I see the same thing. I have two neighborhoods that have been my bread and butter for 30+ years. When I started out I could buy a 2/1 bungalow for 18-22K all day long. When they went to 30's I couldn't believe it and sat out for 3-4 years thinking it was going to crash. I got back in buying in the upper 30's to low 40's, they were solidly cash flowing. Prior to the pandemic these houses were selling in 50's to 60's, still cash flowing but just barely. Today they are selling for 160 to 180 with a negative cash flow of at least 300, more if they use a PM. Price appreciation has flattened out so I'm not sure what these investors are thinking other than perhaps they are operating on gut feelings rather than analysis and hoping that interest rates will come down, prices will go up, and rents will continue to skyrocket. I don't see that happening.

I guess I'm still old school. No matter how many times I hear that things are different, I know better. Cash flow and appreciation are the two keys to profit.

That said, I think I passed up a lot of valuation today by setting my cash flow criteria too high thus passing up some properties I wish now I would have bought years ago. In today's world I might even take break even on cash flow knowing the profits will come in a year or two with a pile of profit in future years.

Around here houses haven't cash flowed for 20 years so my point of reference is skewed.

Flips are possible but they aren't easy. Its either a moderately priced area which means 500-700K with small margins or the 800-1.2 in expensive areas. The catch being that these are usually cash only deals due to condition.

Around here houses haven't cash flowed for 20 years so my point of reference is skewed.

Flips are possible but they aren't easy. Its either a moderately priced area which means 500-700K with small margins or the 800-1.2 in expensive areas. The catch being that these are usually cash only deals due to condition.

These prices simply don't make sense. Fundamentals matter. Anything else is the "greater fool theory" where your ability to make money is reliant on someone being a greater fool and paying more than you did. That's perception based and perceptions can change overnight.

I'm seeing the same, although things are a little more sane in the Midwest.

We have out of state investors trying to sell their pandemic purchases for out of state price, and I guess it's working for the big expensive places but for "rental size" the places are too expensive to cash flow. So appreciation is what you get if you hold long enough but then you've got high maintenance, and at a higher rate, in a hard-to-reach area.

I get what you're saying. However, there is no logical reason to expect prices to crash down. Ladies and Gentlemen of the jury, I enter into evidence:

1) The USA is still about 3 - 5 MILLION housing units short based on current demand. Mostly in the "starter" house level. People want 3/2/2, which no one is building anymore.

2) The USA continues to be a hot spot for immigration. So while our natural birth rate has declined below the level of replacement, immigration is more than making up for it. We're still a great place to live, regardless of what media talking heads say. More population = steady or increased demand for housing.

3) Costs of labor and material is holding fairly steady and/or increasing due to tariffs. We might see that ease back down if/when tariffs are lowered or repealed. But for now, it costs more to build than to buy existing, which supports existing housing prices.

4) Inflationary pressures will continue for the foreseeable future as Congress continues to "borrow" money (i.e. create out of thin air) and deficit spending. There is no reason to expect them to change this any time soon.

Your grandparents would be shocked to see their $5,000 house from the 1940s going for $150,000 a few years ago. People today are shocked to see that same house going for $200,000 - $250,000. 10 years from now, odds are that house will be north of $300,000 and people will be wishing they'd bought back in 2025 when prices were "cheap."

Is a house really "overpriced" at $150,000 if you can fix it for $50,000 and sell it for $300,000?

Nope. So that's what your metric needs to be. What can you fix and sell it for based on current market conditions, not what you did 5 years ago. Pining for the past has never brought it back.

Folks have been waiting 15 years for "prices to drop"... and they should be kicking themselves for missing out. A website whose name rhymes with "Pigger Bockets" had "experts" predicting housing market crashes going on 4 years now. They should be eating crow, but of course they've just doubled down on their gloom and despair with no evidence like what I cited above. Let 'em. They are there to sell books. I'm here to invest when and where it makes sense.

I'm not buying houses for buy and hold now. Only to wholetale them. I don't have the knowledge, experience, or patience to to fix and flip them right, so I just flip them. Buy cheap, clean them up, sell to someone who does what you do. Make $25,000 - $30,000 per deal. Not amazing, but I'll do those deals as fast as I can get them.

Commercial continues to be well-priced in my area compared to residential as people have thought for (too) long a time that it was over priced. The market has crept up to meet it and passed it, but prices never adjusted since people remain skittish about it. Find the places that aren't being optimally used and have languished on the market for awhile.

I live in rural/small town SC. In my area the USDA - FHA - VA and others have loans with no down payment for income up to 80k.

No skin in the game for buyers is pushing at least part of the price increase.

Ken, oh yes I agree that prices in hot hot HOT markets will dip down... a little. 10%... maybe 15%? But they will roar back to life again once people realize it's gotten "cheap" to buy. Or interest rates dip. Or (fill in the blank). My forecasts are based on the steady upward trend of housing prices since the recovery post-Great Depression. Houses todays are all priced 10x or more what they cost back then, and there's no reason to believe that won't continue to be the case.

NE, yeah, I agree it's hard to cash flow a rental in a market like this. High prices make that really tricky. I do believe you can cash flow from flips if you buy a pile of junk and fix it. People are still by and large wanting HGTV quality homes to move into. Gone are the days with Hank and Harriet Homeowner bought a 2 bedroom bungalow fixer and through sweat equity rehabbed their first house. So those junkers fall to us, the investors.

I've flipped three in the past two years, making $25K - $30K a piece end profit, just for "knocking the stink off them" as my agent says. Clean it out, cut the grass, make sure the water turns on and the sewer line hasn't collapsed, and that's about all I do. Turnover time is about 4-6 weeks. I've got one more in the pipe line right now on a Contract for Deed that I rescued for the Tenant/Buyer since the previous owner wasn't making her payments and got foreclosed on. Now I'm the owner/seller getting it to them for the same price, but I got it for a steal. Once again, no work on my part other than being ready to roll and having good connections with an agent who actively keeps his ear to the ground for cool deals like this. That's also where the flip money is: having personal connections to deals that no one else knows about and that bandit signs and mailers miss.

But overall... my forecast is that most markets are going to stay about where they are or increase over the next 5 years. I do not expect prices to sink by more than 5% at most before rebounding. If the USA wins the trade war, I expect an economic boom that will bounce prices up considerably.

Sid's 2 cents. Don't spend 'em all on one house.

Redfin reports :

Some people on this board have been saying we are in a bubble and we due for a crash since before 2020 - probably 2017-2018 or so. Since then, housing has doubled or more in many areas, if not most.

If you're always forecasing a recession, eventually you will be right.

The issue is not if they will come down because they always do. The issue is how long that takes. Around here people have been saying this while properties have risen 2-3X.

If you have the $ to invest and you are running a business then there is also a cost to not investing. There is also the human cost of the people you work with.

We bought some of our houses in the teens...and they are now worth six figures.

I'm having a hard time with the "new" pricing, but everything we own has doubled or MORE than doubled in the last 5 years.

That just shows how much value our dollar has lost in 5 years.

Our model has always been by the dog of the neighborhood, then install sweat equity. So far, it's always worked.

BTW, one of my investor friends is trying to get me to flip a $600k house with him. Some of you are in higher priced markets, but my personal crib is worth about $240k.