Frisco - new build prices (Dallas: foreclosure, to rent, house)

[DFWUser1]

Originally Posted by Lorne

Not sure if we will ever see another 2008/2009 real estate market crash any time soon. Lending has become much more strict, institutional money pouring into the SFR market, and troves of foreign investors piling in. I personally know RE agents that only sell to Chinese investors that comes to DFW and gobbles up as many SF homes which they either rent out, becomes Airbnb, or just sits empty... Not to mention the SFR investors that are pouring in from California and other coastal cities.

I do syndication; real estate private equity to be exact. Everyone and their mama's are asking about sunbelt states, particularly DFW, and ALL are eager to invest in this market. And there are TONS of money (dry powder) sitting on the sidelines waiting to be invested.

Yeah, I just got that feeling last year when covid hit and market crashed. And what happened to this TONS of money before that? Market was kind of normal with steady growth from almost 2016 till beginning of 2020. I am sure this tons of money was there before (it just didn't rain after covid) interest rates are also lower before if not this low, so wondering what caused this explosion all across country irrespective of region, market? Even after accounting peoples desire to move to houses, still appears to be a puzzle

[Lorne]

Yeah I don't blame you. I felt the same way and was totally caught off guard when the opposite happened.

[Kenro911]

Originally Posted by Lorne

Not sure if we will ever see another 2008/2009 real estate market crash any time soon. Lending has become much more strict, institutional money pouring into the SFR market, and troves of foreign investors piling in. I personally know RE agents that only sell to Chinese investors that comes to DFW and gobbles up as many SF homes which they either rent out, becomes Airbnb, or just sits empty... Not to mention the SFR investors that are pouring in from California and other coastal cities.

I do syndication; real estate private equity to be exact. Everyone and their mama's are asking about sunbelt states, particularly DFW, and ALL are eager to invest in this market. And there are TONS of money (dry powder) sitting on the sidelines waiting to be invested.

Issue with 'investor' money is that its over-leveraged to the nipples money. Look up how many Zillow owned homes in DFW there are - they can't sell them, price reduction one after another. They stopped buying because there is concerns over cash-flow at this point.

It takes a small whiff and that money crumbles away into the abyss because its actually not real money.

I'm not claiming that 2008 will happen or anything of the sort, I'm just stating that 'investor' money these days is more unstable than even sub-prime people who bought pre 2008. There is always a chance that the party will continue for decades with no issues or it can crumble tomorrow. Either way, there will be people claiming that they saw it happening from a mile away.

[fwsavemoney]

Originally Posted by DFWUser1

Yeah, I just got that feeling last year when covid hit and market crashed. And what happened to this TONS of money before that? Market was kind of normal with steady growth from almost 2016 till beginning of 2020. I am sure this tons of money was there before (it just didn't rain after covid) interest rates are also lower before if not this low, so wondering what caused this explosion all across country irrespective of region, market? Even after accounting peoples desire to move to houses, still appears to be a puzzle

I think there were multiple factors in play here. Working remote allowed people to not worry about commute so many moved to suburbs/exburbs or to another city. Stock market rebounded quickly and reached all time high. Those that had money invested in the market and bought low during covid had extra cash flow. We also had the lumber shortage which caused the prices to hike and they never came back down after that.

[Rakin]

Originally Posted by Kenro911

According to Redfin, the median sale price in Frisco for SFH between 2016 and 2021 have basically stagnated. So 5 years during which majority of your projects above have been completed nothing happens to house prices - they remain stagnant.

Redfin is wrong. We called it the Toyota effect and I believe it was 2017-2019 time frame when they were bringing in their employees.

The Frisco / Plano / Northern markets were hot and the prices of homes went up quite a lot. All markets like Coppell, Las Colinas had nice surge in pricing and a shortage of homes.

[Kenro911]

Originally Posted by Rakin

Redfin is wrong. We called it the Toyota effect and I believe it was 2017-2019 time frame when they were bringing in their employees.

The Frisco / Plano / Northern markets were hot and the prices of homes went up quite a lot. All markets like Coppell, Las Colinas had nice surge in pricing and a shortage of homes.

Realtor seems to agree too but has less data (goes back to 2018). I'm not saying you're wrong by any means but do you have any data to support that Redfin/Realtor/Zillow/Movoto are wrong?

https://imgur.com/a/U4cejyN


https://imgur.com/a/7K4Y4lR

https://imgur.com/a/kQyn7P0

[Lorne]

Originally Posted by Kenro911

Issue with 'investor' money is that its over-leveraged to the nipples money. Look up how many Zillow owned homes in DFW there are - they can't sell them, price reduction one after another. They stopped buying because there is concerns over cash-flow at this point.

It takes a small whiff and that money crumbles away into the abyss because its actually not real money.

I'm not claiming that 2008 will happen or anything of the sort, I'm just stating that 'investor' money these days is more unstable than even sub-prime people who bought pre 2008. There is always a chance that the party will continue for decades with no issues or it can crumble tomorrow. Either way, there will be people claiming that they saw it happening from a mile away.

In my opinion, Zillow is a terrible example to use (I don't consider Zillow as a equity company). Their approach was set to fail from the start. Whenever I think of institutional money being invested in SFR, I think of Blackstone Group or Colony Capital (Wall Street landlords). Zillow is peanuts compared to those two companies.

Zillow's approach by purchasing SF homes at market price, coupled with the current supply and labor shortage is just asking for trouble. Even if we see another 2008/2009 market crash, you can be sure big equity players like Blackstone Group will be quick to swoop up homes that fit within their model in hot markets at a discount with moderate leverage.

It is a shame, but SFR is becoming more and more as an asset class to these equity companies. Monies that use to be invested in retail and offices will slowly but surely make its way into the SFR market. SFR built-to-rent is becoming a thing too.

[Lorne]

Originally Posted by fwsavemoney

I think there were multiple factors in play here. Working remote allowed people to not worry about commute so many moved to suburbs/exburbs or to another city. Stock market rebounded quickly and reached all time high. Those that had money invested in the market and bought low during covid had extra cash flow.

My thoughts exactly. Even though tons of middle to low income folks suffered during the pandemic. A lot of affluent individuals made MILLIONS during the pandemic. Anyone who invested aggressively in the stock market post March 2020 crash made a TON of money. Obviously, not all stock tickers are created equal, but you get what I mean. My friends and colleagues who went all-in on Tesla post march 2020 crash made a lot of money, some even in the millions.

Our private equity company only paused operations from March to April of 2020. We were given the greenlight in May to continue to acquire properties but only in certain markets within sunbelt states.

[crazyforger]

Originally Posted by Lorne

In my opinion, Zillow is a terrible example to use (I don't consider Zillow as a equity company). Their approach was set to fail from the start. Whenever I think of institutional money being invested in SFR, I think of Blackstone Group or Colony Capital (Wall Street landlords). Zillow is peanuts compared to those two companies.

Zillow's approach by purchasing SF homes at market price, coupled with the current supply and labor shortage is just asking for trouble. Even if we see another 2008/2009 market crash, you can be sure big equity players like Blackstone Group will be quick to swoop up homes that fit within their model in hot markets at a discount with moderate leverage.

It is a shame, but SFR is becoming more and more as an asset class to these equity companies. Monies that use to be invested in retail and offices will slowly but surely make its way into the SFR market. SFR built-to-rent is becoming a thing too.

SFRs are never an asset to companies.
Blackstone or Colony Capital will learn their lesson.
One should look at the Demographics, family formation, fertility rate , immigration levels which are all currently negative for Housing.

Add to it the low Interest rates , Supply Chain constraints and Covid.

I think that the future supply is huge.

[TX Rover]

Originally Posted by crazyforger

SFRs are never an asset to companies.
Blackstone or Colony Capital will learn their lesson.
One should look at the Demographics, family formation, fertility rate , immigration levels which are all currently negative for Housing.

Add to it the low Interest rates , Supply Chain constraints and Covid.

I think that the future supply is huge.

Haven’t you been screaming about the “crash” coming for years and been proven wrong at every step?