Real estate decline 2020

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Sparrow
I wouldn't say so no. Corona Virus cases are still rising in the US, and BLM riots/police defunding & demoralization are still rolling out. Real estate is a lagging indicator. I would wait a few more months tbqh.
 

Zenta

Woodpecker
Gold Member
I haven't seen any gigantic pricing drops on the commercial side. I'm still able to sell buildings in the $50-70 sqft range depending on the size and condition. Then again like everything this could change in a few months as we are still waiting for the ripple effect. I also had more businesses impacted due to oil prices dropping than to corona, but anything that wasn't oilfield impacted most likely would not have been impacted by the corona as none of my stuff is retail or food related.

edit: correction: I do have one tenant that was directly impacted due to large gatherings ceasing to function and he is still impacted by that. He however is a great long term tenant and we have waived his rent during this until things pick up again.
 
I'm currently house shopping in the Tampa area, there's literally zero inventory. I've been searching since last December, where as I used to see probably a dozen or more properties matching my criteria hitting the market, these days I could go a week without seeing a single one and that's with me widening my criteria ie opening up price more, being okay with less bedrooms and bathrooms, etc.

For everyone who is ready to buy now but considering waiting for a deal, the people not paying right now won't be foreclosed on and booted from their homes for a least a year and a half or two and at that point by the time they finally get that house on the market you're going to wait 10 months to get a deal through at the end of which the banks asset manager is going to try to re-negotiate the deal because the deal is 10 months old and "no longer reflects market value".

If you're wanting to buy a home now your looking at 2-3 years to take advantage of any "deals" that are going to come and I somewhat doubt we'll even see those as there's plenty of people sitting on the sidelines with cash specifically waiting for this. I think 10% to 15% woult be on the high end of what's to be expected in terms of a drop.
 

username

Ostrich
Gold Member
The fact that most people can borrow each $100,000 for only ~$432 per month is going to make it difficult for prices to go lower.

My house is paid for but I'm seriously thinking about cashing out 80% since money is so cheap.
 

Zenta

Woodpecker
Gold Member
I'm currently house shopping in the Tampa area, there's literally zero inventory. I've been searching since last December, where as I used to see probably a dozen or more properties matching my criteria hitting the market, these days I could go a week without seeing a single one and that's with me widening my criteria ie opening up price more, being okay with less bedrooms and bathrooms, etc.

For everyone who is ready to buy now but considering waiting for a deal, the people not paying right now won't be foreclosed on and booted from their homes for a least a year and a half or two and at that point by the time they finally get that house on the market you're going to wait 10 months to get a deal through at the end of which the banks asset manager is going to try to re-negotiate the deal because the deal is 10 months old and "no longer reflects market value".

If you're wanting to buy a home now your looking at 2-3 years to take advantage of any "deals" that are going to come and I somewhat doubt we'll even see those as there's plenty of people sitting on the sidelines with cash specifically waiting for this. I think 10% to 15% woult be on the high end of what's to be expected in terms of a drop.
My friend is looking for houses here as well right now and there is nothing decent on the market, mostly overpriced crap flippers that people bought for 50k and want 150k for.
 

Zenta

Woodpecker
Gold Member
Spoke to a top broker today he told me the market is simply dead. Like in coma. Neither people are selling or buying.
I've got two buildings under contract right now and deals are moving.

Edit: what I should really say is there are no "deals" out there so overpriced is moving.
 

kel

Pelican
That is very surprising, then. I'd think anyone who wanted to sell would be able to do so very quickly right now. I guess all the rich people already have their beach town second homes?
 

TheFinalEpic

Pelican
Gold Member
I am seeing sub ~400k move with ease. People are taking heavy advantage of low interest rates, but everything above mid 400's is not moving.

I think this is the divide in rich vs. middle class/poor. Rich people are thinking about the broader economy, everyone else is thinking about how low their mortgage payments are going to be.

I can't see prices increasing fundamentally. Especially where I'm located, all economic indicators are pointing to a decline. But real estate is a lagging market, it's a slow moving giant that has to have people actually take the hit to start a downward trend.

I have seen 30% off list price in the > 1 mil market though.
 

Jestx

Robin
Real estate market corrections usually take 12-36 months after a recession hits to bottom out. For example, during the Great Recession that started in 07-08 the US housing market didn't bottom until around 2011-2012 which was 3-4 years later.

The issue now is that the Fed has decided to send interest rates back to record low levels which makes mortgage rates at record lows (30-yr mortgages rates below 3% and falling) and is helping prop up the housing market, combined with the stimulus checks and boosts to unemployment insurance measures that allow people to keep paying rents/mortgage payments (for now...)
 

kel

Pelican
Presumably one can refinance their current mortgage at a lower rate, too? If so, I need to get my parents on that. All of you homeowners here with mortgages do the same. Get that interest rate down, less money lost to the worst people on earth, do it even if it means a higher monthly payment.
 

username

Ostrich
Gold Member
My parents just refi'ed and cash out $50,000 of equity while paying the same amount monthly. I think the rate was 3.2%.
 
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kel

Pelican
I think my parents have fifteen years left on their mortgage, might be able to refi for a fifteen-year term. I'm also learning about 7/1 mortgages, which have even lower rates right now (for those first seven years). Presumably the rate will jump after seven years but I'm trying to get them to pay off their house more quickly anyways.
 

NoMoreTO

Pelican
I've heard HELOCs might go the way of the do-do over the next few years as lenders look for secure loans.

If people are interested in a HELOC, I'd consider looking into it and perhaps getting one sooner rather than later - assuming you have something good to reinvest the money into.
 

Laner

Hummingbird
Gold Member
I've heard HELOCs might go the way of the do-do over the next few years as lenders look for secure loans.

If people are interested in a HELOC, I'd consider looking into it and perhaps getting one sooner rather than later - assuming you have something good to reinvest the money into.
Looking into one right now. I want to do some renovations and maybe buy some precious metals.

Renovations to sell? Or renovations to enjoy. The eternal home owner question.
 

Seadog

Kingfisher
Real estate market corrections usually take 12-36 months after a recession hits to bottom out. For example, during the Great Recession that started in 07-08 the US housing market didn't bottom until around 2011-2012 which was 3-4 years later.

The issue now is that the Fed has decided to send interest rates back to record low levels which makes mortgage rates at record lows (30-yr mortgages rates below 3% and falling) and is helping prop up the housing market, combined with the sti.mulus checks and boosts to unemployment insurance measures that allow people to keep paying rents/mortgage payments (for now...)
The problem is that real estate prices are very very sticky. For whatever reason people have this ridiculous belief that RE only goes up, so that why when after owning for a while and trying to sell with the appreciation they feel they've "earned", they wait it out, convinced that if there's no bites then it's the market that's wrong, not their price. After a few months when they see their neighbour down the road list a similar house for a bit cheaper to try and undercut them, that's when reality starts to set in and they realize that they too must lower their price. This process iterates a couple dozen times, until prices get too low to ignore based purely off cashflow. This process is very slow, since you're generally (unlike financial markets) dealing with non numbers/financial people, dripping with self-interested, non-quantifiable biases about how much nicer their house is then average, and how markets (particularly the housing one) should work.

toronto-real-estate-market-crash-main-1024x691.png

This is Toronto, but is applicable in general I feel. Of the 3 big crashes they had, it was about 5-10 years peak to trough, which retractions of 25-35% or so. You can see what happened (or didn't happen) in 2008, thanks to the super easy money policies that rewarded the majority of homeowners, and screwed responsible savers like myself (Not that I'm bitter). In hindsight I guess it's not a surprise that the gov't is equally reckless with it's money as the public is with theirs, and pandering to the 70% who own homes is probably good politics. I have great fun on other Canada based forums highlighting how screwed people are there I think. Even before the virus, pretty much every applicable metric like Price/rent, price/income, Debt/income was in excess of what the US was when it fell off a cliff, and now rents are going down, incomes going down, debt going up, and taxes will no doubt too. Yet many people are still permanently bullish, convinced that TO is another London, and because Real Estate.
 

NoMoreTO

Pelican
I have owned a condo in Toronto now for 5 years. I have been thinking about selling it. It's currently rented to a good tenant. I told him when we renewed that

As I think about your comments about real estate, it strikes me that selling real estate more often moves with 'life decisions' more-so than the market. Yes the buyers are sometimes waiting in the wings for things to come down, I have a 40 year old friend who never bought in for this reason. If my rental were a stock, I would probably have sold it, but it just takes alot more planning and has a permanence to it.

If/When the market crashes, most will hold through it. Sellers will have to adjust their expectations, and buyers will make demands for a lower price. But as you say, most are in for the long term. I've made a decision to pull out of TO (see my handle), and this condo is my last piece there. The rent covers the mortgage so you get into the "time the market" and "where am I moving this money into".

I'll be building a house in the country in the next couple of years, ironically with my 800 sq foot condo money I could build a pretty big pad with all the bells and whistles. Or I could get in on some land. It's a big move.

Where you lose in real estate is when you have inflation/deflation at different rates in different locations. I heard a story about a couple who wanted to retire back to Cape Breton Nova Scotia, beautiful place, low price. They left the Greater Toronto area, then their kids started having kids , so grandpa and grandma wanted to move back, prices had rocketed and they can't really get back into the market.

Something similar could happen, condos could drop, but country plots and houses could hold or even rise at the same time. We've seen toronto condos fire up 10%-20% + in a given year while 2nd tier cities chugged along at 5%.
 
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