It looks like the crazy, soaring, pandemic real estate market is beginning to tip and head down, in some areas. Home prices are DOWN in 10 U.S. cities last month. For real. One of them is the major San Francisco Bay Area city, and part of Silicon Valley, San Jose, CA. Watch the video for more details. Reventure Consulting is another YouTube content creator I found recently and like for his good, solid information.
Usually when the country heads into a recession, we see a big drop in the stock markets lead the way down, followed by the real estate markets a few months later. The we slog through months or years to get going again. But the pandemic hitting last year changed the game. The sudden business shutdown wound up leading to about $4-6 trillion in Federal Reserve created "helicopter money," most of that going quickly into the banking system, Wall Street, and Big Business. But then some "helicopter money" got thrown at us everyday people as well, since tens of millions were out of work, or affected in other ways.
In addition, the usually hot spring/summer real estate market got shut down in 2020, leading to the FOMO effect in the late summer and fall, and on into 2021. The lower than normal supply of houses available added to the effect, along with strong buying in some areas by the new tech company "ibuyers," like Zillow, Opendoor, as well as buying by Wall Street investment banks, who couldn't find enough other things to invest in. So, as you probably know, things have been INSANE in real estate, instead of the usual recession style crash in prices and values.
But prices can't go up forever, even though right before every crash, most people seem to think they can. According to the newest Zillow data, explained well in the video above, some cities seem to have reached the tipping point, and selling prices and home values are headed down. San Jose and Santa Cruz, California, have the biggest drops, -1.2% and 1-1%, respectively, month over month. Other cities with falling prices include Madison, Wisconsin, Flint and Ann Arbor, Michigan, Atlantic City, New Jersey, and Manchester, New Hampshire, among others.
Perhaps more interesting, for people watching the national real estate scene, some of the hottest real estate markets in the last few months appear to be cooling down. My one time home town (high school era) of Boise, Idaho, had prices rise only 1/10th of a percent in September. Austin, Texas, as well as Salt Lake City and Provo, Utah, were all just barely up in prices, .1 or .2% each. They all seem to have gone from hot seller's markets, to near the tipping point of a buyer's market. In another obscure video I found, in late September, nearly 18% of sellers with houses listed in Boise had reduced their asking prices, another sign the market is peaking, and about to reverse there.
Down in The South, Florida in particular, prices are rising still, and the markets are still really hot.
What about here in Southern California? It's still a strong seller's market in most counties, and a moderate seller's market in others, according to the most recent data. It looks like things are slowing some in SoCal, and, personally, I believe we will we the markets here peak and turn, and prices begin to drop, in 4 to 6 months. So for all those experienced investors in this area, waiting for the inevitably drop in values and prices, it looks now like early to mid 2022 (February- April?) will be the time to start looking for really good deals at much more realistic prices.
That's my take on where national real estate markets are right now, from watching this video, and several others, of people who are watching the markets intensely. Will Zillow, Opendoor, and even investment banks jump back in to buy a lot of properties as prices drop? That's another open question right now, one that will affect smaller investors. Time will tell.
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