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Great information. In this coming cycle bust the buy-for-rent companies and speculators will be screwed. The excess is not so much in mortgage underwriting standards as in the 2006-10 downturn, but in buy-for-let outfits. Starting from the biggest fish Blackrock down to your individual speculator. Boy are we seeing them ramp up like there's no tomorrow. Someone big will eventually fail, maybe Blackrock. In hindsight everyone will laud Zillow for getting out while the going is good (even though they took a lot of abuse for their relatively minuscule losses). I am salivating about the coming opportunities, but most likely not getting active before 2027.
At some point you'll need an RE agent. You'll want an MLS feed to properties hitting the market as well as a feed to properties just sold. This way you can see how long homes sit before selling. And just as important how much under/over asking price the seller got.
An RE agent can set the parameters for your MLS searches such as: no pool, minimum square feet: 1500, minimum 3 bed/2 bath and only specific zip codes. But you've got to do your part too.. The RE agent needs to know you're serious about buying.
The last time I did this was early 2017. I was planning to buy 2019 and looking in Gilbert and Chandler. However by Feb of 2019 I decided not to buy more property. I'd been watching the RE market with the MLS feeds for about a year and a half and the numbers didn't work for me.
280k -300k for a 3 bed/2bath 1200-1500 sq ft home in Gilbert/Chandler. Rents maybe $1400 a month. I didn't see enough property appreciation to make it worth the hassle. At the time prices were somewhat flat. Sellers getting a bit under/over asking price. Homes were selling within 4-6 weeks.
A year later the pandemic hit and the RE market changed overnight. Blame the shutdown, blame the government, blame bad luck.
But the fact is here we are: 5/3/22. A person can continue to moan about how unfair life is or they can get their **** together.
Yeah, I'm a boomer and yeah "I've got mine." But I'm also 64 and starting to feel it.
Give me back my youth.... and you can gladly have my millions.
I'm not convinced our RE market has peaked. It's possible but what if rates go down again? There is still a lot of hot money chasing rentals, both SFHs and MFHs, because "inflation" and stock market down this year.
I'm not convinced our RE market has peaked. It's possible but what if rates go down again? There is still a lot of hot money chasing rentals, both SFHs and MFHs, because "inflation" and stock market down this year.
You might be correct.
I'm going to keep my eye on the inventory and how long homes sit before selling.
At some point you'll need an RE agent. You'll want an MLS feed to properties hitting the market as well as a feed to properties just sold. This way you can see how long homes sit before selling. And just as important how much under/over asking price the seller got.
An RE agent can set the parameters for your MLS searches such as: no pool, minimum square feet: 1500, minimum 3 bed/2 bath and only specific zip codes. But you've got to do your part too.. The RE agent needs to know you're serious about buying.
The last time I did this was early 2017. I was planning to buy 2019 and looking in Gilbert and Chandler. However by Feb of 2019 I decided not to buy more property. I'd been watching the RE market with the MLS feeds for about a year and a half and the numbers didn't work for me.
280k -300k for a 3 bed/2bath 1200-1500 sq ft home in Gilbert/Chandler. Rents maybe $1400 a month. I didn't see enough property appreciation to make it worth the hassle. At the time prices were somewhat flat. Sellers getting a bit under/over asking price. Homes were selling within 4-6 weeks.
A year later the pandemic hit and the RE market changed overnight. Blame the shutdown, blame the government, blame bad luck.
But the fact is here we are: 5/3/22. A person can continue to moan about how unfair life is or they can get their **** together.
Yeah, I'm a boomer and yeah "I've got mine." But I'm also 64 and starting to feel it.
Give me back my youth.... and you can gladly have my millions.
Thanks for sharing your experience. Yeah right now nothing pencils out for me. It's the "crazy" phase in the RE cycle. I'm not even trying anything. My hope is that my daughter can be our RE agent once we get serious. I would gladly form a LLC with my grown kids (we pool our capital) to get them started. Would love to keep the grandkids around! Which is the greatest joy in my life for sure
I'm not convinced our RE market has peaked. It's possible but what if rates go down again? There is still a lot of hot money chasing rentals, both SFHs and MFHs, because "inflation" and stock market down this year.
I guess the wild card is will people continue to move here in droves from wealthier states. I believe it was mentioned 26% of those moving here are from Southern Cal alone.
P-L is right. A wave of the wand (dropping interest rates) may change the RE market again. And if it gets bad and prices slide fast, that is exactly what will happen. Especially in a mid-term year. And let's not forget that while people were buying "payments" (and the house cost what it costs), now, Fannie and Freddie are holding the bag on millions of properties. That's why I don't understand why the FEDs kept on buying Mortgage back securities until later last year. I mean, what's the point in holding onto ultra-low interest rates keeping an overheated RE market? It's beyond!
Make no mistake, the big investors have propped up this PHX RE market. Analogy: go to an auction and put just a couple of people fighting to buy an item. It can get positively irrational. Well, we have institutional investors combined buying here by the thousands. And some were willing to overpay. Sure, the tax laws/rates are irrationally too low and are the reason why the math (kind of) works. But I bet there are other reasons why they are still buying: like a race for market share in their newer model (analogy Uber and Lyft losing money to feeling good about it?)
But as the Cromford report reported early, the cost per square foot of rentals of DETACHED SFH's is dropping. And the media hasn't noticed yet.
So it's pretty basic: The big question is, What will investors do? And then, we have the new builds. Phoenix building permits for single-family houses in March were the highest since 2006 and 66% higher than 2 years ago March. Yet, housing stock prices have tumbled by 30% since the beginning of the year. Meaning, Wall Street is dumping homebuilder stocks as fast as it can. Most buyers can only see what is going on in front of their noses. And builders currently cannot keep up with labor or supplies. But it's not hard to see a few pieces coming into play that can really shift this market fairly fast in about 6 months.
Surely, investors won't be willing to overpay when rents go down. Because they look at "value" as a combined cash flow (rental income) plus appreciation. If both are pointing the other direction (one variable rental income is and the appreciation is about to stall). That gets coupled together and knocks out several investor buyers.
IF I only focused on ROI, I would sell. But I have a 2-year capital gains timeline going on. I'm not going to give away 50% to Uncle Sam and the state of AZ. I have to wait until Jan 1st. Still, I kind of like my new hood. ROI cannot be the only thing I look at either.
I guess the wild card is will people continue to move here in droves from wealthier states. I believe it was mentioned 26% of those moving here are from Southern Cal alone.
I sell overpriced widgets costing from $1K to $100K for a single item (they need several) to people with too much money. Since the summer of 2020, people have been spending like drunken sailors. The market was inelastic on boats, luxury cars, golf club memberships, etc. That was NOT the case in 2019. Well, I'm feeling a slowdown. I bet those Q1 GDP # that gave us are way too low (down 1.4%). It ONLY happened because people felt completely secure. As in, their stocks were up. Their house(s) were up. Zero chance of a layoff or a slowdown. Consumer confidence was through the roof.
To keep it local I will give an example. Our golf course in our hood took 6 years to sell 175 memberships. They sold 200 inside 2 years AND they tripled the buy-in price (now $75K and they are talking about raising it to $100K). Without question, people cashing in from CA to AZ can change on a dime. Just look at the WILD swings in their CA RE prices over the years.
I'm not saying we are in for a RE depreciation beating. But I can see (and feel) what might go on. I could see my place dropping $200K (I'm currently up $500K in 2 years). That's about a 9-month rollback. OF COURSE, I'm still way up. But the media will be HAMMERING and HAMMERING that point with sob stories. That's going to change some people's minds about relocating. People reading this post just need to think about what a single dose of bad news does to them. Now get it coming at you 24-7 ("coming to a theater near you").
My point: all of these topics are interrelated and intertwined. One big swing often cascades to another. If exuberance is tamed more, it's going to impact people moving to a new frontier like PHX. The last inrush of people moving here was from people trying to restart their broken careers 12 years ago: wounds were licked, and they were ready to start over in the cheap town called PHX metro. This new rush has been with super confidence (job security and newly much thicker wallets). Obviously, Ukraine and the supply chain lingering problems are not helping either. There is a storm coming...
Last edited by MN-Born-n-Raised; 05-04-2022 at 06:09 AM..
Last POV re: why rents have jumped pretty much everywhere. Of course, there is inflation. And yes, cheap money allowed "cheaper payments" that drove up the values of the property (all rentals OR SFH home prices).
But another surge of money that surely impacted the price of rent is the "free money" this past couple of years. I'm talking about $$ that made struggling people have more money than usual. Like the foreclosure moratorium, eviction moratorium, Trump signed (and Biden expanded) relief checks, expanded unemployment, student loan pause, etc. All of these freebies helped fuel the surge.
Next, let's add boosts in wages for every job. In PHX, there is no shortage of advertised $25/hour jobs with minimum experience (i.e., $50K/year). But you need "skills" that too many people don't have. Like communication skills, ethics, and actually showing up for work without being a PITA. Now that's a challenge! Show me a struggling underpaid worker and they are missing those "skills". I'm paying my cleaners $50 an hour and their English is weak. But they do a good job, don't steal, and show up on time. I'm paying my window washers $60 an hour. But they do what they say, can let me know when they are running late, and have a warm smile. "Skills" that struggling people are missing.
I digress. Now that the "free money" is behind us and as you hear from people upset with the rent hikes, there is some pushback and there isn't an endless amount of resources to pay for things. So an equilibrium might mean lower pending prices. Especially for how many new rentals are coming on board.
Here is a (semi-pessimistic) article that discusses realistic trade-offs. It's always good to read both sides of any debate. He brings up a ton of common sense points. I learned a thing or two. https://seekingalpha.com/article/450...er-stocks-down . Maybe it is time to for me to sell my MN lake home. Before people sleeping at the wheel eventually catch on.
I am waiting for a correction...not a bubble per se...but a leveling off and decline over the next year. I thought I read somewhere that mainstream banks had paused HELOCs a year or so ago. Probably because they know the market is overheated and don't want to be left holding the bag with a "Title in lieu" situation.
I do see quite a few new builds coming into the E Valley but their price points are at this elevated level as well. My home sold originally in 1998 for $170k and is now worth well over $700k. A home built and sold for $170k was a budget build...no way should it be worth $700k but here we are. I would sell and downsize but it would, honestly, just be swapping mortgages to stay in this area with the equity making up the difference. (No I am not the original owner, we bought it 9 years ago)
Anyway...the next year is going to be interesting. If GDP posts another negative for Q2 they will call it an official "recession", just depends on how bad the drop is.
this is why a person needs another person who has a full-time job to help the other person by saving on expenses together so the two persons can save enough for a down payment on a two-person house in an area that is affordable
And I'm not so sure that's very different than the way it has always been.
I remember how my aunt and uncle had to scrimp and save to pay their monthy mortgage bill back in the 1950s; it was something like $50.
I remember well having to have a roommate for 3 years when I first got into the work world to be able to afford rent and save a little bit.
The numbers may be different, what many have to do isn't very different.
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I'm paying my cleaners $50 an hour and their English is weak. But they do a good job, don't steal, and show up on time. I'm paying my window washers $60 an hour. But they do what they say, can let me know when they are running late, and have a warm smile. "Skills" that struggling people are missing. 
