Redfin: Riverside, Phoenix, Tampa amongst most susceptible to housing downturn – do you agree? 

Redfin just published the top metro areas most and least susceptible to housing downturn, based on 5 measure: Home LTV, % Homes Flipped, 1H22 Cooling, Net Migration and % 2nd Homes – we believe, relevant measures.  Not surprising the top markets that benefited from pandemic are most susceptible, including Skytian’s top market in Greater Tampa.

That said, the glass is always half full, at least we like to view, here’s why:

• US housing including many FL markets were running unsustainably hot, and what is happening now is basically what the Fed is driving with higher interest rates; we think a correction is needed – long-term healthy
  
• If a market went up 30% YOY in past years, and a “correction” and we agree, unlikely crash, is 15% from that peak, the gain is still material for long-term investors and homeowners
• While all real estates asset classes should be impacted, we believe the correction most impacts single-family homes and less other assets such as storage, RV/mobile home and multifamily, with valuations tied less to comps and more to NOI and cap rates.
• Owners and operators driving value-add to cash-flowing assets as we do with our multifamily will continue to force appreciation and can hold off refinancing and/or exits when economy turns sunny again
• In the end, real estate is local and glass if always half full – if market sentiment turns, buying an asset at greater value due to less competition can mitigate any adverse impacts of interest rates or other macro issues