The real estate investment market is frozen. And it's not caused by the cold weather.
News today from Silicon Valley Real Estate Blog says well what we've been all thinking now for many months : " there is a paralysis in the investment market...mostly due to a standoff between buyers and sellers over the value of real estate." Doesn't that sound familiar?
The same has been reported in the Dallas Morning News," investors are playing a waiting game for a thaw in credit market...but capital is on strike."
One national RE firm, G&E, reported in their company's weekly market insight report," In commercial real estate, a gap has opened between sellers clinging to the aggressive pricing metrics of last summer and buyers dealing with cautious lenders."
One professional stated rather strongly, "It's a buyer's strike." An he added that" Sales volume has gone way down since the credit crunch."
So is it a "buyers strike, or a capital strike?
From what I've seen in the past many months, from Boston north, is that most of the existing inventory of "investment type" real estate is simply over-priced and that the numbers don't work, except for all cash deals!
Many inexperienced speculators entered the investment market, in the past several years, with easy to obtain and often times at 100% mortgage financing, and they both over-paid and drove-up prices to a non- sustainable ( inc0me approach to value) levels.
Some investment buyers will now be forced to pay top dollars or lose substantial capital gain tax deferments . However this is a relative small pool of investor buyers.
Another stated, "Don't expect foregin investors to quickly jump into US real estate -- even though the plunging value of the dollar gives the offshore buyers and edge. The subprime mess has shaken international investors."
What's next? Will the seller's lower prices? Will the investor buyers buy high or wait it out?
It should be interesting to see who blinks first.
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