Quote from @Greg R.:
Quote from @David Song:
@Greg R.
Housing prices will always go up. Buy anytime. - bigger pockets.com
Reality: numerous REI lost their life savings in 2009 and maybe 2022. Over leveraging, insufficient reserve, short term loan with balloon payment, etc.
Flippers bought in Q1 2022 will learn the lesson now. Many of them are losing their shirt. None will tell you publicly.
The price decline started in April 2022, and has been declining for the last 4 months. The bottom has not been reached yet. This is nationwide, from CA to Texas, everywhere.
Couldn't agree more. There seems to be a fantasy land that some folks are living in where prices never go down, and no matter the conditions - it's always the right time to buy. And you're right, the people who've lost everything from the flips they bought in Q1 are awfully quiet right now. Too much ego/ pride to come on BP forms and expose their foolishness.
Foolishness little harsh dont you think ? WE flip a lot of property and build new.. what i have seen is new builds sales are not nearly what they were a few years ago and more in line with 2016 pace. So far for me at least prices have held .. In the cash flow deals we do its nothing has slowed down at all so all those cash flow flippers are doing quite well as rents have risen to the point that higher rates the cash flows are just the same and those that have low interest debt are really looking good right now for buying in Jan Feb.. :)
I think if/when we have a crash it will be the same suspects as 08 CA VEgas Phx were values ran up real quick.. I sold one of my Vegas properties that went up over 30% in one year and then when i put it on market I sold it for 40k over ask and that was in May of this year..
The other thing people are not mentioning and most dont really know.. Is it really depends on the state your in.. For owner occ.. Purchase Money mortgages there is no deficiency judgement allowed by law. This is true in CA OR WA NV AZ and a few others.. In other states does not matter the lender can and will go after deficiencies ( think Texas) . This is one reason the melt down was so severe in CA NV and AZ in 08 the only thing owner occ's lost was equity and credit score they did not have anyone coming after them ( unless they had second mortgages those the lender can get a deficiency.
I wanted to add some real stats for my Oregon new builds.. Price points 675k to 850k.. I started 14 specs in Q 1 I have sold 8 of them all for full price plus extras.. No bidding wars of course as I dont really like that but Zero concessions and Extra's of course carry a nice mark up for all the time and effort we take to customize these homes for the buyers.
But lets talk about these buyers.. 6 of the 8 are empty nesters one paid cash two paid very large down's and decided to use their VA loans so their loans were less than 50% ARV. The others sold properties are put 20 to 40% down.. Again though we are going to have to work for it unlike the years past were it was taking orders. We also have substantial equity in this project with a great bank and banker so if we have to hold its only going to cost me about 10k a month to hold 40 million worth of retail sales and we can do that for a very long time if we needed to.
On our mid west east coast fundings for flippers for mainly investor purchases IE these are rental houses.. so our clients either sell to the cash flow investor or they are BRRR even with rates going up to 7 to 8% on BRRR my clients are in these good enough and rents have risen enough ( even section 8) that these still cash flow with very little or no money out of their pocket.
I just did two in N. Ohio for one of my clients I 100% funded it for them plus i fund 100% of rehab. So all they do is pay utls.. and they refinanced with local bank got 25k cash back and are positive over 600 a month on the two.. that was two weeks ago in just one of the 5 markets i do this in. Of course I only work with very experienced locals I dont do this for the general public.
