So many investors bought at the top of the housing market in their areas and now they are sitting on losses (in some markets). Rents are going down (in some markets), so they can’t rent out their investment property for as much as they thought, so their cap rate will be skinny… but T-Bills are paying risk-free 5%… and no midnight trips to unclog renters’ toilets. At what point do they cry “enough!” and just dump the properties? Of course, no one wants to dump, but price is always determined on the margins, at some point people have to dump their property… death, divorce, emergency need for cash. I think it will take a while still, but I do think that point is coming. And whew, commercial real estate? Ugh. I used to work in the towers at WestLake Park Blvd, Houston TX 77079 when it was Amoco, and 580 WestLake Park Blvd has been empty for years. Empty! What lucky bank or investment company owns that piece of dogmeat?
Most RE investors i know do not buy in inflated markets. And RE markets rarely, if ever, change overnight.
You need to know the specific market before you jump in, but it’s a pretty slow-moving business, especially when you compare it to paper investments.
Buying a home for personal use is a tad different for lots of reasons, not the least of which is that your alternative, a rental house, often follows the purchase market. Over the years, my personal preference for a home of my own usually drove my choice to buy regardless of what the market was doing. I have never lost money on a SFR I purchased. Of the eight personal homes we’ve owned from 1976 to 2010 and not including any appreciation of our current home we’ve made $994K in 2023 dollars.
With the recent crash in the US Pending Home Sales Index, it may be prudent to wait before buying a house. The decline indicates a potential downturn in the housing market, which could lead to lower prices and better buying opportunities in the near future.
