All Forum Posts by: Michael Wooldridge

 30% nationally would be above 08. Unless we crash the global economy I don't see that happening but time will tell. 

 50% over 2 years is not a "crash". Yes, it's a lot of change, still, it's not a crash. 

Think of it in terms of a automobile, what is a "crash"? It's a sudden, massive change, generally from unforeseen factors. A deer runs out, "holly-hell", you hit the brakes, "POW" the car is massively changed, to the lessor, in the blink of an eye. We call that a "crash". 

The term "crash" is exactly that, a massive change in a sudden event. The word is what the word is, again, nobody get's to reassign the English language. 

A 50% change in home prices over 2 years is generally a market re-pricing. And let's be honest, any notion of such actually happening is ridiculous to say the least, because were talking a change to material and labor costs that have very literally never happened in the entire history of the U.S.. Feel free to dig into the data and find me a time that median wages went backwards 50%. 

A market Adjustment is, generally speaking, pricing adjustments in the range of up to 10%. These occur over a duration of time, measured in months. As I have said countless times, there WILL BE market specific adjustments in greater and lessor deviations. SF bay is a great example, that place is primed for a much larger deviation in changes BUT ALSO look at there run-up as well, it was equally much more. AND as I have noted, the difference from replacement cost has the largest cap when we remove land factor, keeping replacement on the structure itself, thus being able to view the value factor of the land alone. 

Land is where the greatest adjustments will be seen, not in structures. 

So, in markets where overall sales values are closer aligned to the utilitarian factor of replacement cost of unit, such as Ohio, of an Iowa for example, lessor adjustments will come. You take your CA homes, where we see some of the biggest gaps in this factor nationally speaking, yup, expect the bigger deviations. 

Also, watch for "insulated" markets to be, well, "insulated". For example certain neighborhoods in D.C., investors in those areas will know exactly what I am speaking about here. 

The midwest is famous in intuitional investing circles as "good ole reliable" and I don't see any change to this standing. Pricing generally more closely follows the utilitarian cost points vs perceptual thus, muting such big swings. 

Again..... again, again, again...... The conversation is one of MARKET WIDE, as in NATIONAL Real Estate market "crash". So I speak specifically to a National median/average etc.. and On that National line, no, NO 20%+ "crash" of Real Estate.     I don't know how I can get more clear and defined.  Yes, 100%, there will be market specific variances, there always is. yes, some village in Alaska might rocket 90%, some area in L.A. could drop 90%, again for the countless times these are market specific variances, we are talking a NATIONAL number/%. 

I for long time have been calling out CA as having a significant time of pain soon coming. The net outflow of persons from CA is substantial, it is. And stage is set for major infrastructure issue that could really spur an even more rapid exodus. That outflow could spur a net unit glut of properties and THAT, a unit GLUT, that is a key necessity to get rapidly descending R.E. prices because it facilitates prices going SUB replacement cost value. 

It's really hard, I dare say impossible, to get a collapse/crash of real estate when there is not enough real estate. If Johnny has 10 apples, and 20 people want apples, how low will the price of Johnnys apples go? Yeah, kind of elementary.    And guess what, just because 10 of the 20 can't afford what Johnny is charging, it does not matter because Johnny only has 10 apples, he only cares what 10 can pay. Johnny doe snot need 20 buyers, just 10. 

The big question comes back to the Fed. Are they willing to crash the global economy? it's looking like the global economy will break before the US does. So do they back off and hope the global downturn + paired with the jobs losses coming is enough to slow/stop inflation? 

If they are willing to break the global economy though. All bets are off on where those dominos fall. I just never thought that far. 

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 that is pretty wild. 6% appraisal job in 2 months. usually it takes a while for the banks and appraisers to adjust. My guess is the banks are getting worried right now. There very well may be a liquidity issue coming up soon.

 Not surprised. 

There was a sizable event that recently happened in the world of appraisal where some people are trying to sue there appraiser for giving them there appraisals, basiclly having buyers remorse and trying to use the appraiser as a sacrificial lamb. Since this recent event, appraisals vary wildly appraiser too appraiser. Some have really tightened the belt and are trying to do things as conservative as possible, even to point of under appraise if have to. 

Then there is the obvious fact that anyone who does R.E. FT will know, appraiser too appraiser things very a lot, same as inspector too inspector. If you have never had to argue a bad appraisal, well your not in R.E. on any scale or regularity. It happens all the time. 

I just closed one and appraisal came back almost $20k higher then what we were looking for or expecting. Does that mean the market is on a rocket to the moon again? I think it has a lot more to do with that appraiser. 

I have an MAI on staff to do in-house reviews. We see it all the time that she reviews an appraisal and hear from her office "what the..... where's the..." then she comes and asks what clown did the appraisal, lol. I don't consider any appraiser worth a squat until they are MAI or have commercial appraisal under the belt. Those who are just residential, massive difference from the two above, MASSIVE. 

So from the info I say it doesn't mean anything, also because we have NOT seen a 6% decline in market. We still have units moving measured in hours/ days, it's not the insanity of 20 offers 20% above list in first 2 days, but full price+ is still the norm in 10 days or less. 

Hey, your so dead set it's a market crash, ok, sell me your properties. I will buy ALL of them, now. Or, do you not own any investment properties? 

I’ll sell you my “equity” based on peak values. We can let it expire end of 2023. I’d like a buyout option if the fed pivots and reinflates the bubble (definitely not ruling that out). Find an escrow that will invest in 1 year treasury at around 4 percent. I highly doubt you have the cash to buyout my equity, but if you do, PM me and we can make arrangements. I wont sell the asset to you because the income I generate on my properties is too substantial. I don’t care about losing 20-30 percent phantom equity, I use the cash flow to stack cash, and when prices drop further I’ll buy more. Since you went there with me (questioning my investments), I have to say, after seeing your website, you only have 4 listings and they are all monthly rentals? Your going to need more than just commission on LTR to buy my equity. And you are not even getting asking price…what’s this…..this you??? 7 percent price cut on a rental? I’m sure this is just an expert strategy by you though, I’m sure you had 40 applicants within first week then you cut the price to get a bidding war!  

very convenient it’s a “7 percent” drop which is what the appraisal came back with over a 2 month window on an investor I know in Minneapolis. 

Don’t worry Sir James, I still like you buddy. Apart from being wrong on this topic, you make some really entertaining posts!

 Joe I have you blocked, and for good reason you weird stalker! I have no idea WTF your rambling about; sell me your equity but your gonna hold the property? Do you have any idea how stupid you sound? 

And not getting market rents? Again, WTF are you talking about? You annoying moronic children trolling away. 

I have half a dozen transaction going on right now, not to mention the existing portfolio carried, the assorted off-market business. Good job, you looked at my available unit rental listings, congratulations, you nearly have a clue. 

And if your inventing price movements because of how things view to you vs Zillow zestimates, Lol, again that's a "you" thing on the ignorance scale buddy. News flash, zillow is not an appraisal system, nor is it accurate, it's a ball-park "guesstimate" and depending on what factors it's grabbing it can be close to correct, high, low etc..     

Lol, by the way, for all out there, notice the sold price for this house? $169k. Notice that rent? $2,500. Yeah, "oh no, we will have to take a discount of getting only $2,500mnth on a $169k property" lol. 
And yes, doing an initial listing for first 4-odd days at a ridiculous price of, let's say $2,700, to then "update" a listing price downward to where you actually want to be, say $2,500, yes it IS a strategy of Price Conditioning. 
I call it the "Kohl's Factor". If don't know, Kohl's is a wildly popular retail store that has a perpetual sale going on. People come in and commonly geek out say "OMG look at this, it's 20% off, we gotta get this $80 waffle maker, it's 20% off!". 
It's the sale factor that drives people like nut's to jump on paying a price that if marked regularly, they'd blow it off, probably mentioning how it's too much. 
Marking things up to purposefully mark it down to drive velocity of actions. 

Jimbo, If you buy the equity, it means you can have any further price gains in excess of the current equity. It's a great deal, I'll even give you a 5% credit adjustment to get you started. I know about the strategy you speak of, but the way you have been talking about how there is no inventory, I would expect that whatever price shows up on your morning "dart throw" board, a willing and able customer surely should have took you up on it. I apologize, I should have known someone like yourself strictly primarily does "off-market" deals, my apologies. I never said anything about Zillow, I was merely mentioning the price cut. Please keep us posted what that rents for, it might be the bellwether for your market there.

Tenants are consumers, and to best interact in a B2C action is to engage in prevailing consumer psychology. At least, that's my opinion of it, and they way I have done it for years, and find maximum success. Especially when dealing with above utilitarian price points. My team does pretty darn good beating the market averages, and I believe much credit is to our system for such, engagement in such consumer psychology actions. 

I don't really seek out to do so much off-market action but it does tend to lean heavily in that arena, by chance of it all. Look, I'm not a standard retail agent, I'm not, heck look at my name, it's "The REI Realtor", not the 1st time home buyer realtor, not the water-front realtor, I am "The REI Realtor", and a lot of REI lives and happens off-market, just the nature of the beast. I do have some MLS listed properties right now though.

As to equity buy, sounds fine and dandy but that's not what I do, I buy assets, I am an ASSET Investor. I do very little speculative investing. My stocks, heavily dividend plays. I would not invest in nothing, I buy assets. What your referencing is a kind of short, your asking me to short your property. I am not much of an options investor, again, I am an asset investor. Everything I own, I have a belief and faith in the asset itself, control, use and monetization of such. It's a solid game plan of wealth for the last few thousand years. 

If I wanted to get into options, I'd just go around and hit-up every MFH Investor I know to place an option on there properties. Options investing is all about the spread, would have to be sizable enough spread potential to make it worth the burn rate in placing the options. And for some reason I am hearing a lot of chatter that people think MFH is a "safe" place to go in this inflation environment, lol, just pumping up that balloon a bit more.

fair enough, you can see why I would not want to sell my asset since it is producing cash flow for me. I understand why you wouldn't want to speculate in options on it. I do agree MFH is going to hold up well through this period. We tend to agree on over 90%, but you just won't accept the possibility of a 20-30% drop in housing over 18 months. You seem to think 10% is possible, so we are kind of arguing about semantics here. 

 I would call it more fundamentals then semantics. 

Your calling for a collapse, in some iteration. 

I am forecasting market adjustments, with consolidations. Some market specific areas will of course have larger variations then others, both upward and downward, as has always been the case and always will be, only peoples attention and knowledge of such change. 

On a national level, on national average, I forecast pricing compression and stagflation, with the additional forecast of a "black-swan" event soon coming. Namely, something done by political powers to empower greater purchasing and/or development of housing units, something on mass scale. There is a few ways such could flesh out. Could be normalization of 40/50yr mortgage, could be actions to reduce regulator actions for entrance of rental units into sec8 and then declare refusal to accept sec8 payments as "discrimination in housing", thus adding however many millions of units to the sec8 supply through force. Tax credits are an almost certainty but I don't see opportunity of this at scale needed and those projects are too much time delay from point of action to result on the market.     Something to really fluff things up to garner support for votes, and it will have to be mostly executive powers related as anything going through congress will provide to many opportunities to die or delay.     Actually, may be a good political strategy of introducing such into congress, knowing it will die, just to get that position, and then utilizing executive powers to really brand selves as the hero's of the day. 

Then again, if the "black-swan" Grandaddy of all comes, War, well all bet's are off. War is a "Twilight Zone" of economics where things work differently. 

On a national level, on national average, I forecast pricing compression and stagflation, with the additional forecast of a "black-swan" event soon coming. Namely, something done by political powers to empower greater purchasing and/or development of housing units, something on mass scale. There is a few ways such could flesh out. Could be normalization of 40/50yr mortgage, could be actions to reduce regulator actions for entrance of rental units into sec8 and then declare refusal to accept sec8 payments as "discrimination in housing", thus adding however many millions of units to the sec8 supply through force. Tax credits are an almost certainty but I don't see opportunity of this at scale needed and those projects are too much time delay from point of action to result on the market.     Something to really fluff things up to garner support for votes, and it will have to be mostly executive powers related as anything going through congress will provide to many opportunities to die or delay.     Actually, may be a good political strategy of introducing such into congress, knowing it will die, just to get that position, and then utilizing executive powers to really brand selves as the hero's of the day. 

Then again, if the "black-swan" Grandaddy of all comes, War, well all bet's are off. War is a "Twilight Zone" of economics where things work differently. 

I see a lot of trouble coming in analysis, as I think many are going to confuse market specific adjustments as being a translation of the entire national market. 

While the entire national market has seen a significant bull-run, the degrees to such vary wildly across the nation. Seattle is a good example of such. 

 UK is complicated by the PM policies right now and also the fallout from brexit. Not going to predict that market.

And yes I’m assuming the expedited fed meeting has to do with some of this though. 

 2 Million or even 4 million is a drop in the bucket in the scheme of things. The other thing is as many of those that hit it also lose it. It’s just another way to earn a living and I suspect fewer will succeed at this than say actual sales people.