What are your predictions to real estate market?

[moneymama]

Hi everyone!
I hope everyone is healthy and doing okay.

What are your predictions to the real estate market? I would love to grab a cheap condo one hour west of NYC — wondering if I just be patient the prices will FALL!! I lived in this particular community before, and watched my own property fall drastically due to 2007/2008 recession.
I since moved to FL......
Thoughts?

Thanks!!

 

[OldShooter]

Prediction: RE will continue to be a very illiquid investment with very high transaction costs and, in the case of individual residential units, very risky because you are betting on the behavior of a single market.

 

[MrsHaloFIRE]

FWIW, I just got an email from our property mgr that there are only 2 mos of houses on the market in the area where our rental is, and if we were considering selling now is a great time given inventory and interest rates. Im seeing a few come on the market in my local area and they are selling. Friend sold hers on day 1 of listing.

 

[Midpack]

https://www.early-retirement.org/fo...urn-do-to-residential-real-estate-102770.html

We have neighbors who are both realtors, talked to them yesterday. They told us we're in a county with greater restrictions than the state at large. They are severely restricted on what they can show (only empty houses) and even developing listings (they can't send in measurers or photographers - deemed non essential services). They can't close a new sale unless the buyer is already homeless. And most of their potential buyers have stopped looking for fear of losing their job. They also said many who already had listings, won't sell now but they want to test the waters in the meantime.

All that is/will drive down prices broadly.

 

[michelek]

My agent believes there’s enough pent up demand to keep him very busy once we open back up again. Given the shortage of available homes plus the delay, we expect to see the market pick right back up. We had a virtual showing today from a agent representing a radiologist who is moving from Florida. She said he can’t move until things open back up again- there must be 1000s of people just like this, who’s life was stopped in its tracks. Let’s make this summer the new spring market!

 

[RobbieB]

As the world goes bankrupt and unemployed real estate will fall.

 

[Mr. Tightwad]

I say sales prices drop a little. But no plunge.

 

[Closet_Gamer]

I vote we'll see a moderate and sustained hit.

Lots of middle class folks -- particularly younger people saving to get a down payment -- are getting whacked by this thing with reduced wages, furloughs and layoffs.

Upper end buyers are getting whacked in the stock market. Even if markets rallied back to their peak, I think people will be scared and more conservative. Negative wealth effect.

Cranking down rates will help but I think its a net negative. Given cycle time to rebuild balance sheets and confidence, could easily last 1-2 years even if we see snap back on employment and GDP.

We're thinking of buying a beach home and recently looked at the cycle coming off of the housing bubble and great recession in our target community. Took nearly 5 years to fully bottom when people just couldn't hang on anymore -- at which point houses were 50% of their peak price -- and then its been a steady but modest climb up since then. We could see a more modest repeat of that.

 

[Midpack]

I say sales prices drop a little. But no plunge.

Could very well be, but it depends on how this plays out, and we don’t know that yet. Unemployment will rise with some temporary but some not. And it seems likely most people’s net worth will take time to recover. Hopefully we’ll be pleasantly surprised?

 

[firemediceric]

Chatting about the economy with an attorney yesterday who lives in an upscale neighborhood in Stuart, FL, she mentioned that phase two of her community had "many" homes that a couple of weeks ago had SOLD signs on them but now have changed to AVAILABLE.

For me personally I would like to see a slide in prices. I'm currently in a modest rental as I finish out my last 2.5 years at w**k. At retirement I plan to move out of the area. The further my savings can go in the real estate market, the better.

 

[REWahoo]

DD#2 and family live in the oil patch. She told me yesterday that the number of homes for sale in her zip code had increased by 600% since January. I suspect it will get much, much worse as layoffs for white collar jobs are just now starting to hit.

Edit: Just took a look at Realtor.com for her zip code. Out of 325 homes for sale, 55 are "new listings", however the site defines that classification. For the city as a whole, there are [-]162[/-] 171 new listings. It is growing by the minute.

 

[pb4uski]

...I would love to grab a cheap condo one hour west of NYC — wondering if I just be patient the prices will FALL!! I lived in this particular community before, and watched my own property fall drastically due to 2007/2008 recession.
I since moved to FL......
Thoughts?

Thanks!!

Would this be to live in or for a rental investment?

 

[calmloki]

I'm amazed at how cheap places are depending on , uhm, location:

Nice old brick house on a rise:

https://www.realtor.com/realestatea...ver-Dr_Northfork_WV_24868_M36854-17932#photo0

We both like houses, particularly old houses, and after spending plenty of time looking and buying and fixing we got into lending to others. That satisfied our looking urge while reducing the labor part a bunch. Now, I don't know. We are long on cash but I almost think I'd rather buy than lend if something weird and cool and unfinanceable appears. Last real estate crash all kinds of bizarre places hit the market. Could be a fun time coming up.

 

[Montecfo]

I think the oil patch, particularly Houston and to a lesser extent New Orleans, will be hit. Tough sledding there for quite a while.

I think some 2nd and 3rd home markets will be soft-especially south Florida.

DC and Boston I think will be strong. No visibility on west coast.

 

[moneymama]

Would this be to live in or for a rental investment?

Second home.....

 

[moneymama]

Would this be to live in or for a rental investment?

Second home/summer months

 

[Mr. Tightwad]

Could very well be, but it depends on how this plays out, and we don’t know that yet. Unemployment will rise with some temporary but some not. And it seems likely most people’s net worth will take time to recover. Hopefully we’ll be pleasantly surprised?

I wasn't referring to oil territory when I said a mild decrease. Houston and Oklahoma will take it on the chin. Elsewhere just a dip, and an overdue dip.

 

[DrRoy]

My guess is that prices will definitely fall. There will be decreased demand plus physical restrictions to the process for some months.

 

[CaptTom]

What about longer term? My guess is that right now (disregarding the Oil Patch areas) we're in more of a pause or even a bit of a dip. If things start to open up soon, prices in historically strong markets may hold fairly well. Maybe short-term rentals and second homes will take a bigger hit.

Where I see a problem is a potential second wave at the start of Winter. Predictions on this are all over the place, and every day we learn more about how much we still need to learn. But if we use 1918 as a model, or listen to current thoughts out of the CDC, things could get grim. Instead of a simple pause, we could be looking at permanent economic damage. The housing market would probably get hit just as hard as every other sector.

 

[Montecfo]

There will almost certainly be multiple waves of this until we get a vaccine. If we get one.

I wonder if CV might actually boost the 2nd home market in some areas over the next few months. People with 2nd homes have another place to go when travel might otherwise be restricted.

Just a thought.

 

[OldShooter]

Second home/summer months

@moneymama, your OP implied to me that you were thinking about making an investment. IMO this type of property is not a good investment for retirees, but if you consider it to be a second home I think that may change the game.

Our second home is about 8% of our net worth but we do not consider it to be part of our investable assets. It's just "the lake place." IMO if you have enough assets that the success or failure of your second home as an investment is not critical, then it's just a matter of spending discretionary assets on something you expect to enjoy. Not substantively different than buying a boat or a big RV.

(RE the posts about hot RE markets, buying high is not generally considered to be a good investment strategy.)

 

[skipro33]

3 homes sold on my street since the virus and subsequent SIP orders selling for between $244 and $266 a square foot. The largest, at 3200 sq ft sold for the highest sq.ft. price of $266 per sq.ft. Also, a lot down the street sold for $350,000. Dozer showed up last week to level it out. I was walking by and a Ferrari pulled up. Met my soon to be new neighbor. He's coming from the bay area of San Francisco. He said a lot in that area are pulling the plug, having made their fortunes in high tech and moving away from the congestion and disease riddled cities. So I talked to the real estate agents who sold the other houses here and they said those buyers also are from the SF area, looking to retire.

I imagine a lot of that is going to happen; folks looking for a reason to finally pull the plug and retire are using this virus as that catalyst.


****EDIT****
I should add; my street is a 2 mile dead end on a ridge at the 1800' elevation on the West slope of the Sierra Nevada mountains, about half way between; East of Sacramento and West of South Lake Tahoe. Parcels are 5 acres and have either a East view of the Sierra snow caps or a West view of the central valley.

 

[Sunset]

I'm amazed at how cheap places are depending on , uhm, location:

Nice old brick house on a rise:

https://www.realtor.com/realestatea...ver-Dr_Northfork_WV_24868_M36854-17932#photo0

We both like houses, particularly old houses, and after spending plenty of time looking and buying and fixing we got into lending to others. That satisfied our looking urge while reducing the labor part a bunch. Now, I don't know. We are long on cash but I almost think I'd rather buy than lend if something weird and cool and unfinanceable appears. Last real estate crash all kinds of bizarre places hit the market. Could be a fun time coming up.

Wow.... I could put that on my CC.
I can see it needs a bunch of work, but still , so cheap, almost just the city lot value.

 

[calmloki]

Wow.... I could put that on my CC.
I can see it needs a bunch of work, but still , so cheap, almost just the city lot value.

Isn't that crazy money? Google maps satellite view gives some hints: There is a rail siding nearby with about 8 tracks, all covered with rows of rail ore cars piled with black coal. Still, building a house like that today would be what? Ten times the cost/square foot?

Illinois has all sort of cheap 'n old stuff as well in the $100k range. Like this, also brick and better condition and nice old wood: https://www.realtor.com/realestatea...ark-St_Stockton_IL_61085_M70411-45853#photo11

 

[Amethyst]

Prediction: We will continue to see flippers claiming to have made a killing, real estate agents assuring everyone the market for houses is just fine and here's one I Just Sold last week!, and people offering you as little as possible for your beautiful house into which you have sunk tons of money.

Prediction: RE will continue to be a very illiquid investment with very high transaction costs and, in the case of individual residential units, very risky because you are betting on the behavior of a single market.