Starter home VS "forever" home

[David Hernandez]

Hello, I'm a new investor trying to get a deal in the SLC, Utah area. I've been watching the market for a while now, and I noticed that since COVID-19 started prices of upper class homes ($500-750k) in good neighborhoods stopped increasing and are not selling fast. Many of them are actually reducing their prices (as much as 50k). On the other hand, starter homes are still selling but at asking price. Pre-COVID-19, starter homes were receiving multiple offers, many of them above asking price. 

My questions are:

1) Are you seeing the same trend in your area?

2) Do you think starter home prices will decrease in following months?

3) Would you buy and hold upper class homes in good neighborhoods (if its a good deal) hoping that their prices will go back up once the COVID-19 panic passes. Renting them in the meantime. 

[Joe Cassandra]

We've seen this for awhile in North Atlanta. Homes over $400k will tend to already sit for a couple weeks before they get any action. 

Homes $325k and down (if in good condition) will go in the first week or two. 

Starter homes will likely keep staying hot as the inventory is so low and affordability is getting nuts for the majority of wannabe homeowners (making sub $75k per year). 

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In terms of buying expensive houses and praying for appreciation...

You're playing a dangerous game there...

What happens as your taxes go up as a non-OO...and your holding costs start mounting...

What if it takes a couple years for prices to ever go up. 

What if they don't go up? We've hit the top of the market and it's down from here?...

You're better off putting all that money into the stock market. At least it's liquid.

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Most expensive homes are hard to cashflow rents. Maybe as an Airbnb, but most people making enough to afford your high rents are likely buying their own home.