Saw an article this am on Drudge talking about prices have peaked in Vegas, Phoenix and showing signs of it in Seattle and Denver.

This correlates with what I'm seeing in my area of Michigan as well.

Prices have gone up over the last 2-3 years quite a bit (40-80%) and now, like other areas, are starting to go down a bit with construction slowing as well ( and not just because of winter).

From this I get the feeling that if we have poor performing properties ( how bout' that illiteration
) it would be a good time to sell them.

I'm seeing the same here. Prices are going down since the summer (some of that may be seasonal, but not all).

On top of prices that have risen too far, too fast you have interest rates going up making them even less affordable than before.

Same thing here but not as brisk as the 2 previous posts.

Also on drudgereport, there was a headline that most CEO's foresee a recession in the near future.

I have a theory that this is a "speed bump" of sorts.

I remember 1985 - 1988, and 2003 thru 2006.

Could be wrong but I have 20 bucks that says greater hyper appreciation will occur in the next 5 years.

Guess we'll have to wait and see ......

"most CEO's foresee a recession in the near future."

In my area of NW New Jersey, prices were rising by 2% - per month - from 1985 thru 1988.

Similar thing happened from 2003 - 2006.

A local realtor/appraiser brought this to my attention. He said values were rising 2 - 3% per month. Thought he was nuts. He said "stop by my office and I'll show you some numbers". I did and he illustrated his theory. Wow!

If you take a hypothetical $100,000 house and multiply/compound 25% per year for 3 years, that 100,000 home is now worth $195,312 - nearly double.

Rapid / hyper appreciation.

Each time this has happened (around here anyway) values dropped 30 - 40 % from their peak after about 6 years after their peak - 1994 after 1988 peak, and 2012 after 2006 peak.

What made the difference is the change in the whitehouse.

We had great prosperity for most of the 1980's. To a lessor degree we had more prosperity from the early to mid 2000's.

Like him or not, I think the current pres is a better businessman than the ones in charge during the 2 aforementioned time periods.

A guru friend of mine explained that as a commodity - the stock market is thoroughly efficient. IE, if there is particularly good or bad news regarding a company or sector, that company or sector's value could change that day. Not so in real estate where changes are moderate over time. Fairly predictable.

This is not a cue for a bunch of political mind-numbed robots to rush in and start bashing and name calling because of being offended. I lived through these times and both prospered and suffered as a result. No matter which way you vote, the numbers don't lie.

Thanks for asking.

I have a buddy who crunches data for national builders.

He explained through some complicated math that throughout the last 100 years, home prices have always come back to a % of median income.

Recessions, FED lending policy, wars, etc... may bump the numbers out of this "sweet spot" but it always returns to this % because the vast majority of the people can afford that amount of outlay in their personal budgets.

IF home prices are above that number we are in some stage of bubble. Back in 06' that "affordable" median home price was $156K nationally while the median home sales price was $246K and rising. When the bubble popped I think it was about $278K.

When is a good time buy real estate? Always!!!

Instead of growing the portfolio, I would encourage you to trade into nicer units or better performers with where we are at in the real estate cycle.

I would also encourage you to try to deleverage yourself now so you are properly positioned when the market does go into the next phase.

Real estate is a people business that deals in bricks and mortar. If you can find folks who have a problem that needs to get solved, you can make deals happen. If these are big problems, you can make even better deals

I think there are opportunities in all types of markets. The hard part is

1. Identifying what type of market you are currently in, and extrapolating out short/long term.

2. Adjusting your strategy to match your current market conditions.

Right now in my area, prices have made buying traditional SFH homes for rentals a bad deal. Prices are too high for the rents generated. Employment/income hasn't changed in this area and is not likely to so we are shifting our focus to Flipping while retail prices are above market value and renting mobile homes which give a good price/rent ratio.