Market Direction - Up or Down?

Question

I am curious to see everyone individual and geographical take on where their market currently stands, and in what direction it is going.

I am in the St. Louis, MO area.  I mostly work in a very niche area of CRE but I also work residential to a certain extent (mainly for my own personal buy and hold portfolio).  Here is what I have seen in the residential market, and where I see things going:

2011 & 2012 - The Bottom

2013 & 2014 - Slow build up in the latter half of 2012 into 2013 with things getting to a pretty frenzied pace by the middle of 2014.  Pretty significant value gains with many people jumping back into the market.  Hard to tell if it was like 2006, but many seemed to be throwing fundamentals into the wind just to "get yield."  There was also a strong hedge fund buying presence.

2015 - Market seems like it has been slowly rolling over since late 2014.  There is still low inventory, but buying activity seems to have cooled significantly.  Many properties seem to be hitting the market overpriced, and are now suffering regular price reductions.  The largest hedge fund(s) in the area have put all buying on hold.

2015 & Beyond - I think we will see lower prices in this market in 2015

What does your market look like?

Fred Heller · Answer

We're looking for things to slow down in Houston this year due to the collapse in oil prices. How much of a slowdown is up for debate. The local Realtor Association is projecting that home sales will be down 12% over last year. And available inventory is expected to grow to a 6 months supply from the current 3 months supply.

Account Closed · Answer

Down here on the MS Gulf Coast we've got a lot of brand new infrastructure in place because of Hurricane Katrina.   Everything on the beach is new.  Even more is being developed around a new Galleria Mall development site approximately 1 mile from the Gulf on I-10 in D'Iberville.  D'Iberville has also recently approved a casino development site on Back Bay Biloxi.   I'm pretty sure D'Iberville is the fasted growing city in our state. Biloxi is building a pro-minor league baseball stadium across from the Beau Rivage and Hard Rock Casinos.  Hard Rock just completed a new hotel.  There is a lot of development occurring here.  The foreclosure market has slowed down and prices are on the rise.  Still there are some great deals to be had.  Insurance has come down and stabilized.  Good land and waterfront prices are well below 2005 prices.  Mississippi has been historically a value when it comes to waterfront property. Mardi Gras is coming up in a few weeks.  Great time to come enjoy some warm weather and explore an entertainment oriented market with great waterfront amenities.  As a coastal community we are positioning ourselves for tremendous growth.

Frankie Woods · Answer

I agree with your assessment of St. Louis!  Nice to see more of us on BP!

Jeremy Jackson · Answer

I'm seeing sales prices continue to drop in Central Texas. Lots of inventory and the new construction builders are still going.  Average DOM, 120.  Rentals are hot!

Bogdan Cirlig · Answer

On rental side, all markets have been up month over month for past years or so. Also some of my PMs are claiming the low end cheap inventory for sale is drying up.

2015 also coincides with the fact that Millenias are "coming to age" to move from negative equity in positive hence will look to buy. BUT, since some owners are moving back in black with the recent appreciation, they might look to get out and sell which will drive the inventory up and prices down.

Keep an eye on the foreclosure news from leading websites and also on job reports and consumer price index.

Economy I'd say looks stronger, which is what will always drive home ownership up.

I'm personally bullish about 2015 :)

David Chwaszczewski · Answer

Here in Charlotte prices seem to still be rising in most areas. On some projects we are doing we have been fortunate to get more then our initial ARV when we first analyzed the deal.  I keep hearing about a large shadow inventory of homes that are just sitting unoccupied or home owner is in foreclosure that banks have not acted on yet, my understanding it is the 10yr ARM's coming up that will drive up foreclosures.  If that is true it we could see a price reduction in home prices.

Peter MacKercher · Answer

I think your correct things started to slow down when ferguson happened. i think there going to pick back up spring and summer time.

Dan Heymann · Answer

William: I am also in Saint Louis and believe your assessment is correct.

Market Direction - Up or Down?

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