In the last few weeks, I have been driving around the Class C and D hoods where most my rental houses are. If I see a vacant house with a FSBO sign, those are ones that spark my first interest. I am not seeing any FSBO signs, which extremely rare. I am seeing vacant houses but those are usually houses that the city is planning on bulldozing. When a house here is so bad that it will not even sell at a Tax Sale, the city bulldozes it and clears the lot. There is no shortage of vacant city owned lots here.

So, what is going on here? Is the RE market at it's peak and may be even in some form of Bubble that could pop any day? I even ran my Handyman AD last week and nobody called!!

Tony,

Yes, we are. - Random selection of 20 internet articles from "experts".

No, we aren't. - Random selection of 20 internet articles from "experts."

Who knows? - S i d' broken crystal ball.

Here are a few known facts you can use to decide which group of experts you believe.

1) According to NAR (National Association of REALTORS), the amount of down payments on sale has increased from 4% to almost 8% over the past 2 years. This indicates Buyers have more cash.

2) No doc, nothing down loans are a tiny fraction of the market.

3) The economy is growing, not just home prices inflating.

4) Interest rates continue to be at historic lows, allowing Buyers to pay more for houses.

5) Millennials who put off home guying after the Great Recession of 2008-2009 are flooding into the market.

6) Foreign money is hitting large markets hard as yields on other investment have mostly dried up.

S i d's 2 cents:

In 2020, everyone was sure real estate would tank due to Covid shut downs. It did the opposite. Will it do it again? I don't know, and no one else does either. The economy is complex and multi-faceted. You can have 20 indicators that say the market will continue to go up, and all it takes is one BIG EVENT to wipe them all out. Likewise, you can have a big event (Covid) that seems like it should wipe everything out, and yet it can also drive people to "safe" investments, and traditionally real estate ranks as a hedge against inflation and a good place to park money is a hard asset.

Is there any risk of inflation today? Uh-huh. Gold is pretty, but you can't do much with it other than look at it. Real estate provides utility as well as an investment.

Why no FSBOs? Because people see they can sell their house and make good money. No need to sell to low-baller/cheapskates like me.

I'm staying in the game, but I've shifted focus to commercial where there are no moratoriums.

Let's drink some Coors and chat about it!

Interest rates will rise a bit over the next couple of years and that will likely slow the rate of appreciation. I don't see a bursting of a bubble.

Sid,

Yes, we are over-due for a Coors/PBR induced business brainstorming session.

I am looking at another house today but there is a RE agent showing the house to me. Here, I can swing a stick and hit 5 RE agents,...I can't avoid them. This 3/2 fixer upper house is listed at $35K and it is located just across the street from one of my other rental houses. I know the hood here but I need to get the price down to about $18K. This will be a long shot especially since the house was just listed on the MLS yesterday. 10 years ago, I could have bought this house for $15K, but that was then and not now.

[[[[[....... it will not even sell at a Tax Sale, the city bulldozes it and clears the lot. There is no shortage of vacant city owned lots here......]]]]

Oregon,

I doubt that will happen in my town. My city is a LL's paradise and has been for a long time. Why? Most of the politicians, lawyers and judges here own rental properties themselves which may explain why our moratorium only lasted 6 weeks here last summer. There are even a few well-known elected politicians who are slumlords too.

I think that we have not seen the top yet. As long as the interest rates are low people will keep buying.

The for certain riots that will happen all summer will drive more people out of the big cities and those in the country will benefit from this.

If investors have the stomach for very high risk they can likely get really good deals while the flames are roaring and the guns are shooting. If, and I do mean IF, they get some control on the riots, maybe in a year or two city prices might start back up but I will pass on investing in the big cities. I do not see any type of control being established. I'm thinking it will only get worse.

My crystal ball says with the gov'ment printing TRILLIONS to feed it's addiction to cash, we will have many years of inflation.

Hum. Landlords can not evict their tenants but are required to pay all of the associated taxes and fee's (to operate income property) on time, or face the music. Now congress has approved a few extra Billion Dollars to hire new Tax Auditors. So the Franchise Tax Board and IRS are knocking at my door. Why have my taxes gone down compared to the prior year?

So I asked one guy, "which planet did you hatch from? Tenants don't have to pay their rent and with protections tenants can mess up their place and then City Housing will order the landlord to fix/repair the tenant caused damages.

Ken,

I am not even seeing any "We Buy Houses" bandit signs anymore! Those use to be everywhere.

Ken,

Back in my heyday, I use to get 8-10 calls a DAY from running my Handyman Ad. All of these callers had one thing in common,..they hated RE agents! RE agents at one time or another, would tell these people all of the things you will need to do before I will list your house for sale (remove all your Walmart junk, clean your house, paint, leave the house during showings, etc, etc.) which just insults these people. Most agents are great at selling Class A and B houses but with Class C or D house sellers, the agents had a tendency to insult them about the way their houses looked.

I'm of the belief we will be here for several years. I read something recently that tells me there will not be many foreclosures. Interest rates, while they may go up some, are projected to remain below historical average. Inflation is up which will keep prices high for a few years. And if things like the Infrastructure reinvestment comes to pass then there will be another trillion dollars pushed to the construction industry.

MikeA,

The usual dribble to drum up dumb answers by the usual.

You can't get a career economic professor to guess right on this. So really. Questions like are we in a bubble-- what a junk post and waste of time.

Myob,

As you know, all RE is LOCAL. I am an investor who studies my local market up, down, side-ways and all around. I do this constantly too, especially if I am in the market to buy a house. The research I do is not obtained from books, charts, graphs or statistical analysis like a college professor with a PhD. would normally do. My market research is obtained from being down in the trenches of my local market,...and this is where 'street smarts' is learned. Having street smarts is probably one my greatest assets too. Now, once I have obtained the information that I need, I then crunch the numbers using simple math to determine what my first and final offers will be.

The reason I made this post was because after doing my usual local market research, I noticed all of the 'usual indicators' of a normal RE market had disappeared. No FSBO signs, no bandit signs, etc. And just yesterday, I got into a 'bidding war' with another investor over a fixer-upper due to the limited number of available properties for sale. Again, this is not normal for my market.

By making this post, I just wanted to confirm that what is going in my local market is actually happening nation wide. Apparently it is,..so I consider this post to be worthwhile and not junk as you see it.

Ken so I can answer people like you.

Roy your question insinuated BUBBLE: as in across the country. A more reasonable e question would be "what r experiencing in your area"?

Roy - I agree with you - all RE is LOCAL - You are using some common sense about a decrease in FSBO signs - no bandit signs - bidding wars etc. Local indicators that may require some adjustments to your bidding strategy.

According to a local RE Broker/Investor with 80 units /friend - 40+ yrs in the buss - houses in our area is selling higher and faster than she has seen in a long time. Why? Who knows - reason varies - I recently sold a house 22% higher than 3 market analysis - buyer said he was tired of looking and he really liked the house. For me be aware of National RE market, but respond to you local market.

As Sid noted we have to many experts interpreting data to suggest the RE market or the Economy is going this way or that way. To me most of it is noise. Listen but take it with a grain of salt.

I think your strategy is good for YOUR MARKET.

MYOb,

A RE 'Bubble" is more of a national phenomenon than a local one. When a bubble pops, a recession usually follows and then after awhile things move back to normal.

Back in 2007, the sub-prime RE market was in a gigantic and over-inflated Bubble. That one popped in 2008 and our economy almost went into a major Depression. When the big 3 auto makers and a host of other 'too big to fail' companies needed 'bailouts to avoid bankruptcy',...that was probably the largest 'bubble pop' in history. I do not think our economy could survive another bubble pop like that one!

PG,

I wish I had a recording of the bidding war I got into yesterday, which something I swore I would never do. All of the bidding was done with TEXT messages. The RE agent was in the middle of me and this other investor who either had deeper pockets or who was just a greater fool than I was. Plus, the RE agent was playing the role of an 'auctioneer'.

Ken

I was thinking the same thing which is why I stopped bidding at $20K. Now, if the agent calls and says,..'the other investor has bailed out',...then I will know for sure this agent was playing me for a fool. And if she did, I can always bail out myself or go back to my original offer. Two people can play this little game.

This is just another reason I hate dealing with RE agents.

Ken,

RE agents are out canvasing my neighborhood (where I live) knocking on doors asking anyone if they would be willing to sell their house. Local agents are now getting desperate with no inventory to sell. In a normal market my Class B+ 3/2/2 house would sell for $225K. I just quoted an agent $325K if you want to be the listing agent for a house that I had no intention of selling just 5 minutes ago! Plus, the broker this agent works for is a LL and business associate of mine.

Oh what a crazy world we live in now. Low inventory is making the local agents do things they would not normally do!

I go out of my way to keep track of the number of listings available in active and pending status locally. In a balanced market place we would have about 220-230 homes available in the MLS. At the low point in inventory there was only 59 units available. We are slowly trending upward in inventory size, but we are still under 80 units - so this is still very much a sellers market.