The housing crash is in full swing. When mortgage rates go from 2.75% to 6% in less than a year, there is no other possible outcome. Prices are down 10%-ish already in my burg. Which as an investor I’m kinda meh about given prices increased 100% between 2019 and 2021.
Car prices are no different. They are subject to the same dynamic as home prices. Not that long ago 1.9% loans were plentiful. Now those same car loans are 4 or 5%. Even Enron economist Paul Krugman (who is wrong about everything) can see what’s coming.
I was under the impression the housing market would take a huge dump a few months ago, although the cycle would take 6 months.
Most houses by me in NJ are still selling, over asking, I don’t get it. Either people don’t know real estate or are just too dumb, or both. The people buying these houses are going to be under water for a while.
I think there was a lot of pent up demand of people trying to buy houses and couldn’t the last few years. I personally know a couple of people that tried to buy a house for 18+ months and got outbid more than a dozen times. Those people I know have all now bought houses within the last 2-3 months - I think once all the buyers like that get houses everything will really drop.
Exactly what’s still happening. Plus lots of boomers still putting down 20% or paying cash for their kids houses. We still have a huge inventory shortage, and high rents, which makes buying even at 6% better then renting in most markets.
Real estate is a slow burn. The last crash took 5 years to fully bottom out.
Also selling over asking doesn’t mean much if asking prices are lower than before. Quick search for NJ shows prices are behaving the same as everywhere else. And it’s not uniform either geographically. As the cliche goes, all real estate is local and that is true for price timing as well. But even so, NJ is not immune to the national trends.
Well its 10% so far. There is definitely more to go. I buy properties for cash flow and long term hold. So I don’t freak out over short term swings. Just like with equities.
Cash flow? I used to as well but haven’t seen anything but the hood cash flowing the last few years. Any new investor, unless they get lucky, has been banking on appreciation it seems. That’s a recipe for disaster in a down turn. I survived the last crash and sold all my rentals last year. I’ll consider buying again if I can find 8-10% cap rates. Highly unlikely anytime soon on any properties in decent areas
Last property I bought was in 2019. It’s become too expensive relative to rent to buy now. And while I increased rents last year and earlier this year, well into double digits, I can’t do that again. There’s only so much the market will bear. I’d love to raise rents 20% every year but that’s just not realistic.
Yep my rent in Miami went from 3300 to 4k this year. They tried to get 4500! I did rent it under market value last year by paying a year upfront. I couldn’t find anything comparable to what I have under $5k this time around. Market here is still insane with many rentals going over asking price.
Luckily I was able to negotiate this lease for month to month in case the market does crash, then I can move to something nicer for the same price.
If I bought my condo it would be 750k. $1500/mo maintenance fee and 15k/yr in taxes. So renting at 4k is about 2500/mo cheaper then buying. They have increased in value 200k the last 2 years so that’s what people chase here
Sure Florida is very regional as well though. Miami is still mostly cash buyers and a lot of international buyers getting money out of their inflationary countries.
Condos for me are an absolute NO GO ZONE in terms of investments. The HOA fees destory any positive return. It boggles my mind how so few people understand the math. Glad you do.
The thing with chasing appreciation is you have to know when to get out. But humans being the greedy a-holes we all are, never get out in time. Because if it went up $200K well surely it will go up another $100K. And when everyone realizes the game is up, they all rush for the exists and get killed.
Which is why r/e investing for me never takes into account appreciation. I always assume 0 appreciation when deciding on investments. And I sleep well at night.
Also you’re paying 10% to get in and out. Typically that’s an impossible amount to recoup in a normal market…
The appreciation combined with Philly going wacko communist on investors and not allowing us to evict non paying tenants influenced me to exit. Plus managing units from 1000 miles away isn’t easy and management companies want 10% which takes most of the cash flow.
The govt did give me 20k for my non paying tenant after a year. But I had to give that to the tenant to get them out of the property. Quite the clusterfuck. Tenants know they have landlords by the balls which is why mom and pop investors are waning and it’ll be all corporate in the future. Own nothing and be happy mantra again…
Find me 10 cities and I’ll find you 10 people in each of those cities who say IT’S DIFFERENT HERE because reasons. It’s not different anywhere. The laws of supply and demand as well as capital asset pricing model, apply everywhere.
There will always be people buying. Even in the midst of the biggest crashes activity doesn’t go to zero. So yes, there will be rich South Americans buying condos in Miami tomorrow and next year and 5 years from now. But like all economic activity, price is determined at the margin. And at the margin, prices are falling, pretty much everywhere, including Miami.
“Single-family houses last month came with a median price tag of $570,000, down 2% from $579,000 in June, according to a monthly housing report released Thursday by the Miami Association of Realtors. Condominium prices, meanwhile, declined 7% to $380,000 in July in Miami-Dade, from $410,000 the prior month.”
