Are You Bullish or Bearish on prices in your area in the next year?

Question

ResiClub and Lance Lambert are out with their most recent investor survey. It shows most investors they surveyed across the US being bullish to some extent with regard to future values in their region. What about in your area- are you bullish or bearish? Are prices in the next 12 months going to be flat, increase 1%-5%, 6%-10%+ or decrease? What is the most important factor leading you to your opinion?

Read the full article here and see what investors were saying about other important questions. https://www.resiclubanalytics.com/p/resiclubgroundfloor-hous...

Read the full article here and see what investors were saying about other important questions. https://www.resiclubanalytics.com/p/resiclubgroundfloor-hous...

Marcus Auerbach · Answer

I agree, survery of investors does not mean much, especially if many of them are new/small with a few units. Thats more like a temperature check on how optimistic everyone feels right now.

Any long term prognosis can only rely on supply and demand projections. In the end it comes down to number of people (households) in an area and number of units. How many active buyers/sellers is more of a short-term impact, just like interest rates and other things and leading to annual fluctuations. The real question is how many units are being built and what does net migration look like on top of demographics.

I can answer the question for my market Milwaukee, because I have been tracking these metrics locally for the last 10 years or so. I just downloaded June numbers, which typically sets the peak for our metro area and we are up 8% YoY. I expect MKE prices long term (10 years) to at least increase to the national average, there is really no reason why Milwaukee should not get there based on a current trajectory as well as infrastructure spending and re-development we are seeing downtown.

We have seen consistent appreciation never below 6%, but also never over 8% over the last 9 years, which basically means median prices have doubled. My operating assumption for our own investing is that this will happen again over the next 10 years.

Technically you'd have to net out inflation and look at wage growth. In these terms real estate has not really gone up that much. But even so, you financing is also eroded by the devaluation of the dollar. A friend of mine said the other day real estate investing is basically a shorting the USD.

Chris Seveney · Answer

@Robb Almy

Here is what struck me

“In total, 224 investors who own short-term or long-term single-family, condo, or townhome rental properties completed the survey. Only ResiClub readers were invited to participate”

To me this is like asking people at a political party convention what their opinion is on their candidate.

I find this information absolutely useless to be honest.

Andrew Syrios · Answer

What animal describes having a lukewarm prognosis for prices in my area? Presumably it should be an animal that starts with a B...

So I guess I'm beaverish or something on prices in my area in the next year.

V.G Jason · Answer

My area? Austin. Short-term bear.

Long-term bull, and the nastiest of them bulls.

Forget what these investors say though, Chris hit the nail on the head on the surveyed pool. We want the intel from the average family looking to move, mixed with long term investors and near term investors so it's a good mix. We move based off where we think things are going, not where they've gone. I'm not going to listen to another investor, or not very likely I will, on how I move. I actually will size them up and move around them. 99% of the "REI" on this board do exactly the opposite of what I do.

Robb Almy · Answer

@Chris Seveney Thanks for your reply. Do you find the info useless because there is not a big enough sample or because it was only readers subscribed to their newsletter?

@Nicholas L. I certainly understand your point about price. Cash flow is the name of the game when it comes to controlling the asset so you are right it really doesn't matter whether the value goes up or down as long as you can carry it.

I think the data from the survey is what it is and would certainly not make any investments based on it. I do think it lends itself to a conversation of where prices are going. Like politics, real estate is local (even hyper local sometimes) and none of us have a crystal ball.

It has been interesting to see prices come down in places like Florida, Texas and Idaho and inventory in those places return to pre-pandemic levels. Conventional wisdom would have said with rates so high (comparatively speaking to where they were) demand and prices would have lessened in more places and more quickly but in many places prices have held steady even as inventory creeps up. It will be interesting to see what happens if we get a Fed rate cut or two before the end of the year what will happen.

Nicholas L. · Answer

@Robb Almy

from my perspective ... i don't really worry about 'price.'  i certainly want my long term rentals to be 'worth' more and to appreciate over time, but i worry much more about what they can rent for.  a swing up or down 5 or 10% doesn't really impact me a ton i don't think.

with that said it's certainly a worthy topic of conversation.  what did you think?

Are You Bullish or Bearish on prices in your area in the next year?

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