My friends new build townhome in SJ which he bought for 960k in 2020, rose till 1.5M and now he says it’s 1.2M
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Good, he still has 20% buffer before it turns negative for him. But if the trend continues, its a matter of 2-3 months.
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Which camp are you in?
- Bottom in Dec/Jan
- Bottom in Nov 2023
- Take 2-3 years to bottom
I am actively monitoring the Austin market. Using Zillow, prices decline by 6-10% depending on zip code. Is not what RC claims would be crashing. California is the one that is crashing.
It all depends upon the Fed. If Fed stays course, I think it will bottom in late 2023, that’s when the interest rate will peak at ~4%. If Fed stays put at 4%, prices may continue to fall for another year or so. However I think, Fed will pivot and will start to lower the rates again, then prices will stabilize and start grow again.
I am planning for a continued drop in Bay Area till the end of this year at which point I will get back in market looking for good opportunities and I will keep looking till late 2023 when I think prices will bottom out.
IF Fed stays course to 4% rate, I bet the bottom will be 50% lower than the peak in April. This will be the best outcome for Bay Area for long term sustainability.
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When was the last time the market was favorable enough that you purchased in the Bay Area?
Bought in 2014, 2015, 2018 and 2020. Will buy more in 2023.
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So rich?
Haha, Trying… I call three digit millionaires truly rich and I am far from that…
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Looks like you have similar concerns with CA as I do such as homelessness, crime, 17 years worst place to do business(CNBC) => businesses leaving(bad behavior catches up with you eventually), Hollywood leaving, high cost of living, poor infrastructure, falling population etc.
So, given the above are you diversifying to other states or continuing to concentrate your RE investments in Bay Area?
That is you’ve two digit 
Far from that = about the same as @wuqijun
Took you so long to even consider going out of state?
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I really want to but I have realized that managing RE is like a full time business and not really passive unlike what many people think specially if your operating model is to buy mismanaged properties (there are many in Bay Area, thanks to techies) and upgrade to raise rent/value. It is very difficult to do this remotely.
Hopefully, I will be able pick one more base city as my next HQ (:-)) to get some diversification. But will have to wait for market to settle down first.
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Where you stay become a consideration. CA has a high State income tax. If you have net profit in rental, it defeats the purpose of buying in no to low state income tax States.
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Bay Area and CA has some solid foundations I think. Most of the CA and Bay Area problems are artificially created due to bad politics. When it gets too bad, political climate will change and things will be fixed. SF has gone through these kinds of transformations 3 times in the past.
CA Prop 13 and 1031 exchange are your friends to keep taxes less painful.
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High 2 digits (greater than 50) is good enough, no need for 3 digits
You should have sold it all this spring before it goes to zero!
My cost base is very low and I am sitting at 2-3x appreciation so no need to sell and pay taxes.
Um, prices aren’t up that much since those purchase years. Let me guess. All your tenants pay above market rents too….
Fixer upper, off market deals, better management …
Prices today should be @2x of 2014.
Lower for 2015 and following years.
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