dickmilde- out here in the NW it has been a bit different recently. The REO properties on the low end got hit pretty good (some easily down over 50% from peak on single family, more so on condos) while the upper end has held up some but down more than your area and still a bit softer (not as many qualified buyers) than the low-end recent turnaround. I started looking more in earnest around Oct-Nov at distressed stuff and making a few lowball offers. I swear about 2 weeks after I started, the whole lower end (REOs in avg/OK neighborhoods) caught fire.
Now if I see a cheap 'hot' listing, it will have 5-14 offers in a day/couple days with "last and best" coming back from sellers/banks. I have seen a couple sell close to 20% above the list price. Before that, I could spend 3 or 4 days deciding on which one to bid on (out of maybe a dozen) and then lowball it by 10-15% and work from there with counters or whatever. Managed one small property doing that and got it cheap last year.
This year it has become too competitive now so I'm about ready to call it quits and be happy with what I managed. Maybe more inventory will show up but aint happening right now.
Just not enough supply to deal with right now. It's a waste of time to see a place that you could buy for 5-10% less than list price 2 months ago now go above the list when it first lists and with many offers to boot so no bargaining leverage/wiggle room on price.
The 11% you mentioned- is that your rate of return after paying all cash and calculating in taxes/insurance (and HOA dues of course) and maybe a repair and/or vacancy cushion? The condo I picked up would give me an 11.8% annual return on all cash purchase if it rents for 10 out of 12 months and doesn't have repairs. If I put in a repair amount it gets closer to 10% but still... Conversely, if it rents all 12 months we're talking over 16%. If you leverage the property with a loan, it gets better as far as rate of return on the upfront cash used to buy although there are all those fees with a loan.
Tricky part with condos of course in part is understanding whom the owners are, looking out for potential special assessments in the future, how many upside down owners, how many owners not current on HOA dues and such. I had to do a fair amount of background looking before figuring out the place I bought and that was a bit tiring.
The HOA has had decent cash cushion for several years and dues have only modestly risen. There are a couple longtime owners of a few blocks of units too but not so much to be near majority-control levels and they've owned the units since the early 90s or earlier w/o leveraging the properties so they're generating good cashflow as well. Hoping to meet them at the next HOA meeting and owuldn't mind picking up another unit or two in there if price is right.
In general though, I'm a bit leary of some of the risks with condos (such as upside down HOAs with special assessment risks or jumping HOA fees or both and large amounts of underwater owners). Would rather have single family home where you own the property and building outright but that market is running away and was just getting to my buy area when it turned almost on a dime.
Good luck with your RE investments! If we get any price appreciation on the units, that'll make for a nice kicker.
I don't mind stealing bread from the mouths of decadence... But I can't feed on the powerless when my cup's already overfilled.
-Temple of the Dog
