Anybody else notice a slowdown in buyers? Ed? Terry? Jim? - Posted by SteveA (FL)

Posted by Laure on May 12, 2000 at 07:43:58:

We just finished all of our “millenium stew”. Now working on the beans. I don’t recommend visiting us at our home anytime in the near future… we are burning incense in anticipation of the flatulance !

Laure :slight_smile:

Anybody else notice a slowdown in buyers? Ed? Terry? Jim? - Posted by SteveA (FL)

Posted by SteveA (FL) on May 11, 2000 at 06:46:10:

Admittedly, I’m a beginner and have been studying CRE for 6 months. I’ve made 2 offers and I am getting ready to make another, so I consder myself “on my way.” But I have been in the professional world for 12 years.

One thing that is beginning to concern me is how the average listing time is increasing in this area. My Realtor has commented several times about how a lot of listings are being reduced 2 and 3 times and listing times are lengthening. I live in a very desirable n’hood where homes usually sell in a matter of days but recently, they’re listing for several weeks or even months.

Any input on why you think this is happening? What’s your prediction for the next year? The home I have my eye on has been listed for 4 months and has just been reduced. I know rates are creeping up but they’re still good and the economy is in great shape which would make me think there are still a lot of buyers out there.

As a side, I’ve been trying to sell my '98 Ford Ranger for 2 months now, too. I’ve had trucks in the past and they always sell quickly, but this one isn’t. Are consumers tightening their belts or are things just “so good” that they’re buying new assets instead of resales?

Thanks in advance.

Re: Anybody else notice a slowdown in buyers? Ed? Terry? Jim? - Posted by Rob FL

Posted by Rob FL on May 11, 2000 at 20:54:02:

No slowdown in Central Florida. In fact there are tons of buyers and not enough houses to go around.

You may want to take a look at the Florida Association of REALTORS web page. It has lots of info about the Florida economy. http://fl.realtorplace.com/

yes, but be prepared - Posted by d.henderson

Posted by d.henderson on May 11, 2000 at 17:35:18:

This is a lively question and answer session.
I live in a town of 8,000. We had a shut down of the only large factory in town. Three hundred people will be totally without a job by July 1,2000.
I started to put two houses under contract when I heard the news. I decided not too, I want to see what happens.
People will always need a place to live, but at this time here - it’s how many people will be here to need a house.
I know because of this it will affect the rent and housing market. There will be a lot more motivated sellers - landlords & homeowners.
So now, I will recall the ones that weren’t motivated a month ago and pick up on my marketing. Waiting
Make your money going in and offer something in a good neighborhood, it’s a slam dunk! as Laure says smile*
always learning,
Dee-Texas

The First Rule of Prediction… - Posted by JPiper

Posted by JPiper on May 11, 2000 at 13:37:14:

The first rule that all prognosticators should observe is to predict often…that way, sooner or later you get it right. Personally, with predictions and $1 you can get a cup of coffee.

Having said this, my own belief is that Fed policy right now is to slow the economy down. Their effort to do this is reflected in rising interest rates. How successful this effort will be remains to be seen, as well as how serious they really are about it in an election year.

Notwithstanding this, Fed moves generally will only work after a period of time. So the idea here is that perhaps the economy will slow, but it will likely be 3-6 months from now.

The shape of that slow down is impossible to predict. But the actions that you should take are to pencil your deals carefully. Carefully take a look at your risks. DO NOT assume that the real estate market 6 months from now will be what it is today. DO NOT assume the lending market will be exactly as it is today.

Matter of fact, these aren’t bad ideas in any type of market.

JPiper

Yes. - Posted by eric

Posted by eric on May 11, 2000 at 12:31:10:

Yes. Things have been “Hot” for too long. Though it’s just now starting to unravel, I believe, firmly, that this tree is going to start shaking hard on the 16th, when the Fed ups rates by half a point, not a quarter. While that in and of itself won’t trigger a downturn, it will be the beginning of a correction I believe, in both stocks and real estate. One which I believe is long overdue anyway. Stocks are trading at 100, sometimes 1000 times earnings, sometimes infinite times earnings if they’re not even making a profit, and prices keep going up. In Real Estate, I’ve seen prices double in three years. It just can’t keep going like this, nor do we want it to, unless you already own a bunch of buildings. I’ve encountered a lot of personal frustration with this “seller’s market”, people expecting me to do ridiculous things just to buy their house. Their time is almost up, and I am getting ready for it; I’m looking forward to it.

NO SLOW DOWN IN SAN DIEGO!!! - Posted by Soraya

Posted by Soraya on May 11, 2000 at 11:52:44:

I thought with the increase in interest rates there would be more property available for creative deals. Have not found that to be true yet.
Soraya

Re: Anybody else notice a slowdown in buyers? Ed? Terry? Jim? - Posted by Ed Garcia

Posted by Ed Garcia on May 11, 2000 at 11:23:08:

Steve,

Everything goes in a cycle. Real-estate is no different, it can be affected by many
factors of the economy, not just the stock market or rising rates.

Over the years as rates have been held down in the 6s and low 7s, the refi market
was booming, but Real-estate sales was slow. Today rates are in the solid 8s and
the refi market is slow due to the majority of home owners have already taken
advantage of the low rates, and the newer home owners don’t as a rule, have enough
equity to refinance, while real-estate sales are booming.

Employment is at a all time low, however the quality of employment, tells me that
affordable housing is going to be on the rise. Steve, it all boles down to monthly payments
and what the average wage-earner can afford. For over 35 years I’ve been aware that the
average American is a payment buyer.

We talk rates and points, what’s happening in the stock market, being a millionaire and on
and on, but the bottom line is, the average American is a payment buyer.

The first American dream is to be a homeowner, and the second is to be a Millionaire.
Today being a Millionaire is a JOKE. In my fathers day if you were a millionaire you were
a wealthy man, and the sky was the limit. Today’s Millionaire is just a payment buyer that can
afford larger payments. My point being, INFLATION. The purchasing power of the American
dollar is not there. So in reality it makes no difference what happens to the stock market, interest
rates, what have you, the best hedge against the economy, inflation, and in real-estate is
AFFORDABLE LIVING, a cheap house. There’s always going to be a market for it.

Example: you mention, “As a side, I’ve been trying to sell my '98 Ford Ranger for 2 months now, too.
I’ve had trucks in the past and they always sell quickly, but this one isn’t. Are consumers tightening
their belts or are things just “so good” that they’re buying new assets instead of resale’s?”

The reason you’re having a problem in selling your Ranger is because, you can buy a new one
at a cheaper payment even though the buyer will pay more. The way financing is available on a new
vehicle, it allows them to be competitive as far as payment are concerned.

Knowing that the average American is a payment buyer. Looking at the average wages being paid in a given area, which is available information in every city. You can now see what your affordable housing
market is going to be. Another way of identifying affordable housing is to buy a house, and after you
bought it with all of its debt service, it still gives you a positive cash flow and your rents are at market.

I get tired of forecasters, fortune tellers, economist (they’re a big joke), or people that predict the economy who tell you the bad news is coming. I have many friends who judge the economy by the stock market or other economic indicators. We all know that things are going to change, we just don’t know when.

So rather than to look into my crystal ball as Dave puts it, I’ll just say go after affordable houses and don’t
look back. Your going to have people that are going to be impressive with their economic jargon, don’t be
concerned, they don’t know any more than you do.

Steve, you know one thing. If times are good, they’re going to get bad. If times are bad, they’re going to get
better. The question will always be, when? Rather than guess the market, be prepared for it.

There is a saying that goes like this, (God, gave me the ability to accept the things I can not change. To change the things I can, and the wisdom to know the difference.)

One of Jim Pipers favorite sayings is, ( You make your money on the buy) along with that, Jim structures
his deals with positive cash flow based on market rents. Buying in that manner, your deal becomes bullet proof.

I already regret answering your post in the manner that I have because if Jim Piper reads it, he’s going to
call me and say,(Garcia, I read your post to Steve. If you believe what you’ve wrote, then why are you investing in commercial). I know today’s going to be a long day.

( smile)

Ed Garcia

How Then Should We Live…and Prepare? - Posted by soapymac

Posted by soapymac on May 11, 2000 at 09:49:03:

Kim P. (CT) asks a very good question. My question is, then, how should we prepare for the downturn?

Here on Cape (of the) Cod, the market is still frenetic. RE agents of old do not remember a better time. RE agents of new have yet to experience a slowdown, i.e., buyers market.

Yet I see some chinks in the market starting to appear. While inventory is short locally, I’m noticing sellers who get “antsy” if their house doesn’t go under agreement in two or three weeks.

Has the RE market built itself up like a house of cards? Should we stand on the sidelines and wait a bit, but still pick and choose when we see a good value?

Could someone help me think this through?

Cordially,

Roy MacLean
"soapymac"

Re: Anybody else notice a slowdown in buyers? Ed? Terry? Jim? - Posted by Doug Pretorius

Posted by Doug Pretorius on May 11, 2000 at 07:52:53:

Here, currently we are in the hottest sellers’ market in history. This week there are 880 properties (houses, condos, townhouses, and multi-units) on the MLS. Normally there would be 3 times that number. Houses sell within a couple of weeks with MANY offers and usually well above asking, especially within a couple of miles of my house.

What’s amazing about it is that last year at this time it was a buyers’ market, and since then property prices have gone up 15-20%. Rising interest rates don’t seem to be having any effect yet either.

Re: Anybody else notice a slowdown in buyers? Ed? Terry? Jim? - Posted by GregNorman

Posted by GregNorman on May 11, 2000 at 07:46:05:

I think that is going to depend on your area. I asked my mortgage broker the same question because of the rates. He didn’t think things would slow down b/c the number of houses on the market is still very low.

All comes down to supply and demand.

GregNorman

Re: Anybody else notice a slowdown in buyers? NO - Posted by Kim P. (CT)

Posted by Kim P. (CT) on May 11, 2000 at 07:44:51:

The market here is unbelievable. It’s over-saturated with buyers and not enough sellers. Houses are selling anywhere from 1-5 days after listing. They are selling before the sign hits the front lawn. I’ve seen some realy ugly houses sell for top dollar. Even house rentals are very scarce. Top rents are being charged and people are scooping them up. Being a newbie, it’s been a little discouraging. I don’t see as many desperate sellers. I look for foreclosures and vacant properties.

I’m curious as to any suggestions on how to handle a market like this?

Kim

Not Jim, Terry or Ed… - Posted by David

Posted by David on May 11, 2000 at 07:33:01:

real estate markets are localized. that’s one of the great things about real estate, unlike Microsoft which sells for the same in Seattle, New York City and Paducah.
Here in Pa. things are still selling good, interest rates still good at 8% and uneployment is at all time lows. life is good, but fickle and unpredictable. there are lots of variables, many beyond local control.
Paid $1.30 for gas yesterday, but was in Barbadoes a few months ago and gas was $4.00 a gallon. If gas ever went that high here, it would have a drastic effect on real estate.
Don’t know if this is any help my crystal ball is broken today.

Re: Anybody else notice a slowdown in buyers? Ed? Terry? Jim? - Posted by Laure

Posted by Laure on May 11, 2000 at 06:59:55:

We had a slow winter and spring, but things are really heated up right now. It’s certainly cyclical, however, interest rates rising are going to take a big bite out of the pace we’ve gotten used to. Sales will, most likely, slow down as rates rise. And the election offers additional speculation on the part of buyers.

Laure :slight_smile:

Re: yes, but be prepared - Posted by Laure

Posted by Laure on May 12, 2000 at 07:52:57:

Good move ! I grew up in a town of 5,000 people. And when I moved away, I became surprised that the town still exists, and actually flourished ! (I was young) Every area is different, but “my little town” has done well. I still don’t understand why anyone would want to live there! hehehe. not slamming you in any way, I just didn’t like where I grew up. Good luck in yours.

Laure :slight_smile:

This is great advice . . . - Posted by Robert M. Campbell

Posted by Robert M. Campbell on May 13, 2000 at 09:54:29:

. . . because you can never, never assume that current market trends will continue in any given direction.

Making money in real estate ~ as well as any other “speculative” market ~ is all about “risk management.”

When you contol your risk . . . and you have a sound investment plan you follow . . . the profits automatically take care of themselves.

With that maxim in mind, the smart investor ALWAYS asks himself: “What is the market telling me to do.”

When you can answer that question with confidence, you know you are informed and prepared . . . and you will succeed in any investment endeavor.

Robert M. Campbell

Don’t run from the future, don’t let the boogie man of the unknown get you… - Posted by David

Posted by David on May 11, 2000 at 11:59:54:

the worst real estate market that I can remember was around 1981 when interest rates were 18% on mortgages.
Keep on investing and don’t let the bad news dissuade you. You can make money or lose money in either an up market or a down market. As far as I’m concerned this is a great market, make it while you can; and then make it when everybody else is hiding out in the bunkers. 1981 was a great year to buy, not so hot to sell but as long as you are creative you have the assets to make it in the up market or the down market.
David Krulac

Re: How Then Should We Live…and Prepare? - Posted by JohnG

Posted by JohnG on May 11, 2000 at 16:59:32:

For my money, I feel that it is possible to make money in good markets and bad - in fact I have done better in flat to bad markets than in these hot markets.

If the basic premise of your business is to buy below market, then it follows that the level of prices in the marketplace is not of great concern.

I’m afraid that any further comments re where the market is going; i.e. interest rates etc is not an area where I feel comfortable. I was waiting for the market to take a big correction 2-3 years ago (the stock market that is) - and with the DOW up to 10,000 plus, I am amazed at the strength of the so called “new economy”. I am still a great believer in the value of real estate as both a way to make money (income) in the short term and for appreciation in the long term.

Of course, I still have a supply of food, water, candles, and wood left in my garage in preparation for the great calamity known as the “Y2K meltdown” so what do I know !!!

Re: How Then Should We Live…and Prepare? - Posted by Doug Pretorius

Posted by Doug Pretorius on May 11, 2000 at 10:40:16:

Seems to me that any kind of no money down sandwich (lease or finance) would be a good thing in a market that may soon decline. That way if things get real bad you only lose cashflow, you don’t have anything in the properties. Of course that might still be tough to get in a hot market, but if those sellers get antsy enough…

Personally I’m looking forward to a downturn, it’ll give me a better chance to get some good deals, which hasn’t been happening lately.

Paul Simon sang it… - Posted by Laure

Posted by Laure on May 12, 2000 at 07:53:50:

My little town…