Hey guys, I've had multiple posts about wanting to start a bit of syndication work and I'm curious what your thoughts are on the repercussions the U.S. Economy is going to have from Covid.
What sort of timeline do you think the housing / real estate market is going to fall?
I am no expert by any means, but I do expect some single-family homes to start falling this fall and winter as people start dumping their second and third homes first. (vacation homes). I'm very young so I was considering playing vulture and picking up a rental unit at a huge discount, then later move into the multi-family space. (which I currently underwrite)
Am I on the right track with my guesses here? Would love to hear your thoughts.
Curious why you are predicting a sudden drop in SFH values when they've done nothing but go up since covid began. My market is breaking records still, and it shows no sign of slowing.
I could be wrong, but I am seeing a dramatic increase in vacation / 2nd home sales in our area. I am using those home sales as a leading indicator of sorts. Also, I'm in a high-tourism city so I think covid will hurt our market more than most cities.
Suburb NJ/NY/CT is on fire. Premiums on some stuff... including NJ shore houses/hamptons/second homes.
Second home sales have skyrocketed, rents in vacation areas off the chart. SFH is so under built across the nation seems pretty tough to see much downside, and with desires to exit cities and WFH (and low mortgage rates). I think SFH will see solid price gains in many markets for next year and longer.
If there is any potential for pain, look at condos/coops in major cities (specifically NYC/SF/Chicago), that is where the pain is.
No one knows anything nor should predict anything regarding COVID, so kudos to you for admitting that. The right way to do real estate and the reason why it is a bedrock asset is because you can and should hold minimum ten years. SFH is having its moment in every market outside of the big cities (NYC, CHI, etc) (meaning dynamic of NYC people buying hamptons houses) because can afford to snatch up what they want outside the city. That is an artificial and temporary prop up. DM me, happy to hear your thoughts on response
What drives real estate value is job growth. I believe existing trends pre-COVID including businesses and investment steering towards lower-cost markets in the southeast, texas, and phoenix/denver will be amplified from this pandemic.
Don't agree with this. I owed an investment house that I got tired of dealing with tenants. I had a price I needed in mind, but was not able to get that. Once Covid hit, I had an offer for $10k over my ask. On top of this I had two offers at ask and four within 3% of ask. This house isnt even in a booming market either and even if the top three buyers backed out, I still was going to get 97% of my ask. The concept that SFH will fall significantly wont happen for a long time. Too much capital out there. Only way housing prices will decline is if supply increases heavily...thats not happening anytime soon.
Ahhh really interesting to hear. I appreciate your input.
Similar to other commenters, I am seeing absolutely no drop in values in my area and quite the contrary, prices are still going up and transactions are still occurring. I would also caution against playing vulture unless you really know what you are doing. There's a reason sellers are selling their homes at cheap prices...clearly they think prices will fall further..unless you see something that they don't or are able to add some type of value that they can't. Furthermore, if you think prices will fall due to higher supply of SFH being put up for sale, then where is the bottom and how are you so certain you can catch it? Similarly for foreclosures, if an owner is underwater on their mortgage, then that typically means that the property is worth less than the loan otherwise the owner would have sold the property to paydown the mortgage.
I think SFH will remain strong within my markets.
I do wonder if we will see people start to rely more and more on WFH, coworking, and/or master plan communities as a result of this. Basically, I am wondering how the Office sector will respond.
SFH will remain strong like others have mentioned. I could see suburban markets performing better as people look to be more spread out. I can see people considering housing/locations that can better accommodate for a car as people stay away from public transit and WFH stays more common, even in the post-covid world. And this in my opinion i think applies to MF too, not just SFH. Dense urban centers will be hit harder than the suburbs.
Less diversified markets will suffer the most, especially those highly dependent on tourism. Unless air travel is seen as safe and those markets can make their tourism experiences safe as well, i find it hard to see those markets doing well through this pandemic.
Personally - I think we will start to see multifamily prices drop around May/June 2021. I think for Class B & C multifamily, pricing will go down. For class A, you might not see it (yet).
I haven't seen single family house prices drop yet, which is strange...
I’m not so sure it will drop. I don’t know where I read this, but we haven’t built this few houses per capita since 1962. Many of the builders went bust in the last recession and dropped out of the industry completely. While requiring larger down payments is more prudent for the lenders, this practice hurts the little guy when financing residential construction.
The housing crisis last recession was not only brought on by unemployment, but also massive supply. Not so much supply this time around.
The homeownership Rate increased rapidly this quarter. From 65.3% in Q1 of this year to 67.9% by Q2. Plus there is at least some form of forbearance going on in mortgage payments this time vs the last recession. Prices could fall, but I just can’t imagine the price cuts being massive or lasting a while. I do think mega mansions will probably be able to be scooped up at good prices in the coming years.
LOL @ 2nd homes. 2nd home prices are on fire!
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