doesn’t look like Austin and overall state looks pretty good.
So I don’t know I see the dip coming hell planned for it. BUt I just see a lot of differences from 08 when you look broad nationwide at different markets.
- 3yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @Michael Wooldridge:
Absolutely different from '08. Different causes. but will the results be the same? Time will tell.....But everyone says 'this won't be like '08 because that was caused by blah blah blah.' Reality is that we don't know because every time is different. Stay tuned....we will see......
- Investor · El Dorado Hills, CA · Member since 2012 · 1k+ posts · 1k+ votes3y
I am not a doom and gloomer but I think you need to decide how long you want to wait. I think you deal with the market as it is or pull it and wait until early spring. I think staying on the market from November - January is not going to be ideal for your pricing integrity.
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes3y
Hammering down on price even more.
- Real Estate Investor · Tempe, AZ · Member since 2012 · 874 posts · 648 votes3y
- 3yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
According to CAR, San Diego county is still up 11.7% YOY. I believe this puts us down nearly 10% since the high. I expect there to be further decline, but on much lower volume.
As an investor I would rather pay less for a property with higher rates then having the same P&I on more expensive property with lower rates. Interest is tax deductible. Property tax in my state is based on purchase price. If interest rates fall, the property can be refinanced. The issue at this time is that the rates have risen substantially more than the prices have dropped.
At this time I would only purchase either a property way below market price or one that I have identified a great value add. I will not be paying market price without a great value add.
Good luck
- 3yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @Amy Raye Rogers:
It's amazing to see the psychological impact of the headlines.
Isn't it though? All it would take is one dramatic, yet false, headline to set off a crash.
- Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes3y
We have seen DOM creep up to 20-30 days. Overall KC is stable compared to other markets that have exploded(Utah, Nevada, Idaho, etc). We saw a 10-15% price increase (year over year) over the last couple years so it is expected for things to calm/drop. When looking for deals I try to discount the ARV 5-10%. The good thing about the current market is on the buy side you can be aggressive. For deals sub 200K we are offering 5-20K under asking
- Specialist · Indianapolis, IN · Member since 2021 · 312 posts · 282 votes3y
Quote from @Amy Raye Rogers:
What we are seeing in my Midwest location is a massive slowdown in transactions. The trading volume will go down until some level of future predictability returns for buyers & sellers. It's amazing to see the psychological impact of the headlines.
I agree - the psychological element is huge. It becomes a self-fulfilling prophecy: when people think prices are going down, they don't buy, and prices go down.
- Specialist · Indianapolis, IN · Member since 2021 · 312 posts · 282 votes3yFinding success by being bolder with offers? I've had mixed results. Some sellers still think it's the same market it was 6mo ago
Quote from @Caleb Brown:
We have seen DOM creep up to 20-30 days. Overall KC is stable compared to other markets that have exploded(Utah, Nevada, Idaho, etc). We saw a 10-15% price increase (year over year) over the last couple years so it is expected for things to calm/drop. When looking for deals I try to discount the ARV 5-10%. The good thing about the current market is on the buy side you can be aggressive. For deals sub 200K we are offering 5-20K under asking
- Specialist · Indianapolis, IN · Member since 2021 · 312 posts · 282 votes3y
Quote from @Dan H.:
According to CAR, San Diego county is still up 11.7% YOY. I believe this puts us down nearly 10% since the high. I expect there to be further decline, but on much lower volume.
As an investor I would rather pay less for a property with higher rates then having the same P&I on more expensive property with lower rates. Interest is tax deductible. Property tax in my state is based on purchase price. If interest rates fall, the property can be refinanced. The issue at this time is that the rates have risen substantially more than the prices have dropped.
At this time I would only purchase either a property way below market price or one that I have identified a great value add. I will not be paying market price without a great value add.
Good luck
This is good insight, I didn't consider the tax implications of paying interest vs paying a higher price. I agree that forcing appreciation is still the best strategy.
- Specialist · Indianapolis, IN · Member since 2021 · 312 posts · 282 votes3y
Quote from @Joe Bertolino:
I am not a doom and gloomer but I think you need to decide how long you want to wait. I think you deal with the market as it is or pull it and wait until early spring. I think staying on the market from November - January is not going to be ideal for your pricing integrity.
That's what I'm thinking. Even on the personal side the timing is bad, so waiting until March is likely the option I'll go with.
- Specialist · Indianapolis, IN · Member since 2021 · 312 posts · 282 votes3y
Quote from @Bruce Woodruff:
Quote from @Michael Wooldridge:
Exactly. Another thread has poster with an opinion that sellers will not panic, but your examples are where I think we're headed, and pretty quick. Winter is coming fast and people know that is a dead market...
You do realize you are in Arizona where people are seeing bigger adjustments than say the northeast, Carolinas or Florida right? It’s like being in Cali right now and saying the rest of the country will see what they are seeing.
Yep, I know where I am and we're getting some of first of the trend that will hit everywhere before this is over. People from California have been flooding in here for the past few years and paying outrageous prices for houses just because they had all the 'Cali money' from the cash sales of their houses over there. That was dumb and now those houses are worth much less. Prompting a good bit of angst and hand wringing. People hate getting a bad deal. Will that make them sell, maybe not....but the people that didn't pay cash and got loans are now having a moment of regret...
Yeah... the buyer's remorse is real. Anecdotally, I've seen many of my friends come to regret buying in the frenzy.
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