I attended a course today on the state of the real estate market and here are my notes – Denise Lones always has interesting and useful take-aways.
Money flow, building permits and inventory, follow laws and developers. We can also look at what is happening in the world.
The stock market hit a high today. Why? Investors are excited for tax reform…hedging their bets.
Health care not a rich mans game, but tax cuts are.
We were in a steroid market…a false market going into 2005. Vegas crashed; people could not afford to buy.
Lately we have seen multiple offers, however, now that we are in fall it’s not as crazy. Inventory has taken a dump – it came down a couple of hundred listings. Is this the time of year?
Issues are facing us:
1. Hirst decision – the minute a person can’t build in a location due to water issues, they will look elsewhere, moving demand for land. It will not be resolved this year.
2. Cost to build new construction has gone through the roof. There is a shortage of labor. Where are all the tradespeople going to come from? People also make more money freelancing – so why work for a builder?
Everyone and their uncle want to age in place. One plumber said he is working at 3x the normal rate and dropped all his contracts with big companies. Remodeling craze. HD TV makes it look easy.
3. Californians coming here for jobs, because we have rain. In some states, water companies will pay you to take out your grass. Major corporations are buying up land with water – show called Blue Gold.
4. Aging populations – aging and then dying – leave wealth to baby boomers. The average baby boomer that gets a settlement invests in real estate instead of the stock market.
5. Storm water and wildlife issues make building more difficult.
Some investors are buying legacy condos – they buy four condos for children in certain zip codes and sit on them. They don’t rent them out because of certain laws, which will cost them more money.
Lawsuit with one condominium building – the HOA is suing a company from China because the building is 80% empty.
Watch East Everett for new construction.
Investment is about control. City of Seattle has rent control.
Look at price of a condominium in Los Angeles and San Francisco – investors aren’t going to pay. Investors don’t want Seattle anymore due to those issues. They are scared of Seattle.
It is important to attend city council meetings.
Vancouver has done a powerful thing – big developers build eight units a floor – times two million a pop. Out of that Vancouver will need ten units at X dollars or 10% of the cost – and they will buy a community for the homeless.
They have made communities (people don’t wake up in the morning and want to be homeless). They are homeless for financial, drug, or mental illness reasons.
Killing off the first time homebuyers market has impacts on the rest of the market.
A five-five market is balanced. Vancouver is a 4-5, we are 2.5-3
There are five tiers: first time buyers, move up buyers, second set of move up buyers, seniors, and investors.
The market will change in two years. People don’t want to commute. Roads and transit are forcing people to make decisions. There will be inventory changes. Much depends on laws that may or may not pass.
Stock market, what goes up, comes down. Politics, such as a decision by Mueller, comes out one way or another and it will have an effect on stock market.