I'm along the same line of thinking. It seems that it will get worse before it gets better. The tone of the real estate market has certainly changed.

my guess is we'll see a correction into the Dow mid to high 29's and everything adjusts across the board equilaterally, re: RE, Stock, business etc...

We are slammed at work, but it ain't gonna last for ever.

Real estate is Bat Sh!t crazy in the Bay Area, its 65% (just my house) of my gross worth. Its only a "found" asset if I decide to do anything with it. I'm not taking any equities out to invest in any other real estate at this time....

It'll adjust, just try to keep everyone aware to keep their overhead minimal....

Sitting by waiting for the storm to pass for the most part. I'm taking bites here and there though when it makes sense and brings my cost average down. My 401k's I haven't slowed down on once bit since those are on autopilot. Fun times!

Let's hope you're right, the big reports this week could help slingshot us back in the right direction, or...

Still just treading water here as well. I took about a 10% dip off my highs but it's come back a couple points in the last week or so.

My main shocker was Target about a month ago but I still believe in them and haven't sold any.

Meanwhile the divvies keep rolling in and reinvesting dollar cost averaging the rest of my shares down.

Investing 101
 

Like Glassman says the Bay Area housing is crazy
It cooled slightly but I had two neighbors catch the wave
One sold for $900k over asking the other saw it and sold his
the next week for $600k over asking. I thought the Zoom kid
next door paid too much 1 1/2 years ago.. he almost doubled in
that time.... but those prices were at the top in fantasy land
out here. I bought 20 years ago so the tax man would kill me
if I left and where would I go?

Bob

Oh, I'm down waaaay more than 10%. If that's all you're down, Lance, great job! I'm still just sitting by waiting for times to dip in when it's good. I'm still concerned we haven't seen the bottom. I'll keep dripping until then though.

Housing prices are down 3.1% in Vegas from June to July. That's one of the biggest in history including the great recession. And it's probably just getting started.

I'm surprised there hasn't been an implosion in commercial real estate markets yet. Maybe there has but it just hasn't hit the news or bank earnings yet?

I imagine mortgage rates doubling will have that effect. According to Redfin, vegas housing prices were up 22.5% in June compared to last year......and approximately 50% since June of 2019.

Even with the recent drop the SP500 is still up ~195% over the past ten years.

Investing 101
 

I get a commercial real estate news letter every day
Again Silicon Valley. Some are rethinking and subleasing their
office space but it is amazing how many of the big investors
are buying things at big money like tomorrow is going to be
a lot better.... some guys that bought a bldg at lets say $80 mil
are making $40 to $60 mil more than they bought it two years back

We also have Google, Facebook, Apple etc buying all sorts of property
My office building is across the freeway from Google and many of
the other owners on my street have sold out to Google many years back and renting back.

I do a lot of Lab renovations as a contractor and their vacancy is still
very low as the labs still need to be there so they can do their work
South SF is the so called Bio Tech Capitol of the world and has grown
so much in the last 5-10 years.. Many are moving south or north because
the rents for them there are getting so high

Hard to figure things out.. maybe Google will make an offer we can't
refuse on our bldg... until then we keep plugging away

Bob

That sounds about right. Some depreciation is a good thing long term. Affordability has gotten out of control. The rent vs. ownership ratio is too far out of whack with the hike in interest rates. It will all sift out. This isn't Silicon Valley.

With that said, it's by far the most rapid shift in the market I've witnessed in 22 years in the real estate business in Vegas. It's like a light switch. Sales were down 40% from just one year ago. Inventory has tripled in months. While 2021 is not a fair bar to measure by long term, it's the weakest July since at least the great recession. Frankly, I'm surprised the market endured as long as it did.

As always, if you are in it for the long haul, it probably doesn't matter.

Homes are still selling over asking and buyers are making offers the first day on the market here, very competitive but Zillow seems to think prices are waning based on what I see for our home anyway.

Commercial Real Estate is another situation. My wife just renewed her retail lease for a minimal increase vs 2 years ago after some negotiation and there are so many huge office spaces that are vacant, just an endless stream of 'Available' signs driving around. Retail seems to be holding up much better than office space around here.

It appears the more laid back markets in the mid-west are far stronger than say Vegas, Phoenix, Boise, etc... Our prices shot up over 45% since the pandemic. When interest rates nearly doubled, affordability went to crap. In fact, the average monthly payment in the valley shot up $750 per month over night. That's a tough pill to swallow for an average buyer. I've witnessed a median priced property where the rents were $600 less per month than ownership with a minimum down payment. My research showed that our only chance was to sell to an instiitutional investor. We had virtually NO showings/interest on a median priced house in regards to a primary residence buyer. After aggressive price cuts, we did secure an institutional investor that will lease it. Many Vegas neighborhoods are dominated by hedge fund type investors.

One the high end, the absortion rate is very low. People are just throwing in the towel and withdrawing their listings. Conditioning is a factor. It's a completely different market almost overnight. That means it will take far more patience and aggressive strategies. It will take agents and sellers some time to adapt.

As a local in the know, do you think the constant national level news of water issues, lake mead, etc., are impacting the vegas & area (maybe all SW?) markets, especially relocations?

I think it's starting to have an effect. Our population shrunk last year by about 2%. That's the first time we've lost population in 50 years I believe. I plan to leave here in 18 months and it's a factor in the decision. Have I had a client leave in 22 years due to the water? Not directly. I think it's a factor now and it will become more imposing if mother nature's path continues on the track it's on currently. The lake was nearly full 22 years ago. That's not really that long ago, but the SW has grown substantially in that time. Vegas is first in line and we have a 3rd intake near the bottom of the lake. Even if the lake gets to dead pool which means the river will stop in Lake Mead, supposedly we'll still have water. We only take about 5-10% as it is. I sincerely hope mother nature changes her tune and it never gets that severe as it will devastate the SW. Especially AZ, CA, and Mexico. There needs to be stricter measures in my opinion. Outlaw grass and pools at least for a while. The pool contractors here are so busy you wouldn't believe it. Imagine the amount of water it takes to fill a pool and replace evaporation. Grass needs to be watered 15 minutes a day, 7 days a week to have a chance to keep it alive in the hot months. There are so many things that can be done, but I don't think it will change until it gets really bad. That's seems to be the human way. I don't plan to stick around to see how it plays out.

Where are you planning to go, if you don't mind me asking, Todd?

I've have to agree with you about the pools and grass. You're literally in a desert. It's amazing to me the number of pools people have in Florida. Florida has sink hole issues in certain parts specifically because they've been dropping the water table so much.

God willing, Spearfish South Dakota. We've loved it for almost 20 years. It's a thriving ecosystem with great people and a small town feel, but with reasonable convenience. The Black Hills is really a paradise. Ponderosa pines, prairies, streams, lakes, trails, and low humidity due to the elevation. Clearly they have some serious weather with snow and hail, etc, but we're ready for the seasons. All this sun is getting old. LOL I'm hoping for 5+ acres and a large detached shop.

I’ve read a couple of times that Duluth Minnesota is the place to head to escape climate change, assuming you believe in it, but damn that is a cold place in the winter.

Don

Sounds lovely, Todd. I haven't been to S Dakota but hope to some day. Best of luck on getting there and dealing with the winters.

Don, I was in Grand Rapids, MN three years ago during January or February. I was testing a new installation. It was -30*F so we were able to do cold start testing by just leaving the machine outside overnight, lol. It's a dry cold but everything is covered in ice and snow for months.

I just went through Duluth on my way to the Boundary Waters for a Scout canoe trip for a week. No disrespect tot he hearty soles who live there, but I would rather deal with any climate change coming than live there in the Winter. I'd bet they would enjoy a bit of global warming that time of year.

On the green topic, it will be interesting to see how the new bill that just passed the Senate impacts large company profits, the market, inflation and the US economy. I have only heard what is in the news which I'm sure is largely biased both ways depending on who the source is. I'm not optimistic but time will tell.

Investing 101
 

Funny I was born in Grand Rapids Min... We left Minnesota
when I was 3... been in Silcon valley almost all my life
Don't think I can survive any other weather as we are spoiled
here... I used to ride my dirt bike where they built the Apple
Spaceship...it was just one orchard away from my house

Bob

crap, crap, crap. It's all crap, lol. This may be a ways from being over. Hope everyone is holding on.

Opporunity, opportunity, opportunity, all I see is opportunity. LOL

Seriously, I do think there will be some serious pain and a storm to weather, but it had to happen. Things were out of control. With change comes opportunity if we are open to seeking it.

Not ready to jump in yet, I'd guess we still have more downside but it depends. When the fed signals they are about done with rate hikes and / or we are close to the mid-term elections I'll start looking again. Of course world events could certainly change that - Ukraine and China / Taiwan could spoil things.

Yep, ready to deploy cash sitting on the sidelines when I think the "sale" has peaked. As of now, the S&P at 3300 is my planned entry point.

Not trying to time the market, my gut just tells me we still have a ways to go down before we go up.

Daniel

You're both correct. It is a great buying opportunity. I too am waiting for it to settle a little before I start buying again. These last couple weeks have just been very heavy drops for me. Glad I'm not close to retirement age.

I’ve been buying in August and September, even though we have all the unknowns listed above. I’m not trying to catch the absolute bottom, as it’s a fools errand. Still hanging onto some cash, but picking up shares on down days. With no commission fees, I don’t see any reason not to…

Phoenix must be the outlier... It's crazy here, inflation is nuts, cost of living rising like crazy yet people just keep moving here. The last 3 houses that sold in our neighborhood sold to friends or family of neighbors with no realtors involved for still very large numbers. I do see some realtor signs stay up longer than before but it seems if it's a desirable place in decent shape, it sells pretty quickly.

We are still just treading water, holding our cards tight and collecting divvies. I thank Greg Weld regularly for getting me into this type of investing and also wonder regularly what he would be thinking and doing during these crazy non-sensical times.

Definitely strange times. Holding div stocks feels safer than ever right now. If Greg got you into stable long plays, sounds like he had solid foresight. Have you ever looked at Reg A+ offerings? They let companies raise up to $75M without a full SEC registration, crazy useful for startups and growth investments. Great explainer here: https://federal-lawyer.com/securitie...yer/ppm/reg-a/