Real Estate Market the next few months?

Question

Hey all,

With the crazy market going on, it's getting harder to search and buy. I found myself in an area where it's really out of reach (Northern Virginia). Just like many others whom may find themselves in the same situation, I can't help but keep wondering... will the market cool down or will we have more inventories coming up in the next few months? What are some of the indicators to believe so?

What are your thoughts?

Thanks.

Russell Brazil · Answer

The market where you are generally is on fire, that does not extend to all asset classes. The market for condos in the DC area are a buyers market, as is small commercial office space.  If the market is too hot for you, pivot to the cold asset classes.

Michael Plante · Answer

Will NOT cool down if anything prices will go up even more

Especially after August

Brad Hammond · Answer

Hi @Joe Nguyen, good question.  In my opinion, the surge is due to a large part of the low interest rates.  Properties are all about the payment, not the price and the payment is so much lower now than in the past.  I think once rates start to go back up, that will reduce the number of buyers on the market.  I think a lot of sellers are waiting for the top of the market and I think once we've seen that, prices will rapidly fall.  Not sure when that is going to be.

Michael Plante · Answer

govt may require govt funded mortgages to be extend up to 10 years with no penalties or interest if effected by covid

Joaquin Camarasa · Answer

Adding to the condos conversation, I would say only buy a condo if you are planning to live on it for a couple of years or more. It is still uncertain when all the young professionals will be fully required to come back and also how many of those will be able to keep working from home. Currently, somebody that wants to rent in DC has a lot of options and the rent prices in many of the areas are trending a lot lower than pre-covid. You need to factor that when buying a condo.

What is going to happen in the next few months?

As many have mentioned here it will be all related to the rates. However, we do see in our area many professionals with high incomes, unless there is a dramatically increase in rates paired with an increase in unemployment figures, single family homes and townhomes are not going to cool off.

One topic I don't see discussed much is the rise of access to information. You can gather so much information about investing in Youtube, BP, etc.. that was not there 5-7 years ago. Many millennials and Gen Z are getting in the househacking game and at the same time they tend to prefer scenarios where they do not have to interact with tenants. I do not see home prices cooling off in the near future.

Jonathan Stone · Answer

@Cassidy Burns @Russell Brazil

I like the similar thinking of find the cool asset class see where there are profits to be made.

As for pricing I will add two things. If we do see the additional 2 trillion dollars of gov spending I would expect any of the areas here discussed to slow down. Second I can’t speak to the cost to build new in those areas but if it’s anything like here in the PNW, housing prices can’t fall too far because the cost to build is increasing rapidly, while demand is not slowing down. So unless you see a population decrease or wholesale shift in income opportunities in the region it’s unlikely demand falls.

Cassidy Burns · Answer

Great thread.  I personally have a theory on certain asset classes that are going to see a bump, and others that are going to see a slight depression.  Because, I agree, some price points won't be able to continue to rise as quickly as they are, especially when rents are not trending with the value increases.  EVENTUALLY, those people who overpaid for assets, are going to have to move out of those assets and realize they are in a negative cash flow position, forcing them to HAVE TO SELL, or just not move and stay in them (inventory lows ) .

When people zig, you should zag.  I think DC Condos is one of the best investments you can make right now, as long as you know the numbers / rents.

Ruth Lyons · Answer

I'm in the Maryland part of the DMV so I can't comment on Northern Virginia. As an investor and realtor in Maryland, however, 2020 was my best year ever. So far in 2021, the inventory shortage is really hurting business. Buyers are frustrated -- and putting in offer and offer on properties my clients don't get is exhausting. There is nothing to buy without significantly overpaying while also forgoing an inspection -- and I don't advise my clients to do that. I think the market will get more balanced once interest rates start to go up. The housing shortage is, at least in part, a result of the massive amount of would-be home sellers who spent time and money to refinance and decided to stay put rather than sell. When interest rates go up, the incentive to do that goes away and more houses will come to market.

Aj Parikh · Answer

@Joe Nguyen I don’t expect it to cool down in Northern va at least. If there were 9 offers on a a property there might be 5 if anything.

Ika Sargeant · Answer

@Joe Nguyen I personally do not see how the price jump we are seeing in Washington DC metro  is sustainable. I agree a great part of it is the low rates and of course the inventory levels. Just as an anecdote, I calculated single homes in one area of Maryland priced around 500K were receiving anything from 30K or more over asking price. I have also heard at a higher price point homes are commanding north of 50K over asking price. The difficulty in determining when this market might cool is because I think the demand that is driving this is very strong. Some buyers might decide to drop off but certainly if the rates go up that will cool things off. So where this ends I have no idea. Just hoping the theory that "what goes up must come down" is true.

Real Estate Market the next few months?

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