Real estate decline 2020

COVID-19 pandemic has caused slow down of Real Estate because people have no extra earning resources. There are many work have been blocked.
 

kel

Pelican
I know this is anecdotal, but in my neighborhood places are selling like hotcakes. I've never seen so many "sold" signs so quickly.
 

NoMoreTO

Pelican
I gave my tenant a 10% reduction in his rent. His lease was coming up for renewal, he has overall been good, a little whiny, but I don't have a ton of desire to be trying to rent it out to someone else in this market. It is a Downtown Condo in a large city.

He was planning on staying temporarily til he bought, but has been there almost a year. He is now waiting for the market to come down. He seems educated on the matter, but who knows.
 

squiggly

Sparrow
I had a tenant move out, probably because of the crisis, but had another move in 2 weeks later paying 30/week more, so it's not too bad.
 

Troller

Woodpecker
With pandemic house prices are increasing. It makes some sense. Lack of supply. Demand make prices rise. It´s too early to tell. People are holding back.

What will happen when government programs end?


Home sales dropped nearly 18% in April, while decline in inventory pushed prices to a record high



The Hamptons rental market is booming, making the ritzy area more unattainable than ever — even for 'middle-class rich people'
 
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jordypip23

Pelican
Gold Member
With pandemic house prices are increasing. It makes some sense. Lack of supply. Demand make prices rise. It´s too early to tell. People are holding back.

What will happen when government programs end?


Home sales dropped nearly 18% in April, while decline in inventory pushed prices to a record high



The Hamptons rental market is booming, making the ritzy area more unattainable than ever — even for 'middle-class rich people'
The Hamptons is just an exurban extension of Manhattan & not reflective of America as a whole. It is a classic East Coast hideout for the banksters, socialites, celebrities, etc. But I am trying to make sense of the other article link that you have posted.
 

Admiral

Newbie
There are two sources for the decline, first, the collapse of tourism, S/T furnished rentals/Airbnb stock will get converted to long term rental and result in lower rents esp in cities like SF, NYC, Paris.

Second of course, the general economic downturn will depress prices as people can't make their mortgages have to sell their property, same dynamics as in 2008.

Furthermore, the movement towards city living away from the suburbs will reverse as Boomers now view living in places like Manhattan or Santa Monica as dangerous, and urban activities like going to the theater, crowded restaurants etc as no longer attractive. Exurbs that are rural with acreage and lower densities will get a boost.
After seeing the post I looked up my house. Definitely got a boost, I'm on about an acre parcel with all of my neighbors on about 1/2 - 1 acre. Looks like the prices here are pretty stable.
 
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Troller

Woodpecker
"Government action has played an important role in this. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, the $2.2 trillion stimulus bill signed into law in late March, puts in place protections for homeowners with federally backed mortgages. It prohibits lenders of those types of mortgages from foreclosing on homeowners until at least June 30, and it gives homeowners the right to request forbearance on their mortgages — meaning a pause on paying them — for 180 days. They can also request another 180-day extension.

“Forbearance has stopped defaults; otherwise, we would have seen a wave of defaults,” said Susan Wachter, a professor of real estate at the Wharton School at the University of Pennsylvania."

 

Arado

Pelican
Gold Member
Impact of current civil unrest on real estate markets? I'm thinking small towns with homogenous populations in red states will be a solid bet, even if prices go down in the short term, inflation and civil unrest in blue states will make it a worthwhile investment even if home prices are still historically high.
 

nordle

Newbie
Sales in Ireland are down about 75% on this time last year. I'm holding 5 doors with no debt and hoping to pick up another 2 next year when the real drop hits.
 

The Wire

Kingfisher
Gold Member
I gave my tenant a 10% reduction in his rent. His lease was coming up for renewal, he has overall been good, a little whiny, but I don't have a ton of desire to be trying to rent it out to someone else in this market. It is a Downtown Condo in a large city.

He was planning on staying temporarily til he bought, but has been there almost a year. He is now waiting for the market to come down. He seems educated on the matter, but who knows.

Interesting, I just got the opposite response from my landlord. I am currently on a month to month lease as my last yearly lease has been expired for a while now. My landlord just sent me an email stating my rent was going up 10% because my unit is under the market value(which it is). He told me to give to give him an answer this week if I accept or if I want a termination. I've been with my landlord for 6 years now and no issues with him as I never complained about anything, I asked him to fix major issues which he does.

Even with my unit being under the market value I find his timing to be odd with the turmoil going on in the world and that I am a hasselfree tenant with a 6 year track record of payments on time. The issue for me is that while my unit is a extremely desirable place during normal times being near a restaurant/bar district, I have no desire to be in a area like this as it's literally useless for me with covid19 and potential riots.

I am almost certain at this point I am going to terminate the lease and temporarily move in with family because I want to see how this year plays out because there is too much turmoil and I can see prices coming down heavily and I am extremely liquid.
 

NoMoreTO

Pelican
Interesting, I just got the opposite response from my landlord. I am currently on a month to month lease as my last yearly lease has been expired for a while now. My landlord just sent me an email stating my rent was going up 10% because my unit is under the market value(which it is). He told me to give to give him an answer this week if I accept or if I want a termination. I've been with my landlord for 6 years now and no issues with him as I never complained about anything, I asked him to fix major issues which he does.

Even with my unit being under the market value I find his timing to be odd with the turmoil going on in the world and that I am a hasselfree tenant with a 6 year track record of payments on time. The issue for me is that while my unit is a extremely desirable place during normal times being near a restaurant/bar district, I have no desire to be in a area like this as it's literally useless for me with covid19 and potential riots.

I am almost certain at this point I am going to terminate the lease and temporarily move in with family because I want to see how this year plays out because there is too much turmoil and I can see prices coming down heavily and I am extremely liquid.
I'd check the market. You might want to consider subleasing your place while you live with your parents. If he is just raising it 10% after 6 years he is a good landlord. He might be feeling the pinch on things under these times.
 

The Wire

Kingfisher
Gold Member
I'd check the market. You might want to consider subleasing your place while you live with your parents. If he is just raising it 10% after 6 years he is a good landlord. He might be feeling the pinch on things under these times.

He's raising it after 4 years. So this would be second rent increase which is not unreasonable at all during normal times though a bit odd timing now.

I wouldn't want to be involved in a sublease as I can't see a worth while upside especially I have to give him an answer by Friday and I he wouldn't sign off on that even if I had someone unless as I know he's going to relist at higher than 10%.

He's a good landlord but I'm also a good tenant where I didn't even see him for years at a time. He's batting .500 on tenants as the guy who had my apartment before me was perfect on paper(chiropractor with his own business) but he let him off the lease in 7 months because he was such a pain in the ass and other girl in a front unit he terminated because she was giving him lip. It goes both ways, he can make more on the apartment but more risk for him. Just bad timing on asking for it with the world burning and it's not as desirable to be there under these conditions. At this point I am very liquid, working remote and want to make some calculated moves so getting locked into a year lease at a 10% increase when I was month to month isn't advantageous for myself.

I do agree with you he's probably feeling the pinch because I know he owns some college student rentals and he's probably screwed with getting them filled(I also wonder if they skipped payments for April/May when colleges closed).
 

Hell_Is_Like_Newark

Kingfisher
Gold Member
I own multiple rental properties (small apartment buildings), but bought all 1997 to 2002, back when real estate was ridiculously cheap. Back then, the rent equivalent value was much higher than the sale value. Back then the area was a lot rougher. Two and half decades of gentrification has changed things dramatically.

I stopped buying though because I cannot buy, renovate, and rent with positive cash flow. The sale price vs. rent income is now completely out of wack. Two things are driving this in my area:

1. Foreign money: Capital from overseas coming to the US for safety. The owners of this capital concern is not making good returns. It seems their investing strategy is to "get the hell out of Dodge" to America, where even losing half their investment is better than losing all of it back home. This has been driving up prices.

2. New York City money: People who were paying $5k+ a month in rent are now buying small apartment buildings here as an owner / occupied arrangement. They still end up paying $5k+ a month (mortgage +taxes), after subtracting rent income, but now actually own their own home instead of rent. So positive cash flow not required.

A third item that is now no longer a factor is AirBnB. My neighbor pulled in $178k a year Airbnb his three family wreck of a building (he did make it look nice though.. structurally the building is a disaster). Airbnb is essentially banned now (with a few exceptions). He sold it to some Indian guy for just under $1million and admitted to me that he really ripped the buyer off.

At some point, prices are going to adjust. I don't expect them to go to the crazy cheap days of the early to late '90s as the demographics has changed way too much for that to happen. My one long term tenant jokes that I am "not the only white boy in the neighborhood now".
 

rdvirus

Woodpecker
Thoughts on the effect of vacant land prices? I'm thinking rural, likely an hour to the nearest city.. wondering if I should hold off on buying something.
 

nordle

Newbie
I just bought a duplex here in Ireland against my better judgement. It's 2 x 3 bedroom houses in a main town in average condition for €70k. I can rent it out for €1500 monthly on a 20-year lease to the local government (if I put €12k into renovations). The low price was due to the seller needing cash immediately, they could have tidied it up a little and gotten way more. It's a sick deal, I couldn't help myself.

That all said, I reckon the real drop is yet to come. It might take a year for the drop to hit properly. Even conservative local think tanks are predicting 25% drop in residential real estate. So I will be hustling up as much cash as possible for an expected dip, trying to hold off even if I see a good deal come up. HODL your cash, the drop is yet to come.
 

NoMoreTO

Pelican
I just bought a duplex here in Ireland against my better judgement. It's 2 x 3 bedroom houses in a main town in average condition for €70k. I can rent it out for €1500 monthly on a 20-year lease to the local government (if I put €12k into renovations). The low price was due to the seller needing cash immediately, they could have tidied it up a little and gotten way more. It's a sick deal, I couldn't help myself.

That all said, I reckon the real drop is yet to come. It might take a year for the drop to hit properly. Even conservative local think tanks are predicting 25% drop in residential real estate. So I will be hustling up as much cash as possible for an expected dip, trying to hold off even if I see a good deal come up. HODL your cash, the drop is yet to come.
Duplexes are a great investment. I have a residential duplex and it's been a homerun. Especially something I was told years back, buy a duplex, rent half and live in the other half. The rent pays your mortgage and a young guy doesn't need a big house. Government lease sounds like a sweet deal, I'd hold your nose, pay the renos and ride that Long term lease and forget about it. Just tell them no rainbow flags allowed, against your religion.
 

jakester318

Sparrow
It looks like coronavirus is going to put the big hurt on both home sale prices and rents.

Here's a good blog that is sharing a lot of stories on the issue:

http://housingbubble.blog/
If you have cash or equity, you might as well consider buying rental property. People have to live someplace, and even if your home value decreases, that means other homes decrease in price, which could offset your loss if you buy a rental property on the cheap.

This is my strategy as I'm quickly approaching the payoff of my own home.
 

nordle

Newbie
I am 100% invested in rental properties. Not even crypto or stocks. Land is land, and will hopefully hold as a family investment for generations.
 
I'm in Southern California, and the house listings in my particular city seem to have exploded.

There will be a crash, but it will come sometime in 2022 once the real impact of the shutdown becomes a reality as people realize that a lot of the jobs are not going to come back.

The prices are still good (for sellers), and I would consider selling and moving to a sane state, but all my family is here.
 
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