Market Changing?

Question

I received a cold call from a RE agent last week asking if my family was still in the market to buy a primary residence.   During the discussion I asked why she was calling me in this hot sellers market.   Her response was "in the last couple of weeks, things have just slowed down.  We are not seeing five offers and bidding wars for each property any more."   SoCal BP members, is this what everyone is seeing?  Is the SoCal market slowing?   How about other areas of the country?  If so, what is everyone's feeling about the causes?  The Fed?  Rising interest rates?  Too fast a climb in too short a period?  How do experienced investors monitor this?

Tom Goans · Answer

From what I have been reading for months, in fact almost 1 year, the real estate market slowdown should not be a surprise. In fact, it should be expected and continue for some time to come.

From what I am reading, the real estate market has peaked in numerous markets around the country. In fact, foreclosures are once again increasing in several major markets.

There are numerous contributors, you have mentioned several. The present market has many similarities to past historic plateaus and declines.

Real estate market strengths, expansions, and declines are generally local in nature. However, some national factors affect every real estate market in the country. Always have and always will.

Karen Margrave · Answer

@Bill B. We've been in this business for a LONG time. When the market crashed we were hit HARD. However; this is what we know. Once you get started and have some deals under your belt, it will get easier. Hang in there, keep learning, and soon you'll have the confidence to jump in. Maybe you can find someone else to do a deal with in your area, or work for on their deal. Good luck. In the meantime, BP is here!

Tom Goans · Answer

Thank you Bill for the very kind words. This is a business with unlimited potential for those who do what others are unwilling to do. Associate with the soaring eagles of the industry and you should do very well.

May your future be full of great success.

Bill B. · Answer

@Derek Faller

@Karen Margrave

@Tom Goans

@Albert Hasson

@Michaela Graham

@Nick Patterson

Thank you all for your responses.  It sounds like most of the major markets are slowing.   It is tough for a newbie with limited capital to decide when, where, and how to pull the trigger.  Analysis paralysis is pretty darn difficult to avoid, ain't it?  :-)

I'm beginning the process of getting my real estate agent license and will review if I want to do the course work for the brokers license after that.   The more I read on BP and off, direct MLS access is a prerequisite to REI.....at least for my personality.   Also, it is plain from the some of the stats mentioned in the posts above that MLS access was used and is important.

Karen and Tom, (with all respect to the other posters) I am humbled that people of your level of accomplishment took the time to respond to this post.   I don't know if you understand the awe that a newbie feels when we see accomplishments like those you list.   It helps us to believe that "it can happen" if we just don't screw up.   As with any business, getting it going is the hard part.  But, seeing YOUR success is inspiring.   VERY inspiring.   I don't see enough praise in the forums for those who know success on such a scale taking the time to help and guide the rest of us.

Thank you.

When I pull the trigger on my first successful deal, I will contact you so that you can see the fruits of your giving very clearly.    Thanks again.

Michaela G. · Answer

Well, so many people were touting how the real estate market has recovered and everything's fine again. But the problem is, that the 'recovery' was due to incentive by low interest rates. So, people, who might have bought a few months down the road, bought because there were low rates.

Once the rates started going up in June and inventory started increasing, with sellers who waiting before they put the houses on the market, I now think we're definitely coming to a slowdown.

I've been following some areas in the SF bay area and the inventory has doubled since middle of August.

Now there's also talk about fannie/freddie lowering the jumbo loan threshold, which could push a lot of buyers in this area out of the game, because they'll now have to come up with 20% down.

Remember when there was the home buyer's credit in 2010 and when that stopped in april? Everybody thought that that was a normal recovery before, but it wasn't, because people had been given an incentive to buy. Same with the low interest rates that we had.

Albert Hasson · Answer

Tom,  where are foreclosures increasing?

We have rising supply here in Phoenix due to decrease in sales activity,not an increase in supply.

Karen Margrave · Answer

As they say, ALL real estate is local. Even in the same county, there are various pockets of growth, and lack of, and one needs to dig deeper into their local market, watch what is selling and where, pricing, etc. in order to know what their market is. It's all about supply and demand.

For us, we building new, spec homes in areas where land is very hard to come by, meaning new homes, that aren't part of a planned development are not readily available. The last house we built, we had a buyer lined up before we even closed on the short land escrow.

We now have another home we are building in San Clemente, CA. We are in the design phase, and will actually break ground in about 8 weeks. We have already been contacted by agents with buyers wanting to look at the plans, etc. The asking price will probably start at $1,275,000 for approximately 3000 sq. ft.

Southern California, or at least Orange County, has an unemployment rate of only 5%. There are universities, community colleges, medical centers, research of all types, manufacturing, cultural events, recreation, amusements, and is considered the Silicon Valley of southern California. Add to that the high median family income, and it makes it a great place for selling real estate.

Also, people from all over the world come here during their cold winters, as we have perfect year round weather.

For now things seem good. However; if interest rates start going up, or some political mess happens to affect the economy, that could change everything.

Derek Faller · Answer

Things up here in Oregon have slowed down a little bit due partially to more inventory being on the market. Earlier this year there was a shortage of homes for sale compared to buyers looking for homes. There was also probably a little bit of a concern of rates jumping up which hasn't happened yet. The summer always brings out more buyers who have kids that try to get moved before schools starts so their kids don't have to change schools mid-year.

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