RE Crash prediction for 2020

[Vinay H.]

I read that rents are down at least 3% in the hot markets of SF, NYC and Boston? Any landlord in these areas care to comment? If so, how does that affect the decisions to buy rental properties in these metros as the tents could go Yes down further whilst the prices are skyrocketing out of control!!?? Is a crash in the investment market in these areas inevitable? Looks like right now almost every rental investment in Cambridge MA is going to bleed money on a rental cash flow basis. Sample figures. 2 br 1 bath listing for 550 k selling at 570k. Monthly expense with just mortgage tax and fees are running at 2.7 to 3k and the rents have softened to 2.3k. Now if you add vacancy and maintenance to this equation, it looks like such an "investment" in Cambridge is going to bleed 5 to 6 k a year on a cash flow basis. Of course, the potential for appreciation is 4% easily a year or even 10% in these areas but again the numbers show a market that is not rooted in reality. Crash prediction is as follows: More apartments staying vacant (seattle times article and npr podcast on nyc yesterday) Projects are permitted and planned years in advance so even as commercial multi family of 50+ are crashing, they are still building Ok n next 2 years smaller devlopers and property managers to go under, default, get bought out. Short REITs such as avalon that have large exposure to markets such as SF Seattle and NYC where rents went up so high to drive people to purchase but developers kept permitting Note analysis does not apply to sfh and non top 10 metro.

[Mike Dymski]

Yes, cyclical markets go through...well, cycles.  The active BP members in these cyclical markets (1) buy well (2) add value (3) use long term debt (4) maintain reasonable LTVs (5) buy in good locations with high demand (6) hold very long term and (7) have reserves.  There is no sense in discussing reckless investment into hot cyclical markets without these safeguards...those investors are not on BP trying to learn how to prudently invest.

These BP market correction posts have been going on for years.