Anyone else worried about the LLC Investors (especially the out of towners) making it tough for regular homebuyers here?

[GVoR]

Originally Posted by BoBromhal

From the 2008 peak (that's when we peaked), we're up about 20% in the Triangle for single family homes. I don't think anyone would call that "crazy gains" (and not saying you are either, but it's an underlying point).

From peak to 2011 bottom, overall value dropped 8%.

From the bottom to now, we've gained 30% in 8 years. That's certainly not crazy gains.

A pendulum only swings "equally" both ways, yes? Major urban markets like SF, LA, MIA, SEA, NYC that gain 30% in 2 years have a much greater chance of swinging down 30% than we do.

The only thing I would counter is there are areas that don't have the "equal" swing.

Just as we saw in the '08 recession, there were areas that simply didn't feel it the same way.

For instance we bought our first home in a nice, but not great, town in the 95/495 corridor in MA. Mature neighborhood, no frills, 1960s homes, quarter acre lots, 1300-1900 sq ft, 3-4BDs, 1-2BAs, 8 blocks from downtown with an EPA Super Fund site in between.

The history of that home:
1997 - 2007 (peak) - 190% increase in the value of the home
2007 - 2013 (trough in MA, we bought it in 2012) - 24.8% decrease in value.
2013 - 2019 - (recovery) - 44% increase in value

Of the cities you mentioned, I would reckon SF, LA, NYC, BOS (I know less about SEA and MIA) are largely "equal swing" proof - they will have down swings, but the ups far outweigh the downs. And I say that as only having owned in a "suburb" 40 miles outside of Boston. The inner suburbs; Milton, Newton, Wellsley, Watertown, Brighton, Alston Malden, Somerville et al have no where else to build. The supply is capped. Econ 101 takes over from there. And the demand for those areas isn't probably going anywhere; they are established education and professional centers.

NYC is NYC - Financial center of the universe.
Boston has, what 35 colleges within the city limits?
SF and LA are SF and LA; the land of dreams.

If we compare the Triangle to those cities, I would take an non expert guess that we are far more susceptible to equal swings than they are there...but I'm certainly no expert. The Triangle still has a ton of potential supply (it's way less developed here than any of those cities/areas) and given the net migration to here, demand has driven a lot of the gains I would guess.

EDIT TO ADD - I recall a graph from IB Econ class in HS (cant remember the name of the curve) but it laid out a market where the curve over time is always moving up, while there are peaks and valleys within it; each valley floor is higher than the previous one.

Short of some massive earth shattering recession (and I realize the Yield Curve inverted in March, so 2-3 years post that is what history tells us to be mindful of - mid-end 2021 could be fun) some areas are simply "always up"

[BoBromhal]

You are correct, generally no market loses ALL of its gains.

In the worst recession of modern times...

From peak to 2011 bottom, overall value dropped 8%.

the drops were generally larger in the markets that appreciated much more.

[UserNamesake]

Originally Posted by olderandwiser456

Yes, this is happening all over the county. The Raleigh-Durham-CH area shows up on many lists of desirable areas in which to live and retire. Usually in the top 10 or 15, depending on the type of list. That attracts not only young professionals looking for good job opportunities, but also retirees. And businesses relocate to "hot" or up-and-coming areas, such as the triangle, which is a good thing.

Along with that comes the real estate investors, out-of-state or out-of-country investors looking to invest in real estate in this "hot" area. Some of that can be beneficial, if run down properties are fixed up and resold and neighborhoods are improved, for example. But that does push out some folks looking for a starter home if prices are escalated beyond the value of the property, which is very unfortunate.

But I think the worst part of all of this is the absentee landlord/owner, who does not maintain the property if they are the LL, doesn't properly screen prospective tenants, and worst of all, if the absentee owner doesn't occupy the home for extended time (years), just waiting for the market to increase, then flips to make a quick buck, while the property sits vacant and jacks the value so some new buyers are priced out. All of these issues can devalue neighborhoods. Nice stable neighborhoods don't want vacant properties sitting around, sometimes not well maintained, while absentee owners wait to cash in.

This is happening all over the place, but especially in these "hot" areas, which the triangle has become.

See list below, just one example. Raleigh-Durham comes in at #10 on 2019 Best Places to Live list.

https://realestate.usnews.com/places...places-to-live

Really strong post .

Originally Posted by luv4horses

Sorry, but although individually you may be stellar neighbors, the movement of money from high cost of living areas to Raleigh definitely raises prices for those who earned their money more modestly in the Triangle. Some states have higher payout for similar skills. A million dollar home in California is affordable to those with good CA jobs. But when that person wants a better life and moves to the Triangle (lol), he can buy a similar home for about half that. So when he buys and the asking price is 10% above the comparables, what does he care? He pays the extra, the seller is happy, and he has contributed to rising prices by providing a new comp.

Slowly but steadily, as long as our area can handle this, our prices will rise due to people moving from higher cost of living areas. Our jobs may pay less, so these buyers stop making the biggest bucks, but they already have a very nice nest egg/cushion to work with. That's what hurts people local to our area trying to make it only on money they earn here.

And I'm not sure the Chinese are hiding dollars from their governments? China knows there is a lot of US investment and probably like the idea that they can force it to be pulled at any time, thus affecting the US economy. Meanwhile those investments in real estate also cannot help but push prices higher.

Another excellent post.