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How will the US real estate market react to market declines?

How will the U.S. real estate market respond to market declines?

How will the US real estate market react to market declines?

 

How do you think the US real estate market will react to market declines? Will it cool down or rather attract investors from the capital market?

Link to the original post on the United States Real Estate Forum on Facebook - Works on a desktop computer:
http://bit.ly/2CZY8Rc

The original responses to the post can be read at the bottom of the current post page on the site or in the link to a post on Facebook and of course you are invited to join the discussion

  • following
  • Hi Amir. Great question. I would also love to hear the opinions of forum members. Thank you for being here and for sharing ???
  • Will attract investors from the capital market
    Once the markets are declining investors are looking for other avenues including real estate, which will spend the money from the capital market to the lender will cause further decline
  • This is not the same bubble as in 2008. The real estate market today is much more winking and transmits much more stability to American investors and it seems that even if the primary markets (New York, LA, Miami) hit all other markets will rise relatively gradually but remain stable
  • Precisely after the crisis of 2008, it was very difficult to buy real estate at one-fifth of the price before the crisis, and in connection with this question, a lot depends on the interest rate. If the interest rate continues to rise, it will not be so attractive to buy real estate
  • The real estate market is still very strong. There is a slowdown but big and strong players are now in the American market. I believe that within two years there will again be a particularly sharp rise in the country's coast
  • Excellent answers ??? Thank you ???
  • Here are my views from two directions:
    1. The general - these are declines that pretty much clear the situation..and that's fine..decreases of a few days do not affect anything.
    If there were increases they would not ask it.2. Because of financial planning -
    Investment in the real estate market constitutes a diversion of risks compared to the stock market because of the correlation between the markets.
    This does not mean that there is a direct effect but rather low and not high.
    (You can always say that if there are declines over time, people have less money saving and less bonuses and therefore will buy less) .. But real estate is a balancing weight in the portfolio

    So a period of several declines should not affect ..

  • Copies an answer to a similar question I gave here a few weeks ago, of course before the stock market crashes -
    In my opinion, there is no doubt that rising interest rates oppress investors and cause the market to cool, as well as geopolitical factors such as the US-China trade crisis and rising tariffs are moderating the economy, but on the other hand average US unemployment has fallen to 3.7, the lowest level since 1969 Which indicates a strong economy and in many areas a slowdown in home sales is caused due to lack of inventory or overpriced real estate prices and not necessarily due to lack of demand which is a very significant difference between the situation today and the situation at the beginning of the crisis of 2008 where there was a surplus of millions of homes. Of millions of homes although this too is starting to change and more inventory is entering the market. There will no doubt be a crisis because the market is cyclical but I do not expect a catastrophic crisis like in 2008 but a slowdown in the market - it is important to remember that the US market consists of hundreds of sub-markets that did not behave as one piece, for example Manhattan Washington and Texas (due to massive immigration from expensive California) Which did not go down significantly in the crisis and in some areas even went up so what I expect will be that in the next year and a half there will be realization in areas where there is over-demand from investors such as Jacksonville, which are already being started by investors who move their money to areas not yet recovered. We are seeing a massive increase in demand in areas such as Detroit and Greece that investors have avoided approaching but in a situation of rising interest rates, high asset prices and low returns investors have no choice but to look for alternatives especially when stock markets are at an all-time high The regional economy during an economic crisis, for example areas where huge companies such as Amazon, Apple, etc. are establishing new centers and will cause positive migration, the creation of tens of thousands of new jobs, etc. Who encourages physical investment in infrastructure and renewal and at the same time prepares to deal with such a crisis, as Connecticut in an article I published or beyond our borders - Australia, where there was no crisis for about 20 years because the government has a special budget for crises that provide residents with a steady income. "Resources even when the economy is declining and keeping interest rates low to encourage business and investment lending, or Washington where government institutions are not experiencing a slowdown in times of crisis because employment in these institutions is not affected by market forces as we saw with Detroit's auto industry." B. tries to cool the economy with a series of interest rate hikes to lower the rate of inflation but Trump opposes the move because it leads to a slowdown in the economy. Another move many investors are making now is moving from properties that are more vulnerable to crises to more economically resilient properties - properties with higher and stronger yields such as multi-family independent rentals, moving from areas D to C and above, and smaller apartments in greater demand in times of crisis. Also experienced investors realize the equity in their assets and spread them over a larger number of assets with no direct correlation to their existing assets or simply holding cash that in a crisis is also a proper position, because when the market goes down the equity disappears. I would love to hear your opinion on the state of the market and of course the wisdom of the masses in the forum.

 

  • Because interest rates in my opinion prices will fall and there will be an aggressive sale. Of course it will take time and sometimes when we live in it is hard to see
  • First of all it is important to understand that the American market is not one but about 300 sub-markets. Dean Dallas is not like Philly or New York - everyone will behave differently.
    In addition, the residential real estate market in the US is dictated by homeowners rather than investors or funds.
    As of December 2017, there has been a decline in mortgage applications driven by homeowners.
    Think about the mood of someone who wants to buy a house: For about two years now + he has seen his purchasing power erode as a result of price increases + interest rate increases. He could no longer buy the house he wanted but had to settle for less or wait.
    Stock market investors are not interested in touching real estate (some say “hate”) directly (at direct cost) but only through funds. While there are many stock market investors who are just looking for where to move the money.
    Because of the interest rate, which in my opinion is still low but for many looks high compared to a year ago, and because real estate prices are still high relative to the NIS in my opinion many will not enter real estate in the coming year but wait to see how the market behaves -> which can create a great opportunity for players Long-term.

Responses

  1. First of all it is important to understand that the American market is not one but about 300 sub-markets. Dean Dallas is not like Philly or New York - everyone will behave differently.
    In addition, the residential real estate market in the US is dictated by homeowners rather than investors or funds.
    As of December 2017, there has been a decline in mortgage applications driven by homeowners.
    Think about the mood of someone who wants to buy a house: For about two years now + he has seen his purchasing power erode as a result of price increases + interest rate increases. He could no longer buy the house he wanted but had to settle for less or wait.
    Stock market investors are not interested in touching real estate (some say “hate”) directly (at direct cost) but only through funds. While there are many stock market investors who are just looking for where to move the money.
    Because of the interest rate, which in my opinion is still low but for many looks high compared to a year ago, and because real estate prices are still high relative to the NIS in my opinion many will not enter real estate in the coming year but wait to see how the market behaves -> which can create a great opportunity for players Long-term.

  2. Copies an answer to a similar question I gave here a few weeks ago, of course before the stock market crashes - in my opinion there is no doubt that rising interest rates oppress investors and cause the market to cool, as well as geopolitical factors such as the US-China trade crisis and rising tariffs The US average has dropped to 3.7, which is the lowest level since 1969 indicating a strong economy and in many areas a slowdown in home sales is caused by a lack of inventory or overpriced real estate prices and not necessarily due to lack of demand which is a very significant difference between today and the situation. Which was at the beginning of the 2008 crisis where there was a surplus of supply of millions of homes and now we are in the deficit of millions of homes even though that too is starting to change and more inventory is entering the market. There will no doubt be a crisis because the market is cyclical but I do not expect a catastrophic crisis like in 2008 but a slowdown in the market - it is important to remember that the US market consists of hundreds of sub-markets that did not behave as one piece, for example Manhattan Washington and Texas (due to massive immigration from expensive California) Which did not go down significantly in the crisis and in some areas even went up so what I expect will be that in the next year and a half there will be realization in areas where there is excess demand from investors such as Jacksonville. We are seeing a massive increase in demand in areas such as Detroit and Greece that investors have avoided approaching but in a situation of rising interest rates, high asset prices and low returns investors have no choice but to look for alternatives especially when stock markets are at an all-time high and before realizations The regional economy during an economic crisis, for example areas where huge companies such as Amazon, Apple, etc. are establishing new centers and will cause positive migration, creating tens of thousands of new jobs, etc. Who encourages physical investment in infrastructure and renewal and at the same time prepares to deal with such a crisis, as Connecticut in an article I published or beyond our borders - Australia, where there was no crisis for about 20 years because the government has a special crisis days "Resources even when the economy is declining and keeping interest rates low to encourage business and investment lending, or Washington where government institutions are not experiencing a slowdown in a crisis because employment in these institutions is not affected by market forces as we saw with Detroit's auto industry." B. tries to cool the economy with a series of interest rate hikes to lower the rate of inflation but Trump opposes the move because it leads to a slowdown in the economy. Another move many investors are making now is moving from properties that are more prone to crisis to more shock-resistant properties - properties with higher and stronger returns such as single-family multi-family, moving from areas D to C and above, and smaller apartments in greater demand in times of crisis. Also experienced investors realize the equity in their assets and spread them over a larger number of assets with no direct correlation to their existing assets or simply holding cash that in times of crisis is also a proper position, because when the market goes down equity disappears. I would love to hear your opinion on the state of the market and of course the wisdom of the masses in the forum.

  3. Here are my views from two directions:
    1. The general - these are declines that pretty much clear the situation..and that's fine..decreases of a few days do not affect anything.
    If there were ups they would not ask that.

    2. Because of financial planning -
    Investment in the real estate market constitutes a diversion of risks compared to the stock market because of the correlation between the markets.
    This does not mean that there is a direct effect but rather low and not high.
    (You can always say that if there are declines over time, people have less money saving and less bonuses and therefore will buy less) .. But real estate is a balancing weight in the portfolio

    So a period of several declines should not affect ..

Responses

  1. First of all it is important to understand that the American market is not one but about 300 sub-markets. Dean Dallas is not like Philly or New York - everyone will behave differently.
    In addition, the residential real estate market in the US is dictated by homeowners rather than investors or funds.
    As of December 2017, there has been a decline in mortgage applications driven by homeowners.
    Think about the mood of someone who wants to buy a house: For about two years now + he has seen his purchasing power erode as a result of price increases + interest rate increases. He could no longer buy the house he wanted but had to settle for less or wait.
    Stock market investors are not interested in touching real estate (some say “hate”) directly (at direct cost) but only through funds. While there are many stock market investors who are just looking for where to move the money.
    Because of the interest rate, which in my opinion is still low but for many looks high compared to a year ago, and because real estate prices are still high relative to the NIS in my opinion many will not enter real estate in the coming year but wait to see how the market behaves -> which can create a great opportunity for players Long-term.

  2. Copies an answer to a similar question I gave here a few weeks ago, of course before the stock market crashes - in my opinion there is no doubt that rising interest rates oppress investors and cause the market to cool, as well as geopolitical factors such as the US-China trade crisis and rising tariffs The US average has dropped to 3.7, which is the lowest level since 1969 indicating a strong economy and in many areas a slowdown in home sales is caused by a lack of inventory or overpriced real estate prices and not necessarily due to lack of demand which is a very significant difference between today and the situation. Which was at the beginning of the 2008 crisis where there was a surplus of supply of millions of homes and now we are in the deficit of millions of homes even though that too is starting to change and more inventory is entering the market. There will no doubt be a crisis because the market is cyclical but I do not expect a catastrophic crisis like in 2008 but a slowdown in the market - it is important to remember that the US market consists of hundreds of sub-markets that did not behave as one piece, for example Manhattan Washington and Texas (due to massive immigration from expensive California) Which did not go down significantly in the crisis and in some areas even went up so what I expect will be that in the next year and a half there will be realization in areas where there is excess demand from investors such as Jacksonville. We are seeing a massive increase in demand in areas such as Detroit and Greece that investors have avoided approaching but in a situation of rising interest rates, high asset prices and low returns investors have no choice but to look for alternatives especially when stock markets are at an all-time high and before realizations The regional economy during an economic crisis, for example areas where huge companies such as Amazon, Apple, etc. are establishing new centers and will cause positive migration, creating tens of thousands of new jobs, etc. Who encourages physical investment in infrastructure and renewal and at the same time prepares to deal with such a crisis, as Connecticut in an article I published or beyond our borders - Australia, where there was no crisis for about 20 years because the government has a special crisis days "Resources even when the economy is declining and keeping interest rates low to encourage business and investment lending, or Washington where government institutions are not experiencing a slowdown in a crisis because employment in these institutions is not affected by market forces as we saw with Detroit's auto industry." B. tries to cool the economy with a series of interest rate hikes to lower the rate of inflation but Trump opposes the move because it leads to a slowdown in the economy. Another move many investors are making now is moving from properties that are more prone to crisis to more shock-resistant properties - properties with higher and stronger returns such as single-family multi-family, moving from areas D to C and above, and smaller apartments in greater demand in times of crisis. Also experienced investors realize the equity in their assets and spread them over a larger number of assets with no direct correlation to their existing assets or simply holding cash that in times of crisis is also a proper position, because when the market goes down equity disappears. I would love to hear your opinion on the state of the market and of course the wisdom of the masses in the forum.

  3. Here are my views from two directions:
    1. The general - these are declines that pretty much clear the situation..and that's fine..decreases of a few days do not affect anything.
    If there were ups they would not ask that.

    2. Because of financial planning -
    Investment in the real estate market constitutes a diversion of risks compared to the stock market because of the correlation between the markets.
    This does not mean that there is a direct effect but rather low and not high.
    (You can always say that if there are declines over time, people have less money saving and less bonuses and therefore will buy less) .. But real estate is a balancing weight in the portfolio

    So a period of several declines should not affect ..

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