Yes January felt like it was never ending, but here we are about to wrap up February and it feels like things have been a little quiet right?
WRONG!! There is pent up demand and everything is flying off the shelves. Think of it as though we got news that there is a giant El Nino coming (we wish) and that you're being responsible and thinking about running to the store to grab your hazard supply. That's a bit where our market is. That storm feels like it's a brewing and it's a scramble to get your necessary rations to weather the storm.
People have money again. The stock market has been on a steady growth path for many years here and is hitting new highs even if we've had a slight correction here. Hotel occupancy has been breaking records or floating around all time highs since 2015. (Can you believe that was 3 years ago now?) On the flip side, I think most experts don't expect to have another crash/recession. If that's not what we're going to have, what can we expect whatever it is that we're supposed to be expecting?
This is all code for we need to be significantly more sensitive to what will more than likely be a slight correction. More than likely, it'll be a correction comparable to like what we saw in the 80's or 90's: not earth shattering, but days on market will increase and the market will speak.
Going back to the title of this post. Most cycles/pendulum swings are broken up into three different parts. The first being the crawl out of the bottom. This is basically the fall from the top to the point where inventory stops increasing and begins to dry up. I believe our inventory began to really dry up in 2011 with fewer foreclosures and a move to more conventional sales.
Since 2011, we've been in a solid upswing. I don't think it takes a rocket scientist to see that. With that, we've been in that mid section of the cycle/pendulum. But where is the market for the upper third?
I was originally saying that the new tax plan was not necessarily real estate friendly. This to some extent is still true. However, it still seems to work for first time home buyers as well as the elite. For those who are limited on how much they can deduct for one reason or another, the new tax plan still works. However, the unforeseen was the effect that the tax plan would have on our elite class. Across the board there has been a reduction on taxes. For the elite, the tax reduction outweighs the impact of the reduced deductions that they are able to keep more and help move along the top tier of the marketplace which has been slower than the other sectors to return to pre recession highs.
I don't know that I want to put all my chips in that basket, but we all try to look for these pivot points. Even so, ideally this is a marker for the move into the upper third of the cycle. The upper third is typically characterized by appreciation plays as opposed to cash flow opportunities, low days on market/inventory, etc. Maybe we will see these same characteristics out of the elite class properties which will be the indication for the actual top. It's always the magic question and somewhat like the fountain of youth, we're all chasing it somewhat blindly. Rather than looking for the precise point, I'd encourage you to look at an article looking at the Warren Buffet style of investing:"Approximately Right"
WRONG!! There is pent up demand and everything is flying off the shelves. Think of it as though we got news that there is a giant El Nino coming (we wish) and that you're being responsible and thinking about running to the store to grab your hazard supply. That's a bit where our market is. That storm feels like it's a brewing and it's a scramble to get your necessary rations to weather the storm.
People have money again. The stock market has been on a steady growth path for many years here and is hitting new highs even if we've had a slight correction here. Hotel occupancy has been breaking records or floating around all time highs since 2015. (Can you believe that was 3 years ago now?) On the flip side, I think most experts don't expect to have another crash/recession. If that's not what we're going to have, what can we expect whatever it is that we're supposed to be expecting?
This is all code for we need to be significantly more sensitive to what will more than likely be a slight correction. More than likely, it'll be a correction comparable to like what we saw in the 80's or 90's: not earth shattering, but days on market will increase and the market will speak.
Going back to the title of this post. Most cycles/pendulum swings are broken up into three different parts. The first being the crawl out of the bottom. This is basically the fall from the top to the point where inventory stops increasing and begins to dry up. I believe our inventory began to really dry up in 2011 with fewer foreclosures and a move to more conventional sales.
Since 2011, we've been in a solid upswing. I don't think it takes a rocket scientist to see that. With that, we've been in that mid section of the cycle/pendulum. But where is the market for the upper third?
I was originally saying that the new tax plan was not necessarily real estate friendly. This to some extent is still true. However, it still seems to work for first time home buyers as well as the elite. For those who are limited on how much they can deduct for one reason or another, the new tax plan still works. However, the unforeseen was the effect that the tax plan would have on our elite class. Across the board there has been a reduction on taxes. For the elite, the tax reduction outweighs the impact of the reduced deductions that they are able to keep more and help move along the top tier of the marketplace which has been slower than the other sectors to return to pre recession highs.
I don't know that I want to put all my chips in that basket, but we all try to look for these pivot points. Even so, ideally this is a marker for the move into the upper third of the cycle. The upper third is typically characterized by appreciation plays as opposed to cash flow opportunities, low days on market/inventory, etc. Maybe we will see these same characteristics out of the elite class properties which will be the indication for the actual top. It's always the magic question and somewhat like the fountain of youth, we're all chasing it somewhat blindly. Rather than looking for the precise point, I'd encourage you to look at an article looking at the Warren Buffet style of investing:"Approximately Right"
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