Not using this as a conclusion to the current market changes - - I feel those changes have yet to truly be absorbed in the system as mortgages originating today - will probably close deals weeks/months from now. Just chiming in to report what I see in my tiny sphere of interest.
Metro Atlanta - my world is 3bed/2bath units under 350k. Could be townhome, or SFH.
The units I bought last summer for around 247 hit an apex of 335k. Sales data being reported in the 2nd half of June show units where asking was $325k-$328k-- final sale price was 335k. Still brought somewhat over asking.
Today - I see stuff that would’ve usually been under contract in 3-5 days…sometimes being sold in 20-22 days. Starting to see drops in asking prices - 5-10k. In my $335k complex - there’s 3 for sale----2 are asking $330k - yay them. ONE unit got listed for 290k - and went pending in a day. Geez - they wanted to sell quick but 40K under the other units? Boo on them. Will be interesting to see if the 330k units sell, or drop in price - - my feeling is $310-315 is around the corner.
Rehabs: I’ve never done a “flip” but I really want to start. I dunno if I’m being too conservative - -but I just think it’s murky to forecast a Retail Value - in 3 or 6 months from now as the rate increases digest - and maaaaaaaaaaybe jobs get softer. That being said…I just got rejected on my 6th offer this summer. Asking was 215k. Not the prettiest place - it was a gentrifying neighborhood of Marietta GA. I offered $220k - 5 over asking and at that I feel the profit margin would’ve been far LESS than the average rehab. Well they went with another offer. We speculate they offered the same money - BUT the agent said they waived any inspection or due diligence. The last offer - - I went 6k over asking and someone beat me by 20k.
Our theory is that if the homes weren’t too bad - sweat equity buyers bought them. In one case it seems a contractor who could do the work himself beat me out.
So, while I don’t want to see my units go down in value - I’m truly hoping to have some buying opportunities in coming months.
A handful of townhomes - under 330kish - are on market for 31-32 days right now. Unless they get lucky with a buyer soon, if there’s another rate hike, I can’t imagine how prices don’t get cut.
On my personal “what am I worth today” calculations I always penciled in a value for houses at 8% under the going rate at what might have been the apex.
“On my personal “what am I worth today” calculations I always penciled in a value for houses at 8% under the going rate at what might have been the apex.”
We have rarely lived in a place we can do this type of valuation. Even with Zillow and other sites that give a price estimate, our addresses just get a “Nothing comparable” or other “I don’t know” answer.
What I did on our last place is take the land price and added the building costs as I paid them, essentially cost basis. I just carried that as the value for our net worth calcs.
When our insurance company sent an appraiser to estimate replacement cost, I used 2/3 of that value for the house.
When we sold that place, the proceeds went into our current build. The amount rises with each draw.
The units I have a sort of cookie cutter townhomes - metro bedroom communities so on any given month there will be 1-3 transactions. For instance - last week of June and 1st week of July, 2 identical units to mine sold – I just take those prices, minus 5-8%, and pencil that value in for an idea of where I stand. Mine are end units – I feel that would command a bit more - but I don’t count that, I figure that is more cushion OR a nice gratuity at the end
Right now it is our 14th largest position, down 20%.
We have owned it a long time, Nov 2000. I sold some and bought some over the years.
When I started selling in late 2020 and 2021 to make cash to build our house, I sold mostly growth stock and left most of our dividend stock alone.
In 2020, NLY was 0.87% in Nov 2020 vs 2.58% now, but I sold some in Dec 2021 when I was preparing to close my traditional IRA (Jan 2022) and I bought shares in Jan 7.36, Feb 7.03 and Apr 6.68 this year.
While it has risk, I am Ok with it because of our circumstances.
