"Hot" markets explained + why you should Buy Now!

[Jon Q.]

Now is the time to BUY!

Here is what is occurring in virtually all "hot" real estate markets nationally:

"Hot" = strong population and job growth markets and therefore increasing price trend line 

This applies to San Jose, San Francisco, Los Angeles, Seattle, Denver, Dallas, Austin, San Antonio, Houston, Charlotte, Raleigh, Atlanta, Ft. Lauderdale and many other markets on the list below...  

This specifically is a chart of market price, as it moves through real estate market cycles in a "hot" market that has an increasing price trend line.  Once prices surpass the point in the center, your ability to cash-flow disappears (though there are a few exceptions). Again, although there are a few exceptions.... Generally... for SFRS with 4 bedroom / 2 baths, once price moves beyond $120/125K, generating cash-flow becomes difficult if not impossible.   With 3 bedroom / 2 baths, once price moves beyond $100/110K, generating cash-flow becomes difficult or impossible. In "hot" markets, although market cycles are continuously occurring and prices rise a fall... there is an increasing trend line and therefore the next bottom will have market prices that are higher than the last bottom. Market prices rise at a faster rate than market rents, so... your ability to generate cash-flow eventually disappears.  In this chart, that is the point in the center.   Exceptions: Though unusual, it is possible for these situations to occur: Markets where rents are rising at the same rate as market prices.  Dallas MSA might apply, but although rents are rising quickly, I think prices are rising at a quicker rate. Fixers Acquired at Deep Discount.  Properties that you can acquire at a severe discount to market price because there is a significant problem with the problem and you're able to fix it for less than the discount you were able to negotiate on the purchase price. Other exceptions? Thoughts?

Hot Markets

Here is a list of states ranked by population growth percentage (column 3). For purposes of this post, I would define a "hot" market as markets that are in the top 20 in this chart.

[Josh Caldwell]

This is a fantastic time to buy real estate, but not in the hot markets.  Hot market get hot because people speculate into them and drive the prices beyond sustainable cash flow levels.  IF you invest with this model you will get you *** handed to you eventually.  Those of us who learned this lesson in 2008, invest for cash flow not appreciation. My market of Pittsburgh is a great cash flow market. Our rent to price ratio is much better than anything you will find in CA.  Find a market that looks like mine does and invest for the long term.