September 30, 2021 Eviction Moratorium Ends!

 When I read about the "bubble", the over pricing of real estate and "pandemic fears", I am reminded of an old Wall Street saying: "The Market Climbs a Wall of Worry".

One thing for certain real estate is far different than the stock market.  No mater when or where, crisis or prosperity value can always be found in real estate.  It is just a matter of learning where to look.  

The legislative end of the Eviction Moratorium will bring property on the market.  OPPORTUNITY! How many homes?  I can't tell you that.  I do know that there are certain statistics that are a telling indicator.

There are approximately 1.7 million home is "Forbearance".  That means 1.7 million home owners have decided they will not pay their mortgage for one reason or another.  That number of 1.7 million is down from over 7 million during the peak of the Pandemic.  Of those 1.7 million who have not paid their mortgage from anywheres from 18 months or less, they are  or should be in a process of negotiation with their lender to restructure the mortgage.  Some will pay off the amount due, some will have a new mortgage with the failed payments incorporated into the new loan.  And, some will find themselves in no better situation than when the pandemic hit.  No job, no future and no unemployment benefits to sufficiently allow them to own a home.  To those how many of them are in the 1.7 million?  

When you begin to ponder that question consider this, there are 600,000 homes for sale in the US.  That is the inventory.  What will happen when another 100,000, 300,000, 500,000 OR 1.7 MILLION come into inventory.  Will prices continue to move up, will they stabilize or will they back off some.  

Next to consider is the rental market.  In California, Policy Link, an Oakland based research group states there are 753,000 families behind in their rent.  They owe a cumulative $2.8. Billion.  Landlords have been suffering.  Government funds still have not be distributed to pay the landlords.  What happens here?  Landlords sell and get rid of the rental property?  Fix and Flippers wanting introductions to sellers and allow a sale without commission, inspection and cash closes. How many come on the market from the Flippers?  Flippers are not long term holders.  They MUST sell!  If they don't the bank takes over and sells the property.

The next phase of potential inventory comes from the Pandemic.  Home owners are fearful of who comes into their home and if the potential buyer is vaccinated and or will they leave the virus in their home.  They are going to iBuyers.  Institutional buyers who will pay all cash no commission and no inspections to "Fix and Flip".  Now we have another source of inventory that are in hands who are not willing to hold and wait.  You and I can look at the soft market and say.  Oh I will hold off, I lived here for 30 years, what is another year or so.  The iBuyer cannot wait.  The Fix and Flipper cannot wait.  They sell to a point they break even.  At least they don't lose money.

BUBBLE WATCH!

I love this phrase and love the commentary around it.  It is the Climbing a Wall of Worry from the stock market.      DOES CALIFORNIA REALLY HAVE A BUBBLE?  Or is it Chicken Little yelling the Sky is Falling?

Jonathan Lansner of the Southern California News Group wrote an interesting and rather enlightening article on the BUBBLE.  He used Goggle Trends to help him analyze data of some 39 states.  The balance where unavailable.

California had the 6th largest "housing bubble".  In the past 12 months. Statewide gain of 20.2% over 12 months, #7 among 39 states from a 6% annual average from 2016-2020.  Now consider the Top Bubbles

District of Columbia is #1.  15.7% gain vs 4.3% average

Idaho #2 with 37.1% gain vs. 11.6% average

Washington #3 with 21.9% gain vs 9.2% average

Oregon #4 with 20.4% vs 6.5% average

Arizona #5 with 23.9% vs 8.1% average

Those are West Coast states

Kansas 16.3% vs 5.2% average

Iowa 11.5% vs 4.1% average

Missouri 16.6% vs 6.1% average

Louisiana 16.6% vs 3.1% average

Pennsylvania 16.4% vs 4.9% average

So are we, you, I and our neighbors and friends going from one over priced situation to another?

Don't let fear and greed dictate common sense.  Sure you or I cannot buy my house for what we paid for it.  That has gone on for generations!

Real Estate is an opportunistic market place.  It is based upon personal needs.  Sure our medical costs are high.  But the service is far better than a town in Kansas or Idaho.   Weather here is alright, far better than the 110 in Phoenix, or the storms of Gulf Coast and Florida.  Yes we are a liberal state, but would you want that or live in Texas where guns are worn and mothers have no choice over their bodies.  

Now let's get back to buying and selling real estate and investing in real estate in California and looking for value building and opportunities.  The grass is always greener on the other side.....until we get there.