What the market looks like for 2015:
The market continues to slow and it looks like sales volume
keeps dropping. Sales volume collapsed by 6.1% in November as reported by the
NAR. We are playing a game of chicken
with Sellers not lowering prices and buyers not raising bids. Sellers are not taking to kindly to this high
stakes game and have begun to pull houses from the market or waiting to list them. Spring should be very interesting, as we will
see Sellers decide to start to list homes or else wait another year to sell.
Those that can not wait will be forced to sell.
New home permits continue to be dismal in historical
terms. Builders need to step into the
market but they are still feeling the sting of the 2008 great depression. At
this point builders are only taking on projects one phase at a time. The one bright spot is apartment
construction, which was very steady in 2014.
Investor competition continues to drop in the SFR market as
cash purchases dropped to 25%. Overall
it looks like Institutional Investors have been signaled to exit the
market. This will leave the professional
in the game and give us some breathing room.
I would be looking for Institutional Investor that bought at above
$200,000 to begin to sell since price appreciation has slowed. If inventories
in high dollar markets begin to rise dramatically then this may be the reason
and should help buyers.
OIL SHOCK:
The one wild card in the real estate game is Oil. Nobody predicted that Oil would stay this low
for so long. This will impact every
market in the world and has created debt detonator that will force
liquidity. Those entities that have poor
balance sheets will be forced to sell. I do see the OIL SHOCK reaching into the
real estate market since so many banks and institutional investors have real
estate assets. Banks are a little more
protected with the passage of the last Government spending bill that protects
derivative losses ( search; Jamie Dimon himself called to urge support for the
derivatives rule in the spending bill) but I do feel even they will be forced
to raise capital.
In closing 2015 will be a great year for wholesalers and
Birddogs with many people needing to sell.
Much more so than 2015. As the
2008 great depression continues the economy keeps trying to gather its footing.
Each time it does something always comes up to knock it down. In Real Estate
terms 2015 should be a much better year for property investors with interests
rates so low and so many new opportunities to find deals.
Good Luck and happy hunting.
Daniel Valle.
The Capital Mercantile Exchange.
dv@capital-mercantile.com
