[Konig1985]

Hello,

I hope everyone on this forum is doing well and staying healthy.

I appreciate someone starting this thread. I was transferred to our company's APAC office and did not have many chances to visit Connecticut for the past few years. However, I still a own a rental property in Wilton with a great tenant family. Current rental yield after all expenses before taxes is a measly 4.5%. Based on Zillow, the rate I am charging is 15% lower than the current median zillow rent estimate.

I was tempted to sell it in the current market. However, I have no better idea on what to do with the cash. Of all the asset classes available to me, I could not find a better risk adjusted investment than real estate at the current juncture. Relative to equities, bonds and crypto, the run up of real estate prices in the suburbs looks mild if you consider that is driven by both structural shift to WFH and monetary policy. If rates are hiked, the structural trend of WFH will still linger for awhile and limit housing price decline. I cannot say the same for other asset classes that are basically air.

The only trade that made sense to me is to sell in the suburb and buy in the city and hope everyone has to go back to office. However, NYC prices still look insanely overpriced to me. I have no idea how those developers managed to get perpetual payment extensions from their creditors.

If someone has a better idea of what to do with the cash after you sell your house, Im all ears.

[SteveM85]

Originally Posted by Konig1985

Hello,

If someone has a better idea of what to do with the cash after you sell your house, Im all ears.

In this case I would liquidate. NOW! Let it sit then reinvest at the next market or RE declines. Not a matter of if but when. They will. You'll never time the peaks and valleys with 100% accuracy but close enough works.

[Konig1985]

Originally Posted by SteveM85

In this case I would liquidate. NOW! Let it sit then reinvest at the next market or RE declines. Not a matter of if but when. They will. You'll never time the peaks and valleys with 100% accuracy but close enough works.

You are assuming this is close to the peak for real estate and I am just not so sure. Closing cost is super high so my capital gain after expenses and taxes is just about 4 years of net rent. Doesnt seem to be worth the trouble at this stage when I can get the same after 4 years (assuming rent does not fall).

For this reason, I feel there is some fundamental support for home prices unless rent falls dramatically.

[SteveM85]

Originally Posted by Konig1985

You are assuming this is close to the peak for real estate and I am just not so sure. Closing cost is super high so my capital gain after expenses and taxes is just about 4 years of net rent. Doesnt seem to be worth the trouble at this stage when I can get the same after 4 years (assuming rent does not fall).

For this reason, I feel there is some fundamental support for home prices unless rent falls dramatically.

you answered your own question then

[kidyankee764]

In speaking with a realtor in central Connecticut (he covers Branford, Guilford area), he brought up one issue that has been a nightmare for his office: the failure of homes to appraise at their agreed to sale price. This tells me that not nearly as many people are paying cash, or have the cash off hand to bridge the gap.

This tells me there will be lots of issues down the road.

[JayCT]

Originally Posted by kidyankee764

In speaking with a realtor in central Connecticut (he covers Branford, Guilford area), he brought up one issue that has been a nightmare for his office: the failure of homes to appraise at their agreed to sale price. This tells me that not nearly as many people are paying cash, or have the cash off hand to bridge the gap.

This tells me there will be lots of issues down the road.

Ive heard this is a problem across the country actually. My real estate friends in Fairfield County though say they don’t see as big a problem with it there. I haven’t seen many, if any, lost or delayed sales here though so it’s not an insurmountable problem to deal with. Jay

[kidyankee764]

Originally Posted by JayCT

Ive heard this is a problem across the country actually. My real estate friends in Fairfield County though say they don’t see as big a problem with it there. I haven’t seen many, if any, lost or delayed sales here though so it’s not an insurmountable problem to deal with. Jay

That’s not what my family friend noted. He said especially in the last month, his office has been trying to get creative to bridge that gap between buyers and sellers when homes don’t appraise. He also said it wasn’t specific to his office as many realtors are seeing this issue in his local area. His last sale (I believe it closed yesterday) the buyers in Guilford had to be gifted the 20k to cover the difference by other family members. The buyer wouldn’t budge. Not good.

Any realtors here seeing this more than usual?

[hvexpatinct]

Originally Posted by kidyankee764

In speaking with a realtor in central Connecticut (he covers Branford, Guilford area), he brought up one issue that has been a nightmare for his office: the failure of homes to appraise at their agreed to sale price. This tells me that not nearly as many people are paying cash, or have the cash off hand to bridge the gap.

This tells me there will be lots of issues down the road.

Not super surprised - although the failure to appraise thing isn’t market specific- happening in Denver, Dallas, Seattle too. Cash or large down payment is definitely a thing in the western part of the state right now.

[SteveM85]

Originally Posted by kidyankee764

In speaking with a realtor in central Connecticut (he covers Branford, Guilford area), he brought up one issue that has been a nightmare for his office: the failure of homes to appraise at their agreed to sale price. This tells me that not nearly as many people are paying cash, or have the cash off hand to bridge the gap.

This tells me there will be lots of issues down the road.

I don't know either way. I don't know that many people near me to corroborate, I wouldn't know who to call or where to look that up, but I would expect it to be the case. With more transactions than normal, you'd expect more deals to fall through. Not surprised. It's fair to pose the questions on issues down the road. We've seen how these things turn out. Usually not for the better. Buyers buying with hearts and emotions, not brains, RE investors feeling invincible riding paper highs on an on. I don't think will be on the brink of global disaster and collapse like CT Yank would have you believe. More like a correction.

[kidyankee764]

Originally Posted by hvexpatinct

Not super surprised - although the failure to appraise thing isn’t market specific- happening in Denver, Dallas, Seattle too. Cash or large down payment is definitely a thing in the western part of the state right now.

Right, but this is the Connecticut forum and I was informed of this by a southcentral CT realtor.