Housing crash deniers ???

[Greg R.]

Unfortunately I've been away for a few months while taking care of some personal matters, so I haven't been able to keep up on discussions. 

However, several months ago there were ample amount of folks here insisting that a market crash/ correction was impossible and that prices would only continue to increase.

Curious if there are still people out there who feel this way? If so, I'd love to see some data that supports your view that the market isn't going to crash/ correct. 

[James Hamling]

Quote from @Carlos Ptriawan:

Quote from @James Hamling:

Quote from @Carlos Ptriawan:

Quote from @Michael Wooldridge:

Given the direction of the thread this is sort of funny little tidbit of news. https://finbold.com/bitcoin-ad...

Bitcoin adds $15 billion in 15 minutes as CPI data comes in lower than expected

 hahaha I'm probably the only one here who mentioned that Inflation would be lowered quickly. I even share the data analytics from JP Morgan. The Fed knows that their data is lagging 12-16 months but as Food, medical insurance, used car and gas service is all going down. Even James saying inflation would be here to stay. NO.

So how do I know that ? the fastest way to reduce inflation is by : taking the money out of circulation. This is the real trick. 

So what one must do to track Inflation progress is check Fed Balance Sheet position along with M2 in circulation, I keep hunting this information and have been telling you the balance sheet now (if we calculate it correctly) is on the same level as mid-level of 2020. It has regressed a lot.

Next few months, the inflation number would be down as well as the shelter is catching up with the downtrend and hopefully energy price keeps going down.Fed evans already announced by 2025 the inflation is 2% again, it will take 24 months. 

Now if FFR is between 4.5-5% in 2023 and yield around 3.5-4%, expect 30YFRM around 6.5-7.0 then. Not sure what would be the impact later on the house inventory.

 Carlos, you and I have a different comprehension level in economics then the vast majority out there, and thus our language is a bit different speaking in exact correct econ language vs common tongue. 

When I say inflation is here to stay, I am speaking in "common tongue" and in reference in terms of the price basis of items. I am NOT saying inflation rate is "here to stay" as in inflation will remain ~8%, or even ~6%, no, that would be nuts right. 

When most people are saying, in common tongue, about relief from inflation, they mean prices going back to what they were 6, 12, 18, 24 months ago. Which you and I know is not inflation stopping but deflation. 

Yes, that's very true, especially for Food item, usually, it would be like this:

1 lbs chicken March 2019: $1.05
1 lbs chicken March 2020: $1.20
1 lbs chicken March 2021: $1.40
1 lbs chicken March 2022: $1.80
then on 
March 2023: $1.70 ... for a while and we will accept that as new normal.

For Real Estate prices, the correlation is extremely correlated to the cap rate based on my study.
We have zip code here in 2022 where the price is gratifying between 2017-2021 levels but most other zip codes like in MN is printing the new high every year.

Price of real estate is possible to regress to the prior year value if demand is not there in the low cap rate market.


 

 Yeah, cap rate is a good way to view it although one has to keep in mind if there is any factors out there adjusting the rental basis price also. Meaning a market that is lagging in it's rental price basis, which I get it that many would say "really, there is underpriced markets out there?" and the answer is yes, 100% there is. Namely satellite cities. 

I will use MN as an example. The Twin Cities is the #1 market in MN, with a median home price in mid $300's, and replacement pricing hovering in high $200's, touching on $300k (that's JUST building price, no factoring of land) for median home. 

There is some satellite markets of major population density where historically they lag the major market by ~24 months. And in these markets I can still snag properties at significant discount for replacement cost value. In those markets not just unit pricing but rents are also trailing, with inventory "washing-out" setting the stage for strong appreciation prospectus. 

As unit acquisition costs raise, it elevates that rental calculus basis, thus raising rents, which has a feed-back-loop of raising unit pricing.   

In an environment like today, this is one of those "Markets Of Opportunity" I look for, that an appreciation feed-back-loop is nicely "primed". 

So yes, cap rate is a good metric to utilize for this forecast price movement but also keep in mind the relationship with replacement cost's, and positioning of a market for the "wash-through" of existing inventory. It's a value-add strategy at a market metric vs property specific. 

[Greg R.]

Quote from @Carlos Ptriawan:

Quote from @Greg R.:

Some other interesting news... A Federal Judge in Texas blocked Biden's loan forgiveness program. If this sticks and can only be possible through a bill passed by congress, it'll be dead in the water if the R's take the house. 

I knew a couple people who were banking on this, so this would be a big blow to those who were expecting relief from their high intertest loans. 

https://www.wsj.com/articles/f...

 I think the biggest impact this year in the mega crash level would be the crypto wipeout. The impact in term of dollar is huge, maybe most Silicon VC now are 25% poorer after their stupidity :-) Their level of corruption inside the crypto business is amazing. Such in a way that the money coming from FTX is being re-invested to Sequoia (its own funder), that's Ponzi scheme.

But wait, there're a lot of folks here even in BP that restart to buy crypto LOL   

Greg as long as there're crazy people there we don't know what would happen. Few years ago I thought NFT and Metaverse is joke.

These are all factors. Obviously some larger than others, but each of these factors will have an impact on people. For the millennials who didn't have anything invested, the crypto crash won't impact them at all. However, tens of millions of people were positioned to have either 10k or 20k cleared from their student loans. This could have been the difference between buying a house in 2023 or not. 

Not sure the impact this will have, because what's being taken away was never theirs to begin with. I guess this is probably a much bigger hit to optimism than anything. 

[Chris Clothier]

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Quote from @James Hamling:

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Quote from @Michael Wooldridge:

Redfin data is readily available and free for all. Just google it. Your analysis is coming from a quarterly basis, which is obviously going to present a different data set than a month-over-month analysis. You're looking at three months of data grouped together at a time: Apr/May/Jun, Jul/Aug/Sep, etc. 

So Chris, assuming what you said is true, which I have no reason to believe it isn't. You've purchased thousands of properties in TX, almost 2k in Dallas/ DFW. Are you saying that you are paying the same for homes right now than you were early in the year? There's been no, or a negligible decrease in prices? 

Just want to make sure I understand where you're coming from. 

We buy all over the metroplex from Crowely & White Settlement out West all the way over to Rockwall in the East.  And we are more heavily concentrated in the southern part of the metroplex as opposed to the North.  The retail value of the homes we purchase is between $250,000 to $375,000.  We've built a pretty robust CRM through Saleforce including a mapping feature and we have data on over 8,000 properties in Texas, primarily DFW.  It looks like a smiley face on the map.  Curved upper left across the bottom and curved to upper right of Metroplex with spots in between on the north sides.

You did understand me correctly.  We are have not seen any decrease in value in some areas.  In fact, we are getting outbid right now on some properties where 6 months ago we were not.  We see properties on a weekly basis going to highest-best and often lose.  The only actionable thing that tells us is that demand and confidence remains high in those areas.  There is still such pent-up demand coupled with little inventory that prices are not falling and we are getting outbid on some properties that we want.  

In the areas where we are seeing prices drop (we use comparable sales to verify), those drops are between 3% and 8% and much of it again depends on how much activity is in that neighborhood and the motivation of the seller.  We still see heavy activity but we are seeing discounts to what we paid in the 2nd qtr.  Properties continue to move quickly, but we are not seeing the bidding in those areas.  

My take on this whole conversation is that everyone is right and everyone is wrong.  There are no definitives.  You may be seeing an actual correction in the specific areas and property types you concentrate on.  At the same time, investors can be seeing high demand, price stabilization and even price appreciation in the same city.  Again, it could come down to price point, location and supply/demand.  Since a correction in the real estate market is undefined, but many economists predicting one define it a prices dropping in the single digits and by more than 5%, I'll stick with what I said the first day you put this out there that I'm not worried about a crash at all and a correction in any area I'm in doesn't bother me. 

[Victor S.]

Quote from @Carlos Ptriawan:

Quote from @Greg R.:

Some other interesting news... A Federal Judge in Texas blocked Biden's loan forgiveness program. If this sticks and can only be possible through a bill passed by congress, it'll be dead in the water if the R's take the house. 

I knew a couple people who were banking on this, so this would be a big blow to those who were expecting relief from their high intertest loans. 

https://www.wsj.com/articles/f...

 I think the biggest impact this year in the mega crash level would be the crypto wipeout. The impact in term of dollar is huge, maybe most Silicon VC now are 25% poorer after their stupidity :-) Their level of corruption inside the crypto business is amazing. Such in a way that the money coming from FTX is being re-invested to Sequoia (its own funder), that's Ponzi scheme.

But wait, there're a lot of folks here even in BP that restart to buy crypto LOL   

Greg as long as there're crazy people there we don't know what would happen. Few years ago I thought NFT and Metaverse is joke.

 Carlos, looks like even Mickey is freezing and/or laying people off now: 

Disney planning 'targeted' hiring freeze, some cuts - CNBC (NYSE:DIS) | Seeking Alpha

[Greg R.]

Appreciate the detailed response Chris. This makes complete sense. You're operating in a very low price range, well below the median. In my experience the lower tier of homes always have the most competition. If you look at buyers as a whole, you have the largest group who are qualified/ able to buy at the bargain price point, and as you go up the price ladder you have fewer and fewer qualified buyers. Not surprised at all that you still have some bidding wars at that price point. 

I'm not active in the price range where you operate... but that's not what's going on in higher priced properties. A few stats that are of interest...

Inventory is at the highest point since December 2020.

We're seeing the most price decreases  since Nov 2019

Median sold price is down 91k since May. 

You're operating pretty far below the median, so it would explain why you're seeing way different market behavior. 

So again, our perspectives are from two different angles. I suspect that the homes in the low price range would remain competitive. Homes at or above the median are the most susceptible to price reduction. 

[Carlos Ptriawan]

Quote from @Greg R.:

Appreciate the detailed response Chris. This makes complete sense. You're operating in a very low price range, well below the median. In my experience the lower tier of homes always have the most competition. If you look at buyers as a whole, you have the largest group who are qualified/ able to buy at the bargain price point, and as you go up the price ladder you have fewer and fewer qualified buyers. Not surprised at all that you still have some bidding wars at that price point. 

I'm not active in the price range where you operate... but that's not what's going on in higher priced properties. A few stats that are of interest...

Inventory is at the highest point since December 2020.

We're seeing the most price decreases  since Nov 2019

Median sold price is down 91k since May. 

You're operating pretty far below the median, so it would explain why you're seeing way different market behavior. 

So again, our perspectives are from two different angles. I suspect that the homes in the low price range would remain competitive. Homes at or above the median are the most susceptible to price reduction. 

 Greg, if federal balance sheet position is equal to mid of 2020 or end of 2021 (based on different calculations) , then mathematically speaking, real estate price should be between 2020- 2021 level. In your market, it's most important to know what price level it will settle and find a new price discovery. I guess Austin may have some room to be around Q4 2021 position. 

That action itself will cause inflation to do down. 

[Carlos Ptriawan]

Quote from @Victor S.:

Quote from @Carlos Ptriawan:

Quote from @Greg R.:

Some other interesting news... A Federal Judge in Texas blocked Biden's loan forgiveness program. If this sticks and can only be possible through a bill passed by congress, it'll be dead in the water if the R's take the house. 

I knew a couple people who were banking on this, so this would be a big blow to those who were expecting relief from their high intertest loans. 

https://www.wsj.com/articles/f...

 I think the biggest impact this year in the mega crash level would be the crypto wipeout. The impact in term of dollar is huge, maybe most Silicon VC now are 25% poorer after their stupidity :-) Their level of corruption inside the crypto business is amazing. Such in a way that the money coming from FTX is being re-invested to Sequoia (its own funder), that's Ponzi scheme.

But wait, there're a lot of folks here even in BP that restart to buy crypto LOL   

Greg as long as there're crazy people there we don't know what would happen. Few years ago I thought NFT and Metaverse is joke.

 Carlos, looks like even Mickey is freezing and/or laying people off now: 

Disney planning 'targeted' hiring freeze, some cuts - CNBC (NYSE:DIS) | Seeking Alpha

 So the problem with Disney is their margin is extremely small, only 2% (0.4B); their main source of income is largely from TV and park. Strangely, the income coming from the TV channels is much more than the park business while it's having higher operating costs.

It seems layoff in Disney Park is a great choice by the CEO. Stock should be up LOL

[Nicholas L.]

@Greg R.

here's a serious question for you.  it seems to me that it's a tough time to be a buyer right now.  even with prices steady or falling in some markets, most primary buyers don't pay cash, and so with the increase in interest rates, their monthly payments are still going to be much, much higher than last year.  and, i just don't see any scenario in which prices come down so much that they offset this, especially at price points below the median.  

so - do we stay in this 'stand off' where builders slow down, affordability remains tough, and many sellers won't drop prices unless they have to sell to afford another house?  

[Michael Wooldridge]

Quote from @Nicholas L.:

@Greg R.

here's a serious question for you.  it seems to me that it's a tough time to be a buyer right now.  even with prices steady or falling in some markets, most primary buyers don't pay cash, and so with the increase in interest rates, their monthly payments are still going to be much, much higher than last year.  and, i just don't see any scenario in which prices come down so much that they offset this, especially at price points below the median.  

so - do we stay in this 'stand off' where builders slow down, affordability remains tough, and many sellers won't drop prices unless they have to sell to afford another house?  

Greg will tell you prices will drop more they just need time.

Many of us will say sales will slow until next year. By Q3/Q4 rates could be below 6% or close.  

So stand-off - sales next year will be half of 2021.

[Carlos Ptriawan]

Quote from @Michael Wooldridge:

Quote from @Nicholas L.:

@Greg R.

here's a serious question for you.  it seems to me that it's a tough time to be a buyer right now.  even with prices steady or falling in some markets, most primary buyers don't pay cash, and so with the increase in interest rates, their monthly payments are still going to be much, much higher than last year.  and, i just don't see any scenario in which prices come down so much that they offset this, especially at price points below the median.  

so - do we stay in this 'stand off' where builders slow down, affordability remains tough, and many sellers won't drop prices unless they have to sell to afford another house?  

Greg will tell you prices will drop more they just need time.

Many of us will say sales will slow until next year. By Q3/Q4 rates could be below 6% or close.  

So stand-off - sales next year will be half of 2021.

we are at an inflection point again where Dollar started dropping violently and the mortgage drops 50 bps (another record in history ?) after CPI moves to the 7% level. The gov seems going to artificially deflate CPI.

These two are very premature early signs of recovery in tech and housing. Bottom may be over. Maybe :) 

And from all alternative asset class, only real estate-backed investment is printing positive yields this year.

[Nicholas L.]

@Carlos Ptriawan

yes - the crypto crash sure has been something.

[Greg R.]

Quote from @Nicholas L.:

@Greg R.

here's a serious question for you.  it seems to me that it's a tough time to be a buyer right now.  even with prices steady or falling in some markets, most primary buyers don't pay cash, and so with the increase in interest rates, their monthly payments are still going to be much, much higher than last year.  and, i just don't see any scenario in which prices come down so much that they offset this, especially at price points below the median.  

so - do we stay in this 'stand off' where builders slow down, affordability remains tough, and many sellers won't drop prices unless they have to sell to afford another house?  

It is absolutely a tough time to be a buyer now. This is the time to sit on the sidelines and let conditions improve. I really don't care about the rates, rates go up and down. I'm sure that in the next 2-5 years rates will land somewhere in the 4's, even if it's temporary. Ever hear the term "marry the home, date the rate"?

I'm happy to buy at a 7-8 rate when the price is right. I'll eventually be able to refi out of the rate and when I do the deal will be that much sweeter. 

Think of this, would you be better off if you purchased a home in May/ June and paid 10% over value and got a rate in the 3's, or got that same house 15% UNDER value with an 8% rate? That's a 25% swing in principal balance... again, I'm very confident rates will touch the 4's sometime in the next 2-5 years, so you'd eventually have a much lower principal balance and a rate that's not too far off from what people got during the bubble. 

In several metros (look at my posts yesterday) inventories are rapidly increasing. In some places we've already eclipsed 2019 inventory levels. Almost all of the deniers cite low inventory as the main reasons prices will not drop. So what's going to happen now that inventory is rising, rates continue to rise, and a vast majority of buyers refuse to buy? I think it's pretty obvious. 

[Greg R.]

Quote from @Michael Wooldridge:

Quote from @Nicholas L.:

@Greg R.

here's a serious question for you.  it seems to me that it's a tough time to be a buyer right now.  even with prices steady or falling in some markets, most primary buyers don't pay cash, and so with the increase in interest rates, their monthly payments are still going to be much, much higher than last year.  and, i just don't see any scenario in which prices come down so much that they offset this, especially at price points below the median.  

so - do we stay in this 'stand off' where builders slow down, affordability remains tough, and many sellers won't drop prices unless they have to sell to afford another house?  

Greg will tell you prices will drop more they just need time.

Many of us will say sales will slow until next year. By Q3/Q4 rates could be below 6% or close.  

So stand-off - sales next year will be half of 2021.

 So what's your suggestion then? Buy right now?

[Michael Wooldridge]

Quote from @Greg R.:

Quote from @Michael Wooldridge:

Quote from @Nicholas L.:

@Greg R.

here's a serious question for you.  it seems to me that it's a tough time to be a buyer right now.  even with prices steady or falling in some markets, most primary buyers don't pay cash, and so with the increase in interest rates, their monthly payments are still going to be much, much higher than last year.  and, i just don't see any scenario in which prices come down so much that they offset this, especially at price points below the median.  

so - do we stay in this 'stand off' where builders slow down, affordability remains tough, and many sellers won't drop prices unless they have to sell to afford another house?  

Greg will tell you prices will drop more they just need time.

Many of us will say sales will slow until next year. By Q3/Q4 rates could be below 6% or close.  

So stand-off - sales next year will be half of 2021.

 So what's your suggestion then? Buy right now?

IF a deal made sense sure. In some states and places there are investments ot be had. 

For many I’d sit for 6-9 months - no big deal. 

Which is pretty much what we’ve been saying most buyers will do. 


 

[Greg R.]

Quote from @Michael Wooldridge:

Quote from @Greg R.:

Quote from @Michael Wooldridge:

Quote from @Nicholas L.:

@Greg R.

here's a serious question for you.  it seems to me that it's a tough time to be a buyer right now.  even with prices steady or falling in some markets, most primary buyers don't pay cash, and so with the increase in interest rates, their monthly payments are still going to be much, much higher than last year.  and, i just don't see any scenario in which prices come down so much that they offset this, especially at price points below the median.  

so - do we stay in this 'stand off' where builders slow down, affordability remains tough, and many sellers won't drop prices unless they have to sell to afford another house?  

Greg will tell you prices will drop more they just need time.

Many of us will say sales will slow until next year. By Q3/Q4 rates could be below 6% or close.  

So stand-off - sales next year will be half of 2021.

 So what's your suggestion then? Buy right now?

IF a deal made sense sure. In some states and places there are investments ot be had. 

For many I’d sit for 6-9 months - no big deal. 

Which is pretty much what we’ve been saying most buyers will do. 

Ok... we disagree on how far prices will go, but we're in agreement on how to proceed. Best to wait 6-9 months unless a smoking deal appears. 

However, I could be in the market to buy in 3-4 months if prices come down enough, which I think is a strong possibility. 

But in any event, right now isn't a good market or time to buy.

[Karen Margrave]

All real estate is local. Nobody has any idea what will happen. America has a huge housing deficit, and costs to build new units are out of reach. However; larger cities with broad based economies will always fare better than smaller areas with narrower job base and service related jobs . Once we see job losses, that will impact ability of people to pay living expenses, mortgages and rent. 

[Michael Wooldridge]

Quote from @Greg R.:

Quote from @Michael Wooldridge:

Quote from @Greg R.:

Quote from @Michael Wooldridge:

Quote from @Nicholas L.:

@Greg R.

here's a serious question for you.  it seems to me that it's a tough time to be a buyer right now.  even with prices steady or falling in some markets, most primary buyers don't pay cash, and so with the increase in interest rates, their monthly payments are still going to be much, much higher than last year.  and, i just don't see any scenario in which prices come down so much that they offset this, especially at price points below the median.  

so - do we stay in this 'stand off' where builders slow down, affordability remains tough, and many sellers won't drop prices unless they have to sell to afford another house?  

Greg will tell you prices will drop more they just need time.

Many of us will say sales will slow until next year. By Q3/Q4 rates could be below 6% or close.  

So stand-off - sales next year will be half of 2021.

 So what's your suggestion then? Buy right now?

IF a deal made sense sure. In some states and places there are investments ot be had. 

For many I’d sit for 6-9 months - no big deal. 

Which is pretty much what we’ve been saying most buyers will do. 

Ok... we disagree on how far prices will go, but we're in agreement on how to proceed. Best to wait 6-9 months unless a smoking deal appears. 

However, I could be in the market to buy in 3-4 months if prices come down enough, which I think is a strong possibility. 

But in any event, right now isn't a good market or time to buy.

I’m saying buy when you find a deal. Always be looking. Money sitting in bank doesn’t make money. If you can find something right now that has high return of. Course buy it. Waiting for the best deal or trying to time any market is fool hardy.

I know people slow investing into Roth and 401k rigth now. Because they hate how much they are losing. That’s lost earning and Thursday/friday showed it. I expect more downturns next few months but you can’t time things.

So my point comes back to if you can get a good rental now with a strong return buy. If in 6-9 months rates are down - it will be easier to find the deal. 

So buy when you can make money. Don’t care what kind of market we are in



 

[Greg R.]

Buying when there is a good deal is common sense - that's true regardless of prices, rates, or market conditions. 

The point is that a overwhelming majority of buys right now are not good deals. Prices are still very high and rates are at a multi-decade high. 

Trying to buy at the very bottom is nearly impossible, but that's not what I'm advocating. I'm saying not to buy when prices are at the ceiling. If I buy somewhere between the high and the low, that's ok. Buying at the top of a bubble is not smart. 

So you say it's a fools errand to try and forecast the market, which is exactly what you and Carlos are trying to do. You guys sit here and talk about the economy, inflation, the IFM, the FED and what they are going to do a year out. 

But now you're saying that trying to time any market is "fool hardy". 

[Carlos Ptriawan]

Quote from @Greg R.:

Buying when there is a good deal is common sense - that's true regardless of prices, rates, or market conditions. 

The point is that a overwhelming majority of buys right now are not good deals. Prices are still very high and rates are at a multi-decade high. 

Trying to buy at the very bottom is nearly impossible, but that's not what I'm advocating. I'm saying not to by when prices are at the ceiling. If I buy somewhere between the high and the low, that's ok. Buying at the top of a bubble is not smart. 

So you say it's a fools errand to try and forecast the market, which is exactly what you and Carlos are trying to do. You guys sit here and talk about the economy, inflation, the IFM, the FED and what they are going to do a year out. 

But now you're saying that trying to time any market is "fool hardy". 

I am all the time timing the market. I see real estate as asset-class. Currently it's expensive asset class. Zillow automation next year growth is only 1 percent. We can make money from different asset class.

If I invest in Gov bonds or high grade corporate bond: I could get 4-5% year. Imagine saving money in the bank is bettr than US real estate appreciation. If I invest in high quality private REIT funds, appreciation is still whooping 10%, crazy LOL

It doesn't make sense to purchase US real estate right now except for STR only.

If USS IRR is 0% ; real estate investing internationally can easily generate 15-20% IRR and without too much tax hassle.

I may re-investing internationally again LOL ( or invest in coal mining? :)

[Greg R.]

Quote from @Carlos Ptriawan:

Quote from @Greg R.:

Can you expand on this?

[Carlos Ptriawan]

Quote from @Greg R.:

This is because you don't know how to do it. I always bought real estate,stock,bond at the bottom and timed the market very carefully. My biggest purchase was two real estate in 2009 that I bought using maximum leverage. In 2018 from one of the houses appreciation equity can already fully pay off the other home. I'm basically living for free just after a few careful smart humble decisions. Never had debts, all college kid is paid by home appreciation and kid got paid again by zillow now lol :)

How do I do this ? I run the amortization ratio in an excel sheet and price appreciation following inflation and economic growth (including from IMF LOL). I do a lot of investment scenario analysis. 

[Carlos Ptriawan]

Quote from @Greg R.:

Quote from @Carlos Ptriawan:

Quote from @Greg R.:

Can you expand on this?

 This is why I think you may only have knowledge on direct real investing only.
We could also invest in REIT Funds, There're two type of REIT, public and private, for private you have to be accredited investors. I put money into those funds as well. Those funds are managed very carefully by billion dollar company like Jones Lang,etc,etc.

The REIT performance this year is whooping 10%. I tracked 30 private REIT and they're all making money, not a single one losing money. 
In fact every single other asset class is losing money this year except REIT.

If you want to purchase investment of private REIT you must have access to RIA.

[Michael Wooldridge]

Quote from @Greg R.:

Buying when there is a good deal is common sense - that's true regardless of prices, rates, or market conditions. 

The point is that a overwhelming majority of buys right now are not good deals. Prices are still very high and rates are at a multi-decade high. 

Trying to buy at the very bottom is nearly impossible, but that's not what I'm advocating. I'm saying not to buy when prices are at the ceiling. If I buy somewhere between the high and the low, that's ok. Buying at the top of a bubble is not smart. 

So you say it's a fools errand to try and forecast the market, which is exactly what you and Carlos are trying to do. You guys sit here and talk about the economy, inflation, the IFM, the FED and what they are going to do a year out. 

But now you're saying that trying to time any market is "fool hardy". 

 I said it’s a fools errand to time the high and the low. It’s also pointless because there are other factors. 
As an example if I’m sitting on $1 million cash right now do I really hold off because interest rates are high? Especially if I know I can refinance and make money in the meantime and protect the current money from inflation? 

The only thing I advocate is making good deals period. I bought one not long ago will make CoC conservatively 19% on the realistic side closer to 23% and possibly as high as 27%. interest rate isn't great at 6% but who cares with that kind of cash flow? i'll refi in a few years. Could I maybe lose 5-7% in equity in short term? Sure. Do I care? Nope not selling it anytime soon.

Anyway there’s a different in forecasting no crash to market and trying to time the high and low.

[Carlos Ptriawan]

Quote from @Michael Wooldridge:

Quote from @Greg R.:

The only thing I advocate is making good deals period. I bought one not long ago will make CoC conservatively 19% on the realistic side closer to 23% and possibly as high as 27%. interest rate isn't great at 6% but who cares with that kind of cash flow? i'll refi in a few years. Could I maybe lose 5-7% in equity in short term? Sure. Do I care? Nope not selling it anytime soon.

Anyway there’s a different in forecasting no crash to market and trying to time the high and low.

 what downpayment assumption that you use ?
in the highest cap rate zip code in US, w/ 25% down in 12 cap, I could get 4-ish DSCR. With 7.5% rate, DSCR is 2.5, still cash flowing but not much.

[Michael Wooldridge]

Quote from @Carlos Ptriawan:

Quote from @Michael Wooldridge:

Quote from @Greg R.:

The only thing I advocate is making good deals period. I bought one not long ago will make CoC conservatively 19% on the realistic side closer to 23% and possibly as high as 27%. interest rate isn't great at 6% but who cares with that kind of cash flow? i'll refi in a few years. Could I maybe lose 5-7% in equity in short term? Sure. Do I care? Nope not selling it anytime soon.

Anyway there’s a different in forecasting no crash to market and trying to time the high and low.

 what downpayment assumption that you use ?
in the highest cap rate zip code in US, w/ 25% down in 12 cap, I could get 4-ish DSCR. With 7.5% rate, DSCR is 2.5, still cash flowing but not much.

 25%. The difference going from 20 to 25% was massive in terms of points/interest. IT was shocking at the time. On the flip side I’m sitting at 6% which isn’t horrible.