How will Coronavirus affect the Real Estate Market

[biophase]

Personally, I think real estate will begin to decline. However, we won't see it begin decline until 6-8 months from now because sellers are usually oblivious to market changes. They will keep their asking prices up until the properties sit for a long time. Then eventually they will start to lower prices as their real estate agents begin to tell them what the market is doing.

I think investors who've been there and done that will wait and wait. Everything is so uncertain now. I'll probably wait at least until 2021 to do anything now.

 

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[MoneyDoc]

Thats surprising.. You think there is any reason why the virus would cause an increase in price?

Do you think it's the same for United States?

My uncle is a real estate investor and he says people are literally "fleeing" from China and Iran. Most are coming to Canada or are trying to get their families to Canada. Not sure how credible this is but he's a big time player in Canada's market. With that said, prices are extremely high and do not make any sense at all. The one's in the "FOMO" stage are buying, which in my opinion is a big mistake. 30 year old homes in good areas are selling for $200k over asking. Does the area warrant that much of a price? Hell no. Even land prices don't make sense. The ones developing now are doing so because they've purchased the land years ago. In my city, I don't know of one developer that has recently bought land to build.

Not sure about the US market.

 

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[MooreMillions]

I am curious as to how this pandemic will divorce banking from real estate and commercial real estate from corporations not involved in real estate.

Almost 20 years ago I informed my employer, via a focus group, that teleworking is the future so why not start now. It was a logical progression to me because I was consulting homes and small businesses on installing cable, dsl, satellite, and VPN’s.

They heard me, but shrugged it off due to it not being imminent. Well, now it is imminent. Google has led the way, with Twitter close behind, on employees working from home indefinitely.

Once high speed hit homes, I was wondering why companies would not want to take the rent money they pay to landlords every month and reinvest in remaining parts of the business.
At minimum it is tens of thousands of dollars every 30 days to pay for employees not being there a minimum of a 3rd of the time plus weekends.

Why would any business in a capitalists society pay for something it just doesn’t have to? Kickbacks?
Just my thoughts.

 

[SteveO]

Following this thread. Also interested in hearing the opinion of @SteveO as well.

I'm a bit torn. I want to buy a house - not having a home that I own during COVID has been annoying. I'm looking at buying in Scottsdale, but I'm amazed at how fast homes are getting quickly snapped up.

Now, if I'm going to keep it for 5+ years, it doesn't matter too much. But my gut says I could get a better deal by waiting 6-8 months...

I can't imagine that the market will stay as strong as it is currently. Are you buying cash or payments? That is an important question. Interest rates are so low right now that it may be worth purchasing and locking in the rate. Variables here are how long you plan to own this house or whether you will need to refinance in the future.

If you are buying with cash, I would wait for a downturn.

So your gut is telling you correctly.

We can talk about this more when I roll into Colorado. Look forward to seeing you.

 

[Bekit]

With that said, prices are extremely high and do not make any sense at all. The one's in the "FOMO" stage are buying, which in my opinion is a big mistake. 30 year old homes in good areas are selling for $200k over asking. Does the area warrant that much of a price? Hell no. Even land prices don't make sense. T

Maybe people who are pulling money out of the stock market are putting it into real estate?

 

[biggeemac]

I own three properties.....one is about to be developed with my new house, and another I am doing a refi to get some cash out for my new house. I wouldn't be comfortable buying anything at retail value at this point because of all the FOMO. That usually points to something bad coming up. For me, doing a new development feels much more safe since I am paying for most of it with cash. My two existing houses are very cash-flow heavy, so I am not worried about the extra that I will need to pay for the refi.

 

[MJ DeMarco]

I'm hearing that property taxes are going to skyrocket to account for budget shortfalls.

Hearing CA, AZ, CO, and other places.

Looks like it has started...

Nashville approves ‘painful' property tax hike

City levy rates would increase 34%

www.foxbusiness.com

 

[LightningHelix]

Just looking for a few opinions.

How do you guys think the real estate market is going to be affected by Coronavirus?

I've heard that Real estate usually trails economic effects, is there a month window or so after we hit bottom on investments, that we will see the bottom of real estate?

Looking for a good opportunity to get into income properties, but I know several of you are much more experienced in this than me.

 

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[TFF123]

Money has to go somewhere. It has come out of the stock market... and initially went to bonds. But now bond yields are almost non-existent and bank rates are just as bad.

For those (few?) without financial struggles, I'd expect them to be eyeing up property markets in the next few months as forced sellers begin to emerge.

 

[rocket99]

I can't speak for other markets, the inventory in Arizona is drying up. It is keeping prices high.

I could probably sell my house and make $100K on it after just a few months of ownership.

I live in Arizona, too. It's a seller's market big time. We have the lowest inventory currently since 2005. I sold an investment property last month. I got 8 offers in two days. All over asking. It fell through the day of closing due to problems with the buyers loan. Put it back on the market and got 6 offers $10k-$15k over asking the first day. Real estate is hyper local though. Each state is very different.

 

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[foodiepersecond]

We just got a 152 unit property under contract in Houston. Originally had it under contract for $22M back in February, let it go due to Covid, and renegotiated last week at $20M. Newer investors are sitting on the sidelines, leaving some good deals out there. And with multi-family investors slowing down, there's lots of institutional money looking for a home right now -- so raising money is easier than it's been in a while.

Excited to see how this plays out in a future podcast

 

[biophase]

The market in and around Sedona, AZ is strong for residential. One friend has 12 in escrow. For a small town of 10,000 +, that's big. People that can, are moving from the big cities to the rural areas.

Commercial. I'm about to rent some space and the prices have fallen. I might even buy soon. Many retail businesses have gone under. The smaller owners of commercial are nervous. The big corps, not so much and it seems they're keeping prices up and waiting.
People smarter than me and with much more experience tell me it might be a little early to get into commercial. Maybe wait another month. But the deal I have on the table is good so I'll most likely pull the trigger.

Again, this is in and around Sedona,AZ. Also, a friend in MI selling residential says the market is strong. Multiple offers on properties.

Weird, all the homes I’m looking at in Sedona are sitting on the market and being reduced.

So I’m just waiting and waiting. I’m looking at $800k-$1.5m homes so maybe the higher end is stagnating. I’d imagine the larger Airbnb homes will be hurting soon.

 

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[MattWorks]

Looking for a good opportunity to get into income properties, but I know several of you are much more experienced in this than me.

Although I don't have experience nor the capital to invest, I see suburbs of larger cities as a buying opportunity considering more companies are going to integrate working from home more frequently, allowing employees to move out of expensive cities and live a bit further out in suburbs.

Best of luck!

 

[Bigguns50]

Weird, all the homes I’m looking at in Sedona are sitting on the market and being reduced.

So I’m just waiting and waiting. I’m looking at $800k-$1.5m homes so maybe the higher end is stagnating. I’d imagine the larger Airbnb homes will be hurting soon.

I haven't followed the market as close recently. I have noticed some, one in particular at about $1.3 mil, was well under $300/sq ft. Great price. (I would guess it might be an Airbnb prop). I've also seen some Airbnb properties up for sale. I've seen some FSBO signs as well. Those overleveraged should fall in price in time.

I'm having dinner w/friends who own a home in the Seven Canyons later this week. They have a lifetime of experience with commercial and residential. I'll let you know their opinions.

Let me know if I can do anything for you here or if you have questions about location.

 

[MoneyDoc]

Just looking for a few opinions.

How do you guys think the real estate market is going to be affected by Coronavirus?

I've heard that Real estate usually trails economic effects, is there a month window or so after we hit bottom on investments, that we will see the bottom of real estate?

Looking for a good opportunity to get into income properties, but I know several of you are much more experienced in this than me.

The market in Canada is actually rising because of the virus. More people are "fleeing". However, I expect a very big correction as soon as everything is settled down in a couple of months. The market prices are absurd. Top investors are not buying anything.

 

[Envision]

I think alot of people are forgetting how much cash institutional investors are sitting on. The trillions that were pumped into the economy are masking the damage that was actually done. But thats not to say that there won't be winners when this all shakes out.

If you buy with good fundamentals. Looking at location, cash flow, and long term (Without over leveraging/betting on appreciation) you should be okay. But if your tenants are a couple of people susceptible to a down market your just as screwed as they are if they cant pay.

With that being said, im liquidating some of my residential property to move into commercial (warehousing/storage). I remember my dad told me that there would be 2-3 times in my life to take advantage of a cycle that would compound wealth not seen in "good" times

I think we're about 6 months out from that. I bought a duplex in 2017 for 260k and today its market rate if 500k - numbers are so blown out it's hard to comprehend whats going on but thats what makes me think this cant last forever

 

[Tilos]

We just got a 152 unit property under contract in Houston. Originally had it under contract for $22M back in February, let it go due to Covid, and renegotiated last week at $20M. Newer investors are sitting on the sidelines, leaving some good deals out there. And with multi-family investors slowing down, there's lots of institutional money looking for a home right now -- so raising money is easier than it's been in a while.

That’s awesome man! Congrats! Wow, glad to hear y’all got a 152 unit under contract.

I’m making the bridge from
SFH to MFH. Felt like the economies of scale was def better. Been reading Joe Fairless and listening to Michael Blank.

I agree with the post above. Looking forward to a future podcast on that deal!

 

[JustinY]

Selling my Oxnard, CA condo since we're moving to Vegas. Realtor took 360 pictures on Sunday the 5th. Listed it on Monday as coming soon with a plan to fully list on 14th and no visits until the 22nd after we move out.
Had a full price offer by Wednesday the 8th.

Also had an offer for $10k over asking, but with $10k for closing. It was clearly a no though because the townhouse won't appraise that high and they clearly don't have any cash to bring to the table if they need the money for closing.
We just got the house appraised a few months ago to get the PMI off.

Owned it 3 years and it went from $335k to $387k.
Put 10% down ($33.5k) and spent $25k fixing up floors, granite counter tops, and new AC/furnace.
Still owe about $287k, so we'll gross ~$100k. Then take out $31k for realtor fees and closing costs and we'll have made $10k.

 

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[JasonR]

Following this thread. Also interested in hearing the opinion of @SteveO as well.

I'm a bit torn. I want to buy a house - not having a home that I own during COVID has been annoying. I'm looking at buying in Scottsdale, but I'm amazed at how fast homes are getting quickly snapped up.

Now, if I'm going to keep it for 5+ years, it doesn't matter too much. But my gut says I could get a better deal by waiting 6-8 months...

 

[Bigguns50]

The market in and around Sedona, AZ is strong for residential. One friend has 12 in escrow. For a small town of 10,000 +, that's big. People that can, are moving from the big cities to the rural areas.

Commercial. I'm about to rent some space and the prices have fallen. I might even buy soon. Many retail businesses have gone under. The smaller owners of commercial are nervous. The big corps, not so much and it seems they're keeping prices up and waiting.
People smarter than me and with much more experience tell me it might be a little early to get into commercial. Maybe wait another month. But the deal I have on the table is good so I'll most likely pull the trigger.


Again, this is in and around Sedona,AZ. Also, a friend in MI selling residential says the market is strong. Multiple offers on properties.

 

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[JustinY]

It looks like higher end real estate around Vegas are dropping prices if they're still on the market, but the lower end stuff is selling well.
We've seen some $500k houses drop $30k in the last 3-4 months while the $100-200k places are getting multiple offers.
Same around here in Oxnard, CA except you need to add $300k, haha.

And I heard that Vegas will likely increase taxes as well due to a huge hole in gambling revenue for the state.

 

[Red]

I'm hearing that property taxes are going to skyrocket to account for budget shortfalls.

Hearing CA, AZ, CO, and other places.

California is always running a deficit though.... CO is subsidized by weed, so I don't see that happening as sales are supposedly still up year over year there. AZ just needs to legalize recreational weed & we'll be fine, haha.

 

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[Bigguns50]

I can't imagine that the market will stay as strong as it is currently.

Agree. Unemployment is still HIGH. Virus is out of control in many areas. Then there's the Fear.
Doesn't look like the Feds will extend benefits. I'm wondering when the money will run out.

I wouldn't be comfortable buying anything at retail value at this point because of all the FOMO.

My Wife experienced FOMO just before the housing crash. Lesson learned.

AZ just needs to legalize recreational weed & we'll be fine, haha.

Getting there.....https://mjbizdaily.com/adult-use-cannabis-legalization-in-arizona-appears-headed-for-november-ballot/

 

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[Connor]

So here are my preliminary thoughts (for whatever they are worth) on housing- think we'll see more demand for multifamily and industrial, but for single family:

1. This will likely accelerate the movement of people from the Northeast and California to the Sun Belt, so those areas will likely continue to see demand. Coastal SC here is going crazy with sales, but that will probably cool off later in the year. I would not want to own high-end property in the areas where people are bailing right now (i.e. Manhattan).
2. There is a TON of institutional capital sitting on the sidelines looking for a home. SFR funds can't buy enough effectively, so JP Morgan recently gave American Homes 4 Rent a bunch of money to develop rental subdivisions. If you're in the $100k-200k price point (or a bit above and below that), the SFR funds will help prop up pricing, as this will push more people into renting long-term.
3. With super low rates and banks not wanting to have a bunch of REO property, I think we will continue to see some level of forbearance even after the government rules end, which will make the lag time even longer than in 2008.

Unlike in 2009-10, where pretty much everywhere was impacted other than TX, I think we'll see a lot more places that hold up fairly well relative to the rest of the US. But that's just my opinion. We're continuing to carefully acquire through this, and we just did a rate adjustment too to capitalize on the low interest rates.

 

[LightningHelix]

The market in Canada is actually rising because of the virus. More people are "fleeing". However, I expect a very big correction as soon as everything is settled down in a couple of months. The market prices are absurd. Top investors are not buying anything.

Thats surprising.. You think there is any reason why the virus would cause an increase in price?

Do you think it's the same for United States?

 

[Bekit]

Here's how it affected the real estate market in China:

(The red line is 2020.)

Source:

View: https://youtu.be/OE-tLNyYVPM?t=620

 

[MoneyDoc]

Personally, I think real estate will begin to decline. However, we won't see it begin decline until 6-8 months from now because sellers are usually oblivious to market changes. They will keep their asking prices up until the properties sit for a long time. Then eventually they will start to lower prices as their real estate agents begin to tell them what the market is doing.

I think investors who've been there and done that will wait and wait. Everything is so uncertain now. I'll probably wait at least until 2021 to do anything now.

I'm 100% with Kenric on this. I really feel like the end of this year we'll see a decline. Stress test for mortgages is getting easier this April in Canada, so prices will be on the rise and again, FOMO will kick in literally forcing buyers to buy.

 

[DaRK9]

My uncle is a real estate investor and he says people are literally "fleeing" from China and Iran. Most are coming to Canada or are trying to get their families to Canada. Not sure how credible this is but he's a big time player in Canada's market. With that said, prices are extremely high and do not make any sense at all. The one's in the "FOMO" stage are buying, which in my opinion is a big mistake. 30 year old homes in good areas are selling for $200k over asking. Does the area warrant that much of a price? Hell no. Even land prices don't make sense. The ones developing now are doing so because they've purchased the land years ago. In my city, I don't know of one developer that has recently bought land to build.

Not sure about the US market.

That’s interesting considering how they handled SARS.

 

[mikemiller]

Hi,
The coronavirus will bring a great impact when it comes to the real estate industry. I recently went through this blog which was very useful. I hope it helps you too!

Corona Virus Hits the Real Estate Market, Scares Home Buyers and Sellers

The real estate industry is walking on the tightrope situation because of the pandemic spread of C0VlD-19. Thinking how can it affect real estate with most of the deals done online? Yes, it affects the REIT reality in this spring season with harsh deaths and economic breakdowns.

hubpages.com

 

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[Devampre]

I'm watching the prices of many properties in my province in 5 different areas. Still haven't really seen any large changes to any listings just yet.

I am kind of hoping to find a good deal for myself.

One thing that was crazy to me (a noob) was the price difference between two properties in one of the cities.

There's a single two bedroom condo unit for $1.1 million and a two bedroom trailer home for like $25,000. I understand the differences and a bit of the "why's." However, from a fundamental perspective as a means of shelter, this kinda blew my mind. Especially since both are in low crime areas and the trailer home is actually closer to the University.

I don't claim to know everything or all the details, but I just thought that was interesting.

 

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