@Russell Brazil @Omar Khan
Nowhere in my post did I call for a price decline. Just noted that price appreciation has gone hyperbolic. Also, wouldn't make the argument "prices have only gone down twice before, it can't happen!" That's exactly what we heard back in 2003-2006...but hey, at least I know where sentiment is. And I'm not even addressing the entire national market - this is expressly about Portland, Maine.
You want to talk national trends I would be happy to point out that first time buyers as a % of mortgage applicants is around 45% versus 15% two years ago, that there is a lot of overdevelopment going on in multiple markets (D.C. comes to mind as a great example, and the public apartment REITs results there back this up), that birth rates for 25-35 year old women have started picking up, etc. that all support my viewpoint that entry-level single-family product is what people want and that on the balance, the market is not as supportive of rent increases as it was three years ago. Talking of putting my money where my mouth is, I own entry-level homebuilder stocks - LEN, TMHC, NVR.
The yield hunting thing is not anything new - has been the case for last 8 years at this point. I bring that up because cap rates were not as unattractive in Portland, say, 3 years ago. Or 5 years ago. Etc. And I would argue that the people searching for yield - institutional investors - are not buying du/tri/quadplexes. Institutional size properties, yes, but not something on this small of a scale. Mom + pop investors such as ourselves may on the margin be more inclined to buy something like that to get yield, but I would argue with the 10-year Treasury at 3%, and blue chip stocks like CAT yielding 2.5%, they headaches that come with being a landlord are not worth the extra 100 basis points - anyone who has been around this game long enough would agree with me on that, I hope.
This notion of "staying on the sidelines" being looked down upon is also not something I particularly care for...asset valuations (and life in general) is not black and white. Just because you aren't buying FB stock today doesn't mean you should be shorting it.
