All Forum Posts by: Austin Wolff

What are some downsides, if any, to this region?

"Walking for dollars"

 Definitely agreed. Going from one city in the midwest or the south to another seems nonsensical to me.

Thank you for the disclaimer on "unless you live in CA or NY." Keep in mind at least 58 million people live in one of these states. A subset of those will be investors, and that's a lot of investors who may need to invest OOS.

 This is the correct answer. You don't live in a high-cost area like coastal California. Therefore, your backyard will be better than OOS.

 Most of the time I make them, but this particular map is from Pew

Why don't you go visit Detroit and see for yourself?

This seems like the perfect time to buy in Austin, TX. If it weren't for the high property taxes, I I would be looking here. Local experts are likely to thrive in Austin. 

Underlying fundamentals are great. Still healthy job growth. Vibrant culture. New supply permitted falling. Still will require a hefty down payment to make up for the cash flow eaten by property taxes -- but this price correction is a great thing for anyone wanting to enter an appreciation market.

I currently think multifamily real estate is bottoming out (so either at the end of a Recession Phase or the beginning of a Recovery Phase). But what is the current market cycle for residential real estate?

- Some markets have seen home prices decrease from their 2022 peak (like Austin, TX). I would definitely consider those markets in a Recession Phase, and perhaps now may be a fine time to start looking for deals.

- Other markets have continued to see price increases, mostly because of strict supply. It appears as if they never quite hit the Peak Phase, even during 2022. It’s as if they have just had one long, slow Recovery-and-Expansion Phase since the Great Recession (like Lexington, KY).

- One more thing to keep in mind: most markets have seen price increases in nominal dollars (meaning, they more-or-less have risen due to inflation). However, many markets have seen price decreases in real dollars, even if their price tag has technically increased. This means that in some markets, while home prices have increased, the increases have not kept up with inflation, resulting in real price loss. I would consider these markets as part of the Recession Phase.

I think the market cycle phase depends on location, but across the board I see either:

1) Recession Phase for pandemic boom-towns,

2) (light) Recession Phase for markets that aren't appreciating faster than inflation, and 

3) Recovery/Expansion for places that never "boomed" during the pandemic -- just solid & steady growth (many Midwest/Northeast Markets).

Either way, it appears to me that now is the time to buy (even more so for multifamily properties).

What are you seeing in your market? Am I completely off?

There's no law of physics or finance that says housing has to be affordable. That's why I think #2 is a possible reality. 

However, if I must participate in discussing #1, I don't think home prices will be going down in nominal dollars. However, in real dollars, home values have absolutely gone down in many markets. So I do think 1a is likely, if wages are somehow able to keep up with inflation, and home price growth is slower than inflation.