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Today’s top stories…
Real estate stocks take a nosedive with recent inflation data
San Francisco sellers face losses as pandemic-era purchases come back to haunt them
Dave Ramsey remains bullish on housing
💰 Deal of the Day!: 4 bd | 4 ba | Groveland, CA
Today’s mortgage rate (30 Yr. Fixed): 7.34% ☝️
Real Estate Stocks Feeling the Squeeze
Yesterday's market saw real estate stocks taking a serious hit, with REITs like Easterly Government Properties, Vici Properties, and Kilroy Realty plummeting between 5% and 7%. Opendoor Technologies, a transaction platform operator, took an even more dramatic 11% dive.
The culprit? High interest rates that just won't quit. March CPI data showed inflation rising 3.5% year-over-year, higher than economists predicted. This means the Fed's hopes of cutting rates this year are fading fast, and borrowing costs are putting the squeeze on homebuyers, developers, and landlords alike.
But it's not all bad news. Despite the challenges, housing demand remains strong, and people are still willing to shell out for a place to call home. Plus, the U.S. economy continues to chug along, providing a solid foundation for the real estate market.
As always, it's important to remember that knee-jerk reactions to market fluctuations are often overblown. Stay calm, stay informed, and keep your eye on the long game.
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⏰ Quick Tips
You asked. I answered.
How do I find good investment properties?
To find quality investment properties, start by determining your investment criteria, such as location, property type, and target return. Utilize online real estate platforms, like Zillow, Redfin, or LoopNet (for commercial properties), to search for properties. Network with local real estate agents who specialize in investment properties (even if it’s SFH investments), and attend property auctions or foreclosure sales through websites like Auction.com or RealtyTrac. Analyze potential deals using metrics like cash flow, cap rate, and return on investment (using tools like the BiggerPockets Calculator) to ensure they align with your goals.
San Francisco Sellers Singing the Blues: 1 in 5 Taking a Loss
Brace yourself, Bay Area investors – the SF housing market is in for a bumpy ride! According to a fresh report from Redfin, nearly 20% of San Francisco home sellers took a loss during the three months ending on Feb. 29. That's more than quadruple the national average of 4.3%!
How bad is the damage? SF homeowners who sold at a loss took an average hit of $155,000 – a far cry from the nationwide median loss of $39,912.
So, what's behind this real estate rollercoaster? Many SF sellers bought their homes during the pandemic peak, when prices were soaring higher than the Golden Gate Bridge. The median sale price topped out at a jaw-dropping $1.66 million in April 2022, but has since plummeted 15% to $1.41 million.
As Redfin puts it, "The typical person who bought in San Francisco at nearly any point in 2021 or 2022, when the housing market was red hot due to ultra-low mortgage rates, would have taken a loss if they sold during the first few months of the year."
The Bay Area remains the most expensive real estate market in the U.S. – so while the short-term outlook may be stormy, the long-term potential is still as bright as a California sunset. Corny, I know.
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Dave Ramsey's Crystal Ball: "Prices Will Go Up" as Blackstone Bets Big
Dave Ramsey is doubling down on his bullish housing market predictions, even as the Fed continues its interest rate hikes.
Ramsey's logic is simple: with a persistent supply shortage, "when there is a shortage of an item ... prices go up." He warns against waiting for prices to drop, stating confidently, "Prices will go up ... I promise you, you can look up this five years from now and you're going to go 'God, that old fart was right again.'"
The demand is there, too. Bank of America's 2023 Homebuyer Insights Report reveals that 56% of Gen Z and millennials who aspire to own a home plan to buy within the next two years.
And it's not just individuals looking to invest. Blackstone Inc. recently announced a massive $10 billion acquisition of AIR Communities, their largest-ever multifamily market buy. The firm believes that a slowdown in construction will limit apartment supply, making it a smart investment.
In fact, Wall Street's appetite for rental units is growing. MetLife Investment Management predicts that by 2030, institutional investors may control 40% of American single-family rental homes.
For prospective homebuyers worried about high interest rates, Ramsey advises, "Marry the house, date the rate." By purchasing now, homeowners can build equity and potentially benefit from price appreciation, rather than continuously paying rent to landlords like Blackstone.
However, renters can find some solace in the fact that it's currently cheaper to rent than buy a home in all of America's 50 biggest metro areas, according to Realtor.com.
As always, stay informed, diversify your portfolio, and be prepared to adapt your strategy in this dynamic real estate landscape. The long-term outlook remains promising for savvy investors who can navigate the short-term challenges.
(source)
💰 Deal of the Day!
Price: $849,000
Address: 12307 Tower Peak Ct, Groveland, CA 95321
With its stunning mountain and lake views, spacious layout, and proximity to amenities, this beautifully remodeled Pine Mountain Lake property is the perfect getaway for large families or groups seeking relaxation and adventure in the Yosemite area.
Airdna data:
Estimated monthly payment: $5,766/month (if financed)
Estimated monthly revenue: $4,250/month
Cashflow excludes additional operating expenses. Always confirm local regulations, HOAs and permits before purchasing a property.
Thanks and see you tomorrow!
✍️ Brett