Author Topic: Impact on residential real estate  (Read 2229 times)

tede02

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Impact on residential real estate
« on: March 22, 2020, 07:15:28 PM »
On Wednesday morning last week, I woke up with an elavated heart rate. The coming economic blow of what's underway seemed to have hit me. I'm in the middle of real estate transaction. Buying a higher priced home for the area I live in (exurbs of Minneapolis). I told my wife, we need to get our house listed ASAP before the waves of unemployment hit. The last thing I want is to be stuck with our home, or have to sell with prices sliding.

Our current home is considered affordable for the area (<$400k). I knew we had fundamental factors in our favor from the standpoint of extremely tight supply like the rest of the country. Low interest rates also helps. But I was deeply worried that the economic uncertainty may have already majorly damaged demand. I wasn't planning on listing until mid April but we scrambled to list last Friday. Despite my worries, the house sold in a little more than 24 hours for full asking price. Only give was closing costs. We would have had multiple offers if we waited but the offer we received appears extremely solid and likely to close. Long story short, demand for so-called "affordable housing" remains extremely strong at least in this area. It kind of amazes me how commerce persists despite major uncertainties.


arcube

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Re: Impact on residential real estate
« Reply #1 on: March 22, 2020, 07:54:15 PM »
On Wednesday morning last week, I woke up with an elavated heart rate. The coming economic blow of what's underway seemed to have hit me. I'm in the middle of real estate transaction. Buying a higher priced home for the area I live in (exurbs of Minneapolis). I told my wife, we need to get our house listed ASAP before the waves of unemployment hit. The last thing I want is to be stuck with our home, or have to sell with prices sliding.

Our current home is considered affordable for the area (<$400k). I knew we had fundamental factors in our favor from the standpoint of extremely tight supply like the rest of the country. Low interest rates also helps. But I was deeply worried that the economic uncertainty may have already majorly damaged demand. I wasn't planning on listing until mid April but we scrambled to list last Friday. Despite my worries, the house sold in a little more than 24 hours for full asking price. Only give was closing costs. We would have had multiple offers if we waited but the offer we received appears extremely solid and likely to close. Long story short, demand for so-called "affordable housing" remains extremely strong at least in this area. It kind of amazes me how commerce persists despite major uncertainties.

Thanks for sharing but I think you got lucky. The real estate market will be hit pretty bad soon. Did you close or are in escrow?

tede02

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Re: Impact on residential real estate
« Reply #2 on: March 22, 2020, 07:59:06 PM »
I'm not out of the woods yet. Closing is in 30 days. But it's a non-contingent offer and buyer has already been underwritten for a conventional loan. Also, the buyer is a city employee so I'm guessing his paycheck is going to keep coming. Not sure what his wife does. I won't be one-bit surprised if larger events, like a nation-wide shut-down, delay the closing. At this point, the delay would actually help me because I need to find temporary housing for about 30 days before closing on my new place in late May.

arcube

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Re: Impact on residential real estate
« Reply #3 on: March 22, 2020, 08:11:40 PM »
I'm not out of the woods yet. Closing is in 30 days. But it's a non-contingent offer and buyer has already been underwritten for a conventional loan. Also, the buyer is a city employee so I'm guessing his paycheck is going to keep coming. Not sure what his wife does. I won't be one-bit surprised if larger events, like a nation-wide shut-down, delay the closing. At this point, the delay would actually help me because I need to find temporary housing for about 30 days before closing on my new place in late May.

All the best.

jhcap

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Re: Impact on residential real estate
« Reply #4 on: March 22, 2020, 09:19:10 PM »
I am very worried about the impact to both long and short term rental real estate. I own both long term residential properties and short term vacation rentals in a ski resort town. All ski resorts have closed and all Spring break bookings have canceled. Historically there has been a shortage of rentals in my town, but with the hit to travel and hospitality thing could change drastically. So far Summer rentals have not canceled, but if they did it would be a big financial blow. Also, our town and rental market is highly dependent on H1B Visa workers. If they can't travel to the USA or if the jobs for them are not available it will be terrible for the local economy. I made it through GFC, hoping I can weather this storm too.

Cigarbutt

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Re: Impact on residential real estate
« Reply #5 on: March 23, 2020, 04:01:44 AM »
I am very worried about the impact to both long and short term rental real estate. I own both long term residential properties and short term vacation rentals in a ski resort town. All ski resorts have closed and all Spring break bookings have canceled. Historically there has been a shortage of rentals in my town, but with the hit to travel and hospitality thing could change drastically. So far Summer rentals have not canceled, but if they did it would be a big financial blow. Also, our town and rental market is highly dependent on H1B Visa workers. If they can't travel to the USA or if the jobs for them are not available it will be terrible for the local economy. I made it through GFC, hoping I can weather this storm too.
That's interesting.
Please, if you are inclined to do so, provide periodic follow-up, especially when you'll feel that your concerns are taking the corner.

Spekulatius

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Re: Impact on residential real estate
« Reply #6 on: March 23, 2020, 04:15:02 PM »
Be careful with first time home buyers. A lot of them get cold feet. In this environment, I couldn’t really blame anyone.
Life is too short for cheap beer and wine.

jhcap

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Re: Impact on residential real estate
« Reply #7 on: May 13, 2020, 10:02:17 AM »
I am very worried about the impact to both long and short term rental real estate. I own both long term residential properties and short term vacation rentals in a ski resort town. All ski resorts have closed and all Spring break bookings have canceled. Historically there has been a shortage of rentals in my town, but with the hit to travel and hospitality thing could change drastically. So far Summer rentals have not canceled, but if they did it would be a big financial blow. Also, our town and rental market is highly dependent on H1B Visa workers. If they can't travel to the USA or if the jobs for them are not available it will be terrible for the local economy. I made it through GFC, hoping I can weather this storm too.
That's interesting. Please, if you are inclined to do so, provide periodic follow-up, especially when you'll feel that your concerns are taking the corner.

Well it turns out that there are a lot of people fleeing the bigger cities for the mountains. I am in the process of signing a long term lease with a family from New York. It's about half as much as I would make from VRBO/Airbnb in a normal year, however it is enough to pay my mortgage and expenses. I will resume short term rentals next year when, hopefully, things have normalized.


fareastwarriors

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Re: Impact on residential real estate
« Reply #8 on: May 14, 2020, 11:02:08 AM »
As millennials flee coronavirus-ridden cities, JP Morgan teams up with American Homes 4 Rent to build large suburban rental homes

https://www.cnbc.com/2020/05/14/coronavirus-jp-morgan-american-homes-4-rent-team-up-to-build-suburban-rentals.html