All Forum Posts by: Michael Wooldridge

 Henry! Really like your specific perspectives and examples. I agree... it's not clear how we could get to this "buyers market" i'm referring to... however I like the mental exercise of thinking forward to what has happened in the past and could someday happen again for us. Want to be sure I am among the buyers at the time and help others think that way too!

That being said. Your points are solid. I don't know where the inventory will come from with all the bottlenecks out there.

Portland, like most areas of the country I'm guessing, has seen a plateau and inventory is slowly ticking up (still right around 2 months, however, or just under which is definitely still a seller's market).

I can only speculate where inventory may come from. I agree Owner Occ properties are scarce and there's not a ton of relief on the horizon. New construction price cuts will ease the pressure some, but not enough to break the dam I don't think?

One area I think we'll see inventory rise from is investors. Many investors bought thinking airbnb would make them a killing or they thought they'd try their hand at flipping and many of them will likely find themselves in a tight spot as prices do not continue to climb and perhaps even decline a bit. I think we'll see many airbnbs come on the market as well as flips that need to get sold asap. 

We'll need more than that to get to a real Buyers market. Who knows what the future holds! Going to be interesting to watch play out for certain!

 15% is possible...however the pricing on 15% down now is so bad it makes no sense. Got a quote a couple weeks ago with 15% down....and it had 5 points attatched. So it doesnt make sense to pay 5 points when that could just be 5% more down instead.

Yep, I know where I am and we're getting some of first of the trend that will hit everywhere before this is over. People from California have been flooding in here for the past few years and paying outrageous prices for houses just because they had all the 'Cali money' from the cash sales of their houses over there. That was dumb and now those houses are worth much less. Prompting a good bit of angst and hand wringing. People hate getting a bad deal. Will that make them sell, maybe not....but the people that didn't pay cash and got loans are now having a moment of regret...

 Yes it's called the rate sensitivity factor. I think the better indicator would be the "mortgage/middle-class income". 

In a high cap rate market, it doesn't have a strong sensitivity to rate adjustment.
In a low cap rate market, the market is very sensitive to rate adjustment and thus more volatile to repricing.

Someone in Twin Cities,MN with someone from Phoenix and Bay Area will take a look from a different lens altogether as the market is entirely different.

It's like buying a car: Tesla or Kia Rio. The interest rate differences don't matter for Kia Rio buyers as the base price is cheap ; while for Tesla buyer any 1% interest changes means a more drastic payment.

I agree this probably isn't going to be an '08 scenario. I think there is just a lot of fear mongering, so there will be some fantastic individual deals made, if you can find the sellers that are spooked right now. I don't expect the whole market to drop to a similar extent. 

This has been discussed before. If #3 is true, then we would not see an increase in active inventory.
See housing market and equity market works in a similar fashion. The market needs liquidity. Liquidity comes from the buyer.

Currently, 100% of market in US has a negative YoY of new listing. Good, the theory is right. BUT. for those who has to sell, they don't see enough buyer so in about 75% of the market, there's positive increase in active inventory. Literally we have more seller than buyer.

Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY. 

I think there will be at least a few panic sellers in every market though. I'm in San Antonio, and we're not doing too bad here yet, but people listen to the national news, and some of them will make a decision to sell below where the market is actually headed, based purely on fear. Waiting and watching prices won't make those deals happen though. You actually have to be out making the offers.

Some things to consider:

1) Demographics.  Over the next 10 years real estate values should be stable and rise although at a slower pace than the last 10 years due to the large millennial generation entering the housing market.  After that, we could see a decline unless immigration makes up the difference for low birth rates.

2) All real estate is local.  Here in Kansas City (and most of the Midwest), sometimes known as a linear market, we don't see much up and down even during major "crashes."  However, in cyclical markets like LA, Miami, New York, etc, all bets are off.

3) 40% of homeowners own their houses free-and-clear and another 30% or so locked in 30-year fixed rates in the 3-4% rate and are unlikely to sell or let their houses go to foreclosure for the next 20 years.  I don't see much room for a crash with those stats alone.