How's your housing market? (2 Viewers)

[Harry Frogfish]

There are a handful of homes we would really like but aren't for sale.  I'd like to approach them with offers over market while eschewing commissions to get someone to listen.  We'd have a lawyer do the rest.

What's the best way to find contact info besides address?  I'll be blown away if a letter fetches anything but a trash bin but what the hell, these are some crazy times.

Plan B includes a much larger swath in which I'll have a highly recommended realtor cess it all out.  But before I meet with her, I figure I'll swing for the fences.

 

[Phil Elliott]

I’m in Austin as well and homes are going in just a couple days. Offers are minimum of 50k over asking price and inspection waived etc.. It’s crazy. I purchased less than 2 years ago and could easily sell for over 200k more than what I paid for it. Where would I go though? 

Same boat. We downsized in Austin 2 years ago. After looking for 4 months, we found a "coming soon" and were the first showing and made a full price offer that day. We thought we were crazy. But homes on our street have doubled in price in 2 years, most of it last 6 months. We have multiple calls a day from realtors trying to find listings. But we think where would we go? Now, if we get up to 300% over what we paid in 2019 we might have to reconsider. Fricken crazy. Companies relocating here are going to have to start building condo towers for their employees.

 

[Sand]

I'm officially no longer a landlord.  Sold the beach house - put a hefty price on it and waited to see if anyone wanted it.  Under contract in 4 days.  Nailed the top of the market.  Well, at least as of right now.  

Went at 7x the price per square foot that my residence is valued at.

 

[Zegras11]

Median price is Ada County (Boise area) is up 45.3% in last 12 months.

Days on market average is 12.  Down 57.1% in last 12 months.

Inventory is 570 homes for sale. Down 54% in last 12 months.

Homes sold - 790 last month.  Down 5.4% from 12 months ago.


That said, showings are noticeably down since two weeks ago today, Memorial Day weekend.  With covid restrictions lifted, everyone I know is going on vacation, flying to see relatives they have not seen in 16 months, or going to live graduations for 2021 and 2020.  I think this might last through the end of the month and even next month.

I got a buyer accepted on a super nice home in great condition. There were no offers first four days.  I was stunned.

Launched a listing in a first timer, 3/2/2/1124 home.  Only had 8 showings Thursday and Friday.  Two months ago, I would have had 30+.  SHould still have 3-4 offer by Saturday am I'm told.

With inventory so low, still don't think it's a top. More likely 60% of the buyers just getting away after being house bound for so long.

 

[KGB]

In AZ,  Purchased for 135K during the crash of 2007.  I think I can get 5-600K.

But where do I go?  Mexico?

 

[The Z Machine]

In AZ,  Purchased for 135K during the crash of 2007.  I think I can get 5-600K.

But where do I go?  Mexico?

Sure. Why not. 

 

[Captain Cranks]

Median price is Ada County (Boise area) is up 45.3% in last 12 months.

Days on market average is 12.  Down 57.1% in last 12 months.

Inventory is 570 homes for sale. Down 54% in last 12 months.

Homes sold - 790 last month.  Down 5.4% from 12 months ago.


That said, showings are noticeably down since two weeks ago today, Memorial Day weekend.  With covid restrictions lifted, everyone I know is going on vacation, flying to see relatives they have not seen in 16 months, or going to live graduations for 2021 and 2020.  I think this might last through the end of the month and even next month.

I got a buyer accepted on a super nice home in great condition. There were no offers first four days.  I was stunned.

Launched a listing in a first timer, 3/2/2/1124 home.  Only had 8 showings Thursday and Friday.  Two months ago, I would have had 30+.  SHould still have 3-4 offer by Saturday am I'm told.

With inventory so low, still don't think it's a top. More likely 60% of the buyers just getting away after being house bound for so long.

I read an article where the Redfin CEO said a lot of buyers are taking a break from the mental exhaustion of trying to buy a home right now.  I know I went through this a couple months ago where I quit looking for a few weeks because it was so mentally taxing to go through the process only to lose out to some out-of-state all cash bid.  I personally know three couples who want a new house but have given up because either the market has run too far from affordability or is just too competitive to want to hassle with.      

 

[Zegras11]

I read an article where the Redfin CEO said a lot of buyers are taking a break from the mental exhaustion of trying to buy a home right now.  I know I went through this a couple months ago where I quit looking for a few weeks because it was so mentally taxing to go through the process only to lose out to some out-of-state all cash bid.  I personally know three couples who want a new house but have given up because either the market has run too far from affordability or is just too competitive to want to hassle with.      

I'm sure there is some of that in the equation also, but the main thing now is people are just getting away when they haven't for so long.  

 

[Ilov80s]

I think I mentioned here that my in-laws bought the lakehouse a couple doors down from them to flip and sell. Grea set-up but just really out of date and weirdly laid out. They are about 1/4 of the way through the process (demo'd, newly framed, some electrical and plumbing redone) and someone came to them and said they want the house. They told my in-laws to let him know what they planned to list it at once they were done flipping it and he will give them 90% of it to just take it now as is and he will finish all the work that has to be done (drywalled, flooring, appliances, a new deck, all the bathrooms, etc). 

 

[dkp993]

I read an article where the Redfin CEO said a lot of buyers are taking a break from the mental exhaustion of trying to buy a home right now.  I know I went through this a couple months ago where I quit looking for a few weeks because it was so mentally taxing to go through the process only to lose out to some out-of-state all cash bid.  I personally know three couples who want a new house but have given up because either the market has run too far from affordability or is just too competitive to want to hassle with.      

The mental exhaustion is real, very very real.  We’re 6 weeks into our search and it’s taxing.  Continuing having to go up against 25 to 30 other bidders on something you’ve seen once for 15 mins is crazy.  Oh and it’s only the biggest financial decision of your (our) life to date.  We just lost out to one we really wanted, we were the second highest bid. The winning bid? They bid 5K on top of whatever the highest bid would be, blind.  They had no real clue what the top would be, and didn’t care. 

It’s so nuts we actually just blind bid a house that isn’t showing for 2 weeks and we went 75 over the list.  The agent says they already have 4 other offers and we aren’t the highest.  

This market is indescribable.  

 

[Capella]

A house up the street from me (same community) that is 1200 square feet less than mine just sold for 50k more than what I paid in February 2019. Crazy town. 

 

[Zegras11]

The mental exhaustion is real, very very real.  We’re 6 weeks into our search and it’s taxing.  Continuing having to go up against 25 to 30 other bidders on something you’ve seen once for 15 mins is crazy.  Oh and it’s only the biggest financial decision of your (our) life to date.  We just lost out to one we really wanted, we were the second highest bid. The winning bid? They bid 5K on top of whatever the highest bid would be, blind.  They had no real clue what the top would be, and didn’t care. 

It’s so nuts we actually just blind bid a house that isn’t showing for 2 weeks and we went 75 over the list.  The agent says they already have 4 other offers and we aren’t the highest.  

This market is indescribable.  

This describes it well for sure.  I've heard dozens and dozens of insane stories this year.

Wife went to visit her parents in Mill Valley, CA, two weeks ago. A home down the street from parents went for a MIL over asking.

This little slow down allowed a single mom to win on my listing that went live Thursday. I was told she had lost 13 times before.  She has two kids.  I was really hoping she would win.  Small townhome.  3/2/2/1140.  Listed at $285, sold for $300. She made the earnest money of $3k non-refundable after the inspection, submitted that inspection was for buyers knowledge only, and offered to put up $5k, if there is an appraisal gap.  We have a comp at $285 from six weeks ago a few doors down, but it was only 2/2 and same square feet. We all agreed that extra bedroom was worth ay least $10k.


I know many here hate agents, but now is a time to have a very good one, that understands how to win in these situations. We had another $300k offer that didn't have any of the above items I mentioned.  The agent that lost didn't ask me how they could have won.

The amazing thing about this market is once a certain way becomes popular for winning an offer, another agent comes up with a slight change to that then becomes more popular. Seems like what's working best is changing every week. So crazy.

 

[⚡DEADHEAD⚡]

Wife went to visit her parents in Mill Valley, CA, two weeks ago. A home down the street from parents went for a MIL over asking.
 

I know you know $1 million over asking is not unusual in the Bay Area. I live in the Oakland hills. It's pretty common. Totally nuts.

As a homeowner, I feel great about it. As a parent, less so. I just don't know how our kids will settle in the Bay Area, if they want, once they start their career down the line. Maybe they won't, and we'll just follow them around once we retire. 

It's interesting. School let out last week and in my neighborhood, a bunch of houses popped up on the market. People trying to take advantage of the hot market, and I'm sure there's some normal post-school selling once kids are out of high school and going to college. I know some people who live in 3,500 sf houses as empty nesters. Time to sell.

ETA: I don't hate agents. They make sick money here, and in the Oakland hills it's a bit of a mafia, but they know how to get maximum dollar. When we sold our previous house, also Oakland, our agent got us 6 offers, and when we decided on which to take, she made a phone call and got the buyers to throw some more $ into their offer. That's some varsity stuff.

 

[Captain Cranks]

The mental exhaustion is real, very very real.  We’re 6 weeks into our search and it’s taxing.  Continuing having to go up against 25 to 30 other bidders on something you’ve seen once for 15 mins is crazy.  Oh and it’s only the biggest financial decision of your (our) life to date.  We just lost out to one we really wanted, we were the second highest bid. The winning bid? They bid 5K on top of whatever the highest bid would be, blind.  They had no real clue what the top would be, and didn’t care. 

It’s so nuts we actually just blind bid a house that isn’t showing for 2 weeks and we went 75 over the list.  The agent says they already have 4 other offers and we aren’t the highest.  

This market is indescribable.  

Wow.  I'm just out at that point.  

One thing I realized quickly here in Florida is to have a chance you need to find something that doesn't have a pool or needs a little work.  Otherwise the NY, NJ, or CA contingent will snatch it up because it's exactly what they're looking for.  

There was a gorgeous turnkey 3k sq footer that listed in March for $635k.  It quickly went pending, but for whatever reason was back on the market in April at $675k.  Just saw the other day it closed for $725k.  

 

[Angry Beavers]

makes me happy to sell, rent a year and then figure it out... this bubble is going to burst ... partiuclarly when the economy turns into a dumpster fire

 

[Zegras11]

makes me happy to sell, rent a year and then figure it out... this bubble is going to burst ... partiuclarly when the economy turns into a dumpster fire

except it's not a bubble.  It's supply and demand.  There were 70% less homes built in the USA from 2010-2020, than any decade for 60 years.  We are like 4-5 million homes short on supply, which is why our stories in this thread are all very similar. It's all over the US, and not a regional thing

At best, it levels off for just a month or two here. It's going to take years to get the supply back up.

 

[dkp993]

except it's not a bubble.  It's supply and demand.  There were 70% less homes built in the USA from 2010-2020, than any decade for 60 years.  We are like 4-5 million homes short on supply, which is why our stories in this thread are all very similar. It's all over the US, and not a regional thing

At best, it levels off for just a month or two here. It's going to take years to get the supply back up.

Yep.  And exactly why I pulled the trigger and sold and jumped in. This is far more mid 1980’s then 2008. Add in no better time to lock in a low interest rate (as those are bound to rise) it became pretty clear to me now was the time.  I knew it would be a battle (and it has been) but will be worth it in the end.  

 

[Zegras11]

Yep.  And exactly why I pulled the trigger and sold and jumped in. This is far more mid 1980’s then 2008. Add in no better time to lock in a low interest rate (as those are bound to rise) it became pretty clear to me now was the time.  I knew it would be a battle (and it has been) but will be worth it in the end.  

I agree. This feels like the early 80's to me where the prices of EVERYTHING jumped up big time and never came back.

 

[Capella]

makes me happy to sell, rent a year and then figure it out... this bubble is going to burst ... partiuclarly when the economy turns into a dumpster fire

100% not a bubble. 

 

[The Z Machine]

except it's not a bubble.  It's supply and demand.  There were 70% less homes built in the USA from 2010-2020, than any decade for 60 years.  We are like 4-5 million homes short on supply, which is why our stories in this thread are all very similar. It's all over the US, and not a regional thing

At best, it levels off for just a month or two here. It's going to take years to get the supply back up.

I'm telling you, come to Baltimore.  Houses are cheap still... inventory is lower but not down like other places. 

 

[FBG26]

Wife and I are casually looking to see if anything bigger pops on the market. We went to a couple of open houses this afternoon just to check stuff out. The most interesting part to me was how dead it was. We spent 30  minutes in each house and we're the only ones there. I would've thought they be crazy busy. But maybe everybody is out of town and/or burned out like other posters have mentioned. 

First house was asking $230k more than they bought two years ago. They put in a new kitchen and updated the bathrooms. Tile work in the bathrooms was terrible. I think they got greedy thinking they could get away with asking anything in this market, quality be damned. Somebody might pay what they are asking but won't be me. 

Second house was same square footage for sightly more money. This place was super nice. New siding, ac, heat, kitchen. Out of our price range currently but if it sits a few weeks I might make an offer. 

 

[Alex P Keaton]

except it's not a bubble.  It's supply and demand.  There were 70% less homes built in the USA from 2010-2020, than any decade for 60 years.  We are like 4-5 million homes short on supply, which is why our stories in this thread are all very similar. It's all over the US, and not a regional thing

At best, it levels off for just a month or two here. It's going to take years to get the supply back up.

Yeah, it’s a bubble.   Give it a couple months post-pandemic.

 

[Zegras11]

Yeah, it’s a bubble.   Give it a couple months post-pandemic.

This is my pet peeve LOL.  Most people don't know what a bubble is.  Just because prices are rising doesn't mean it's a bubble.

The rising prices here are caused by severe lack of inventory.  That one guy that has lost a dozen times and says #### it and goes another 50k higher, because he's so worn out.

A bubble involves wild speculation at tops by a huge group of people.  That's what happened 10+ years ago.  Inventory was 10-15 higher and wild speculation rampant.  People were churning homes then.  

People are over bidding in desperation, not speculation.

 

[Alex P Keaton]

This is my pet peeve LOL.  Most people don't know what a bubble is.  Just because prices are rising doesn't mean it's a bubble.

The rising prices here are caused by severe lack of inventory.  That one guy that has lost a dozen times and says #### it and goes another 50k higher, because he's so worn out.

A bubble involves wild speculation at tops by a huge group of people.  That's what happened 10+ years ago.  Inventory was 10-15 higher and wild speculation rampant.  People were churning homes then.  

People are over bidding in desperation, not speculation.

Umm, I absolutely know what a bubble is.

 

[CletiusMaximus]

makes me happy to sell, rent a year and then figure it out... this bubble is going to burst ... partiuclarly when the economy turns into a dumpster fire

I'd be happy to do the same, but rents are insane around here.

 

[dkp993]

I'd be happy to do the same, but rents are insane around here.

Yeah that’s not an option here either.  Rental inventory is just as low as purchase and rents are stupid. Also as I said prior, renting for a while likely misses the current interest rates.  Want to lock that up for a while. 

 

[dkp993]

Yeah, it’s a bubble.   Give it a couple months post-pandemic.

You’d be hard pressed to find much analysts out there right now to support this.  Almost everything is pointing to a plateauing not a crash.  

 

[Alex P Keaton]

You’d be hard pressed to find much analysts out there right now to support this.  Almost everything is pointing to a plateauing not a crash.  

That’s been true of many bubbles.  I don’t expect us to crash down way below pre-2020 prices.  But what we are witnessing right now is not normal, will not continue, and will be (with the benefit of hindsight) a temporary, artificial price increase that isn’t sustainable.  Prices won’t plateau at this level. 

Admittedly, I could easily be wrong about this.  Wouldn’t be the first (or last) time.

 

[dkp993]

That’s been true of many bubbles.  I don’t expect us to crash down way below pre-2020 prices.  But what we are witnessing right now is not normal, will not continue, and will be (with the benefit of hindsight) a temporary, artificial price increase that isn’t sustainable.  Prices won’t plateau at this level. 

Admittedly, I could easily be wrong about this.  Wouldn’t be the first (or last) time.

I don’t disagree there could be a small pull back temporarily, but over the course of say 3-5 years it’s above we’re it is now. IMO.  

 

[Zegras11]

That’s been true of many bubbles.  I don’t expect us to crash down way below pre-2020 prices.  But what we are witnessing right now is not normal, will not continue, and will be (with the benefit of hindsight) a temporary, artificial price increase that isn’t sustainable.  Prices won’t plateau at this level. 

Admittedly, I could easily be wrong about this.  Wouldn’t be the first (or last) time.

Except it's not artificial.   It's supply and demand in a very pure form.

And there is an insane amount of cash on the sidelines and equity in trade ups to keep these prices where they are and even higher.  When the inventory catches up, then things will slow down.

The definition of a bubble includes a sudden, collapse of prices.  A rising bubble has irrational speculation at or near the top. That's not happening right now. There is a pool of rental investors speculating long term right now, but not the rampant speculation of 10+ years ago where anyone breathing at any income level bought and sold every few months with no doc loans 

And on the other post about rentals.... Rental inventory is even worse. Countless ma and pop landlords are selling right now and taking the profits as they head towards retirement, taking much needed inventory out of the market. I have clients getting 50 apps on rentals right now and bidding the rents up they are so desperate.

 

[⚡DEADHEAD⚡]

makes me happy to sell, rent a year and then figure it out... this bubble is going to burst ... partiuclarly when the economy turns into a dumpster fire

Yeah, we have friends playing this game. They started looking for a house about 10 years ago.

 

[Capella]

That’s been true of many bubbles.  I don’t expect us to crash down way below pre-2020 prices.  But what we are witnessing right now is not normal, will not continue, and will be (with the benefit of hindsight) a temporary, artificial price increase that isn’t sustainable.  Prices won’t plateau at this level. 

Admittedly, I could easily be wrong about this.  Wouldn’t be the first (or last) time.

What do you think is going to happen to turn this around? 

 

[eoMMan]

I'd be curious to see the data behind wages/household incomes vs. these higher home values (both owners and renters) and comparing it to a few years ago. So much more of people's income is going to housing these days. Wonder what the percentages are.

 

[Alex P Keaton]

Except it's not artificial.   It's supply and demand in a very pure form.

And there is an insane amount of cash on the sidelines and equity in trade ups to keep these prices where they are and even higher.  When the inventory catches up, then things will slow down.

The definition of a bubble includes a sudden, collapse of prices.  A rising bubble has irrational speculation at or near the top. That's not happening right now. There is a pool of rental investors speculating long term right now, but not the rampant speculation of 10+ years ago where anyone breathing at any income level bought and sold every few months with no doc loans 

And on the other post about rentals.... Rental inventory is even worse. Countless ma and pop landlords are selling right now and taking the profits as they head towards retirement, taking much needed inventory out of the market. I have clients getting 50 apps on rentals right now and bidding the rents up they are so desperate.

I appreciate your perspective, but simply disagree.   We've witnessed a massive run-up in a wide range of asset classes and commodity prices.   Feel free to choose which assets or commodities to choose from.   Some of those are clearly short-term in nature (e.g., price of lumber, Dogecoin) while others are more difficult to assess.   

This topic is also complicated by the "local" nature of real estate dynamics.  I doubt that we are in a true real estate bubble in every single sub-geography of the US.   But for a large portion of the country, the prices we are seeing now are not sustainable.  Just my opinion.  Absolutely could be wrong.

 

[Alex P Keaton]

What do you think is going to happen to turn this around? 

I really don't know.   It's a fair question.   I've never been through a global pandemic before and haven't read up on human behavior coming out of a pandemic (yet).   That's on my 4th of July reading list.

 

[Zegras11]

I appreciate your perspective, but simply disagree.   We've witnessed a massive run-up in a wide range of asset classes and commodity prices.   Feel free to choose which assets or commodities to choose from.   Some of those are clearly short-term in nature (e.g., price of lumber, Dogecoin) while others are more difficult to assess.   

This topic is also complicated by the "local" nature of real estate dynamics.  I doubt that we are in a true real estate bubble in every single sub-geography of the US.   But for a large portion of the country, the prices we are seeing now are not sustainable.  Just my opinion.  Absolutely could be wrong.

Have always appreciated yours.

I had a good run five year run putting about 120 first timers into homes.  And that has slowed down for sure with the rising prices in the last year, but I am still getting some approved. Likely because our market is finally just reaching national averages. I can see higher priced markets having huge problems for sure.

With the low rates, I have a couple making $48k, with zero debt and they qualify for $355k. And they live in the Payette area where they can still get a decent place for $250k.  The $210k home when we started four months ago is gone.

But there are still a lot of first timers and the millennial's are one of the largest groups ever just entering their home buying phase.   I think this group could keep things from falling too far IMO.   Weird take:  I also see the young kids more willing to do what it takes to buy a home like they value it more than young kids did 10-20 years ago.

 

[Alex P Keaton]

Have always appreciated yours.

I had a good run five year run putting about 120 first timers into homes.  And that has slowed down for sure with the rising prices in the last year, but I am still getting some approved. Likely because our market is finally just reaching national averages. I can see higher priced markets having huge problems for sure.

With the low rates, I have a couple making $48k, with zero debt and they qualify for $355k. And they live in the Payette area where they can still get a decent place for $250k.  The $210k home when we started four months ago is gone.

But there are still a lot of first timers and the millennial's are one of the largest groups ever just entering their home buying phase.   I think this group could keep things from falling too far IMO.   Weird take:  I also see the young kids more willing to do what it takes to buy a home like they value it more than young kids did 10-20 years ago.

Super interesting to hear your experience with the market.  And to be clear, I value your direct experience and the conclusions you draw from it.  Even though I disagree on some elements, a large chunk of what you have suggested makes sense, including everything quoted above.

I see similar behavior/mindset from millennial folks at my work.  They want a house as nice as their parents’ houses (suburban Chicago), but they want to buy it at age 30 vs their parents who got a starter home at 25 and traded up into the nicer house at age 45 or 50.   That dynamic and mindset has to play a role in what we are witnessing now, which is in line with your comments.

Thanks for a solid back and forth.

 

[Zegras11]

I see similar behavior/mindset from millennial folks at my work.  They want a house as nice as their parents’ houses (suburban Chicago), but they want to buy it at age 30 vs their parents who got a starter home at 25 and traded up into the nicer house at age 45 or 50.   That dynamic and mindset has to play a role in what we are witnessing now, which is in line with your comments.

So that's a huge part of the problem now.  From 2010-2015, there was hardly any new construction. Small builders folded. Big ones tried to survive.

When they started to build again, hardly any of the builders focused on starter homes.  The low end was $350-450, which now sell for $550+.

I can see for sure what you described in a Chicago type market.  Here, we have kids making $18-25/hr in construction jobs and wife making $2-3K, at age 20-25, and they see the value of getting in and starting to build up equity.

 

[Angry Beavers]

FWIW, in my situation, getting divroced, selling the house, not really sure what city I will be living in 2 years from now. I hear you that prices may not come back, but they have gone up sooo much here in Cleveland that I thought buying into this market was a fools errand. Thanks for all the feedback. 

 

[FairWarning]

I would love to sell and just rent.

 

[culdeus]

I appreciate your perspective, but simply disagree.   We've witnessed a massive run-up in a wide range of asset classes and commodity prices.   Feel free to choose which assets or commodities to choose from.   Some of those are clearly short-term in nature (e.g., price of lumber, Dogecoin) while others are more difficult to assess.   

This topic is also complicated by the "local" nature of real estate dynamics.  I doubt that we are in a true real estate bubble in every single sub-geography of the US.   But for a large portion of the country, the prices we are seeing now are not sustainable.  Just my opinion.  Absolutely could be wrong.

Need supply to come online and it just isn't.   That or people start shifting back to Detroit instead of moving to Austin.  The mass exodus of people to 100 acres a mule and a VPN connection didn't materialize. 

 

[KGB]

I would love to sell and just rent.

rents here are crazy too.  az

 

[Desert_Power]

I appreciate your perspective, but simply disagree.   We've witnessed a massive run-up in a wide range of asset classes and commodity prices.   Feel free to choose which assets or commodities to choose from.   Some of those are clearly short-term in nature (e.g., price of lumber, Dogecoin) while others are more difficult to assess.   

This topic is also complicated by the "local" nature of real estate dynamics.  I doubt that we are in a true real estate bubble in every single sub-geography of the US.   But for a large portion of the country, the prices we are seeing now are not sustainable.  Just my opinion.  Absolutely could be wrong.

I'd like to agree with this since I want to buy some rentals, but I'm not convinced there are enough headwinds. Perhaps a lot of the COVID migrations will slow or reverse with people coming back into the office more. There are a lot of mortgages delinquent today, so maybe a significant amount would go into foreclosure when the moratoriums end. I think it is more likely most get worked out.

I don't expect rates to rise significantly and we just have such an under-supply of housing lately. Those are big levers. Agree there is a lot of crazy behavior today, but I think I don't think those people are going to take massive losses or anything.

 

[Captain Cranks]

That’s been true of many bubbles.  I don’t expect us to crash down way below pre-2020 prices.  But what we are witnessing right now is not normal, will not continue, and will be (with the benefit of hindsight) a temporary, artificial price increase that isn’t sustainable.  Prices won’t plateau at this level. 

Admittedly, I could easily be wrong about this.  Wouldn’t be the first (or last) time.

One thing to consider is just how much the expansion of the money supply over the last year has lifted asset prices.  Despite the federal government telling us there's little inflation, you need to look at none other than the stock market and real estate to see that's not true.  Since the Fed isn't going to be taking that money back anytime soon, the extra dollars will remain in assets, thereby keeping their prices inflated.  

 

[SFBayDuck]

My Bay Area landlords told us back in late February they had to sell the place, 4/2 about 1,300 square feet, with a pool.  Offered it to us at $765K, with the caveat it was as is, no realtors.  That didn't make sense for us at the time so we turned them down.

They ended up putting probably $25K-$30K into the place - fresh paint, resurfaced the pool, a couple of new appliances.  They listed it on 5/18 for $859K, it was in contract 5/24 and sold 6/11 for $915K.  I'm guessing all cash with a close that fast.  I'd say they timed that pretty well.

 

[SFBayDuck]

I also have a buddy who's a realtor in Marin, he's closing on two $2M, one $3M, and one $4m home for clients....this week!  Told me, "having a great year, but it almost feels a little dirty."  He also was lamenting how five of his good buddies (including me) have either cashed out or given up and left Marin this year.

 

[The Z Machine]

Yeah, we have friends playing this game. They started looking for a house about 10 years ago.

Hopefully they took their down payment and put it on SP500 and let it roll.

 

[culdeus]

I'd like to agree with this since I want to buy some rentals, but I'm not convinced there are enough headwinds. Perhaps a lot of the COVID migrations will slow or reverse with people coming back into the office more. There are a lot of mortgages delinquent today, so maybe a significant amount would go into foreclosure when the moratoriums end. I think it is more likely most get worked out.

I don't expect rates to rise significantly and we just have such an under-supply of housing lately. Those are big levers. Agree there is a lot of crazy behavior today, but I think I don't think those people are going to take massive losses or anything.

Who are the "these people?  If you are delinquent and sell your house and come out with cash in hand, I mean that's not a foreclosure.  I mean you are homeless, but have a pocket full of cash.

 

[Desert_Power]

I'd like to agree with this since I want to buy some rentals, but I'm not convinced there are enough headwinds. Perhaps a lot of the COVID migrations will slow or reverse with people coming back into the office more. There are a lot of mortgages delinquent today, so maybe a significant amount would go into foreclosure when the moratoriums end. I think it is more likely most get worked out.

I don't expect rates to rise significantly and we just have such an under-supply of housing lately. Those are big levers. Agree there is a lot of crazy behavior today, but I think I don't think those people are going to take massive losses or anything.

Who are the "these people?  If you are delinquent and sell your house and come out with cash in hand, I mean that's not a foreclosure.  I mean you are homeless, but have a pocket full of cash.

Assuming you mean the bold, I am referring to people going high over asking/waiving repair or due diligence type of items.

 

[dkp993]

Well it’s been quite the fight for the past 2 months but we finally won a bid (6th house we bid on) and are in escrow.  We got a bit lucky as we weren’t the top dollar bid but we could offer a rent back for a few months that the other top bids couldn’t.  We definitely paid top of the market pricing but was expected, especially for a pool home (plus we got top market for our sold home), and as it plans to be our 10/15 year home I’m not sweating it.  

Now we just cross fingers on inspections and the contingency phase of escrow goes well.  Really don’t want to have to get back in to the bidding war scene.