Few saw the change coming this fast. Yet, in just a matter of weeks it appears that the North American real estate market has substantially shifted in favor of buyers.
This is great news for real estate wholesalers. It also means that those who are still stuck holding properties need to move them very fast.
Home Sellers Are Slashing Prices
We’ve fast gone from incredible bidding wars, with even big investment firms proudly paying 50% over market value for properties, to sellers almost competing just as fiercely in slashing their asking prices.
In Boise, Idaho 40% of home sellers have recently reduced their prices. Followed by around 30% in New Orleans, and Cape Coral.
Home Values Are Coming Down
Of course, in turn, sales prices and home values are coming down along with that. Some cities are already reportedly seeing them down 10% to 15%. For example, in Kalamazoo, MI.
Similar trends have been reported in Canada, where the market has also flipped, and recently hot markets like Waterloo are down by 8.5% as of April. With economists expecting them to drop by 20%.
It is true that these are reductions from very lofty highs. If the Fed can manage a soft landing it could just mean a slowing of growth, without an absolute crash.
Though JP Morgan Chase’s CEO just warned that we are facing an imminent financial hurricane.
What It Means For Real Estate Investors
Those still holding rehabs and speculative flips need to exit them fast. Or they face being caught underwater, with dead weight that is dragging them down.
Of course, most experienced investors have been waiting for this moment. They’ve been waiting for asset prices to come down, and the numbers make sense again.
It’s time to get bidding, and scaling. Just at the right figures, which price in the drop. Then wholesale them fast enough not to get caught with any further declines.
Obviously, this is best done by filling pre-orders from other investors who have cash and are ready to buy them immediately once they are under contract.
While capital markets have been flush, and business and mortgage lenders eager to put money to work out there, rising rates, and fear of a contraction could change that.
This makes leveraging transactional funding for quick in and out deals, with low risk an even more appealing option as we look ahead.
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