I posted a graphical representation of the SFH market in Seattle and wanted to know what folk think.
1) Have we turned the corner and in a Sellers Market 2 (tern coined by duru Dave Lindel)?
2) If so what is the best thing to do?
This is an interesting analysis. I am in this market and yes even bidding in auction has gone crazy. Better to hold your money and wait for the madness to subside.
Lan - very interesting, thanks for sharing. It's an interesting time.
From the article…
"3) For those investors find other emerging markets outside SFH real estate or some hobbies because your going to have to just wait it out, like a bear hibernating in the winter."
Any suggestion on these emerging markets, specifically in Seattle / Tacoma area?
In just starting in REI. I could sell my own residence…buy a 4-plex to occupy and rent the rest. I'm getting the impression that's not great to do from this article.
It does seems like more of a sellers market now compared to a year or two ago. Especially if your deal flow was from REOs and short sales. WA SFR market does seem to be better for flipping now versus buy and hold, although there still could be some deals here or there in some areas. You would have to jump on them quick though in this low inventory low interest rate environment. The bubble was not as high and the burst not as deep as other states. Even so, as far as sitting things out, I sat things out for several years during the bubble when things made no sense. Things are definitely not normal right now. What will happen when the Fed stops stimulating and raises interest rates? Hard to predict. There's lots of different ways to invest in real estate besides buy and hold. Flipping, new construction, pooling funds together with others on projects, out of state, etc. I'm using the time now to work on my primary residence which was a foreclosure and now that I'm less busy, reaching out networking with others and looking for opportunities.
@Lane Kawaoka Your area is probably much like Orange County, CA. The truth is, prices in high demand areas appreciate, and the advice to "wait it out" doesn't work. In reality, in areas of historical high demand, that demand continues for many reasons (healthy local economy with a broad based job market, natural beauty, good schools, medical care, etc.) with demand comes higher prices. The only thing that will help keep prices down is the supply of more units to the market. However; when land in popular areas is scarce, etc. the prices will still continue to go upward. The fact is, prices in areas such as ours, may never again be lower than they are now.
Though there may be no opportunities for buying low, fixing and flipping, there may be some great opportunities for new construction, land development, etc. Rather than buying a house, you may want to look at well placed condos, etc.
What happened in 2008 was a fluke. Thinking prices in all areas are going to come tumbling down again would be foolish. Make your plan, whatever it is, based on the reality of the market, today, and leave the crystal ball alone.
Seattle and high cost west coast areas are poised for appreciation. The way i see it you make your money with cash flow or appreciation. The prudent investor will not count on appreciation but in the forementioned areas its part of the market and why you are buying into the area. As always it comes down to goals.
I just wrote a blog post on this subject. Cash flow isn't the only game in town! In high dollar areas that have consistent demand, appreciation can be tremendous on the right deals. Investing In High Dollar Markets
As builders in an established, high demand area, we are finding that people get excited about an opportunity to purchase new construction. Often in the coastal areas the houses are older, in established areas, etc., and can be remodeled. However; they still end up with a remodeled house, when what they really want is modern, new, and not in a planned development with high HOA fees. It's a great niche! and profitable.
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