Is real estate price drop really local

[Youwei Chen]

There is recent thread discuss whether it buyer market, and people mention real estate is local.

https://www.biggerpockets.com/forums/311/topics/62...

I live in North New Jersey, realtor mention for several areas, price are coming down, inventory are up, sale are slow. 

I am thinking investing in Kansa City and Indianapolis, however, the local market (NNJ) cooldown is causing significant psychological barrier for me. 

Should I really be concerned about what happening in part of NJ if I plan to invest in other state?  Will it be wise to wait few months in real estate?

from a new buy/hold investor that mainly use realtor.com, would appreciate any help :)

[Jay Hinrichs]

real estate is and always has been highly regional in the US.   from one factory towns were the factory went out of business and towns lost population.. 

to new markets were jobs are plentiful and expanding..  then you do have migration patterns.

state income tax and property tax 

for instance take Vancouver Washington...   NO state income tax.. property tax's moderate to low compared to high tax rate states.. and you just drive 5 miles over the Columbia River to do all your shopping in Oregon which has no sales tax.. 

( with the exception of a vehicle) everything else can be bought in Oregon.. this hurts retailers in southern Wa. and props up retailers in Portland.. 

Oregon and southern Wa are huge in migration markets..some of the highest in the country.

but even with all that our prices have had such a run they are take a breather right now.. things by and large have topped.  DOM is getting back to balance but its still a slight edge to sellers..  ITs OK to have a balanced market. 

what seems to see no slow down though is the under 125k or so rental homes .. in the quote un quote cash flow markets.  Inventory is tight. with prices rising in those markets for the wholesale deals.. and construction cost up.. but rents have no gone up at the same rate which is putting a big squeeze on those trying to buy inventory.. its far harder now than it was coming out of GFC.

And I think that is a testament as well to those providing this housing for out of area investors doing by and large a much better job of rehab and management than what we saw in the last decade.. At the end of the day they are not building anymore of this type of inventory .. the houses are still far less than replacement costs.. however as all these investor enter the market and do a better job of being landlords inventory has shrunk..  Most of your subprime mortgage mess has cycled through.. and as stated burntout landlord syndrome is not as acute as its been in the past. 

So for those markets to go to the next level we need to see a floor on rent at 1000 a month or higher .. not 750 to 800 like we have now.. investors simply slow way down once the price points and rents get to the 1% rule and pass it.. at least in historic non appreciating or non liquid markets.